The grading of products to satisfy different buyers is referred to as?

Businesses rarely sell one uniform version of a product. Instead, they create several versions that differ in quality, size, packaging, or features, so that buyers with different needs, tastes, or budgets can each find a version that suits them.

This practice of grading a product into distinct variants aimed at different categories of buyers is called product differentiation. For example, a soap manufacturer may sell a plain bar for price-sensitive buyers and a scented, individually wrapped version for buyers willing to pay more, even though the core product is similar.

This is different from a product line, which refers to a group of related products sold by the same firm, and from a product mix, which refers to the entire range of product lines a firm offers. Product concept, on the other hand, refers to management's basic philosophy about what the business is selling. None of these three describes the act of grading one product to appeal to varied buyers.

Exam takeaway: when a question links grading or varying a single product to reaching different buyer groups, think product differentiation rather than product line or product mix, which describe the breadth of a firm's overall offerings.