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E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 9: Differentiation and Positioning Strategies

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Chapter 9 Objectives

After reading Chapter 9 you will be able to: Define differentiation and positioning and explain

why they are important elements of marketing strategy.

Identify dimensions of differentiation and Internet-specific differentiation strategies.

Discuss how companies can position or reposition themselves on the basis of attributes, technology, benefits, user category, relation to competitors, or integrator capabilities.

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The J. Peterman Story

The J. Peterman Company is a classic example of successfully combining clever differentiation with powerful positioning.

The founder established his company as a breed apart from ordinary competitors.

Visit jpeterman.com and discuss what makes their products “unique.”

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Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish the product from the competition.

There are a number of differentiation dimensions and strategies for their accomplishment.

Differentiation

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Differentiation Dimensions

A firm can differentiate along 5 dimensions: Product Services Personnel Channel Image

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The Internet differentiates itself by providing a limitless assortment of products.

Differentiation may include customization, bundling and attractive pricing of products.

Internet sales may not rely as heavily on product packaging as do traditional retailers.

Packaging minimization will reduce waste and costs.

Product Differentiation

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Service Differentiation

Customer service can be enhanced by 24 hour customer feedback through e-mail.

Home delivery of groceries and online banking and securities trading are becoming increasingly popular.

Today such services supplement traditional services, but may someday replace them.

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The Internet is a location-free, time-free distribution and communication channel.

The Internet serves as a transaction and distribution channel.

The Internet provides highly specialized personal services and “do it yourself” websites.

Channel Differentiation

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Image Differentiation

A company can differentiate itself by creating a unique experience online, called “experience branding.”

The Internet’s interactivity allows companies to respond more quickly to customer requests. Faster communication. Retain current customers and attract new ones.

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Differentiation Strategies

Differentiation strategies are particularly important on the Internet. Internet marketing strategy revolves around

company image and product information available on the Web.

Specific strategies may include: Being the first to enter the market. Owning a product attribute or quality in the mind

of the consumer.

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Differentiation Strategies, cont.

Demonstrating product leadership. Utilizing an impressive company history or

heritage. Supporting and demonstrating the

differentiating idea. Communicating the difference.

Amazon.com and Monster.com have successfully differentiated themselves.

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There are 6 differentiation strategies unique to online businesses.

1. Site Environment/Atmospherics Easy downloads; easy navigation.

2. Making the Intangible Tangible Virtual tours, 3-D images, trial downloads.

3. Build Trust Strong brand recognition. Privacy policy.

Internet-Specific Differentiation Strategies

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Internet-Specific Differentiation Strategies, cont.

4. Efficient and Timely Order Processing Deliver timeliness as an important benefit.

5. Pricing In the early days of the Web, companies offered

discounts as purchase incentives. Majority of firms today differentiate themselves in

other ways besides pricing.

6. Customer Relationship Management Managing long term relationships with customers.

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Enhancing the Experience

The E-Marketing Opportunity Model helps companies differentiate using e-marketing opportunities for enhancing: The selling process. The customer buying process. The customer usage process.

Online differentiation involves: Creation of a distinctive customer experience. Development of one-to-one relationships with

customers.

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Positioning is the process of creating a desired image among its competitors in the public’s mind.

The e-marketer’s goals is to build a position on one or more bases that are relevant and important to the consumer.

Positioning

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Product or service attribute.High-tech image.Benefits.User categories.Comparison with competitors.Integrator position.

Bases and Strategies for Positioning

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Product or Service Attribute

May include features such as size, color, speed, etc.

Amazon’s one-click check-out process is an example of a positioning attribute.

Tylenol does not sell online, but provides useful one-to-one features for pain relief and health information.

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Technology Positioning

Shows that a firm is on the cutting edge of technology.

At Lands’ End, consumers can build virtual models of themselves and try on virtual outfits.

At American Airlines, customers can store seating preferences and frequent flier account information.

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Benefit Positioning

Benefit positioning is generally a stronger basis for positioning, because it answers the consumer question: What will this do for me?

Miller Lite offers software that can be used as a social organizer.

On the Valvoline motor oil site, visitors can send greeting cards, download racing screensavers and sign up for newsletters.

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User Category

User category positioning relies on customer segments.

Kellogg’s has an interactive site for children.

Yahoo! Geo Cities hosts pages organized by neighborhoods and specific interests.

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Competitor Positioning

Many firms position by benefits that provide advantages over their competitors.

Companies may position themselves against An entire industry. A particular firm. Relative industry position.

“I Can’t Believe It’s Not Butter” margarine positions itself against other margarines.

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Integrator positioning

We can expect to see more integrator positioning in the lending, jewelry and hospitality industries.

Lending Tree helps brokers find clients more quickly and cheaply.

Blue Nile sells an estimated $129 million of jewelry that would require 116 retail stores.

Web travel agencies can move market share to hotels that give them discounts.

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Repositioning is the process of creating a new or modified brand, company or product position.

A company may enhance or modify a position, based on market feedback, .

Yahoo! repositioned from online guide to Web portal.

Amazon repositioned from world’s largest bookstore to “Earth’s biggest selection.”

Repositioning Strategies