Product differentiation refers to the: .1. fact that as more of a product is produced the cheaper it becomes per unit. 2. response of incumbent firms to new entrants. 3. belief by customers that a product is unique. 4. ability of the buyer of a product to negotiate a lower price.

Belief by a customer that a product is unique.

Explanation: Product differentiation is a strategy used in marketing that strives to distinguish a company's products or services from the other competitors. product differentiation involves successfully identifying and communicating the unique qualities of a company's offerings while highlighting the distinct differences between those offerings and others on the market.

Product differentiation is based on the consumers' attention on one or more key benefits of a brand that make it better than other competitors, Also differentiation may reflect in the name, packaging, and promotion of a product, furthermore, a product differentiation strategy should demonstrate that a product can do everything the competing choices can but has additional benefits no one else offers.