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Fundamentals of Financial Management, Concise Edition10th EditionEugene F. Brigham, Joel Houston 777 solutions Marketing positioning is the process of developing a marketing mix that puts the product in a unique position to the targeted segments for attracting potential buyers. Marketing positioning involves arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers, which is accomplished through formulating competitive positioning for a product and a detailed marketing mix. What is Market Positioning?A product’s position is how consumers define the product on important attributes. It indicates the place the product occupies in consumers’ minds relative to competing products. For example, in the automobile market, Toyota Tercel and Subaru are positioned on the economy, Mercedes and Cadillac on luxury, and Porsche and BMW on performance. Volvo positions powerfully on safety. Consumers are bombarded with a lot of information about products and services. In each buying situation, they cannot reevaluate products. Consumers arrange products into different categories by positioning products, services, and companies in their minds. A product’s position refers to the complex set of perceptions, impressions, and feelings that consumers bear in their minds for the product compared with competing products. Consumers position products in their minds with or without the help of marketers. But marketers want to play an active role in positioning their products. They must plan positions in a way that will ensure their products the greatest advantage in selected target markets. This implies that marketing mixes must be designed to create these planned positions. Market Positioning StrategiesTo be successful, a company should decide on the number and type (s) of differences planning to promote. Let us now have some idea of how a company can decide on this issue. There are differences in opinions among marketing experts and writers about how many differences a company should promote. Some argue that it is always wise to find one suitable attribute and promote that aggressively, highlighting the company’s strength in it. The need to invest distinctive benefits in a product gives rise to the concept of the Unique Selling Proposition or USP. This is the feature or feature in a product that offers unique benefits not found in its competitors. To understand the concept, let us take the example of holiday marketing companies. Several holiday companies specialize in the organization of package tours aimed at the young (18-30) travel market. While the product offered is similar in many respects, companies focusing on this market segment seek ways to differentiate their product from others. Thus, company ‘A’ may emphasize that their hotels are used exclusively by their customers. In contrast, company ‘B’ may place stress on the added adventure and, company ‘C’ may focus on the blatant sexual promise of their holidays. USP basically highlights on picking one attribute and trying to be number one in that attribute. There are many attributes available to which a company may pick one and try to establish it as number one because number one always draws more attention than others. The attributes could be ‘quality,’ ‘service,’ ‘price,’ ‘value,’ ‘reliability,’ ‘safety,’ ‘speed,’ ‘customization,’ ‘modern’ etc. There are situations when companies may need to go for double-benefit positioning. It happens when more than one firm claim to number one on the same dimension or attribute. Companies pursue double benefit positioning usually intend to find a special niche within the target market. On some other occasions, companies may go for pursuing a triple-benefit positioning strategy. Some toothpaste manufacturers are found to pursue this strategy by claiming that their products can serve three purposes. They try to convince the claimed benefits market by developing toothpaste that squeezes out of the tube in three color stripe. Marketers can adopt various positioning strategies.
Importance of Market Positioning1. Positioning as the interface between brand identity and brand imageBrand identity in the marketplace depends on positioning. Customer’s perception of the brand develops only when the Market Positioning is proper. 2. Positioning as a source of competitive advantageBetter marketing positioning will give the company a competitive advantage over other firms on the market. 3. Market Differentiation with Positioning – Positioning breaks the clutter of noiseThe are plenty of products, and the number of firms delivering them is several. Positioning will help a firm to stand out in the crowd of sellers. A clear Brand Position enables you to efficiently and effectively communicate and reach your target audience. Clear market positioning makes the brand and its product visible and attractive to the customers. 4. Positioning Makes Buy easy for CustomersConsumers want easy solutions and options to make purchase decisions. And positioning triggers an emotional response from your target audiences, giving them a quick way to trust you and increase the interest level of customers and increase sales numbers. Why do Companies adopt a Positioning Strategy?In the previous lesson, you were given ideas on differentiation. You have seen there that a company can try to differentiate its product in many different ways. No matter how a company tries to differentiate its product, it will not be considered different if customers do not perceive it differently. Adopting a policy of differentiating products involves a cost to the company, and it expects to realize such costs by increased sales. But, there is no guarantee that sales will go up unless customers act positively. To act positively, customers look for something in a product claimed by its seller as different. A company should, therefore, be careful in selecting ways of differentiation and provide for the following criteria in its offer:
Experiences say that several companies could not meet the above criteria in their differentiation. The reason may be that customers did not consider the product different, or the particular company failed to take its product in the customers’ own frame of reference. This resulted in the failure of and loss to the firms. To meet the need for particular market segments, companies should differentiate their products based on specific attributes or characteristics to meet specialized market segments’ needs. To achieve this task, marketers use the positioning. The position is a term that describes a product’s objective or subjective characteristics with competing brands. Positioning may be an attempt to differentiate a marketing offer from competitors. A positioning strategy may be used to:
Choosing and Implementing a Positioning StrategyThe task of choosing and implementing a positioning strategy involves three steps. The company must first identify a set of possible competitive advantages on which the position will be built and then select the appropriate competitive advantages. Finally, the company must find a way of effectively communicating and delivering the chosen position to the market. Identifying Possible Competitive AdvantagesFor being successful, the company must choose a positioning strategy that gives it an advantage over competitors. Competitive advantage can be gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. But promises only are not enough to build strong positions. When a company positions its product as offering the best quality and service, it must ensure the delivery of promised quality and service. So positioning starts with differentiating the company’s marketing offer from competitors, making the consumers believe that this will give them more value than competitors’ offers do. Gaining a competitive advantage by differentiating the offer may not always be possible. Some companies find many insignificant advantages that are swiftly imitated by competitors. These companies should, therefore, keep identifying new potential advantages, and they introduce them one by one. These companies do not think that they will have a single major permanent advantage. Rather, they expect to gain many minor ones that can be introduced over some time. A company can differentiate its offer from competitors based on product, services, personnel, or image. Product DifferentiationA company’s physical product can be differentiated. Although some companies offer highly standardized products (antibiotics), meaningful differentiation might be possible in some cases. Some products can be highly differentiated, such as apartment furniture. In such a case, the company can offer various standards or optional features not provided by competitors. Thus, Volvo provides new and better safety features; Delta Airlines offers wider seating and free in-flight telephone use. Products can also be differentiated according to performance. Whirlpool designs its dishwasher to run more quietly; Procter & Gamble formulates Liquid Tide to get clothes cleaner. Companies also can differentiate their products by style and design. Products can be differentiated on attributes such as consistency, durability, reliability, or reparability. Many car lovers buy Jaguar cars even though Jaguar has a poor reliability record. But car lovers call Jaguar cars ‘jaaaggg’ because of the unique look and feel they get from owning a Jaguar car. Services DifferentiationA company can also differentiate the services that are associated with the product. Speedy and careful delivery can provide a competitive advantage. Deluxe, a check supply company, has built an impressive reputation for shipping out replacement checks one day after receiving an order – without being late once in 12 years. Companies can also be differentiated based on the installation. IBM, for example, is known for its quality installation service. It delivers all pieces of purchased equipment to the site at one time rather than sending individual components to sit and wait for others to arrive. And when asked to move IBM equipment and install it in another location, IBM often moves competitors’ equipment as well, Repair services also can differentiate one company from another. Many automobile buyers will be willing to pay a little more for post-purchase repair services. Companies can differentiate their offers by providing training services to buyers. For example, General Electric not only sells and installs expensive X-ray equipment in hospitals but also trains the hospital employees who will use this equipment. Some companies offer free or paid consulting services like data, information systems, and advising services that buyers may need. Marketers can discover many other ways of differentiating services that add value to their products. They can choose from myriad services and can even create new ones to differentiate themselves from the competitors. Personnel DifferentiationOne way of gaining a competitive advantage is to employ and train better people than those of competitors. For example, Singapore Airlines enjoys an excellent reputation largely because of the grace of its flight attendants. MacDonald’s people are courteous, IBM people are professional and knowledgeable, and Disney people are friendly and upbeat. Personnel differentiation calls for careful and proper selection and training of customer-contact people. Image DifferentiationBuyers can also differentiate marketers based on company or brand images. Companies try to create images that differentiate them from competitors. A company or brand image should reflect the distinctive benefits and positioning of the product. Creating a strong and distinctive image requires creativity and hard work. Symbols, signs, logos, and colors are used to create a strong company or brand recognition and image differentiation. A company can also build an image through the types of events it sponsors. For example, Pepsi Cola has identified itself closely with sports events, such as cricket tournaments. Selecting the Right Competitive AdvantagesEven if a company finds several potential competitive advantages, it must choose the ones on which to build its positioning strategy. It faces two important issues – how many differences to promote and which differences to promote. How Many Differences To Promote?Many marketers believe that companies should vigorously promote only one benefit to the largest market. Each brand should select an attribute and claim itself as “number one” on that attribute. Buyers tend to recognize “number one” easily. Thus, Peps toothpaste consistently promotes its decay prevention. Some of the popular “number one” positions to promote are “best quality,” “best service,” “lowest price,” “best value,” and “most advanced technology.” Other marketers believe that companies should position themselves on more than one differentiating element. This may be required in situations where two or more companies claim to be best on the same attribute. Steelcase, an office furniture systems company, differentiates itself from competitors on two benefits: best on-time delivery and best installation support. As the mass market is fragmenting into many small segments, companies are trying to widen their positioning strategies to appeal to more segments. For example, Beecham promotes its Aquafresh toothpaste as offering three benefits: “anti-cavity protection,” “better breath,” and “whiter teeth.” Clearly, people want all three benefits, and the challenge is to convince them that the brand delivers all three. Beecham’s solution was to create a toothpaste squeezed out of the tube in three colors, thus visually confirming the three benefits. However, too many claims for a brand expose the company to risk disbelief and a loss of clear positioning. Positioning Errors That a Company Should AvoidIf a company emphasizes more attributes while positioning its brand, it may put itself in trouble. Emphasizing too many attributes or claiming to be best in many aspects creates confusion in buyers’ minds, resulting in distrust. This leads to a situation called a ‘loss of clear positioning’ by the marketing experts. Four major positioning errors are;
By avoiding the following four major positioning errors, a company can ensure clear positioning of its product: Under-PositioningIf buyers sense ambiguity about a company’s claim or is unable to differentiate the product from competing brands, we call this under-positioning. In such a situation, a brand of a product is considered the same as some other brand. Over-PositioningIf buyers develop a very focused or insular/narrow image toward the brand, the brand is said to be over-positioned. Buyers here cannot believe the product having certain attributes or options. Confused PositioningIf buyers are found to be confused about the image either due to too many claims made by the seller or frequent changes brought in the positioning of the brand, it is known as confused positioning. Doubtful PositioningIf buyers are suspicious about the sellers’ claims, it is called a doubtful positioning. It is due to the lack of conformance between the claims and the physical features of the product, price, or the manufacturer’s image. Thus, positioning focuses on buyers’ perceptions and preferences about the place a product occupies in a specified market. A positioning strategy is basically the design of a marketing program consisting of marketing mix decisions. Alternative Positioning Strategies Available to a FirmA perceptual map can help a company identify different positioning strategies available and select the appropriate one. A company can pursue one of the following positioning strategies:
Which Differences To Promote?How do you decide which difference (s) you should promote to position your product in consumers’ frame of reference? To decide on this, you should, first of all, identify alternative positioning platforms. Second, you should compare your relative standing on each of them with your major competitor. Third, you should find out the importance of improving standing on each of the platforms. Fourth, you should calculate whether you are able to afford improvements and how fast you can do that. Next, you assess your major competitor’s ability to improve standing on each of the previously identified platforms. Based on the above analysis, you decide which difference (s) you should promote – whether technology, quality, service, or any other. After you arrive at the positioning decision, you should implement measures to communicate it to your target market. How do you do that? Obviously, you communicate your position through marketing mix elements. For example, you have decided to position your product as a quality one. You can communicate this by exploiting one of the elements of the marketing mix – the price. You can give the market an idea that your product is superior since there is a price-quality relationship by charging a high price. Customers perceive the higher-priced brand as a quality product. For gaining a competitive advantage, a company or a brand can be differentiated in many ways. But all differences are not meaningful and worthwhile. Moreover, each difference is likely to enhance company costs as well as customer benefits simultaneously. So the company must be careful in selecting ways of distinguishing itself from competitors. A difference is worth promoting to the extent that it satisfies the following criteria:
Many companies have introduced differentiations that failed one or more of these tests. The Westin Stamford Hotel in Singapore advertises that it is the world’s tallest hotel, a distinction that is not important to many tourists as it turns many off. AT&T’s original picture vision phones bombed, partly because the public did not think that seeing the other person was worth the phone’s high cost. Thus, choosing competitive advantages to position a product or service can be difficult, yet such choices may be crucial to success. 3 Positioning Deliverability Criteria – Ask if the Positioning is JustifiedThe biggest challenge in marketing and branding is developing a proposition for the product. Just market segmentation and marketing targeting will not help in market positioning. You need to position the product in a way that attracts the customer. Three positioning deliverability criteria are;
Communicating and Delivering the Chosen PositionAfter choosing a position, the company must take effective measures to deliver and communicate the chosen position to target consumers. Marketing mix efforts should be synchronized to back the positioning strategy. If the company wants to build a position on better quality and service, it must first take necessary action to deliver that position. Tactical details of the positioning strategy must be worked out to guide marketing mix-product, price, place, and promotion. A company that chooses a “high-quality position” must produce high-quality products, charge a high price, distribute through high-quality middlemen, and use high-quality media for promotion. The company must recruit and train more service people, find service-oriented retailers, and develop sales and advertising messages that communicate its superior service. Thus, a company can build a consistent and convincing high-quality, high-service position. Developing a positioning strategy is easier than implementing it in the market. Creating a position or changing a position takes a long time. Also, positions built over a long time can be lost quickly. After building the most profitable market position, the firm must maintain consistent product quality, service, and marketing. Too many changes might create confusion in the minds of consumers. Rather, modifications and changes in the product’s position should be congruent with the ever-changing marketing environment. Final Words on PositioningTo get a competitive edge, firms try to position their products differently in the minds of customers. A company can position its product through many positioning strategies. Positioning is done, making the product different from the competing products and convincing customers of these differences. Care should be taken by the firm to avoid the errors involved in positioning. During the process of making decisions on positioning strategy, you should ask yourself several questions. Your final move should be absolutely based on the answers to these following questions :
The name of the marketing game in many industries is “positioning.” In such a game, you can survive only if you are a better player. What is the way the product is defined by consumers on important attributes the place the product occupies in consumers minds relative to competing products?The concept of Positioning. According to Kotler, positioning is “the way the product is defined by consumers on important attributes – the place the product occupies in consumers' minds relative to competing products” (Kotler (2002), p. 269).
Is defined by consumers on important attributes the place the product occupies?A product's position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers' minds relative to competing products. Positioning involves implanting the brand's unique benefits and differentiation in customers' minds.
Is the place a product occupies in consumers minds based on important attributes relative to competitive products?Answer: Product positioning refers to the place a product occupies in consumers' minds based on important attributes relative to competitive products. Product repositioning involves changing the place a product occupies in a consumer's mind relative to competitive products.
What refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors?Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors and different from the concept of brand awareness.
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