Lesson 25 market positioning
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Lesson 25 market positioning Lesson 25 market positioning Document Transcript

  • Marketing Management Unit 3 Developing Market Strategies & the Offerings Chapter 9 - Market Positioning Lesson 25 - Positioning & DifferentiationIntroduction:In the last class we looked at Segmentation ... one of the 3 most important considerations we needto explore and define in the development of a successful brand. Now, we look at the other two keyfactors i.e. Differentiation and positioning.Determine how a firm chooses and communicates an effective position in the marketDetermine the major differentiating attributes available to firmsDescribe the marketing strategies that are applied at each stage of the product life cycleDescribe the marketing strategies that are applied at each stage of the market’s evolutionBefore getting on to the theoretical aspect of differentiation how would you differentiate yourselffrom your friend? First obvious answer would be on the basis of name but what about other factors,they can be your intelligence level, hard work, your physical appearance and so on and so forth.Similarly a company or an organization needs to differentiate itself from its competitors.Now let us see how most of the Authors have defined differentiation as:An act of designing a set of meaningful differences to distinguish the company’s offering from itscompetitor’s offerings.Now the next question that I will ask you is related to your awareness level can you recall anyorganization that has invested its resources through out its product life cycle? Ok now let me tell youthat Companies like Hewlett- Packard and priceline.com invested precious resources to develop andthen shepherd their new products through lifecycle. Yet in today’s highly competitive global market-place, we should understand that a product will not survive-let alone thrive- without some distinctcompetitive difference that sets it apart from every rivals products. This is why smart companies relyon differentiation, the act of designing a set of meaningful difference to distinguish the company’soffering from competitors offering. Companies can differentiate its market offering along five di-mensions: product, service, personnel, channel and image.Before getting on to next topic you should just go through this article on differentiation to have a fairidea on what is differentiation.Standing OutIt’s your people who really differentiate you from the competition! By Dick Barnes, Principal, TheFreeland GroupThe concept of “differentiation” is an important piece of the marketing puzzle. It is defined, simply,as the act of using meaningful differences in product, price, distribution, and promotion in order to220 © Copy Right : Rai University 16.101G
  • Marketing Managementdistinguish the company from its competitors.In our last column we discussed ways of differentiating services. The services you offer can be acomponent of product and/or of distribution. When the physical products being offered by competingfirms are not clearly different enough to sway consumers one way or another, they will often lookfirst at price and then more closely at the service each firm provides along with the product. Thoseservices might include transaction ease, delivery, installation, training, and consulting.We all know that supplying services costs us money. Some of that cost is passed along to the con-sumer. Normally a consumer who expects a higher degree of service also expects the final price tagto be a bit higher as well. The ratio of price increase to service offered, called the “price-servicedifferential,” is changing as consumers are expecting more today than ever before. Competitivepressure requires us to supply more service and product at more competitive prices than we did in thepast. When we make improvements in our service, and do so without raising prices, we improve our“price-service differential.” That improves our competitive position.One way to improve services is by looking at the people who deliver those services. The degree towhich our people help us stand out is called “personnel differentiation” and is often overlooked whenreviewing the marketing mix. This doesn’t mean we haven’t tried to hire and retain people who havegood relationship building skills or service expertise. It simply means we don’t always take intoaccount how people affect the quality of our service mix.Marketing professionals normally look at six measurable characteristics of personnel that contributeto the service a company gives consumers: they are competence, courtesy, credibility, reliability,responsiveness, and communication. So what are these characteristics and how do they correspondto your company?Competence, first on the list, is the degree to which each person has the technical knowledge andability to carry out their portion of the service mix with confidence. This is just as important for thosewho take the initial order over the phone as it is for those who install or maintain the equipment. Ahigh degree of competence at every level of the firm means that there are few technical problems orerrors from start to finish of the transaction.Courtesy encompasses the attitudes people show when they deal with others. In our modern busi-ness climate it simply does not pay to have people that are technically competent, but unable todemonstrate respect and consideration for the customer. This does not mean managers need to traintheir people to gush all over customers. Few of our customers appreciate false sincerity…but theyalways appreciate the basic courtesies and a friendly attitude.Credibility is a bit harder to measure as it is found mainly in the eye of the beholder. Does thecustomer feel the person they are dealing with is technically competent? If so, that person is buildingcredibility with the customer. When they tell the customer the truth, and keep the customer informed,they build even more credibility. The customer actually trusts that they care and that they know whatthey are doing.That leads us to reliability. If the employee performs the service correctly, accurately, and does whatthey have said they will do, they are building a reputation for reliability. All of this leads back tobuilding greater credibility as well. You may have the most competent installer in the world, but if heis always an hour late for appointments he doesn’t appear reliable, and he loses you points in theareas of credibility and courtesy.Responsiveness is tied closely to reliability. Do your salespeople return phone calls promptly? Dothey find answers to a customer’s questions in a timely fashion? If they say they will do so, and don’t,they are demonstrating not only a non-responsive attitude, they appear unreliable as well. Credibility16.101G © Copy Right : Rai University 221
  • Marketing Managementwill suffer as a result. Ignoring a problem will not make it go away; particularly when it’s a customer’sproblem.Communication skills can be said to underlie all of the above characteristics to some degree. Aperson who is courteous, credible, and responsive is also normally a good listener and tries to under-stand what it is the customer is really saying. If they don’t communicate well with the customer theremay be no real message that they are competent or have been reliable.If we measure everyone in our own companies against these standards we will find we have noperfect people on our personnel rosters. Does this mean we have been hiring incorrectly or weshould sit down and re-staff the entire organization? Not hardly; and it’s unlikely we would do muchbetter the next time around.The trick to using the knowledge we gain through personnel differentiation is in finding better ways oftaking advantage of people’s talents and de-emphasizing their weaknesses. It also helps us compareourselves with our competitors.Take, for example, the installer we spoke of who was always an hour late to appointments…technicallycompetent but unreliable. The salesperson who sets up the appointments might compensate for thispersonality quirk by warning the customer ahead of time that the installer’s time table may be af-fected by unforeseen events.Suppose that installer also has a hard time communicating with the client while on the work site.There are interim solutions that will help. You might send an assistant installer who is outgoing,communicative, and responsive, to handle that aspect of the service call. In such a scenario therewould be great wisdom in keeping the two together as a team.But in the long term, what we learn through this process will help us to come up with better methodsof overseeing, placing, or training our personnel. We might decide to expend some effort helping ourpeople become more competent, courteous, credible, reliable, responsive, and communicative. Afterall, their abilities directly contribute to the quality of the service areas of transaction ease, delivery,installation, training, and consulting. Such improvements will pay off when our customers see ourfirm as a better place to do business.Now let move on to positioning.If I say TV, what comes first to your mind probably you will say LG Plasma or Sony Wega or anyother. But why is it that you have called out respective names only because that is how they havepositioned themselves in your mind in terms of awareness.Positioning is defined as the act of designing the company’s offering and image to occupy distinctiveplace in the target market’s mindThe main points that you should remember are: Positioning is the final part of the SEGMENT - TARGET - POSTION process Positioning is undoubtedly one of the simplest and most useful tools to marketers. Positioning is all about ‘perception’. As perception differs from person to person, so do the results of the positioning map e.g. what you perceive as quality, value for money in terms of worth, etc, is different to my perception. However, there will be similarities in certain cases. After segmenting a market and then targeting a consumer, next step will be to position a product within that market. It refers to a place that the product offering occupies in consumers’ minds on important attributes, relative to competing offerings. How new and current items in the product mix are perceived, in the minds of the consumer, therefore re-emphasizing the importance of perception!! New Product—need to communicate benefits222 © Copy Right : Rai University 16.101G
  • Marketing ManagementBefore getting into the details of positioning lets us have a recap of what STP is all aboutSegmentation - Targeting - Positioning OverviewWhen we are discussing about STP it is a process of segmenting markets in terms of dividing themarket and then targeting an attractive segment and finally you are positioning the product withpotential customers in the target group. In general, we can say that a segment is a relatively a homogenous group that has got high potentialcustomers who make their purchases based on similar criteria and motivations, act in a substantiallysimilar way (e.g. decision processes, shopping patterns), and can be communicated to using the samefocused media (e.g. watch the same TV shows or read the same magazines).More specifically, segmentation is the definitional process of disaggregating a mass market intocompartmentalized subsets based on criteria such as demographics (e.g. age, sex, location, income),psychographics (e.g. attitudes, interests, lifestyles), usage (e.g. heavy or light users), and benefitssought (e.g. convenience, safety, power).Strategically, the most effective segmentation is typically based on a creative slicing of the market(like benefit segmentation), rather than the application of traditional demographic variables (like ageor income). The next step, after defining alternative segmentation schemes, is the analytically baseddecision process of targeting, i.e. selecting segments that are inherently attractive and that closelymatch the company’s strengths.Without looking at the further discussion can you guess the most attractive segment that can betargeted? In general, we can say the most attractive segments to target are those that are:(a) Prospectively profitable: the segment’s characteristics (e.g. price levels, growth rate) andcompetitive environment (e.g. number of competitors, basis of competition) are conducive to a grow-ing pool of profits.(b) Homogeneous within the segment, i.e. members are relatively similar with respect to atti-tudes, buying criteria, media habits, etc.(c) Heterogeneous across segments, i.e. members in different segments have fundamental dif-ferences and act accordingly.(d) Accessible: members can be reached effectively with communications, and shop in outletsthrough which products can be efficiently distributed.(e) Winnable: the company’s distinctive strengths match the segment’s requirements and provide anadvantage versus competition, so the company can reasonably expect an acceptable share of theindustry profits.You should know that whenever we are planning there are lots of strategic decisions that are takenwhich are applicable in case of positioning also. Now let us discuss about the strategies that areinvolved in positioning. You should try and focus on positioning strategy aspect more because you canapply it successful only if you clear with conceptual part of it.Positioning StrategiesBasically this positioning strategy can provide a focus in the development of an advertising campaign.The strategy can be conceived and developed in a variety of ways. It can be derive from the objectattributes, competition, specific, application, the types of consumers involved, or the characteristicsof the product class. All these attributes represent a different approach in developing a positioning16.101G © Copy Right : Rai University 223
  • Marketing Managementstrategy, even though all of them have the common objective of projecting a favorable image in theminds of the consumers or audience. There are seven approaches to postponing strategy:(I) Using Product characteristics or Customer BenefitsThis strategy basically focuses upon the characteristics of the product or customer benefits. Forexample if I say Imported items it basically tell or illustrate a variety of product characteristics suchas durability, economy or reliability etc. lets take an example of motorbikes some are emphasizing onfuel economy, some on power, looks and others stress on their durability. Hero Cycles Ltd. positionsfirst, emphasizing durability and style for its cycle.In fact we can position a product with respect to its characteristics that competitor has ignored.Brands of paper towels have emphasized absorbency until Viva was successfully introduced stress-ing durability. Viva demonstrations showed their products durability and supported the claim that‘Viva keeps on working’.At time even you would have noticed that a product is positioned along two or more product charac-teristics at the same time. You would have seen this in the case of toothpaste market, most toothpasteinsists on ‘freshness’ and ‘cavity fighter’ as the product characteristics. It is always tempting to tryto position along several product characteristics, as it is frustrating to have some good characteristicsthat are not communicated.224 © Copy Right : Rai University 16.101G
  • Marketing ManagementMyers and Shocker have classified product characteristics:Pseudo physical characteristics: reflect physical properties that cannot be measured on physicalscale as taste, freshness, fragrance, spiciness etc.Physical characteristics: which can be measured on some physical scale like temperature, colourintensity sweetness, thickness etc.Benefits: it refers to advantages that promote well-being of the consumer of user For example‘juice quenches thirst. ‘Thirst-quenching is a benefit and can provide a basis for positioning strategy.(2) Price – Quality Approach or Positioning by Price-Quality - Lets take an example andunderstand this approach just suppose you have to go and buy a pair of jeans, as soon as you enter inthe shop you will find different price rage jeans in the showroom say price ranging from 350 rupeesto 2000 rupees. As soon as look at the jeans of 350 Rupees you say that it is not good in quality. Why?Basically because of perception, as most of us perceive that if a product is expensive will be a qualityproduct where as product that is cheap is lower in quality. If we look at this Price – quality approachit is important and is largely used in product positioning. In many product categories, there are brandsthat deliberately attempt to offer more in terms of service, features or performance. They chargemore, partly to cover higher costs and partly to let the consumers believe that the product is, certainlyof higher quality. But you should understand that in the same product category, there are many other brands thatappeal on the basis of price, although they might also try to perceive as having comparable or at leastadequate quality. In many product categories, the price quality approach is so important that it needsto be considered in any positioning decisions mainly in durable consumer goods. For example, ingeneral merchandise stores, Sabka Bazar is at the top end and all other departmental stores arepositioned under it in terms of price. The advertiser must maintain his image of low price whilecommunicating a quality message but there is always a risk that the quality message will blunt thebasic low price position. So if you want to position your product in terms of price and quality you haveto be very careful.(3) Positioning by Use or Application - Lets understand this with the help of an example likeNescafe Coffee for many years positioned it self as a winter product and advertised mainly in winterbut the introduction of cold coffee has developed a positioning strategy for the summer months also.Basically this type of positioning-by-use represents a second or third position for the brand, such typeof positioning is done deliberately to expand the brand’s market. If you are introducing new uses ofthe product that will automatically expand the brand’s market(4) Positioning by Product Process - Another positioning approach is to associate the productwith its users or a class of users. Makes of casual clothing like jeans have introduced ‘designerlabels’ to develop a fashion image. In this case the expectation is that the model or personality willinfluence the product’s image by reflecting the characteristics and image of the model or personalitycommunicated as a product user. Lets not forget that Johnson and Johnson repositioned its shampoofrom one used for babies to one used by people who wash their hair frequently and therefore need amild people who wash their hair frequently and therefore need a mild shampoo. This repositioningresulted in a market share.(5) Positioning by Product Class - In some product class we have to make sure critical positioningdecisions For example, freeze dried coffee needed to positions itself with respect to regular andinstant coffee and similarly in case of dried milk makers came out with instant breakfast positioned asa breakfast substitute and virtually identical product positioned as a dietary meal substitute.(6) Positioning by Cultural Symbols - In today’s world many advertisers are using deeply en-16.101G © Copy Right : Rai University 225
  • Marketing Managementtrenched cultural symbols to differentiate their brands from that of competitors. The essential task isto identify something that is very meaningful to people that other competitors are not using andassociate this brand with that symbol. Air India uses maharaja as its logo, by this they are trying toshow that we welcome guest and give them royal treatment with lot of respect and it also highlightsIndian tradition. Using and popularizing trademarks generally follow this type of positioning.(7) Positioning by Competitors - In this type of positioning strategies, an implicit or explicit frameof reference is one or more competitors. In some cases, reference competitor (s) can be the domi-nant aspect of the positioning strategy, the firm either uses the same of similar positioning strategiesas used by the competitors or the advertiser uses a new strategy taking the competitors’ strategy asthe base. A good example of this would be Colgate and Pepsodent. Colgate when entered into themarket focused on to family protection but when Pepsodent entered into the market with focus on 24hour protection and basically for kids, Colgate changed its focus from family protection to kids teethprotection that is basically done because of competition. This strategy may be preferred for twosimple reasons: -(i) Competitors may have a well-crystallized image developed over a number of years. The adver- tiser may use that image as a bridge to help communicate another image referenced to it.Sometimes, you know what happens, it is not important to know where you are or what your positionis in the market or how good consumers think you are. It is just important that they believe that youare better or as good as a given competitor.When we are discussing positioning with respect to a competitor it can be an excellent way to createa position with respect to product characteristics, especially price quality. But lets not forget that thiscannot be done in certain cases where it is difficult to evaluate, like liquor products will often use anestablished competitor to help the positioning task. Positioning with respect to a competitor can beaccomplished by comparative advertising i.e., advertising in which the name of competitor is explic-itly named and compared on one or more product characteristics, on factual information. It makesthat communication task easier.Procedure for Determining Positioning Strategy.In the previous topic, we have discussed dif-ferent positioning strategies, then what shouldbe our positioning strategy. All of us knowthat it is a complex and difficult task to iden-tify and select a positioning strategy. Lets usdiscuss the steps involved in positioning strat-egy, there are basically six-step that areadopted226 © Copy Right : Rai University 16.101G
  • Marketing ManagementIn each of the steps, marketing research techniques can be employed to get the necessaryinformation. These steps now will be discussed:(I) Identifying the Competitors – A first step is to identify the competition. This step is not assimple as it seems to be. For example, ‘Pepsi ’ might define its competitors as follows:(1) Other cola drinks(2) Non-diet soft drinks(3) All soft drinks(4) Non-alcoholic beverages,(5) All beverages except waterOne thing, which should be clear to you, is regarding competition that is there basically two types ofcompetitors Primary competitors i.e., competitors belonging to the same product class Secondary competitors, those belonging to other product category. In the above example other cola drinks are primary competitors and other drinks and beverages are secondary competitors.This can be done in number of ways the first approach can be to determine from buyers of a product,which other brands or products they consider appropriate if suppose they do not get a brand of theirchoice.A buyer of ‘Pepsi’ cola may be asked to recall his or her last purchase of Pepsi and shelter anyalternative went through his or her mind or he may asked to name the alternative cola if Pepsi wasout of stock. The resulting analysed will identify the primary and secondary groups competitiveproduct.Another approach that can be developed is related to your associations with the products. In this arespondent may be asked to maintain a diary or to recall the use context for Pepsi. One might be withan afternoon snack. The respondent may then be asked to name all the beverages, which might beappropriate to drink with an afternoon snack. For each drink or beverage, a list of use context can beprepared. This process would continue for 20 or 30 respondents. Then another group of respondentwill be asked to make a judgment on a seven point scale as to how appropriate each beverage wouldbe for each use situations. Thus if ‘Pepsi ’ was regarded as appropriate with snacks, it would prima-rily compete with other beverages used with snacks. The same approach would work with an indus-trial product such as computers.Basically these two approaches suggest a conceptual basis for identifying competitors even whenmarketing research is not employed. A management team or a group of experts, such as retailers orbuyers management team or a group of experts, such as retailers or buyers who have an understand-ing of customers, could employee one or both of these bases to identify competitive groupings.(2) Determining how the Competitors are Perceived and Evaluated – The second step in isrelated to determining the product positioning, it is basically done to see, when the competitors prod-ucts are purchased by the customers. It is to see comparative view, an, appropriate set of productattributes should be chosen. The term ‘attributes’ includes not only product characteristics and con-sumer benefits but also product associations such as product use or product users. In any productcategory, there are usually a host of attribute possibilities. Some can be difficult to specify. Forexample beer has taste, smell, strength, fullness (including alcoholic content) attributes. The task is toidentify the potential attributes out of a variety of attributes to remove redundancies from the test ofattributes and then to select those that are most useful and relevant in identifying the product or brandimages.16.101G © Copy Right : Rai University 227
  • Marketing Management(3) Determining the competitor’s positions – our next focus should be to determine how differ-ent brands (including our own brand) are positioned with respect to the relevant attributes selectedunder the previous step. At this point we should be clear about what is the image that the customerhas about the various product brands? You have to see how are they positioned in respect to eachother? Which competitors are perceived as similar and which as different? This judgment can bemade subjectively. However a research can be taken up for getting the answer of these questions.Such research is termed as multidimensional scaling because its goals it to scale objects on severaldimensions or attributes. Multidimensional scaling can be based upon either attribute data or non-attribute data this topic will be covered in detail in Research Methodology Paper.4. Analysing the Customer – now you need to analysis the customers habits and behaviour in aparticular market segment. The following questions need attention while understanding the customerand the market – (i) how is market segmented? (ii) What role does the product class pay in thecustomers life style? What really motivates the customers? And what habits and behavior patternsare relevant?The segmentation question is, of course, critical. There are various approaches to segmentation butout of all benefit segmentation is relevant here, which focuses upon the benefits or attributes that asegment believes to be important. In order to specify that benefit segments, it is useful to highlight therole of ‘ideal object’ as a tool.Now you should understand what is an ideal object, ‘An ideal object’ is an object, the customerprefer over all other objects including the object, which really does not exist. It is a combination of allthe customers preferred attribute level. Although, the assumption that people have similar perceptionmay be reasonable, their preferences are nearly always different and there ideal object location willdiffer. One reason to locate ideal object is to identify segments of customers having similar idealobject. The attributes of ideal object then should be compared and the advertiser should improve theproduct by renovating the product in view of the ideal object(5) Making the positioning Decision – The above four steps provide you a useful backgroundsand are necessary to be conducted before taking any decision about positioning. The managers cancarry these steps or exercises. After these four exercises, the following guidelines can be offered toreach a positioning decision: -(i) An economic analysis should guide the decision. This analysis depends upon two basicfactors (a) the potential market size, and (b) the penetration probability unless both these factors arefavourable, the success in unlikely.(ii) Positioning usually implies a segmentation commitment. It implies concentration only oncertain segments and ignores the parts of the market. Such an approach requires commitment anddiscipline to the potential buyers. Yet the effect of generating distinct, meaningful positions is to focuson the target segments and not be constrained by the reaction of other segments.(iii) If the advertising is working, the advertiser should stick to it. He should not get tired ofa positioning strategy and should not think of change in advertising used to implement it.(iv) Do not try to be something, your are not. It is usually fatal to decide on positioning strategythat exploits a market need or opportunity but assumes that the product is something, it is not.(v) In making a decision on position strategy, symbols or set of symbols must be considered. If anybrand or symbol is already in use. That must be use in positioning strategy.(6) Monitoring the position – An image objective, like an advertising objective should be measur-able. It is necessary to monitor the position overtime, for that you have variety of techniques that can228 © Copy Right : Rai University 16.101G
  • Marketing Managementbe employed it can be on the basis of some test and interviews which will help to monitor any kind ofchange in the image.Thus, the first four steps in the process provide a useful background. The fifth one only is taken tomake the position decision. The final step is to evaluate and measure and follow up.Now let’s discuss about Product positioning in Advertising. Product positioning in Advertising:Product positioning is a new term developed in the advertising circles during 1970s. No generallyaccepted definition of the term has been developed, although the concept can be described byWilliam J. Station in these words – “A product’s position is the image that the product projects inthe minds of consumers in relation to, first, other products sold by the company, and, second, tocompetitive product.”Thus product positioning may be referred to as the image or overall impression of the product in theminds of the consumers as compared to other brands available in the market. In other words, it is areputation of the product, just as an individual develops a reputation for consistency, trust worthinessand so on, so too do brands, products, companies and organizations.A brand name may have many associations some may be based on physical attributes other willreflect the fact that products are used to express life styles, social positions, and professional roles,Still others will reflect associations involving product applications, types of people who might use theproduct, stores that carry the product, or sales people who handle it. Basically, the advertising can beused to mould and reinforce an image and the decisions as to what kind of an image should bedeveloped is a very crucial to many advertising campaigns. This decision means, selecting thosewhich are to be removed or de emphasized .So we can say that ‘positioning’ or ‘product positioning’ means ranking the brands of a product in theorder of the image or overall impression in the minds of consumers. When we say that Sony Musicsystem is the best or number one among the brands available in the market, it means the position ofbrand Sony is at the top or it hold first position. The position must have a frame of reference for theimage, the reference point usually being competition. It is important to understand that several levelsof organization – the company it self its brands or its products –can be thought of as objects. Animage is associated with each, and that each can be positioned with respect to competitive alterna-tives. Thus an attribute and a competitor must be there in positioning the product.16.101G © Copy Right : Rai University 229
  • Marketing Management Points to remember:230 © Copy Right : Rai University 16.101G
  • Marketing Management16.101G © Copy Right : Rai University 231