The topic of this research work is product differentiation as a competitive tool in the marketing of soft drinks (A case study of Limca Bottling Company). Chapter one focuses on the introductory aspect of this work e.g. problems of the topic, objectives of the research, and research hypothesis. The review of different writers opinion on this research work constitutes chapter two, which is the literature review, it goes further to examine the effect of product differentiation on the profitability of the company. Under this chapter, different forms of product differentiation and market segmentation were also looked into. Chapter three deals with the research methodology, this covers the method used in the collection of both primary and secondary data, presentation analysis interpretation of data and testing of hypothesis is dealt in chapter four. The chapter five attempts to make some suggestion and valuable recommendation essentially to Limca Bottling Company which if properly implemented will go a long way in helping the company in the area of product differentiation and also in market segmentation.