Differentiatio n includes both tangible and intangible dimensions. Tt:111gible d[/: f ere11tiation is concerned with the observable characteristics of a product or service 1har are relevant to customers· rreferences and choice processes, for example size. shape, color, weight, design, material, and performance a11ribu1es such as reliability. consistency, taste, speed, durability, and safety. Tangible differenLiatio n also extend~ to prndue1s and services 1ha1 complement the product in q uestio n: delivery. after-sales !)ervices, and accessories. Opportunities for intangible differentiation arise because the value cha! cus-tomers perceive in a produce is seldom determined solely by o bservable produce features or objective performance criteria. Social, emotional, psycho logical. and esthetic considerations are present in most customer choices. For consumer goods and services the desire for status, exclusivity, ind ividuality, security, and community are powerful motivational forces. \Vhere a product or service is meetjng complex customer needs, differentiation choices involve the overall image of the firm and its offering. Image differentiaLion is especially important for those p roducts and services whose qualities and performance are difficult to ascerrain at the time of purchase (so-called experience goods). These include cosmetics, medical ser vices, and education. Differentiation and Segmentation DifferenciaLion is different from segmenta-tion. D ifferentiatio n is concerned with how a firm competes-the ways in which it can offer uniqueness co customers. Such uniqueness might relate to consist-ency (McDonald's), reliability (Federal Express), stacus (American Express), quality (BMW), and innovation (Apple). Segmentation is concerned with w here a firm com-petes in terms of customer groups, localities, and produce types. Whereas segmentatio n is a teature of marke1 structure, differentiatio n is a strategic choice made by a firm. Differentiation may lead co focusing upon particular market segments, but not necessarily. IKEA, McDonaJd·s, Ho nda, and Starbuck s all pursue diflerenriation, but position themselves within the mass market spanning multiple dcmograrhic and socioeconomic segments.•·• The Sustainability af Di/J'erentiation Advantage D ifterenLiacio n offers a m ore secure basis for competitive advantage than low cost does. A position o f cost advan-tage is vulnerable to the emergence of new competitors from low-co~1 countries and to adverse movements in exchange rates. Cost advantage can also be over-turned by innovation: discount brokerage firms were undercut by internet brokers.