What is product differentiation?

• A. Charging different prices to different consumer groups based on willingness to pay.
• B. When firms produce identical goods so buyers are indifferent about the source and products are perfect substitutes.
• C. Lowering production costs to undercut competitors while keeping the product otherwise identical.
• D. The process of making products distinct through quality, features, branding, or services so consumers perceive differences and firms gain some pricing power.

Answer: (D)