Transcript Positioning and Differentiating the market offering

Positioning and Differentiating the market
offering through Product life Cycle
Chapter 3hapter 4
Developing and Communicating a
Positioning Strategy
 All Marketing strategy is built on STP (Segmentation,
Targeting and Positioning).
 Company first segment the market and then select the market
(customers) it decides to serve (targeting) and after that it
chooses the value proposition.
 After the organization has selected its target market, the next
stage is to decide how it wants to position itself within that
chosen segment. Positioning refers to ‘how organizations want
their consumers to see their product’. What message about the
product or service is the company trying to put across?
 Car manufacturer Daewoo in the UK, has successfully
positioned themselves as the family value model.
 Positioning: Is the act of designing the company’s offering and
image to occupy a distinctive place in the mind of the target
market.
Positioning Strategy
 "A Positioning Strategy results in the image you want to draw in the
mind of your customers, the picture you want him/her to visualize of
you what you offer, in relation to the market situation, and any
competition you may have".
 You will be faced with three main options while designing your Positioning
strategy.
1. Positioning your product against your competitors, " Our prices are half
of that you may find else where for similar products"
2. Emphasizing a distinctive unique benefit “12.1 Mega Pixel Camera in
Mobile”
3. Affiliating your product with something the customer knows and values
“Kardan is offering the same course outline offered by Oxford
University"
Positioning Strategy
 Writing a positioning statement: firm must decides the following:
 Your customer: The type of customer you target.
 The benefits: What you can do for your customers.
 The method: How you do it.
 The USP: Why you do it better than the competitors. (As you may know, USP
stands for "unique selling proposition".)
 Your positioning statement reflects what you need to communicate
about a specific product, and to whom, so you will always hit the right
button, communicating the right message to the right customer at the
right time.
Positioning strategy cont….
 Fill in the blanks and you will get your positioning strategy
 Our product offers the following benefits: -------------- To the following customers (your target market_: --------- Our product is better than the competitors in the following manner: -----
---------- We can prove our product is the best because (evidence, differences,
testimonials..etc) --------------------
Differentiation
 Differentiation:
 The process of adding a set of meaningful and valued differences to
distinguish the company’s offering from competitors offering.
 For example IKEA: the world largest furniture retailer. Positioned its
company’s offering “good quality furniture at low price”
 It operates an excellent restaurant in each store
 It offer child care services while the parents shop
 It offers a membership program entitling members to special discounts
on their purchases.
Differentiation
 Factors should consider while differencing the company’s
offering from competitors offering.
 Important: The difference delivers a highly valued benefit to a
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sufficient number of buyers.
Distinctive: The difference is delivered in a distinctive way
Superior: The difference is superior to other ways of obtaining the
benefit.
Pre-emptive: The difference cannot be easily copied by competitors.
Affordable: The buyer can afford to pay for the difference.
Profitable: The company will find it profitable to introduce the
difference.
Differentiation Tools
 Product: Form, Feature, Performance, conformance, Durability,
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Reliability, Reparability, Style and Design
Services: Ordering Ease, Delivery, Installation, Customer Training,
Customer Consulting, Maintenance and repair
Personnel: Competence, Courtesy, Credibility, Reliability,
Responsibility and Communication
Channel: Distribution and Coverage.
Image: Symbols, Events and Sponsorships.
Differentiation Tools
 Product Differentiation:
 Form:
Many products can be differentiated in form: such as
size, shape, or physical structure of a product. For example
Aspirin, it can be differentiated by dosage size, shape,
color, coating or action time. (for example, a cup of coffee can be
short, tall, etc.);
:
 Features That supplement the products basic functions. Such as
Automatic transmission, rear window defrosting.
 Performance Quality: Low, average, high, or superior.
 Conformance Quality (performance consistency ): Is the degree to
which all the produced units are identical and meet the promised
specification. Suppose a Porsche 944 is designed to accelerate to 60
mile/hour within 10 seconds. If every Porsche 944 coming off the
assembly line does this.
Differentiation Tools
Product Differentiation:
 Durability (life cycle of a product): A measure of the product’s
expected operating life under natural or stressful conditions. Buyers
willing to pay premiums for the products that are highly durable.
 Reparability: Buyers prefer products that are easy to repair.
Reparability is a measure of the ease of fixing a product when it fails.
 Design: In increasingly fast-paced markets, price and technology are
not enough, design is the factor that will often give a company its
competitive edge and affect how a product looks and functions in terms
of customer requirements.
Differentiation Tools
 Services Differentiation
 Ordering Ease: Ordering ease refers to how easy it is for the customer to
place an order with the company. Such as internet banking.
Consumers are now even able to order and receive groceries without going
to the supermarket.
 Delivery: Refers to how well the product or service is delivered to the
customer. It includes speed and care attending the delivery process.
 Installation: Refers to the work done to make a product operational in its
planned location. Buyers of heavy equipment expect good installation
service.
Differentiation Tools
Services Differentiation
 Customer training: Refers to training the customer’s employees to use
the equipment properly. General Electric not only sells and installs
expensive X-rays equipment in hospitals, it also gives extensive
training to users of this equipment.
 Customer consulting: Refers to data, information systems, and advice
services that the seller offers to buyer.
 Maintenance and Repair: Describes the service program for helping
customers keep purchased products in good working order. Such as
Dell and HP e-support system.
Differentiation Tools
 Personnel Differentiation: Companies can gain strong
competitive advantage through having better trained people.
 Competence: possess the required skills and knowledge.
 Courtesy: Friendly, respectful
 Credibility: Trustworthy
 Reliability: Perform the service consistently and accurately.
 Responsiveness. Respond quickly to customer’s requests and
problems.
 Communication: Understand the customer and communicate clearly.
Differentiation Tools
 Channel Differentiation:
 Companies can achieve competitive advantage through the way they
design their distribution channels and coverage. Distribution of your
products in more location than your competitors. Dell in computers
distinguish itself from the competitors by developing and managing
high quality direct marketing channels.
Differentiation Tools
 Image Differentiation: Is the way the public perceives the
company or its product.
 Symbols: identity can be built by strong symbols. Apple (Apple
Computer)
 Colors: Companies may choose a color identifier such as blue for IBM,
Yellow for Kodak.
 Slogans: Every company would benefit by adopting and repeating a
short slogan or tagline. Such as AT&T called itself “The right choice”.
Ford said “Quality is our Number one job”.
 Events and Sponsorships: A company can build its brand image
through creating or sponsoring various events. Such as Bank Alfala
Cup. Pepsi sponsoring major sports events.
Product Life Cycle
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Losses/
Investments ($)
Introduction
Growth
Maturity
Decline
Introduction Stage of the PLC
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Marketing Objectives
Create product awareness
and trial
 Marketing Strategies: Introduction Stage
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Sales growth tends to be slow at this stage because it takes time to roll out a new product
and fill dealer pipelines.
 Costs are high per customer as customers are not that much in introduction stage, and
promotional expenditures are at their highest ratio to sales.
 Profits are negative or low in the introduction stage.
 The companies must plan before introducing new product to the market. To be first can
be highly rewarding but risky as well.
Growth stage of PLC
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
 The growth stage is marked by a rapid climb in sales and profits. Early adopter and
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additional consumers start buying it.
Profits increase during this stage as promotion costs are spread over a large volume.
Attractive stage for competitors.
Prices remain where they are or fall slightly, depending on how fast demand
increase.
Average cost per customer: customers increase so cost is equally divided by them.
Marketing strategies for the growth
stage
 During this stage, the firm uses several strategies to
sustain rapid market growth
 It improves product quality and add new product feature
and improved styling
 It adds new models, product of different sizes, flavors
 It enters new market segments
 It increases its distribution coverage and enters new
distribution channels
 It lower prices to attract the next layer of price-sensitive
buyers
Maturity Stage of PLC
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Marketing Objectives
Maximize profit while defending
market share
Marketing Strategies
Maturity Stage
• The maturity stage divides into three phases
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2.
3.
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Growth: the sales growth rate starts to decline. There are no new
distribution channels to fill.
Stable: sales flatten on a per capita (per person) basis because of
market saturation. Most consumers have tried the product.
Decaying maturity: the absolute level of sales starts decline, and
customer begin switching to other products.
The company should adopt innovative culture.
Marketing strategies for the maturity stage
 Market modification. The company might try to expand the market
for its mature brand.
 For example: Johnson and Johnson successfully promoted its baby
shampoo to adult users
 Volume can also be increased by convincing current users to increase
their brand usage;
 For example: Safe Guard and life boy Gold convincing their users to
wash hands frequently.
 Product modification: Managers also try to increase sales by
modifying the product’s characteristics through quality improvement,
feature improvement, or style improvement.
 For example: Nokia N 95 simple one modified to N 95 Black with
8GB memory. Nokia N73 simple and Nokia N73 Music addition the
black one.
Marketing strategies for the maturity
stage
 Marketing Mix modification: product managers might
also try to increase sales by modifying other marketing mix
element:
 Price: would a price cut attract new buyers? Decrease the price or
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give discounts on volume.
Distribution: can the company introduce the product into new
distribution channels?
Advertising: Should advertising expenditures be increased? Should
the timing or size of ads be changed?
Sales promotion: Should the company step up sales promotion?
Services: Can the company speed up delivery? Can it extend more
technical assistance to customers?
Marketing strategies for the decline
stage
 Sales decline for a number reasons
 Technology advances
 Shift in consumer tastes
 Increase domestic and foreign competition.
 Sales and profits decline, some firm withdraw from
market
 Some firm may withdraw from smaller market
segments and weaker trade channels.
 Some may cut their promotional budgets and reduce
prices further.