Packages to hawaii for Product differentiation. Economists speak of product differentiation when referring to the production of nonhomogeneous goods (i.e., those that are not perfect substitutes for each other). Product differentiation is one of the characteristics of monopolistic competition, a market form under which, given no artificial barriers to entry, many firms sell products differing in physical characteristics, location, service levels, branding, or image. COMPETITION can take the form of price competition or, typical for market situations between monopoly and perfect competition, of product (or non-price) competition, in which advertising plays a major role. The goal of product differentiation is to reduce the price-elasticity of demand by giving products a higher degree of uniqueness and thus to increase market power and maximize profits. Packages to hawaii 2016.