Differentiation and Positioning

1. Differentiation and Positioning 7

2. Discussion Question 1. What are the basic generic competitive strategies? How do firms differentiate their themselves from one another?

3. Generic Competitive Strategies Exhibit 7.1 Competitive Advantage Competitive Scope Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.

4. What is Positioning? A couple of definitions • Creating distinct and valued physical and perceptual differences between one’s product and its competitors, asperceived by the target customer. • The act of designing the firm’s market offering so that it occupies a distinct and valued place in the minds of its target customers.

5. Discussion Question 2. Which words are critical in these definitions? Why? • Creatingdistinctand valuedphysical and perceptual differences between one’s product and its competitors, asperceived bythe target customer. • The act of designing the firm’s market offering so that it occupies a distinct and valued place in the minds of its target customers.

6. Critical words and why they matter • Distinct: Why would anyone choose it, if it’s not different • than what they now buy? • Valued: Differences that are not valued won’t do much good. • Clear-colored colas failed. • Physical: The goods or services must “walk the talk” and be • different; marketing “me-too” products is very difficult. • Perceptual: If the customer does not perceive the difference, • the difference will not matter. • As perceived by/in the minds of: It’s what the customer • perceives that counts, not what the marketer perceives.

7. Discussion Question 3. What don’t we mean by positioning?

8. What is Positioning? • What we don’t mean is: • Which stores or channels you’ll sell the product in • Where on the shelf you hope to have it placed • The market segment you will target • These decisions are related to or grow out of the positioning decision, but they are not positioning, as marketers use the term.

9. Positioning • Physical Positioning • Assessing the current position of a product offering relative to competitor’s (and other product’s offered by the company) on the basis of how various offerings compare on some set of objective, physical characteristics (which are significant to potential buyers). • Value of Physical Positioning • Helps in strategic marketing analysis • Provides information to R&D (key characteristics) • Shows structure of competition • May show product gaps (opportunities for new products)

10. Positioning • Perceptual Positioning • The consumer is not buying physical properties but rather the benefits they provide • Physically similar products may be perceived as different because of different histories, names and advertising campaigns • Dimensions on which consumers perceive competitive offerings • Simple physically based attributes (size, weight, color) • Complex physically based attributes –multiple characteristics used (efficiency, roominess, economy) • Essentially abstract attributes (not related to physical attributes in any direct way (sexiness, prestige, intelligent) • Price – may imply other attributes like quality

11. Positioning • Physical Positioning • Familiar with product class • Industrial goods • Consumer durables • Perceptual Positioning • Less familiar with product class • Nondurable consumer goods

12. Comparison of Physical and Perceptual Positioning Analysis Exhibit 7.3 • Physical positioning • Technical orientation • Physical characteristics • Objective measures • Data readily available • Physical brand properties • Large number of dimensions • Represents impact of product specs and price • Direct R&D implications • Perceptual positioning • Consumer orientation • Perceptual attributes • Perceptual measures • Need for marketing research • Perceptual brand positions and positioning intensities • Limited number of dimensions • Represents impact of product specs and communication • R&D implications need to be interpreted

13. Steps in the Positioning ProcessExhibit 7.4 (1 of 2) 1. Identify relevant set of competitive products serving a target market. 2. Identify the set of determinant attributes that define the “product space” in which positions of current offerings are located. 3. Collect information from a sample of customers and potential customers about perceptions of each product on the determinant attributes.

14. Steps in the Positioning ProcessExhibit 7.4 (2 of 2) 4. Determine product’s current location (positioning) in the product space and intensity thereof. 5. Determine customers’ most preferred combination of determinant attributes. 6. Examine the fit between preferences of market segments and current position of product (market positioning). 7. Write positioning statement or value proposition to guide development and implementation of marketing strategy.

15. Discussion Question 4. What are determinant attributes? Why are they important? An attribute that plays a major role in helping consumers differentiate among the alternatives and to determine which product offering they prefer.

16. Discussion Question 5. What’s the tangible output of the positioning process? • A written statement. • There are two approaches to writing it down: • Positioning statement • Value proposition

17. Some Key Questions Concerning Positioning Statements or Value Propositions • For whom are they written? • An internal audience: marketing decision makers and ad agencies • In what sort of language? • Plain prose. The ad agency or other creative staff will develop the catchy consumer language, based on the chosen positioning. Can the class think of examples of catchy current tag lines and the positioning they represent?

18. Please don’t squeeze the ___________. Charmin. Aren’t you glad you use __________ . Dial Nobody does it like _________ can. McDonald’s Things go better with _________. Coke Good to the last drop, _____________ . Maxwell House ________________, the San Francisco treat. Rice-A-Roni MortonSalt When it rains it pours. The quicker-picker-upper. Bounty Nervous is why you need ______________. Soft & Dry __________ takes grease out of your way. Dawn Nothing beats a great pair of __________. L’ Eggs

19. Take the _______________ plunge. Nestea. Everything is better with __________ on it . Blue Bonnet It’s gonna be a great day. Kellogg’s A sandwich is a sandwich, but a ________ is a meal. Manwich Fly the friendly skies of ______________. United Airlines How do YOU spell relief? Rolaids Pepper (Dr.) Wouldn’t you like to be a ___________ too? America spell cheese _____________. Kraft Let __________ put you in the driver’s seat. Hertz The clean in your mouth is ___________. Colgate Wisk Try ____________ for ring around the collar.

20. Wouldn’t you really rather have a _________. Buick. Dirt can’t hide from intensified _________ . Tide More burger than bun. Dairy Queen Made for a woman but strong enough for a man. Secret You deserve a break today at ______________. McDonald’s Clean as a whistle Irish Spring Trix ____________ are for kids, silly rabbit. Kids make _______________ number one! Cheerio’s What’s the best tuna? Chicken-of-the-Sea Oh please, pass the __________________. Macaroni & Cheese Miracle Whip The bread spread.

21. Some Key Questions Concerning Positioning Statements or Value Propositions • Should they focus on features or benefits? • What is a feature? • A physical attribute of the good or service itself • What is a benefit? • The end-use consequences that the user will experience by using the product • Benefits, which are ultimately why people buy (e.g., safety, for Volvo, vs. side door airbags)

22. Some Key Questions Concerning Positioning Statements or Value Propositions • How many differentiating (determinate) attributes should anchor them? • One, or perhaps two at most. No more. Why? • Clear and simple communication • No confusion about what the product stands for • Examples? • Volvo: Safety. Note there’s more Volvo could say, but here’s where they focus. (One attribute) • Miller Lite beer: Tastes great. Less filling. (Two attributes) • Domino’s Pizza: Originally, fast delivery. Later changed to hot delivery.

23. Positioning Statement for Volvo in North America • Generic format for positioning statements: For (target market), (brand) is the (productcategory) that (benefit offered). • For upscale American families, Volvo is the family automobile that offers maximum safety

24. Value Proposition for Volvo in North America • Generic format for value propositions: • Target market • Benefits offered (and sometimes not offered) • Relative price • Target market: Upscale American families • Benefits offered: Safety • Relative price: 20% premium to domestic family cars

25. A Useful Tool for Positioning Decision Making: Perceptual Map [Product Space] Not Sweet Where would you plot your favorite cereals? Your kids’ favorites? Your grandma’s? Sweet Nutritious Not Nutritious

26. A Useful Tool for Positioning Decision Making: Perceptual Map [Product Space] Sweet or Fruity Where would you plot the soft drink market? Not Sweet Uncola Cola

30. POSITIONING - ATTRIBUTE

31. COMPARISON OF POLISHES 10 Zymol 8 IMAGE10 MothersMcGuires 6 Excalibur Blue Coral Price Polish 4 Eagle 1 Wax Shop NuFinish 2 Turtle Wax Rain Dance 0 10 4 6 8 Quality

33. Discussion Question 6. What is positioning’s role once a product’s positioning strategy has been determined?

34. Positioning is the foundation from which marketing • mix decisions are made • Product decisions: What features are needed to • deliver the required benefits? • Pricing decisions: How should the product be priced • relative to competition? • Promotion: What should promotional messages say • to create the desired perception in the target • customer's mind? • Place: Through what channels should the good or • service be marketed to create the desired perception • in the target customer's mind?