Answer: I disagree with the statement.
Product differentiation is an important feature of monopolistic competition, but it is not the only one. The other features are:
- Large number of sellers: each with a small share of the market.
- Free entry and exit of firms in the long run.
- Selling costs: heavy expenditure on advertisement and sales promotion.
- Close substitutes: products are similar but not identical, e.g. different brands of toothpaste.
- Group concept instead of industry.
- Some control over price because of brand loyalty.
Thus monopolistic competition has many features besides product differentiation.
