Download Ch10 Positioning Positioning: refers to both the place a product or

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Ch10 Positioning
Positioning: refers to both the place a product or brand occupies in customers’ mind relative to their needs
and competing products or brands and to the marketer’s decision making intended to create such a position.
The positioning notion comprises both competitive and customer needs considerations.
10.1: Differentiation: The Key to Customer Preference and Competitive Advantage
 Consumers or organizational customers choose what they buy for one of two reasons: what they choose is
better, in some sense, or cheaper. In case, the good or service they choose is, in some way, almost always
different from others they could have chosen.
 Differentiation is a powerful theme in developing business strategies, as well as in marketing
 Most of the time, differentiation is the reason why people buy.
I.
Differentiation in Business Strategies
 Michael Porter’s classic book on competitive advantage identified three generic strategies: cost leadership,
differentiation, and focus.
 These strategies, which differ in the scope of the target market and market needs they serve (broad or
narrow competitive scope) and on whether they base their competitive advantage on low cost (lower prices
to the customer for equivalent products) or differentiation (products that are superior on some important
dimensions) represent distinctly different ways in which companies can compete for the minds and wallets
of customers in their target markets.
 Porter argues that the worst strategy is to be ‘stuck in the middle,’ to be neither different nor lower in cost
than one’s competitors. Companies in such a position offer customers little reason not to take their business
elsewhere. But customers don’t really buy strategies. They buy specific goods and services and effective
execution: on-time delivery, proper installation, responsive customer service, and so on.
Exhibit 10.1 Generic competitive strategies
II.
Differentiation among Goods and Services
 Customers in one market segment have wants and needs that differ in some way from those of customers in
other segments. Brand positioning allows the marketer to take advantage of and be responsive to such
differences and position particular goods and services so as to better meet the needs of consumers in one or
more of these segments. These differences are often physical.
 Creating both physical and perceptual differences, using all the elements of the marketing mix – product,
pricing, promotion, and distribution decisions – is what effective positioning seeks to accomplish.
10.2: Physical Positioning
 In many cases a physical positioning analysis can provide useful information to a marketing manager,
particularly in the early stages of identifying and designing new product offerings.
 Physical comparisons can be an essential step in undertaking a positioning analysis. This is especially true
with the competitive offerings of many industrial goods and services, which buyers typically evaluate
largely on the basis of such characteristics. In addition, it contributes to a better marketing/R&D interface
by determining key physical product characteristics; helps define the structure of competition by revealing
the degree to which the various brands compete with one another; and may indicate the presence of
meaningful product gaps.
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I.
Limitations of Physical Positioning
 A simple comparison of only the physical dimensions of alternative offerings usually does not provide a
complete picture of relative positions because, as we noted earlier, positioning ultimately occurs in
customers’ minds.
 Even though a brand’s physical characteristics, package, brand name, price, and ancillary services can be
designed to achieve a particular position in the market, customers may attach less importance to some of
these characteristics than, or perceive them differently from, what the firm expects.
 Perceptual positioning analysis – whether aimed at discovering opportunities for new product entries or
evaluating and adjusting the position of a current offering – is critically important.
10.3: Perceptual Positioning
 The evaluation of many goods and services is subjective because it is influenced by factors other than
physical properties, including the way brands are presented, our past experiences with them, and the
opinions of others. Thus, physically similar brands may be perceived as being different because of different
histories, names, and advertising campaigns.
Exhibit 10.3 Comparison of physical and perceptual positioning analyses
Physical positioning
Perceptual positioning
• Technical orientation.
• Consumer orientation.
• Physical characteristics.
• Perceptual attributes.
• Objective measures.
• Perceptual measures.
• Data readily available.
• Needs marketing research.
• Physical brand properties.
• Perceptual brand positions and positioning intensities.
• Large number of dimensions.
• Limited number of dimensions.
•
Represents impact of product
specifications and price.
• Direct R&D implications.
• Represents impact of product specifications and communication.
• R&D implications need to be interpreted.
10.4: Levers Marketers Can Use to Establish Positioning
 Marketing decision makers seeking to win a particular position in customers’ minds will seek to endow
their brand with various kinds of attributes, which may be categorized as follows:
 Simple physically-based attributes. These are directly related to a single physical dimension
such as price, quality, power, or size. While there is a direct correspondence between a physical
dimension and a perceptual attribute, an analysis of consumers’ perception of products on these
attributes may unveil phenomena of interest to a marketing strategy.
 Complex physically-based attributes. Because of the presence of a large number of physical
characteristics, consumers may use composite attributes to evaluate competitive offerings. The
development of such summary indicators is usually subjective because of the relative importance
attached to different cues.
 Essentially abstract attributes. Although these perceptual attributes are influenced by physical
characteristics, they are not related to them in any direct way.
 Price. A brand’s price may imply other attributes, such as high or low quality.
 The importance of perceptual attributes with their subjective component varies across consumers and
product classes. Thus, it can be argued that consumers familiar with a given product class are apt to rely
more on physical characteristics and less on perceptual attributes than consumers who are less familiar with
that product class. It can also be argued that while perceptual positioning is essential for many consumer
goods, such is not the case for many industrial goods.
 Perceptual attributes must be considered in positioning most brands. One reason is the growing similarity
of the physical characteristics of more and more products. This increases the importance of other, largely
subjective dimensions.
10.5: Preparing the Foundation for Marketing Strategies: The Positioning Process
 Positioning a new brand in customers’ minds or repositioning a current brand involves a series of steps, as
outlined in Exhibit 10.4.
 These steps are applicable to goods and services, in domestic or international markets, and to new or
existing brands. Thus, when we say ‘brand’ in the rest of this chapter and those that follow, we include both
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existing goods and services and planned new products – goods or services – that do not yet exist. This is
not to suggest that the determinant product attributes and the perceptions of consumers of the various
competitive offerings will remain constant across countries or other market segments; rather, they are likely
to vary with most products.
Exhibit 10.4 Steps in the positioning process for goods and services
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Step 1: Identify a Relevant Set of Competitive Products
 Positioning analyses are useful at many levels: company, business unit, product category, and specific
product line or brand. At the company or business-unit level, such analyses are useful to determine how
an entire company or business unit is positioned relative to its competitors. The results of such analyses
are sometimes displayed graphically by plotting competing companies or businesses in their respective
quadrants of the generic strategies grid. Larger or smaller dots or circles may be used to indicate relative
sizes of competing firms.
 At the product category level, the analysis examines customers’ perceptions about types of products
they might consider as substitutes to satisfy the same basic need.
 a marketer could obtain customer perceptions of the new product concept relative to likely substitute
products on various critical determinant attributes, as we describe in Steps 3 and 4 of the positioning
process
 A positioning analysis at brand level can be helpful to better understand how various brands appeal to
customers, to position proposed new products or brands or reposition current ones, and to identify
where new competitive opportunities might be found.
 At whichever level the positioning analysis is to be done, the analyst’s choice of competing products
(or product categories or firms) is critical. Marketers who omit important substitute products or
potential competitors risk being blindsided by unforeseen competition.
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Step 2: Identify Determinant Attributes
 Positioning, whether for goods or services, can be based on a variety of attributes – some in the
form of surrogates that imply desirable features or benefits as a positioning base. Some common
bases are the following.
 Features are often used in physical brand positioning and, hence, with industrial
products. Benefits, like features, are directly related to a brand.
 Parentage includes who makes it (bottled by a French vintner; ‘At Fidelity, you’re not
just buying a fund, a stock, or a bond – you’re buying a better way to manage it’) and
prior products (‘Buying a car is like getting married.
 Manufacturing process is often the subject of a firm’s positioning efforts.
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3.
4.
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Ingredients as a positioning concept is illustrated by some clothing manufacturers saying
their sports shirts are made only of organic cotton.
 Endorsements are of two types – those by experts
 Comparison with a competitor’s brand is common
 Proenvironment positioning seeks to portray a company as a good citizen
 Price/quality is used in cases such as Wal-Mart successful positioning itself as the
lowest-price seller of quality household products.
 Theoretically, consumers can use many attributes to evaluate competing brands, but the number
actually influencing a consumer’s choice is typically small, partly because consumers can consider
only attributes of which they are aware. The more variables used in positioning a given brand, the
greater the chance of confusion and even disbelief on the part of the consumer. The positioning
effort must be kept as simple as possible and complexity should be avoided at all costs. Thus, for
most products, experienced marketers hang their hat on one, or at most two, attributes for
positioning purposes.
 It is important to recognize that the importance attached to these attributes often varies.
 Deposit safety is an important attribute to consider when choosing a bank, but most consumers
perceive all banks to be about equally safe. Consequently, deposit safety is not a determinant
attribute: It does not play a major role in helping customers to differentiate among the
alternatives and to determine which bank they prefer.
Step 3: Collect Data about customer’s Perceptions for Products in the Competitive set
 This market knowledge is developed by first conducting qualitative research, perhaps interviews
or focus groups, to learn which attributes are determinant. Then quantitative research follows,
perhaps a survey of consumers about their perceptions, to gather data on how competing products
score on these attributes. Later in this module, we discuss several statistical and analytical tools
that are useful in this portion of the positioning process.
Step 4: Analyze the Current Positions of Products in the Competitive Set
 A useful tool for doing so is the positioning grid, also called a perceptual map. The positioning
grid provides a visual representation of the positions of various products or brands in the
competitive set in terms of (typically) two determinant attributes. Where more than two attributes
are to be considered in a positioning analysis, multidimensional grids, or multiple grids, are
produced. Alternatively, a value curve, which comprises more than just two dimensions, can be
generated. But not all products or brands exist in the minds of most consumers.
 Determining the attributes on which the brand’s positioning will be based is a key outcome of the
positioning process and a driver of the marketing communication strategy, as well as the
marketing strategy overall, that will ultimately be developed. Without clear guidance about the
intended position of the brand, advertising agencies, sales forces, and others charged with building
the awareness and recognition of the product in the marketplace will be ill-equipped to do this
important job.
Building a Positioning Grid
 Positioning for a new store could be done by examining the positioning map for empty spaces
(competitive gaps) where no existing store is currently located. There is such a gap in the upper
right quadrant of the ‘value/fashionability’ map. This gap may represent an opportunity for
developing a new entry or repositioning an old one that is perceived to offer greater
fashionability than Nordstrom at a lower price. Of course, such gaps may exist simply because a
particular position is either (1) impossible for any brand to attain because of technical
constraints or (2) undesirable since there are few prospective customers for a brand with that set
of attributes.
Exhibit 10.5 Perceptual map of women’s clothing retailers in Washington, DC
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5.
Marketing Opportunities to Gain a Distinct Position
 The main opportunity for competitors generally lies in obtaining a profitable position within a
market segment not dominated by a leading brand. Competing head-on against the leaders on
the basis of attributes appropriated by larger competitors is not likely to be effective.
 A better option is to concentrate on an attribute prized by members of a given market segment.
Constraints Imposed by an Intense Position
 Although marketers should seek a distinctive and intense position for their brands, attaining such a
position imposes constraints on future strategies. If shifts in the market environment cause
customers to reduce the importance they attach to a current determinant attribute,
 Repositioning carries with it the threat of alienating part or all of the brand’s current users
regardless of success with its newly targeted group. Success in its repositioning efforts may well
ensure losing its current group of users.
 Another concern is the dilution of an existing intense position as a result of consolidation.
 Another danger associated with an intensely positioned brand is the temptation to overexploit that
position by using the brand name on line extensions and new products. The danger here is that the
new products may not fit the original positioning and the brand’s strong image is diluted.
Limitations of Product Positioning Analysis
 Product positioning indicates how alternative brands are positioned relative to one another in
customers’ minds.
o The problem with this analysis, though, is that it does not tell the marketer which
positions are most appealing to customers.
o Thus, there is no way to determine if there is a market for a new brand or store that might
locate in an ‘open’ position or whether the customers in other market segments prefer
brands or stores with different attributes and positions.
o To solve such problems it is necessary to measure customers’ preferences and locate
them in the product space along with their perceptions of the positions of existing brands.
This is called a market positioning analysis.
Step 5: Determine Customers’ Most Preferred Combination of Attributes
 There are several ways analysts can measure customer preferences and include them in a positioning
analysis. For instance, survey respondents can be asked to think of the ideal brand within a category – a
hypothetical brand possessing the perfect combination of attributes.
 Respondents could then rate their ideal brand and existing brands on a number of attributes. An
alternative approach is to ask respondents not only to judge the degree of similarity among pairs of
existing brands but also to indicate their degree of preference for each. In either case, the analyst, using
the appropriate statistical techniques, can locate the respondents’ ideal points relative to the positions of
the various existing brands on the product space map.
 Another method of assessing customers’ preferences and trade-offs among them is a statistical technique
called conjoint analysis. Customers are surveyed and asked their preferences among various real or
hypothetical product configurations, each with attributes that are systematically varied.
 By analyzing the resulting data, the marketer can learn which of several attributes are more important
than the others. These results can then be used in positioning analyses such as those described here.
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 Using price as one dimension of a positioning grid, or as a key dimension on which a brand is
positioned, is typically not very useful unless price is a key driver of the marketing strategy. This is the
case for two reasons.
 First, price is easily imitable by competitors. Unless the firm has a clear cost advantage over its
competitors, by virtue of its processes or other sources of efficiency, using low price as a basis
for positioning can be a fast road to a price war that no one (except consumers) will win.
 Second, claims that one’s brand – whether a good or a service – is low-priced are sometimes not
very credible, because so many marketers make such claims.
Consider Fit of Possible Positions with Customer Needs and Segment Attractiveness
 An important criterion for defining market segments is the difference in the benefits sought by
different customers. Because differences between customers’ ideal points reflect variations in the
benefits they seek, a market positioning analysis can simultaneously identify distinct market segments
as well as the perceived positions of different brands. When customers’ ideal points cluster in two or
more locations on the product space map, the analyst can consider each cluster a distinct market
segment.[15] For analytical purposes, each cluster is represented by a circle that encloses most of the
ideal points for that segment; the size of the circle reflects the relative proportion of customers within a
particular segment.
 Analysts can learn much about (1) the competitive strength of different brands in different segments,
(2) the intensity of the rivalry between brands in a given segment, and (3) the opportunities for gaining
a differentiated position within a specific target segment.
 But it also can uncover locations in the product space where additional new brands could be positioned
to serve customer needs not well served by current competitors.
Step 7: Write Positioning Statement or Value Proposition to Guide Development of Marketing
Strategy
 The final decision about where to position a new brand or reposition an existing one should be based
on both the market targeting analysis and the results of a market positioning analysis. The position
chosen should match the preferences of a particular market segment and should take into account the
current positions of competing brands.
 It should also reflect the current and future attractiveness of the target market (its size, expected
growth, and environmental constraints) and the relative strengths and weaknesses of competitors. Such
information, together with an analysis of the costs required to acquire and maintain these positions,
allows an assessment of the economic implications of different market positioning strategies.
 Where there are no real product differences, as in so-called me-too products, or no differential
benefits to the user, not only is success hard to achieve, but also ethical issues may arise.
 Once the desired positioning for the brand has been determined, it’s a good idea to write it down so
those charged with developing and implementing the marketing strategy have a clear understanding of
what is intended for the brand and where it will fit in its competitive set. Two approaches are
commonly used for doing so. In the classical approach, a positioning statement is written. A more
recent approach, one being adopted in a number of firms, involves writing a value proposition for the
brand.
Writing a Positioning Statement or a Value Proposition
 A positioning statement is a succinct statement that identifies the target market for which the
brand is intended and the product category in which it competes and states the unique benefit the
brand offers. An example of a positioning statement that reflects Volvo’s marketing strategy in the
United States.
 A value proposition is similarly explicit about what the brand does for the customer (and
sometimes, what it does not do) and typically also includes information about pricing relative to
competitors. Both positioning statements and value propositions should reflect a unique selling
proposition that the brand embodies. In this sense, they reflect the basis on which the marketer
intends to win sustainable competitive advantage by differentiating the brand from others in its
competitive space. In its shortest form, a value proposition typically looks like this:
 Target market
 Benefits offered (and not offered)
 Price range (relative to competitors)
 Detailed value propositions such as these are particularly helpful in positioning industrial goods
and services, where quantifiable customer benefits are often essential to make the sale.
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It is important that the positioning statement or value proposition states benefits that the user of
the product will obtain, rather than features or attributes of the product itself, or vague or
ambiguous platitudes about high quality or excellent service. By benefits, we mean the resulting
end-use measurable consequences that the user will experience through the use of the brand, in
comparison to others.
The marketer generally writes positioning statements and value propositions for use internally and
by others, such as advertising agencies, engaged to develop the marketing strategy. They are short
and succinct, and are typically not written in catchy consumer language, though catchy slogans
and tag lines for communication with customers often follow. For products, they play several
important roles. They provide direction for R&D and product development about what kind of
attributes should be built into the product .
They provide direction for those who create advertising campaigns about what the focus of those
campaigns should be
The value proposition provides direction for pricing decisions.
In a very real sense, the positioning statement or value proposition constitutes the foundation upon
which the marketing strategy is built. More broadly, when used at the business level, as they
sometimes are, these statements articulate the strategic direction toward which the company’s
activities in all arenas should be directed. Promising a certain sort of positioning, or value, to the
target market is one thing. Delivering it is another. Clear and concise positioning statements and
value propositions can play important roles in effectively executing the intended strategy.
10.6: Analytical Tools for Positioning Decision Making
 Collecting marketing research data so positioning decisions are anchored in solid evidence, not mere
supposition or naïve opinion. Advances in computing power and statistical techniques have made possible a
broad range of tools to help the marketing decision maker make the best use of marketing research.
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