Identifying Vertical Product Differentiation in Three Polish Manufacturing Industries: an Enterprise Survey

Abstract

The paper attempts to identify indirectly vertical product differentiation in three industries of Polish manufacturing (manufacture of glass and glass products, manufacture of other general purpose machinery and manufacture of other special purpose machinery) by examining how focus on a given group of customers (segment) is related to company characteristics. Changes in companies' segment orientation between 2002 and 2005 are examined and the factors of these changes are discussed. The analysis is based on a survey of 77 companies.

The data support the hypothesis that there exist segments in the consumer goods market, defined by the income level of customers. In the capital goods market, it is shown that domestic-owned customers are the low-end segment of the market, whereas foreign-owned customers constitute a higher segment. It seems that industries producing capital goods have shifted towards higher market segments between 2002 and 2005 and their principal motive was the pressure exerted by competitors, both domestic and foreign.