Differentiation and Brand Positioning

1. 7 C H A P T E R SEVEN Differentiation and Brand Positioning

2. What is Positioning? • The place a product or brand occupies in customers’ minds relative to their needs • Refers to competing products or brands • Comprises both competitive and customer need considerations

3. Differentiation • Differences in scope–Broad or narrow competitive scope • Different ways in which companies can compete for target markets • Differentiation in Business Strategies • Differentiation among Goods and Services

4. Physical and Perceptual Positioning • Physical positioning • Assessing product offering based on a set of objective physical characteristics • Perceptual positioning • Includes product presentation, past experiences and opinion of others

5. Exhibit 7.2 Comparison of Physical and Perceptual Positioning Analysis Physical Positioning Perceptual Positioning Technical orientation Consumer orientation Physical characteristics Perceptual attributes Objective measures Perceptual measures Data readily available Need for marketing research Physical brand properties Perceptual brand positions and positioning intensities Large number of dimensions Limited number of dimensions Represents impact of product specs Represents impact of product specs and communication Direct R&D implications R&D implications need to be interpreted

6. Kinds of Attributes • Simple physically based attributes • Directly related to a single physical dimension • Complex physically based attributes • Used by consumers to evaluate competitive offerings • Essentially abstract attributes • Are influenced by physical characteristics, but not related in any direct way • Price • Implies high or low quality

7. 1. Identify relevant set of competitive products serving a target market. 2. Identify the set of determinant attributes that define the “product space” in which positions of current offerings are located. 3. Collect information from a sample of customers and potential customers about perceptions of each product on the determinant attributes. Exhibit 7.4 (1 of 2)Steps in the Positioning Process

8. 4. Determine product’s current location (positioning) in the product space and intensity thereof. 5. Determine customers’ most preferred combination of determinant attributes. 6. Examine the fit between preferences of market segments and current position of product (market positioning). 7. Write positioning statement or value proposition to guide development and implementation of marketing strategy. Exhibit 7.4 (2 of 2) Steps in the Positioning Process

9. Tools used to understand the positioning of products • Positioning grid • Also called perceptual maps • Value curve

10. The Limited Neiman Marcus Macy’s Bloomingdale’s Saks Nordstrom Hit or Miss Casual corner The Gap Garfinkels L&T Marshall’s Hecht’s Britches Kmart Sears Woodward & Lothrop JC Penny Talbots Perceptual Map of Women’s Clothing Retailers in Washington, D.C. Washington 1990 Women’s fashion market Women’s-wear fashionability Conservative versus current versus very latest Dress Barn T.J. Maxx Sassafras Loehmann’s Women’s-wear value for the money Worst value Best value Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September 1990. as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992) p. 205.

11. Building a value curve

12. Guiding Development of Marketing Strategy • Two common approaches: • Positioning statement • Identifies the target market • States unique benefits of the product • Value proposition • Similar to positioning statement • Includes information about pricing relative to competitors • Both approaches reflect the unique selling proposition (USP) of the product

13. Positioning Statement for Volvo in North America • For upscale American families, Volvo is the family automobile that offers maximum safety • Generic format for positioning statements: For (target market), (brand) is the (productcategory) that (benefit offered)

14. Value Proposition for Volvo in North America • Target market: Upscale American families • Benefits offered: Safety • Relative price: 20% premium to domestic family cars • Generic format for value propositions: • Target market • Benefits offered (and sometimes not offered) • Relative price

15. Some Key Questions Concerning Positioning Decisions • For whom are they written? • In what sort of language? • Should they focus on features or benefits? • How many differentiating attributes should anchor them?

16. A Useful Tool for Positioning Decision Making: Perceptual Maps Not Sweet Sweet Nutritious Not Nutritious Where would you plot your favorite cereals? Your kids’ favorites? Your grandma’s?

17. The Outcome of Positioning: Brand Equity • Brand equity is the term marketers use to refer to the value created by establishing customer preference for one’s brand. • Brand equity must be managed to retain and grow its value;