Transcript Slide 1

Chapter # 5
Developing and Communicating a
Positioning Strategy
 All Marketing strategy is built on STP (Segmentation, Targeting and
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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 (positioning).
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. i.e. " Our
prices are half of that you may find else where for similar
products"
2. Emphasizing a distinctive unique benefit .i.e. 12.1 Mega Pixel
Camera in cell phone.
3. Affiliating your product with something the customer knows
and values .i.e. Kardan is offering the same course outline
offered by Oxford University"
Positioning Strategy Cont…
 Writing a positioning statement
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For writing an effective positioning statement, the firm must
decides the following;
Your customer: The type of customer you want to target.
The benefits: What you can do for your customers.
The method: How you will do it to provide that benefit.
The USP: Why you think that you can do it better than the
competitors. (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 effective 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 is 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”
 McDonalds: It operates an excellent restaurant in each store
 Johnson & Johnson's: It offer child care services while the
parents shop
 Pizza Hut: It offers a membership program entitling members
to special discounts on their purchases.
Factors should consider while
Differentiating
 Factors should consider while differentiating the company’s
offering from competitors offering.
1- Important: The difference delivers a highly valued benefit to a
sufficient number of buyers.
2- Distinctive: The difference is delivered in a distinctive way
3- Superior: The difference is superior to other ways of obtaining
the benefit.
4- Pre-emptive: The difference cannot be easily copied by
competitors.
5- Affordable: The buyer can afford to pay for the difference.
6- Profitable: The company will find it profitable to introduce the
difference.
Differentiation Tools
1- Product: Form, Feature, Performance, conformance,
Durability, Reliability, Reparability, Style and Design
2- Services: Ordering Ease, Delivery, Installation, Customer
Training, Customer Consulting, Maintenance and repair
3- Personnel: Competence, Courtesy, Credibility, Reliability,
Responsibility and Communication
4- Channel: Distribution and Coverage.
5- Image: Symbols, Events and Sponsorships.
Differentiation Tools
1- 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 or a cup of coffee can be
short, tall, etc.
 Features: That supplement the products basic functions.
For Example: Automatic transmission, rear product failure.
 Performance Quality: Low, average, high, or superior quality.
 Conformance Quality (performance consistency ): Is the
degree to which all the produced units are identical and meet the
promised specification.
For Example: 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
1- Product Differentiation:
 Durability (Product Life Cycle): 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.
For Example: Toyota are considered durable cars.
 Reparability: Buyers prefer products that are easy to repair.
Reparability is a measure of the ease of fixing a product when it
fails.
For Example: Dell computers can be repaired easily.
 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.
For Example: Designer cars, designers clothes are now famous
in customers.
Differentiation Tools
2- Services Differentiation
 Ordering Ease: Ordering ease refers to how easy it is for the
customer to place an order with the company.
For Example: Such as internet banking., Consumers are now
even able to order and receive groceries without going to the
supermarket through online shopping.
 Delivery: Refers to how well the product or service is delivered
to the customer. It includes speed and care attending the delivery
process of any product or service.
 For Example: Furniture should be delivered safe.
 Installation: Refers to the work done to make a product
operational in its planned location. Buyers of heavy equipment
and technology based products expect good installation service.
For Example: Installation of Split, installation of Laptop etc.
Differentiation Tools
2- Services Differentiation
 Customer Training: Refers to training the customer’s
employees to use the equipment properly.
For Example: 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.
For Example: Organization has Customer Care Service Center
 Maintenance and Repair: Describes the service program for
helping customers keep purchased products in good working
order.
For Example: Dell and HP offers e-support system for
customers to repair their products easily.
Differentiation Tools
3- Personnel Differentiation
3- Personnel Differentiation: Companies can gain strong
competitive advantage through having better trained
employees/people. Therefore the personnel can creates
differentiation trough following ways;
 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 customers and communicate
clearly while solving their problems.
Differentiation Tools
4- Channel Differentiation
4- 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 can creates good channel differentiation for your
organization.
 For Example: Dell in computers distinguish itself from the
competitors by developing and managing high quality direct
marketing channels.
Differentiation Tools
5- Image Differentiation
5- Image Differentiation: Is the way the public perceives or
thinks about the company or its products. Organization can
bring Image differentiation in the following ways;
 Symbols: Identity can be built by strong symbols. For Example:
Apple (Apple Computer with an of a little bite, Nike Swoosh)
 Colors: Companies may choose a color identifier such as blue for
IBM, Yellow for Kodak, red for Coca-Cola.
 Slogans: Every company would benefit by adopting and
repeating a short slogan or tag line. For Example: AT&T called
itself “The right choice”. Ford said “Quality is our Number one
job”, Nokia said “Connecting People”, LG said “Life is Good”
 Events and Sponsorships: A company can build its brand
image through creating or sponsoring various events.
For Example: Bank Alfalah Cup. Pepsi sponsoring worldcup.
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 for Introduction Stage
 Marketing Strategies: Introduction Stage
 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
Marketing Strategies for the Growth Stage
 Marketing Strategies: Growth Stage
 The growth stage is marked by a rapid climb in sales and profits.
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Early adopter and 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
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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 pricesensitive 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 for Maturity Stage
The maturity stage divides into three phases;
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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 and techniques
in the maturity stage of PLC.
Marketing Strategies for 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 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?
Decline Stage of PLC
Sales
Decreasing sales
Costs
Low cost per customer
Profits
Low profits
Marketing Objectives
Trying to servive while defending
existing market share
Marketing Strategies for the Decline Stage
 Sales decline for a number of 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.
End of Chapter