6.4 Differentiation and Positioning

Question 1

Beyond deciding on which segments of the market it will target, what else must the company decide on?

Answer 1

Beyond deciding which segments of the market it will target, the company must decide on a value proposition—how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments.

Question 2

Definition of Product position

Answer 2

Product position:

The way a product is defined by consumers on important attributes—the place it occupies in consumers’ minds relative to competing products.

Question 3

Consumers are overloaded with information about products and services. They cannot reevaluate products every time they make a buying decision.

How do consumers simplify the buying process?

Answer 3

To simplify the buying process, consumers organize products, brands, and companies into categories and “position” them in their minds.

A product’s position is the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products.

Question 4

What is a perceptual positioning map?

Answer 4

In planning their differentiation and positioning strategies, marketers often prepare perceptual positioning maps that show consumer perceptions of their brands versus those of competing products on important buying dimensions.

Question 5

What does the positioning and size of each cirlce on a perceptual positioning map represent?

Answer 5

The position of each circle on the map indicates the brand’s perceived positioning on two dimensions: price and orientation (luxury versus performance).

The size of each circle indicates the brand’s relative market share.

Question 6

Figure 6.3 Positioning Map: Large Luxury SUVs

Answer 6

Question 7

What must a firm do if it is going after the same position as another firm?

Answer 7

In many cases, two or more firms will go after the same position. Then each will have to find other ways to set itself apart. Each firm must differentiate its offer by building a unique bundle of benefits that appeal to a substantial group within the segment.

Question 8

The differentiation and positioning task consists of three steps. What are they?

Answer 8

Identifying a set of differentiating competitive advantages on which to build a position,

choosing the right competitive advantages,

and selecting an overall positioning strategy.

The company must then effectively communicate and deliver the chosen position to the market.

Question 9

Definition of Competitive advantage.

Answer 9

Competitive advantage:

An advantage over competitors gained by offering greater customer value either by having lower prices or providing more benefits that justify higher prices.

Question 10

But solid positions cannot be built on empty promises. If a company positions its product as offering the best quality and service, it must…

Answer 10

…actually differentiate the product so that it delivers the promised quality and service.

Companies must do much more than simply shout out their positions with slogans and taglines. They must first live the slogan.

Question 11

What must marketers think about in order to find points of differentiation?

Answer 11

To find points of differentiation, marketers must think through the customer’s entire experience with the company’s product or service. An alert company can find ways to differentiate itself at every customer contact point.

Question 12

In what specific ways can a company differentiate itself or its market offer?

Answer 12

It can differentiate along the lines of:

Product
Services
Channels
People
Image

Question 13

Through product differentiation, brands can be differentiated on…

Answer 13

• Features
• Performance
• Style and design

Question 14

What are some ways companies can gain service differentiation?

Answer 14

Some companies gain services differentiation through speedy, convenient service.

Other firms promise high-quality customer service.

Question 15

How do firms that practice channel differentiation gain compeititive advantage?

Answer 15

Firms that practise channel differentiation gain competitive advantage through the way they design their channel’s coverage, expertise, and performance. Amazon and GEICO, for example, set themselves apart with their smooth-functioning direct channels.

Question 16

What is People differentiation?

Answer 16

people differentiation—hiring and training better people than their competitors do. People differentiation requires that a company select its customer-contact people carefully and train them well.

Question 17

What is image differentiation?

Answer 17

Even when competing offers look the same, buyers may perceive a difference based on company or brand image differentiation.

A company or brand image should convey a product’s distinctive benefits and positioning.

Developing a strong and distinctive image calls for creativity and hard work. A company cannot develop an image in the public’s mind overnight by using only a few ads.

Question 18

What must a company do after it is fortunate enoiugh to discover several potential differentians that provide competitive advantages?

Answer 18

Suppose a company is fortunate enough to discover several potential differentiations that provide competitive advantages. It now must choose the ones on which it will build its positioning strategy.

It must decide how many differences to promote and which ones.

Question 19

What is a unique selling proposition (USP)?

Answer 19

Many marketers think that companies should aggressively promote only one benefit to the target market.

Former advertising executive Rosser Reeves, for example, said a company should develop a unique selling proposition (USP) for each brand and stick to it. Each brand should pick an attribute and tout itself as “number one” on that attribute.

Buyers tend to remember number one better, especially in this overcommunicated society.

Question 20

When should a company position themselves on more then one differentiator?

Answer 20

Other marketers think that companies should position themselves on more than one differentiator. This may be necessary if two or more firms are claiming to be best on the same attribute.

Question 21

Not all brand differences are meaningful or worthwhile, and each difference has the potential to create company costs as well as customer benefits. A difference is worth establishing to the extent that it satisfies the following criteria:

Answer 21

Important: The difference delivers a highly valued benefit to target buyers.

Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way.

Superior: The difference is superior to other ways that customers might obtain the same benefit.

Communicable: The difference is communicable and visible to buyers.

Preemptive: Competitors cannot easily copy the difference.

Affordable: Buyers can afford to pay for the difference.

Profitable: The company can introduce the difference profitably.

Question 22

Definition of value proposition.

Answer 22

Value proposition:

The full positioning of a brand—the full mix of benefits on which it is positioned.

Question 23

Figure 6.4: Possible Value Propositions

Answer 23

Question 24

Figure 6.4: Possible Value Propositions

Answer 24

Question 25

What is more-for-more positioning?

Answer 25

More-for-more positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. A more-for-more market offering not only offers higher quality, it also gives prestige to the buyer. It symbolizes status and a loftier lifestyle. Four Seasons hotels, Patek Philippe watches, Starbucks coffee, Louis Vuitton handbags, Mercedes automobiles, SubZero appliances—each claims superior quality, craftsmanship, durability, performance, or style and therefore charges a higher price.

Question 26

What makes More-for-more positioning vunerable?

Answer 26

Although more-for-more can be profitable, this strategy can also be vulnerable. It often invites imitators who claim the same quality but at a lower price.

Question 27

What is More for the Same positioning?

Answer 27

More for the Same A company can attack a competitor’s value proposition by positioning its brand as offering more for the same price. For example, Target positions itself as the “upscale discounter.” It claims to offer more in terms of store atmosphere, service, stylish merchandise, and classy brand image but at prices comparable to those of Walmart, Winners, and other discounters.

Question 28

What is The Same for Less positioning?

Answer 28

Offering the same for less can be a powerful value proposition—everyone likes a good deal. Discount stores such as Walmart and “category killers” such as Costco, PetSmart, and DSW Shoes use this positioning. They don’t claim to offer different or better products. Instead, they offer many of the same brands as department stores and specialty stores but at deep discounts based on superior purchasing power and lower-cost operations. Other companies develop imitative but lower-priced brands in an effort to lure customers away from the market leader. For example, Amazon’s Kindle Fire tablets sell for less than 40 percent of the price of the Apple iPad or Samsung Galaxy tablet. Amazon claims that it offers “Premium products at non-premium prices.”

Question 29

What is Less for Much Less Positioning?

Answer 29

A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less-than-optimal performance or give up some of the bells and whistles in exchange for a lower price. For example, many travellers seeking lodgings prefer not to pay for what they consider unnecessary extras, such as a pool, an attached restaurant, or mints on the pillow. Hotel chains such as Ramada Limited, Holiday Inn Express, and Motel 6 suspend some of these amenities and charge less accordingly. Less-for-much-less positioning involves meeting consumers’ lower performance or quality requirements at a much lower price.

Question 30

What is More for Less positioning?

Answer 30

Of course, the winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions. For example, when it first opened for business, Home Depot had arguably the best product selection, the best service, and the lowest prices compared with local hardware stores and other home-improvement chains. Yet in the long run, companies will no doubt find it very difficult to sustain such best-of-both positioning. Offering more usually costs more, making it difficult to deliver on the “for-less” promise. Companies that try to deliver both may lose out to more focused competitors.

Question 31

What is a positioning statement?

Answer 31

Positioning statement: A statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference). “To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture, organize, and share moments and ideas from your everyday or business life using your computer, phone, tablet, and the web.”

Question 32

Once it has chosen a position, what must a company do?

Answer 32

Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers. All the company’s marketing mix efforts must support the positioning strategy.