MARKETING MANAGEMENT Crafting the Brand Positioning

MARKETING MANAGEMENT

Crafting the Brand Positioning  

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Marketing Strategy

SegmentationSegmentation

TargetingTargeting

*Positioning**Positioning*

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Chapter Questions

• How can a firm choose and communicate an effective positioning in the market?

• How are brands differentiated?• What marketing strategies are

appropriate at each stage of the product life cycle?

• What are the implications of market evolution for marketing strategies?

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Developing and Communicating a Positioning Strategy

• Positioning: The act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

• Value proposition: a cogent reason why the target market should buy the product.

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• Market positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products, In the minds of target consumers,

• Formulating competitive positioning for a product, and creating a detailed marketing mix

• Marketers must:– Plan positions to give products the greatest advantage– Develop marketing mixes to create planned positions

typically defined by consumers on the basis of important attributes.

– Involves & implanting the brand’s unique benefits and differentiation in the customer’s mind.

Positioning for Competitive Advantage

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Value Propositions

• Perdue Chicken

– More tender golden chicken at a moderate premium price

• Domino’s

– A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price

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Examples of Value Propositions

Company and Product

Target Customers Diff. Benefits Price Value Proposition

Perdue (chicken)

Quality-conscious consumers of chicken

Tenderness 10% premium

More tender golden chicken at a moderate premium price

Volvo

(station wagon)

Safety-conscious “upscale” families

Durability and safety

20% premium

The safest, most durable wagon in which your family can ride

Domino’s (pizza)

Convenience-minded pizza lovers

Delivery speed and good quality

15% premium

A good hot pizza, delivered to your door door within 30 minutes of ordering, at a moderate price

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Positioning: example

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Writing a Positioning Statement

– Positioning statement format: “To (target market and need) our (brand) is (concept) that (point of difference)”

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Writing a Positioning Statement

Mountain Dew: “To young, activesoft-drink consumers who have

little time for sleep, Mountain Dewis the soft drink that gives you

more energy than any other brandbecause it has the

highest level of caffeine.”??(www.mountaindew.com; fun, exhilaration, energy)

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Positioning Errors

• Under positioning:

Failing to really position the brand at all (vague idea)

• Over positioning:

Giving buyers too narrow image of the brand.• Confused Positioning:

Leaving buyers with a confused image of the company.

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Differentiation

• Differentiation: the process of adding a set of meaningful and valued differences to distinguish a company’s offering from competitors’ offerings.

– Differentiation strategies:• Product• Services• Personnel• Channel• Image

2. Consumer Goods Classifications

Convenience goods

Shopping goods

Specialty goods

Unsought goods

Classified by shopping habitsClassified by shopping habits

2. Consumer Goods Classification

2.1 Convenience goods :

Staples Goods: Goods consumers purchase on a regular basis (Toothpast).

Impulse Goods:Purchased without any planning or search efforts (Magazines).

Emergency Goods:Are purchased when a need is urgent (umbrellas during a rainstorm).

2. Consumer Goods Classification

2.2 Shopping goods :

The bases are the suitability quality, price and style

Homogeneous shopping goods:

Are similar quality but different enough in price to justify shopping

comparisons.

Heterogeneous shopping goods:

Offer in product features & services that maybe more important than

price.

Shopping Goods Convenience Goods

Limit Distribution Convenience Distribution

High Price Reasonable Price

Low life cycle High life cycle

Needs planning or search efforts

Purchased without planning or search efforts

Selective distribution policy Intensive distribution policy

ComparativeComparative Between Convenience & Shopping GoodsBetween Convenience & Shopping Goods

Form

Feature

Performance quality

Durability

Many products can be differentiated in form (Size, shape, physical structure of a product.

The company should consider how many people want each feature, how much it would take to introduce each feature, and think of feature bundles or packages.

Most products are established at one of four performance levels: Low, average, high or superior.

A measure of the product's expected operating life under natural or stressful conditions, is a valued attribute for certain products.

Reliability

Style

Conformance Quality

Repairability

Measure of the probability that a product will not fail within a specified time period.

Describe the product's look and feel to the buyer.

Is the degree to which all the produced units are identical and meet the promised specifications

Is a measure of the ease of fixing a product when it malfunction or fails.

Services Differentiation:

Ordering ease: refers to how easy it is for the customer to place an order with the company.

Delivery: to how well the product or service is delivered to the customer.

Installation: refers to the work done to make a product operational in its planned location.

Services Differentiation:

Customer training: refers to training the customer’s employees to use the vendor’s equipment properly and efficiently.

Customer consulting: refers to data, information systems, and advice services that the

seller offers to buyers.

Maintenance & repair: describes the service program for helping customers keep purchased

products in good working order.

Brand Decision

The AMA definition of a brand:

“A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”

Packaging and Labeling

Packaging :

Is all the activities of designing and producing the container for a product.

Packaging includes: The primary package

The secondary package

The shipping package

Packaging has become as marketing tool, well designed packages can create convenience & promotional value.

The label may be a simple tag attached to the product or an elaborately designed graphic that is part of the package.

Labeling functions:

Identifies the product or brand

May identify product grade

May describe the product

May promote the product

Legal restrictions impact packaging for Legal restrictions impact packaging for many products.many products.

Warranties & guaranteesWarranties & guarantees

Warranties:are formal statements of expected product performance by the manufacturer.

Guarantees are most effective in two situations:

The company or the product is not well know. The product's quality is superior to the

competition.

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Warranties and guarantiees

• Guarantees

1- Reduce the buyer perceived risk.2- Suggest that the product is of high quality.3- Company and its service performance are

dependable.4- Enables the company to charge a higher

price than a competitor who is not offering an equivalent guarantee.

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Defining Associations

Points-of-difference (PODs)

• Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand

Points-of-parity

(POPs)• Associations that are

not necessarily unique to the brand but may be shared with other brands

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Conveying Category Membership• Announcing category benefits

• Comparing to exemplars

• Relying on the product descriptor

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Consumer Desirability Criteria for PODs• Relevance

• Distinctiveness

• Believability

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Deliverability Criteria for PODs

• Feasibility

• Communicability

• Sustainability

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Examples of Negatively Correlated Attributes and Benefits

• Low-price vs. High quality

• Taste vs. Low calories

• Nutritious vs. Good tasting

• Efficacious vs. Mild

• Powerful vs. Safe

• Strong vs. Refined

• Ubiquitous vs. Exclusive

• Varied vs. Simple

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Addressing negatively correlated PODs and POPs• Present separately• Leverage equity of another entity• Redefine the relationship

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Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable

Adding further differentiation

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• Important the difference delivers a highly valued benefit to a sufficient number of buyers.

• Distinctive 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.

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• Preemptive competitors cannot easily copy the difference.

• Affordable buyers can afford to pay for the difference.

• Profitable the company can introduce the difference profitably.

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Differentiation Strategies

Product

Channel Image

Personnel

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Differentiation Variables

Product Services Personnel Channel Image

Form Ordering ease

Competence Coverage Symbols

Features Delivery Courtesy Expertise Media

Performance Installation Credibility Performance Atmosphere

Conformance Customer training

Reliability Events

Durability Customer consulting

Responsiveness

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Product Differentiation ‘Dunkin’ Donuts’

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Product Differentiation

• Product form• Features• Performance• Conformance• Durability• Reliability• Reparability

• Style• Design• Ordering ease• Delivery• Installation• Customer training• Customer consulting• Maintenance

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Personnel Differentiation: Singapore Airlines

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Channel Differentiation

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Image Differentiation

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Product Life Cycle

The product life cycle begins when the company finds and develops a new product idea. During product development, the company accumulates increasing investment costs. After the company launches the product, sales pass through an introductory period, then through a period of strong growth, followed by maturity and eventual decline. Meanwhile profits go from negative to positive, peak in the growth or mature sales stages, and then decline.

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Claims of Product Life Cycles

• Products have a limited life

• Product sales pass through distinct stages each with different challenges and opportunities

• Profits rise and fall at different stages

• Products require different strategies in each life cycle stage

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The Product Life Cycle Concept is Based on Four Premises:

Products have a limited life

Product sales pass throughdistinct stages, each with

different marketingimplications

Profits from a product vary at different stages

in the life cycle

Products require different strategies at different

life cycle stages

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Product life cycle stages:

1.Introduction: A period of slow sales growth as the product is introduced in the market, profit nonexistent because of the heavy expenses of product introduction.

2.Growth: A period of rapid market acceptance & substantial profit improvement.

3.Matiurity: A slowdown in sales growth because the product has achieved acceptance by most potential buyers, profit stabilize or decline because of increased competition.

4.Decline: Sales show a downward drift & profit erode.

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Product Life Cycle

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PLC Stages and Characteristics

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Introduction Stage of the PLCIntroduction Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low sales Low sales

High cost per customerHigh cost per customer

NegativeNegative

Create product awareness and trial

Create product awareness and trial

Offer a basic productOffer a basic product

Use cost-plus Use cost-plus

DistributionDistribution Build selective distributionBuild selective distribution

AdvertisingAdvertising Build product awareness among early adopters and dealers

Build product awareness among early adopters and dealers

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Growth Stage of the PLCGrowth Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer product extensions, service, warranty

Offer product extensions, service, warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Build intensive distributionBuild intensive distribution

AdvertisingAdvertising Build awareness and interest in the mass market

Build awareness and interest in the mass market

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Strategies for Sustaining Rapid Market Growth• Improve product quality, add new features, and

improve styling• Add new models and flanker products• Enter new market segments• Increase distribution coverage• Shift from product-awareness advertising to

product-preference advertising• Lower prices to attract the next layer of price-

sensitive buyers

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Maturity Stage of the PLCMaturity Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh profits

Maximize profit while defending market share

Maximize profit while defending market share

Diversify brand and modelsDiversify brand and models

Price to match or best competitors

Price to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefits

Stress brand differences and benefits

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Maturity Stage: Strategies

Marketers can extend the life of the brand by the following methods:

Market modification: converting nonusers & entering new market segments.

Product modification: quality and features improvements.

Marketing-mix modification: Price, distribution, advertising, sales promotion, services.

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Ways to Increase Sales Volume• Convert nonusers• Enter new market segments• Attract competitors’ customers• Have consumers use the product on more

occasions• Have consumers use more of the product

on each occasion• Have consumers use the product in new

ways

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Decline Stage of the PLCDecline Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Reduce expenditure and milk the brand

Reduce expenditure and milk the brand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outlets

Go selective: phase out unprofitable outlets

AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers

Reduce to level needed to retain hard-core loyal customers

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Product in Decline

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Decline Stage: Strategies

• Increasing the firm's investment ( to dominate the market or strengthen its competitive position.)

• Maintaining the firm’s investment level until the uncertainties about the industry are resolved.

• Decreasing the firm’s investment level selectivity, by dropping unprofitable customers, while simultaneously strengthening the firm’s investment in lucrative niches.

• Harvesting the firm’s investment to recover cash quickly.

• Divesting the business quickly by disposing of its assets as advantageously as possible.