What Is a Parity Product? Meaning, Explanation, 6 Facts

If you sell your goods or services online, there is always the risk that someone else will buy them at the same time. If you plan to sell your internet service, you will almost certainly face competition.

Because there are other suppliers of free cloud storage, you might offer your business as “5GB of free cloud storage.” There are other online apps, such as Google Docs, that allow you to create, edit, and save documents in the cloud.

If you’re attempting to market an online service, consider what distinguishes it from the numerous others that provide a comparable experience online. It is suggested that you create a parity product.

What Is a Parity Product?

A parity product is defined as a brand of a specific good that is interchangeable with any other brand of the same sort of object. When two products are judged “functionally equivalent,” we say they are “at parity.”

What Is a Parity Product?

A monopoly does not exist if customers have access to parity items. Many ordinary objects, such as aluminum foil, spatulas, and detergent, might be considered “parity products” in this meaning.

Understanding Parity Products

Because of the ubiquity of replacements, charging a premium for a parity product is challenging. If the firm rises prices while its competitors do not, there will be less demand for the company’s product and greater demand for the parity items of its competitors.

An rise in the price of one brand’s product will raise demand for another brand’s product, hence the cross elasticity of demand for competing commodities will be positive.

This is because many different companies make what is known as a “parity product,” which is functionally comparable to one another. Each product is interchangeable because it serves a similar purpose, has similar components, or both.

What Is a Parity Product?

Because there are different possibilities, the market is less likely to be controlled, and customers benefit from consistent prices. Marketing and branding tactics that try to differentiate one company’s goods from others are critical in the fight for customers’ wallets.

This is frequently the only way to differentiate otherwise similar parity goods, and if done well, it may be highly profitable.

Special Considerations

The phrase “points of parity” refers to the traits that must be present for a brand to be considered seriously as a competitor in a certain market. Customers examine the attributes of your brand and the brands of your competitors when making a buying choice.

Differentiating aspects, on the other hand, are what make your brand stand out from the crowd. Distinctive selling features distinguish you from the competition.

To gain market share in a competitive product category, a company must first address the points of parity, or the areas where it must show that it is on par with the competition (not necessarily better).

What Is a Parity Product?

This is critical in order to begin leveling the playing field between your product and the market’s competing parity goods. After that, you may move on to emphasize the product’s particular benefits over its competitors.

Example Parity Product

The smartphone wars between Apple and Samsung are a perfect example of how companies have differentiated themselves from competitors in the mobile phone business.

While both the iPhone and the Samsung Galaxy S provide many of the same features and advantages, Apple’s phones stand out due to their elegant design and the user-friendly nature of the iOS operating system.

In contrast, Samsung has made it a priority to showcase what they perceive to be their market competitive advantages.

What Does a Parity Product Usually Include?

A “parity product” is created when many producers make substantially the same thing. There are minor differences amongst them, but they are all fundamentally the same.

Such common goods include things like nails, toothpaste, forks, and peanut butter. While each brand may slightly alter the formula or utilize slightly different components, the ultimate product is generally the same.

What Is a Parity Product?

The components or operation of parity items may be the same. The majority of peanut butters, for example, are comparable. They all include peanuts, and while some may have additional ingredients (such as partially chopped nuts, chocolate, or jelly), they are essentially identical.

However, each brand is under pressure to differentiate its products from those of the market leaders, whether to attract new consumers or to keep prices low for existing ones.


When one firm is the only source of a given product, this is called a monopoly and it can cause problems. Since the firm is in charge of production and delivery, it can set any price it wants and make customers pay it or go without.

When the price of a comparable product is raised, the number of units sold frequently falls. Because consumers may easily switch between name brands, there is little price fluctuation for comparable items.

What Is a Parity Product?

By comparing identical things from various brands against one another, this creates rivalry between corporations.


Given the resemblance of parity items, rival organizations’ marketing departments must collaborate to attract customers.

Even though their products are similar, each brand will strive to persuade clients that theirs is the superior alternative through unique packaging, advertising, and sales pitches.

While there are few instances where a product from one brand obviously outperforms another, in most circumstances, goods from many brands perform at or near the same level.

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Pat Moriarty
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