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  1. 1. Marketing Management MBA CP 205
  2. 2. Crafting the Brand Positioning
  3. 3. <ul><li>Learning Objectives: </li></ul><ul><li>Know how a firm can choose and communicate an effective </li></ul><ul><li>positioning in the market. </li></ul><ul><li>Know how brands are differentiated. </li></ul><ul><li>Know what marketing strategies are appropriate at each stage of </li></ul><ul><li>the product life-cycle. </li></ul><ul><li>Know what are the implications of market evolution for marketing </li></ul><ul><li>strategies. </li></ul>Crafting the Brand Positioning
  4. 4. Positioning Act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market. Crafting the Brand Positioning
  5. 5. Writing a Positioning statement Mountain Dew: To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. Crafting the Brand Positioning
  6. 6. <ul><li>Positioning requires that similarities and differences between </li></ul><ul><li>brands be defined and communicated. </li></ul><ul><li>Deciding on positioning requires determining a frame of reference </li></ul><ul><li>by identifying the target market, competition, ideal POPs and PODs. </li></ul><ul><li>Defining competitive frame of reference involves determining </li></ul><ul><li>category membership. </li></ul><ul><li>Category membership refers to all products with which a brand </li></ul><ul><li>competes including the substitutes. </li></ul>Crafting the Brand Positioning
  7. 7. Crafting the Brand Positioning Defining Associations <ul><li>Points-of-parity (POPs) </li></ul><ul><li>Associations that are not necessarily unique to the brand but may be shared with other brands. </li></ul><ul><li>Points-of-difference (PODs) </li></ul><ul><li>Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find, to the same extent, with a competitive brand. </li></ul>
  8. 8. <ul><li>POPs are classified in two types: Category and Competitive . </li></ul><ul><li>Category POPs are associations consumers view as essential to be a </li></ul><ul><li>legitimate and credible offering within a certain product category. </li></ul><ul><li>These represent necessary but not necessarily sufficient </li></ul><ul><li>conditions for brand choice and may change over time due to </li></ul><ul><li>technological advances, legal developments or consumer trends. </li></ul><ul><li>Competitive POPs are associations designed to negate competitors’ </li></ul><ul><li>PODs . </li></ul><ul><li>The key to successful positioning is not so much in achieving a </li></ul><ul><li>POD as in achieving POPs . </li></ul>Crafting the Brand Positioning
  9. 9. Conveying Category membership Announcing category benefits Comparing to exemplars Relying on the product descriptor Crafting the Brand Positioning
  10. 10. Consumer desirability Criteria for PODs Relevance Distinctiveness Believability Crafting the Brand Positioning
  11. 11. Deliverability Criteria for PODs Feasibility Communicability Sustainability Crafting the Brand Positioning
  12. 12. Crafting the Brand Positioning Examples of negatively correlated attributes and Benefits <ul><li>Powerful vs. Safe </li></ul><ul><li>Strong vs. Refined </li></ul><ul><li>Ubiquitous vs. Exclusive </li></ul><ul><li>Varied vs. Simple </li></ul><ul><li>Low-price vs. High quality </li></ul><ul><li>Taste vs. Low calories </li></ul><ul><li>Nutritious vs. Good tasting </li></ul><ul><li>Efficacious vs. Mild </li></ul>
  13. 13. Differentiation Strategies Product Channel Image Personnel Crafting the Brand Positioning
  14. 14. Crafting the Brand Positioning Product Differentiation <ul><li>Style </li></ul><ul><li>Design </li></ul><ul><li>Ordering ease </li></ul><ul><li>Delivery </li></ul><ul><li>Installation </li></ul><ul><li>Customer training </li></ul><ul><li>Customer consulting </li></ul><ul><li>Maintenance </li></ul><ul><li>Product form </li></ul><ul><li>Features </li></ul><ul><li>Performance </li></ul><ul><li>Conformance </li></ul><ul><li>Durability </li></ul><ul><li>Reliability </li></ul><ul><li>Reparability </li></ul>
  15. 15. Crafting the Brand Positioning Personnel Differentiation Singapore Airlines
  16. 16. <ul><li>Personnel differentiation enables companies to gain competitive advantage through having better trained people. </li></ul><ul><li>Better trained people exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness & communication. </li></ul><ul><li>Channel differentiation : Companies can achieve competitive advantage through the way they design distribution channels’ coverage, expertise and performance. </li></ul><ul><li>Image differentiation : Consumers respond differently to company and brand images. Image should be distinguished from identity . </li></ul>Crafting the Brand Positioning
  17. 17. Identity and Image Image: The way the public perceives the company or its products. Identity: The way a company aims to identify or position itself. Crafting the Brand Positioning
  18. 18. <ul><li>An effective identity does three things: </li></ul><ul><li>It establishes the product’s character and value proposition. </li></ul><ul><li>It conveys this character in a distinct way. </li></ul><ul><li>It delivers emotional power beyond a mental image. </li></ul><ul><li>For the identity to work it must be conveyed through every available communication vehicle and brand contact. </li></ul>Crafting the Brand Positioning
  19. 19. <ul><li>Product Life Cycle (PLC) </li></ul><ul><li>A product has a life cycle means that: </li></ul><ul><li>Products have a limited life. </li></ul><ul><li>Product sales pass through distinct stages each throwing different </li></ul><ul><li>opportunities, threats and challenges to the marketer . </li></ul><ul><li>Profits rise and fall at different stages of the PLC. </li></ul><ul><li>Products require different marketing, financial, operations and HR </li></ul><ul><li>strategies in each stage of PLC. </li></ul>Crafting the Brand Positioning
  20. 20. Sales & Profits Introduction Growth Maturity Decline Profit Sales Time Crafting the Brand Positioning
  21. 21. Sales & Profits Time Introduction Growth Maturity Decline Sales *Internet Radios/ Smart phones *Color copiers *Cell phones *DVD Players *Dot matrix printers Examples: Profit Crafting the Brand Positioning
  22. 22. <ul><li>The PLC concept can be used to analyze a product category, a </li></ul><ul><li>product form, a product or a brand. </li></ul><ul><li>Product categories have the longest life cycles. </li></ul><ul><li>Product forms follow the standard PLC more faithfully . </li></ul><ul><li>Products follow either the standard PLC or one of the salient </li></ul><ul><li>variants. </li></ul><ul><li>Branded products can have a short or long PLC. </li></ul>Crafting the Brand Positioning
  23. 23. Common PLC Patterns Crafting the Brand Positioning
  24. 24. Style, Fashion and Fad Life Cycles Crafting the Brand Positioning
  25. 25. <ul><li>MARKETING STRATEGIES </li></ul><ul><li>INTRODUCTION STAGE: </li></ul><ul><li>Sales growth tends to be slow due to: </li></ul><ul><li>Initial teething technological problems, </li></ul><ul><li>Delay in increasing production capacity, </li></ul><ul><li>Delay in getting adequate distribution through retail outlets and </li></ul><ul><li>Customer reluctance to change existing buying behaviors. </li></ul><ul><li>Profits are low or negative due to low sales and heavy distribution </li></ul><ul><li>& promotion expenses . </li></ul>Crafting the Brand Positioning
  26. 26. <ul><li>Promotional expenditures are high because of need to </li></ul><ul><li>Inform potential consumers, </li></ul><ul><li>Induce product trials and </li></ul><ul><li>Secure distribution in retail outlets. </li></ul><ul><li>During this stage, prices tend to be high due to relative low </li></ul><ul><li>output, technological problems in production and high required </li></ul><ul><li>margins to support higher promotional expenses. </li></ul><ul><li>Marketers, therefore, focus their efforts on consumers who are </li></ul><ul><li>ready to buy, usually higher income groups. </li></ul>Crafting the Brand Positioning
  27. 27. <ul><li>Marketers can set high or low level for each element of the </li></ul><ul><li>marketing mix. </li></ul><ul><li>Considering Price and Promotion only, marketers can pursue </li></ul><ul><li>any one of the following strategies: </li></ul><ul><li>Rapid skimming </li></ul><ul><li>Slow skimming </li></ul><ul><li>Rapid penetration and </li></ul><ul><li>Slow penetration </li></ul><ul><li>Rapid skimming involves launching the product at a high price and high promotion. </li></ul>Crafting the Brand Positioning
  28. 28. <ul><li>The strategy is appropriate when large part of potential buyers is unaware of the product, those who become aware are eager to have the product and pay the asking price. </li></ul><ul><li>Also suitable when the firm faces potential competition and wants to build brand preference. </li></ul><ul><li>Slow skimming involves launching the new product at a high price and low promotion. </li></ul><ul><li>Suitable when market is of limited size, most of the buyers are aware of the product & are willing to pay a higher price and there is no imminent potential competition. </li></ul>Crafting the Brand Positioning
  29. 29. <ul><li>Rapid penetration strategy calls for introducing the product at a low price and heavy promotion. </li></ul><ul><li>Suitable when market size is large, buyers are unaware of the product & are price sensitive, there is strong potential competition and learning curve & scale economy factors result in decrease in manufacturing costs. </li></ul><ul><li>Slow penetration involves launching the new product at low price and low level of promotion. </li></ul><ul><li>Suitable when market is large, most of the buyers are aware of the product & are price sensitive and there is some potential competition. </li></ul>Crafting the Brand Positioning
  30. 30. <ul><li>Decision as to when to enter the market with a new product is crucial for a company. </li></ul><ul><li>Being a first mover can be highly rewarding but risky and expensive. </li></ul><ul><li>Late entrants must ensure that they bring superior technology, quality or possess brand strength. </li></ul><ul><li>The first mover or the pioneer company realizes that the competition will eventually enter and will result in fall in its prices and market share. </li></ul>Crafting the Brand Positioning
  31. 31. <ul><li>The Competitive Cycle, that the pioneer must anticipate, consists of five stages: </li></ul><ul><li>Sole Supplier </li></ul><ul><li>Competitive penetration </li></ul><ul><li>Share stability </li></ul><ul><li>Commodity competition </li></ul><ul><li>Withdrawal </li></ul>Crafting the Brand Positioning
  32. 32. STAGES OF COMPETITIVE CYCLE Sole Supplier Competitive penetration Share Stability Commodity Competition Withdrawal Market share Production costs Price premium 100% Crafting the Brand Positioning
  33. 33. <ul><li>Many companies who were market pioneers were overtaken by late entrants. </li></ul><ul><li>Some research findings have cast further doubts about pioneer advantage. </li></ul><ul><li>A distinction must be made between: </li></ul><ul><li>Inventor (First to develop patents in a given category). </li></ul><ul><li>Product pioneer (First to develop a working model). </li></ul><ul><li>Market pioneer (First to sell in the new product category). </li></ul><ul><li>Research has revealed that a large no. of early market leaders, though not pioneers succeed. </li></ul>Crafting the Brand Positioning
  34. 34. Long range Product Market Expansion Strategy Crafting the Brand Positioning
  35. 35. <ul><li>GROWTH STAGE: </li></ul><ul><li>The growth stage is marked by rapid increase in sales as early </li></ul><ul><li>adopters like the product and new consumers start buying the </li></ul><ul><li>product. </li></ul><ul><li>New competitors enter the market attracted by opportunities. New </li></ul><ul><li>products features are introduced and distribution expanded. Prices </li></ul><ul><li>are maintained or fall slightly depending on demand growth rate. </li></ul><ul><li>Promotional expenditures are maintained or increased slightly to </li></ul><ul><li>meet competition & continue educating the market. </li></ul><ul><li>Profits increase as promotion expenses get distributed over </li></ul><ul><li>increased volume of sales – promotion/sales ratio declines . </li></ul>Crafting the Brand Positioning
  36. 36. <ul><li>Also unit cost of manufacturing declines due to producer learning </li></ul><ul><li>curve effect. </li></ul><ul><li>Marketers use various strategies to sustain rapid market growth. </li></ul><ul><li>Some of these are: </li></ul><ul><li>Improve product quality and incorporate new product features. </li></ul><ul><li>Add new models and carry out product changes like changing </li></ul><ul><li>sizes, flavors etc. </li></ul><ul><li>Enter new market segments. </li></ul><ul><li>Increase distribution coverage and enter new distribution </li></ul><ul><li>channels. </li></ul><ul><li>Shift product awareness advertising to product preference </li></ul><ul><li>advertising. </li></ul>Crafting the Brand Positioning
  37. 37. <ul><li>Lower prices to attract next layer of price sensitive buyers. </li></ul><ul><li>These market expansion strategies consolidate the firm’s competitive position. </li></ul><ul><li>The firm, however faces a trade off between high market share and current high profit. </li></ul><ul><li>It has to decide whether it should incur expenses on product improvement, promotion and distribution to capture market dominant position thus compromising on current level of high profits. </li></ul>Crafting the Brand Positioning
  38. 38. <ul><li>MATURITY STAGE: </li></ul><ul><li>The stage is marked by slowing down of sales growth rate. Most products fall in this stage. </li></ul><ul><li>The stage lasts longer than the previous stages and poses enormous challenges to the marketers. </li></ul><ul><li>Maturity stage can be divided into three phases: </li></ul><ul><li>Growth maturity phase </li></ul><ul><li>Stable maturity phase and </li></ul><ul><li>Decaying maturity phase </li></ul>Crafting the Brand Positioning
  39. 39. <ul><li>In the first phase, the growth rate starts to decline. There are no </li></ul><ul><li>new distribution channels to fill. </li></ul><ul><li>Sales on a per capita basis hit a plateau in the second phase due </li></ul><ul><li>to market saturation. Most consumers have tried the product and </li></ul><ul><li>future growth depends on population growth & repeat purchase. </li></ul><ul><li>In the last phase, absolute level of sales declines and consumers </li></ul><ul><li>begin to switch to other products and substitutes. </li></ul><ul><li>The slow down creates overcapacity in the industry that leads to </li></ul><ul><li>intensified competition. </li></ul>Crafting the Brand Positioning
  40. 40. <ul><li>This leads to competitors resorting to price cuts, increase </li></ul><ul><li>advertising, trade & advertising promotion and R&D budgets to </li></ul><ul><li>improve product features & quality. </li></ul><ul><li>A shakeout begins, weaker competitors withdraw and only few </li></ul><ul><li>giant firms survive. These consist of may be a quality, a service or </li></ul><ul><li>a cost leader that serve the whole market who earn their profits </li></ul><ul><li>through high volumes and lower costs. </li></ul><ul><li>Around the big players are a number of niche players who may be </li></ul><ul><li>product specialists and customizing firms. </li></ul>Crafting the Brand Positioning
  41. 41. <ul><li>The challenge the marketers face is whether to strive to be among </li></ul><ul><li>the big players or to be a niche player. </li></ul><ul><li>Companies pursue three strategies in the maturity stage: </li></ul><ul><li>Market modification </li></ul><ul><li>Product modification and </li></ul><ul><li>Marketing mix modification </li></ul><ul><li>Market modification is achieved by trying to expand the market for </li></ul><ul><li>the firm’s mature brand by working with the two factors that make </li></ul><ul><li>up the sales volume i.e. no. of brand users and usage rate per </li></ul><ul><li>user. </li></ul><ul><li>Sales Volume= No. of brand users X Usage rate per user </li></ul>Crafting the Brand Positioning
  42. 42. <ul><li>The company can try to increase the no. of users in three ways: </li></ul><ul><li>Convert non-users. </li></ul><ul><li>Enter new market segments. </li></ul><ul><li>Win competitors’ customers. </li></ul><ul><li>Sales volume can also be increased by convincing current users to </li></ul><ul><li>increase usage rate: This can be done in three ways: </li></ul><ul><li>Try to get the customer use the product more frequently. </li></ul><ul><li>Try to interest customers to use more product on each occasion. </li></ul><ul><li>Try to discover new product uses. </li></ul>Crafting the Brand Positioning
  43. 43. <ul><li>Product modification is achieved through quality, feature and style </li></ul><ul><li>improvement. </li></ul><ul><li>Quality improvement can be effected by increasing product’s </li></ul><ul><li>functional performance - i. e. durability, reliability, speed, taste etc. </li></ul><ul><li>New features build a company’s image as an innovator and win </li></ul><ul><li>customer loyalty. However, new features get imitated by </li></ul><ul><li>competitors fast. </li></ul><ul><li>Style improvement aims to increase the aesthetic appeal of the </li></ul><ul><li>product. Care should be taken to keep in mind consumer’s </li></ul><ul><li>preferences in this regard. </li></ul>Crafting the Brand Positioning
  44. 44. <ul><li>Marketing mix modification can be achieved by modifying </li></ul><ul><li>marketing mix elements. </li></ul><ul><li>Price : Will a price cut result in the customers buying more? </li></ul><ul><li>Whether discounts be offered or list price lowered? Price could also </li></ul><ul><li>be raised to signal better quality. </li></ul><ul><li>Distribution : Can the firm obtain more product support and </li></ul><ul><li>visibility in existing outlets, more penetration in existing outlets and </li></ul><ul><li>introduce products in new distribution channels? </li></ul><ul><li>Advertising : Should the firm change message, media mix, timing, </li></ul><ul><li>frequency or size of ads and increase ad spend? </li></ul>Crafting the Brand Positioning
  45. 45. <ul><li>Sales promotion : Whether sales promotion ( Trade, rebate, </li></ul><ul><li>discount coupons warranties and gifts etc.) be stepped up? </li></ul><ul><li>Personal selling : Firm may consider increasing sales force, revising </li></ul><ul><li>territories & sales force incentives and take steps to improve sales </li></ul><ul><li>call planning. </li></ul><ul><li>Services : Firm takes steps to improve delivery and extend </li></ul><ul><li>improved credit and technical support. </li></ul><ul><li>A major issue with marketing mix modifications is that these can </li></ul><ul><li>be easily imitated by rival firms. </li></ul>Crafting the Brand Positioning
  46. 46. <ul><li>DECLINING STAGE: </li></ul><ul><li>Sales for most of the products eventually decline – for some it </li></ul><ul><li>could be slow for others it could be rapid. </li></ul><ul><li>The decline could be due to technological advances, shift in </li></ul><ul><li>consumer tastes and increased competition. </li></ul><ul><li>These lead to over capacity, price cutting and reduced profits. </li></ul><ul><li>Most of the companies do not devise adequate strategies to </li></ul><ul><li>handle aging products. Some wait for the economic conditions to </li></ul><ul><li>improve or hope that sales will grow with product improvements. </li></ul>Crafting the Brand Positioning
  47. 47. <ul><li>Five strategies can be considered for the declining stage: </li></ul><ul><li>Increase firm’s investment to dominate the market. </li></ul><ul><li>Maintain current level of investment till business uncertainties are </li></ul><ul><li>resolved. </li></ul><ul><li>Decrease investment selectively by dropping unprofitable </li></ul><ul><li>customer groups and strengthening the niche segments. </li></ul><ul><li>Harvesting the firm’s investment to recover cash quickly. </li></ul><ul><li>Divesting by getting out of the market quickly and disposing off </li></ul><ul><li>assets. </li></ul><ul><li>The appropriate strategy depends on the industry’s relative </li></ul><ul><li>attractiveness and the firm’s competitive strength. </li></ul>Crafting the Brand Positioning
  48. 48. SUMMARY OF LIFE CYCLE CHARACTERISTICS Crafting the Brand Positioning Characteristics Introduction Growth Maturity Decline Sales Low Rapidly rising Peak Declining Cost per customer High Average Low Low Profits Negative Rising High Declining Customers Innovators Early adopters Middle majority Laggards Competitors Few Growing Stable tending to decline Declining
  49. 49. Reduce expenditure and milk the brand Maximize market share while defending market share Maximize market share Create product awareness and trial Marketing Objectives Decline Maturity Growth Introduction Life Cycle stage SUMMARY OF LIFE CYCLE MARKETING OBJECTIVES Crafting the Brand Positioning
  50. 50. SUMMARY OF LIFE CYCLE STRATEGIES Crafting the Brand Positioning Strategies Introduction Growth Maturity Decline Product Offer a basic product Offer product extensions Diversify brands and items Phase out weak models Price Charge cost plus Price to penetrate market Price to match competitors Cut price Distribution Selective distribution Intensive distribution More intensive Go selective Phase out unprofitable outlets Sales Promotion Use heavy sales promotion to entice trial Reduce to take advantage of heavy demand Increase to encourage brand switching Reduce to minimal level
  51. 51. MARKET EVOLUTION: <ul><li>PLC focuses on the product and hence gives a product oriented </li></ul><ul><li>picture. </li></ul><ul><li>Firm’s also need to visualize and analyze market evolution as it is </li></ul><ul><li>affected by new needs, competitors, technology and channels etc. </li></ul><ul><li>Markets also evolve through four stages: </li></ul><ul><li>Emergence </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul>Crafting the Brand Positioning
  52. 52. <ul><li>Emergence : It begins on launching the product. Before a market </li></ul><ul><li>materializes, it exists as a latent market. Initially, consumers </li></ul><ul><li>preferences are wide and scattered. Such a market is called a </li></ul><ul><li>diffused preference market. </li></ul><ul><li>To design an optimal product, the firm has three options: </li></ul><ul><li>New product can be developed for one part of the market (Single </li></ul><ul><li>niche strategy). </li></ul><ul><li>Two or more products can be simultaneously launched to capture </li></ul><ul><li>two or more parts of the market (Multiple niche strategy). </li></ul><ul><li>New product developed for the middle of the market (Mass </li></ul><ul><li>market strategy). </li></ul>Crafting the Brand Positioning
  53. 53. <ul><li>Growth : If sales of the new product is good, new firms enter the </li></ul><ul><li>market, ushering in market growth stage. </li></ul><ul><li>If the pioneer has established in the center, the second firm </li></ul><ul><li>entering the market has three options: </li></ul><ul><li>It can pursue single niche strategy. </li></ul><ul><li>It can position its brand next to the leader (Mass market strategy) </li></ul><ul><li>It can pursue multiple niche strategy. </li></ul><ul><li>If the second firm is small it should pursue single niche strategy. </li></ul><ul><li>If the second firm is large, mass market strategy is followed. </li></ul>Crafting the Brand Positioning
  54. 54. <ul><li>Maturity : When the competitors cover and serve major market </li></ul><ul><li>segments, the market enters the maturity stage. </li></ul><ul><li>The competitors go ahead and make foray into each other’s </li></ul><ul><li>market segments thereby reducing profitability of all. </li></ul><ul><li>As market growth slows down, the market splits into finer </li></ul><ul><li>segments resulting in high market fragmentation . </li></ul><ul><li>Market fragmentation is followed by a market consolidation. It is </li></ul><ul><li>caused by a new product attribute that has strong appeal. </li></ul>Crafting the Brand Positioning
  55. 55. Crafting the Brand Positioning Market Fragmentation and Consolidation
  56. 56. <ul><li>Market consolidation may not last long as competitors imitate the </li></ul><ul><li>product attribute. </li></ul><ul><li>Mature markets swing between fragmentation and consolidation. </li></ul><ul><li>Decline : The demand for current products eventually begins to </li></ul><ul><li>decrease and the market enters decline stage. </li></ul><ul><li>Either the need level of the total market declines or the new </li></ul><ul><li>technology replaces the old one. </li></ul>Crafting the Brand Positioning
  57. 57. <ul><li>Recap: </li></ul><ul><li>How a firm can choose and communicate an effective </li></ul><ul><li>positioning in the market. </li></ul><ul><li>How brands are differentiated. </li></ul><ul><li>What marketing strategies are appropriate at each stage of </li></ul><ul><li>the product life-cycle. </li></ul><ul><li>What he implications are of market evolution for marketing </li></ul><ul><li>strategies. </li></ul>Crafting the Brand Positioning