Positioning - Positioning Positioning The design of a...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Positioning Positioning The design of a company’s offering and image to occupy a distinctive place in the mind of the market There are seven positioning strategies that can be pursued: Product Attributes: What are the specific product attributes? Benefits: What are the benefits to the customers? Usage Occasions: When / how can the product be used? Users: Identify a class of users. Against a Competitor: Positioned directly against a competitor. Away from a Competitor: Positioned away from competitor. Product Classes: Compared to different classes of products. Merrill Lynch Position Merrill Lynch Position Merrill Lynch has positioned itself to be the preeminent global investment bank, wealth management and advisory company, an essential partner to its clients. Key facets of this positioning include: Delivering value­added advice, products and services to clients with unmatched levels of quality and integrity Investing in opportunities for growth and diversification that take advantage of the firm's strengths and global client franchise Operating with discipline and focus throughout the firm to ensure that the appropriate resources are committed to each business opportunity Managing risk and capital to ensure efficient deployment of, and appropriate returns on, stockholders' equity Developing employee talent and leadership to its full potential to achieve superior results Positioning Is about Differences Positioning Is about Differences The differences that are promoted for a product must be: Important: The difference delivers a highly valued benefit to the target buyers Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way Superior: The difference is superior to other ways that the customer might obtain the same benefit Communicable: The difference can be explained and communicated to the target buyers Preemptive: Competitors cannot easily copy the difference Affordable: Buyers can afford to pay the difference Profitable: Company can introduce the difference profitably Being First Being First Allows a firm to cut through the noise of other products Miller Lite – not the first light beer, but the first to be positioned as one, with a name that supported the position Lowenbrau – most popular German beer in America Beck’s – “You’ve tasted the German beer that is most popular in America…Now taste the German beer that is most popular in Germany” Customer Positioning Psychology Customer Positioning Psychology Customers rank brands in their minds If a brand is not number 1, it must position itself against that number 1 brand…marketers cannot try to ignore number 1 Avis – “Avis is only number 2 in rent­a­cars. So why go with us? We try harder.” 7­Up – “The Uncola” ­­ behind numbers 1 and 2 – Pepsi and Coke Positioning Positioning Points of Difference – attributes that customers strongly associate with a brand, evaluate them positively, and believe that these points are not as strong with other brands (FedEx (guaranteed overnight delivery), Nike (performance), and Lexus (quality) Swedish retailer IKEA took a luxury product home furnishings and furniture and made it a reasonably priced alternative for the mass market. IKEA supports its low prices by having customers self­serve, deliver, and assemble the products themselves. IKEA also gains a point­of­difference through its product offerings. ) Points of Parity – brand is not unique (Consumers might not ticket payment and delivery options) consider a travel agency truly a travel agency unless it is able to make air and hotel reservations, provide advice about leisure packages, and offer various Back to Miller Lite Back to Miller Lite The initial advertising strategy for Miller Lite beer had two goals assuring parity with key competitors in the category stating that it “tastes great” while at the same time creating a point : It contained one­third less calories and was thus “less filling” than regular, full strength beers. The point­of­difference was somewhat conflicting, as consumers tend to equate taste with calories. To overcome potential resistance, Miller employed credible spokespeople, primarily popular former professional athletes, who would presumably not drink a beer unless it tasted good. These ex­jocks humorously debated which of the two product benefits—“tastes great” or “less filing” – was more descriptive of the beer. The ads ended with the clever punch line “Everything you’ve always wanted in a Beer and Less”. Product Positioning Product Positioning positioning begins with a product, the concept really is about positioning that product in the mind of the customer Product Positioning Product Positioning This approach is needed because consumers are bombarded with a continuous stream of advertising The customer's mind reacts to this high volume of advertising by accepting only what is consistent with prior knowledge or experience. Product Positioning Product Positioning It is quite difficult to change a consumer's impression once it is formed. Consumers cope with information overload by oversimplifying and are likely to shut out anything inconsistent with their knowledge and experience. In an over­communicated environment, the advertiser should present a simplified message and make that message consistent with what the consumer already believes by focusing on the perceptions of the consumer rather than on the reality of the product. Product Positioning Product Positioning Positioning of a Leader Historically, the top three brands in a product category occupy market share in a ratio of 4:2:1. That is, the number one brand has twice the market share of number two, which has twice the market share of number three. the success of a brand is not due to the high level of marketing acumen of the company itself, but rather, it is due to the fact that the company was first in the product category. Xerox makes this point. Xerox was the first plain­paper copier and was able to sustain its leadership position. However, time after time the company failed in other product categories in which it was not first IBM failed when it tried to compete with Xerox in the copier market, Coca­Cola failed in its effort to use Mr. Pibb to take on Dr. Pepper Product Positioning Product Positioning If a firm was the first to introduce a product, then the advertising campaign should reinforce this fact. Coca­Cola's "the real thing" does just that, and implies that other colas are just imitations. Another strategy that a leader can follow to maintain its position is the multibrand strategy ­ introduce multiple brands rather than changing existing ones that hold leadership positions. It often is easier and cheaper to introduce a new brand rather than change the positioning of an existing brand.… a single­ position strategy because each brand occupies a single, unchanging position in the mind of the consumer. Change is inevitable and a leader must be willing to embrace change rather than resist it. When new technology opens the possibility of a new market that may threaten the existing one, a successful firm should consider entering the new market so that it will have the first­mover advantage in it. New York Central Railroad lost its leadership as air travel became possible. The company might have been able to maintain its leadership position had it used its resources to form an airline division. Product Positioning Product Positioning Positioning of a Follower Second­place companies often are late because they have chosen to spend valuable time improving their product before launching it. It is better to be first and establish leadership. If a product is not going to be first, it then must find an unoccupied position in which it can be first. When larger cars were popular, Volkswagen introduced the Beetle with the slogan "Think small." Volkswagen was not the first small car, but they were the first to claim that position in the mind of the consumer. Other positions that firms successfully have claimed include: age (Geritol) high price (Mobil 1 synthetic engine lubricant) gender (Virginia Slims) time of day (Nyquil night­time cold remedy) place of distribution (L'eggs in supermarkets) quantity (Schaefer ­ "the one beer to have when you're having more than one.") Product Positioning Product Positioning Repositioning the Competition Sometimes there are no unique positions to carve out. Reposition a competitor by convincing consumers to view the competitor in a different way. Tylenol successfully repositioned aspirin by running advertisements explaining the negative side effects of aspirin. Customers tend to perceive the origin of a product by its name rather than reading the label to find out where it really is made. Such was the case with vodka when most vodka brands sold in the U.S. were made in the U.S. but had Russian names. Stolichnaya Russian vodka successfully repositioned its Russian­sounding competitors by exposing the fact that they all actually were made in the U.S., and that Stolichnaya was made in Leningrad, Russia. When Pringle's new­fangled potato chips were introduced, they quickly gained market share. Wise potato chips successfully repositioned Pringle's in the mind of consumers by listing some of Pringle's non­natural ingredients that sounded like harsh chemicals, even though they were not. Wise potato chips of course, contained only "Potatoes. Vegetable oil. Salt." As a resulting of this advertising, Pringle's quickly lost market share, with consumers complaining that Pringle's tasted like cardboard, most likely as a consequence of their thinking about all those unnatural ingredients. Product Positioning Product Positioning The Power of a Name A brand's name is perhaps the most important factor affecting perceptions In the past, before there was a wide range of brands, a company could name a product just about anything. Today it is necessary to have a memorable name that conjures up images that help position the product. Descriptive names rather than coined ones like Kodak or Xerox. DieHard for a battery, Head & Shoulders for a shampoo, Close­Up for a toothpaste, People for a gossip magazine. Coined names may be appropriate for new products in which a company is first to market with a sought­after product Margarine is a name that does not very well position the product it is describing. The problem is that it sounds artificial and hides the true origin of the product. "soy butter" would have been a much better name for positioning the product as an alternative to the more common type of butter that is made from milk. Product Positioning Product Positioning Eastern Airlines was an example of a company limited by its name. Air travel passengers always viewed it as a regional airline that served the eastern U.S., even though it served a much wider area, including the west coast. Airlines such as American and United did not have such a perception problem. (Eastern Airlines ceased operations in 1991.) Another problem that some companies face is confusion with another company that has a similar name. Consumers frequently confused the tire manufacturer B.F. Goodrich with Goodyear. The Goodyear blimp had made Goodyear tires well­known, and Goodyear frequently received credit by consumers for tire products that B.F. Goodrich has pioneered. (B.F. Goodrich eventually sold its tire business to Uniroyal.) Other companies have changed their names to something more general, and as a result create confusion with other similar­sounding companies. The Continental Group, Inc. and The Continental Corporation. Few people confidently can say which makes cans and which sells insurance. Product Positioning Product Positioning The Free­Ride Trap A company introducing a new product often is tempted to use the brand name of an existing product, avoiding the need to build the brand from scratch. Alka­Seltzer named a new product Alka­Seltzer Plus. the original name already in position in the consumer's mind. Customers viewed Alka­Seltzer Plus simply as a better Alka­Seltzer, and the sales of Alka­Seltzer Plus came at the expense of Alka­Seltzer, not from the market share of the competition. Some firms have built a wide range of products on a single brand name ­ Heinz. Procter & Gamble has selected new names for each new product, carefully positioning the product in a different part of the consumer's mind. Product Positioning Product Positioning The Line Extension Trap Line extensions are tempting for companies as a way to leverage an existing popular brand. If the brand name has become near generic so that consumers consider the name and the product to be one and the same Life Savers candy The brand name is synonymous with the hard round candy that has a hole in the middle. the company introduced a Life Savers chewing gum. This use of the Life Savers name was not consistent with the consumer's view of it, the Life Savers chewing gum brand failed. The company later introduced the first brand of soft bubble gum and gave it a new name: Bubble Yum. ... very successful because it not only had a name different from the hard candy, it also had the the advantage of being the first soft bubble gum. Product Positioning Product Positioning When Line Extensions Can Work Low volume product ­ if the sales volume is not expected to be high. Crowded market ­ if there is no unique position that the product can occupy. Small ad budget ­ without strong advertising support, it might make sense to use the house name. Commodity product ­ an undifferentiated commodity product has less need of its own name than does a breakthrough product. Distribution by sales reps ­ products distributed through reps may not need a separate brand name. Those sold on store shelves benefit more from their own name. Defining Competition How would you define the competition faced by .....… Nintendo General Motors Guaranty National Baylor University American Cancer Society Quality Dimensions as Product Quality Dimensions as Product Differentiators Form – product size, shape, structure. Aspirin – dosage size, shape, coatings Features – traits that supplement a product’s basic function Performance Quality – the level at which product traits operate Conformance Quality – degree to which products are identical and meet promised specifications Repairability – ease of fixing a malfunctioning product Durability – expected operating life of a product Reliability – likelihood that a product will not malfunction Style – how the product looks and feels Competitive Information Basics Competitive Information Basics Names of Competitors Groups of Competitors Competitor Strategies Market Strength Substitute Offerings Summary of Competitive Offers Quality Dimensions as Service Quality Dimensions as Service Differentiators Ordering ease Delivery Installation Customer Training Customer Consultation Maintenance and Repair Sources of Competitive Sources of Competitive Information Internet Personal Visits Information Market Research Competitive Advertising Written Sources Competitive Analysis Competitive Analysis Who are the competitors in my selected markets? Who are the three strongest? Is their business growing, steady, or declining? Is the over all market growing, steady, or declining? Misusing Competitive Misusing Intelligence Intelligence 5 5 5 5 Companies engage in much competitive intelligence Companies need improvement in translating data into useful information Know your markets! Know your competitors! They probably know you. ­web sites ­annual reports ­trade shows ­competitors’ customers How to get competitive information: ­customers ­salespeople ­analysts ­trade publications Hypnotic Danger of Competitive Hypnotic Danger of Competitive Analysis Competitors may be using yesterday’s solutions Definitions of “competitor” are too narrow Tools For Competitive Analysis Tools For Competitive Analysis Competitive Matrix – represents key competitors and rates key industry success factors Competitive Profile – collecting and organizing information about competitors Media Scanning – assessing competitors strategy by studying what they are doing in various medias Competitive Advantage Features dominated competition Value innovation Imitation vs. initiation Competitive Advantage . . . . Change and competition are two key aspects of developing competitive advantage. Competitive advantage occurs because of perceived customer value and/or uniqueness. Competitive advantage can come from anywhere in an organization. Competitive advantage is temporary. When Competitive Advantage Is When Not Enough * * * * * * * * * * * * * * * * * * * * * ‚ When strategic thinking regresses to competition, companies often imitate, not innovate ƒ A FOCUS ON BEATING THE COMPETITION CAN BE COUNTER PRODUCTIVE? Focusing on competition is feature dominated WHEN… Competitive Advantage Competitive Advantage Is Not Enough Companies should focus on “value innovation” ¾ The customer is at the focus of strategic thinking ¾ Innovation seeks new ways to do things WHEN… Competitive Advantage Is Not Enough Challenge managers to dominate the market Pursue radically superior value Raise frame­breaking questions Factors Shaping Competition and Factors Shaping Competition and Profitability Barriers to entry Cost advantage Product differentiation Patents Capital requirements Regulations Competitive Rivalry Number of Competitors Fixed costs Diversity Exit barriers Bargaining Power of customers Willingness to search Product differentiation Information Bargaining power of suppliers Number of suppliers Access to alternative sources Substitute Products Flaws in the Management of Flaws U.S. Business Organizations U.S. No clear link between strategy and operations Performance measurement systems lead to dysfunctional behaviors Reward systems tend to reinforce dysfunctional behaviors Short term perspective Bottom line perspective Inaccurate reporting Corporate culture not supportive of competitiveness Insufficient concern with quality and productivity Bureaucratic hindrances ...
View Full Document

This note was uploaded on 12/21/2010 for the course BUSA 5336 taught by Professor Jeff during the Summer '09 term at UT Arlington.

Ask a homework question - tutors are online