Product differentiation :

According to Prof. Chamberlin, one of the main feature of monopolistic competition is product differentiation. Product differentiation means that goods are close substitutes but are not homogeneous. They differ in colour, name, packing , size, quality etc. one gets variety of tooth pastes in a monopolistic market, namely, fortans, libaca, colgate, signal, choice etc. likewise there are different varieties of soft-drink, such as, compa cola, Thumps up, limca etc. These products are close substitutes, but at the same time they differ from one another.

Main features of product differentiation:

(1) Because of product differentiation, goods are not homogeneous as in perfect competition
(2) Product differentiation is a real situation of the market. These goods are close substitutes.
(3) Product differentiation may be both real and artificial.
(4) Under product differentiation, producer gets the name or brand of his product legally patented it means that producer alone has the legal monopoly of producing the patented product under the given name, design etc. For example, maruti udyog limited alone can produce maruti cars, Remington . Electronic Typewriter. These firms get the trade marks of their products registered. No others firm can use that mark on its product. However , it can produce close-substitute under another trade mark and thus complete with other sister firms.
(5) Aim of product differentiation in to control, price and increase profit . Product differentiation may increase average cost.
(6) According to Chomberlin, product differentiation satisfies peoples urge for variety. Hence it becomes necessary to pay a little higher price.

Definition of Product Differentiation:

So for all above you can define according to Chamberlin

“ A general class of product is differentiated if only sufficient basis exists for distinguishing the goods ( or services) of one dealer from those of another. Such a basis may be real of fancied, so long as it is of any importance whatever to buyers and leads to a preference for any variety of the product over another”.

Examples of product Differentiation :

Examples of product differentiation are as follows. Like they forhans, cibaca , colgate, choice etc. Simillary in soft-disk such as campa cola, Thumsup, Limca etc.
So from above example, this is clear that product differentiationn menas that goods are close substitutes but are not homogeneous.