The effect of product differentiation on competitive advantage in retail business: A study of supermarkets in Yobe State
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Background of the Study
Product differentiation is a marketing strategy that involves distinguishing a product or service from others in the market based on unique features, benefits, or attributes (Porter, 2023). In the highly competitive retail sector, product differentiation allows businesses to attract customers by offering something distinctive, whether it is a unique product design, superior quality, exclusive features, or enhanced customer service (Kotler & Keller, 2024). For supermarkets, product differentiation is a key strategy to differentiate themselves from other retailers, particularly when consumers have a wide array of choices and are increasingly selective in their purchasing decisions (Smith & Thompson, 2025).
Yobe State, located in northeastern Nigeria, has witnessed an increase in the number of supermarkets due to the rise in urbanization and growing consumer demand for quality goods. These supermarkets face fierce competition not only from other local retailers but also from informal markets and smaller retail outlets. As supermarkets struggle to build customer loyalty and maintain competitive advantage, product differentiation becomes a crucial factor in standing out and meeting the diverse needs of consumers (Danladi & Umar, 2023).
This study explores the effect of product differentiation on the competitive advantage of supermarkets in Yobe State. It focuses on how product uniqueness, quality, pricing strategies, and customer experience contribute to supermarkets’ ability to gain an edge in the market, attract customers, and build long-term business success.
Statement of the Problem
Despite the growing recognition of product differentiation as a strategy for gaining competitive advantage, many supermarkets in Yobe State still struggle with differentiating their offerings in meaningful ways. While some supermarkets have invested in unique product lines or improved customer service, others continue to rely on generic products and price competition, which may not be sustainable in the long term. Additionally, many consumers in Yobe State remain price-sensitive and may not be willing to pay a premium for differentiated products without perceiving clear value.
There is a lack of research on how supermarkets in Yobe State can effectively differentiate their products to achieve a sustainable competitive advantage. This study aims to address this gap by examining the impact of product differentiation on the competitive advantage of supermarkets in the state.
Objectives of the Study
- To evaluate the impact of product differentiation on the competitive advantage of supermarkets in Yobe State.
- To investigate the role of unique product features, quality, and pricing strategies in attracting customers and increasing market share.
- To explore how customer perception of differentiated products influences loyalty and repeat purchases in Yobe State’s supermarkets.
Research Questions
- How does product differentiation affect the competitive advantage of supermarkets in Yobe State?
- What role do unique product features, quality, and pricing strategies play in attracting customers to supermarkets in Yobe State?
- How does customer perception of differentiated products influence loyalty and repeat purchases in Yobe State supermarkets?
Research Hypotheses
- H1: Product differentiation has a significant positive impact on the competitive advantage of supermarkets in Yobe State.
- H2: Unique product features, quality, and pricing strategies influence customer attraction and market share in Yobe State’s supermarkets.
- H3: Customer perception of differentiated products positively affects customer loyalty and repeat purchases in Yobe State supermarkets.
Scope and Limitations of the Study
This study will focus on supermarkets in Yobe State, investigating product differentiation strategies and their impact on competitive advantage. Data will be collected from supermarket managers and consumers. The study may be limited by the subjective nature of customer perceptions, as personal preferences and varying levels of understanding of differentiation strategies may influence responses.
Definitions of Terms
- Product Differentiation: The process of distinguishing a product or service from others in the market by highlighting its unique features, benefits, or quality.
- Competitive Advantage: The ability of a business to outperform its competitors by offering superior value to customers, often through product differentiation, pricing, or customer service.
- Customer Perception: The way customers interpret and evaluate the attributes of a product or service based on their experiences and expectations.
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