Download Chapter 9: Differentiation and Positioning Strategies

E-Marketing 4/E
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 9: Differentiation and Positioning
Strategies
©2006 Prentice Hall
9-1
Differentiation is what you do to the product.
Positioning is what you do to the customer’s mind.
It is the art of getting in and out of the mind
-Jack Trout
©2006 Prentice Hall
Chapter 9 Objectives
• After reading Chapter 9 you will be able to:
• Define differentiation and positioning and explain
why they are important elements of marketing
strategy.
• Identify dimensions of differentiation and Internetspecific differentiation strategies.
• Discuss how companies can position or reposition
themselves on the basis of attributes, technology,
benefits, user category, relation to competitors, or
integrator capabilities.
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The J. Peterman Story
• The J. Peterman Company is a classic example
of successfully combining clever differentiation
with powerful positioning.
• The founder established his company as a
breed apart from ordinary competitors.
• Visit jpeterman.com and discuss what makes
their products “unique.”
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Differentiation
• Kotler defines differentiation as the process of
adding meaningful and valued differences to
distinguish the product from the competition.
• There are a number of differentiation
dimensions and strategies for their
accomplishment.
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Differentiation Dimensions
•
A firm can differentiate along 5 dimensions:
1.
2.
3.
4.
5.
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Product
Services
Personnel
Channel
Image
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Product Differentiation
• Product differentiation:
• Includes customization and bundling
• Offers a combination of products/services that
the individual consumer needs + at attractive
prices
• Supports one-to-one relationship building with
each customer, critical for a company’s longterm success.
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• Product packaging:
• Offline:
• packaging are design to appeal to consumers, be eyecatching, compete with other products on store shelves,
and sell the product.
• http://www2.dupont.com/Packaging/en_US/news_events/
19th_dupont_packaging_award_winners.html
• Online:
• products with more utilitarian packaging (that is designed
to be more practical and useful)
• products will be shipped from the distributor directly to the
consumer and thus never appear on retailers’ shelves.
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Product Differentiation
 Results:
Products don’t need the expensive, colorful packaging
for store display.
Products only need a size and shape that is functional
and useful for the consumer.
Packaging minimization will reduce waste and reduce
packaging costs.
Lower prices, or more reinvestment in higher-quality,
single-layer packaging enhancements.
 Question?? For online what replaces packaging to “attract the customer’s
eye”?
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Service Differentiation
• Customer service:
• Ability to receive customer feedback through e-mail 24 hours a day,
• Ability to respond more rapidly to customer concerns.
• The distribution of products ordered online:
• A way to differentiate services from traditional companies.
• Shop at home groceries
• Online services, such as online banking and securities trading:
• Are becoming increasingly popular,
• Are differentiated both by the features they offer and the service
consumption experiences.
• One day replace the traditional offline services.
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Channel Differentiation
• The Internet:
• = a transaction & distribution channel + a
communication channel + a relationship channel,
• Used to forge one-to-one relationships with individual
customers.
• The Internet expands:
• Companies’ geographic range + business hours +
assortment of products available
• The channel through which it can reach customers +
display a diversified assortment of offerings +
differentiate itself.
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Channel Differentiation
• There are multiple levels of online channel differentiation:
• Product or service information online = advantage over
companies with no Web presence,
Exploits the Internet as a communication channel.
• Commercial transactions online,
Exploits the Internets as a transaction and distribution channel.
• The differentiation of competitors’ Internet-related
service offerings: bank services, pay bills online
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Image Differentiation
• A company can differentiate itself by creating a
unique experience online, called “experience
branding.”
• The Internet’s interactivity allows companies to
respond more quickly to customer requests.
• Faster communication.
• Retain current customers and attract new ones.
• Be Careful not to create bad experiences
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Differentiation Strategies
•
Differentiation strategies are particularly
important on the Internet.
•
•
Internet marketing strategy revolves around
company image and product information available
on the Web.
Specific strategies may include:
1. Being the first to enter the market.
2. Owning a product attribute or quality in the mind of
the consumer.
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Differentiation Strategies, cont.
3. Demonstrating product leadership.
4. Utilizing an impressive company history or
heritage.
5. Supporting and demonstrating the differentiating
idea.
6. Communicating the difference.
• Amazon.com and Monster.com have successfully
differentiated themselves.
•
•
•
A strong brand image helps to attain “ownership” of a product.
(Amazon.com),
Customers are drawn to brands they trust, an attraction that is
enhanced by a positive company history. Monster.com has essentially
gained ownership of online job searches.
Google.com owns the online search market, this becomes evident
when the term “googled it” became part of the American media
vocabulary
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Internet-Specific Differentiation
Strategies
•
There are 6 differentiation strategies unique to
online businesses.
1. Site Environment/Atmospherics
•
Easy downloads; easy navigation.
2. Making the Intangible Tangible
•
Virtual tours, 3-D images, trial downloads.
3. Build Trust
•
•
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Strong brand recognition.
Privacy policy.
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Internet-Specific Differentiation
Strategies, cont.
4. Efficient and Timely Order Processing
•
Deliver timeliness as an important benefit.
5. Pricing
•
•
In the early days of the Web, companies offered
discounts as purchase incentives.
Majority of firms today differentiate themselves in other
ways besides pricing.
6. Customer Relationship Management
•
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Managing long term relationships with customers.
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1. Site Environment/
Atmospherics
(Watson et al. 2000)



Look and feel of site
User friendly
Accurate portrayal of
company and product
2. Tangibilize the
Intangible
(Watson et al. 2000)



Images
Virtual tours
Realistic descriptions
3. Trust



4. Efficiency and
Timeliness


Deliver what is
promised to customers
Deliver in a timely
manner
5. Pricing


Be aware of competitor
pricing
Potential customer
savings
Internet-Specific Differentiation Strategies
©2006 Prentice Hall
Clearly state privacy
policy
Use encryption for
secure transactions
A live person can be
contacted
6. CRM



Customer tracking
Seamless
communication
Greater relationship
efficiency
Enhancing the Experience
• The E-Marketing Opportunity Model (Feeny,
2001) helps companies differentiate using emarketing opportunities for enhancing:
• The selling process.
• The customer buying process.
• The customer usage process.
• Online differentiation involves:
• Creation of a distinctive customer experience.
• Development of one-to-one relationships with
customers.
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Positioning
• Positioning is the process of creating a desired
image among its competitors in the public’s
mind.
• Position is the resulting view of the firm or
brand from the consumer perspective.
• The e-marketer’s goals is to build a position on
one or more bases that are relevant and
important to the consumer.
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Bases and Strategies for
Positioning
1.
2.
3.
4.
5.
6.
Product or service attribute.
High-tech image.
Benefits.
User categories.
Comparison with competitors.
Integrator position.
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Product or Service Attribute
• May include features such as size, color,
speed, etc.
• Amazon’s one-click check-out process is an
example of a positioning attribute.
• Tylenol does not sell online, but provides useful
one-to-one features for pain relief and health
information.
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Technology Positioning
• Shows that a firm is on the cutting edge of
technology.
• At Brand Me, consumers can build virtual
models of themselves and try on virtual outfits.
• At American Airlines, customers can store
seating preferences and frequent flier account
information.
• Question? How long this type of positioning
last?
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Benefit Positioning
• Benefit positioning is generally a stronger basis
for positioning, because it answers the
consumer question: What will this do for me
(the customer)?
• Miller Lite offers software that can be used as a
social organizer.
• On the Valvoline motor oil site, visitors can
send greeting cards, download racing
screensavers and sign up for newsletters.
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User Category
• User category positioning relies on customer
segments.
• Kellogg’s has an interactive site for children.
• Yahoo! Geo Cities hosts pages organized by
neighborhoods and specific interests.
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Competitor Positioning
• Many firms position by benefits that provide
advantages over their competitors.
• Companies may position themselves against
• An entire industry.
• A particular firm.
• Relative industry position.
• “I Can’t Believe It’s Not Butter” margarine
positions itself against other margarines.
• Avis: “We try harder”
• http://www.avis.com/AvisWeb/html/wetryharder/inde
x.html
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Integrator positioning
• We can expect to see more integrator
positioning in the lending, jewelry and
hospitality industries.
• Lending Tree helps brokers find clients more
quickly and cheaply.
• Blue Nile sells an estimated $129 million of
jewelry that would require 116 retail stores.
• Web travel agencies can move market share to
hotels that give them discounts.
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Repositioning Strategies
• Repositioning is the process of creating a new
or modified brand, company or product position.
• A company may enhance or modify a position,
based on market feedback, .
• Yahoo! repositioned from online guide to Web
portal.
• Amazon repositioned from world’s largest
bookstore to “Earth’s biggest selection.”
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