This paper deals with different aspects of differentiation as a strategy to maintain growth and profitability in a rapidly changing environment. The specific aim of the study was to establish constraints in the use of product differentiation as a survivor technique in the building industry. The study shows that firms in the building industry perceive the structure and operation of different markets in the building industry as substantially different. If firms are to improve their market positions by differentiating their output, they need therefore to adjust the way they operate, their resources and their skills base.The survey result also showed that a substantial proportion of all firms are not prepared to be involved in diversification but elect to operate in one market only, despite the obvious advantages of diversification. It would therefore seem likely that the changes in the way a firm operates and the resources it employs when it moves into new markets are substantial.