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7

Differentiation and Positioning

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Chapter Summary
This Chapter will introduce you to the following:
Fast Food Turns Healthy The Concept of Positioning The Concept of Differentiation Generic Competitive Strategies The Difference Between Physical and Perceptual Positioning Seven Steps in the Positioning Process Tools Used in the Positioning Process Unique Value Proposition
Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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What is Positioning?
The place a product or brand occupies in customers minds relative to their needs Refers to competing products or brands Comprises both competitive and customer need considerations Positioning is basically concerned with differentiation

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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What is Differentiation?
As Michael Porter (1996) points out:
A company can outperform its rivals only if it can establish a difference that it can preserve

Porter sees differences in scope


Broad or narrow competitive scope

Different ways in which companies can compete for target markets


Differentiation in Business Strategies Differentiation among Goods and Services

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Exhibit 7.1

Generic Competitive Strategies


Competitive Advantage
Lower Cost Differentiation

Broad Target

Competitive Scope
Narrow Target

Cost Leadership Strategy


Focus Strategy

Differentiation Strategy Focus Strategy (Differentiation Based)

Source: Adapted from Michael Porter, Competitive Advantage, New York: The Free Press, 1985, p. 12.

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Physical and Perceptual Positioning


Physical positioning
Assessing product offering based on a set of objective physical characteristics However, a simple comparison of only the physical dimensions usually does not provide a complete picture of relative positions

Perceptual positioning
Includes product presentation, past experiences and opinion of others

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Exhibit 7.3

Comparison of Physical and Perceptual Positioning Analysis


Physical Positioning Technical orientation Physical characteristics Objective measures Data readily available Physical brand properties Perceptual Positioning Consumer orientation Perceptual attributes Perceptual measures Need for marketing research Perceptual brand positions and positioning intensities

Large number of dimensions Represents impact of product specs


Direct R&D implications

Limited number of dimensions Represents impact of product specs and communication


R&D implications need to be interpreted

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Attributes Used in Positioning


Simple physically based attributes
Directly related to a single physical dimension

Complex physically based attributes


Used by consumers to evaluate competitive offerings

Essentially abstract attributes


Are influenced by physical characteristics, but not related in any direct way

Price
Implies high or low quality

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Exhibit 7.4 (1 of 2)

Steps in the Positioning Process


1. Identify relevant set of competitive products serving a target market.

2. Identify the set of determinant attributes that define the product space in which positions of current offerings are located.

3. Collect information from a sample of customers and potential customers about perceptions of each product on the determinant attributes.
Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Exhibit 7.4 (2 of 2)

Steps in the Positioning Process


4. Determine products current location (positioning) in the product space its intensity.

5. Determine customers most preferred combination of determinant attributes. 6. Examine the fit between preferences of market segments and current position of product (market positioning). 7. Write positioning statement or value proposition to guide development and implementation of marketing strategy.
Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Tools for understanding the positioning of products


Step 4 includes useful tools used for assessing relative positions in the competitive set Positioning grid
Also called perceptual maps Based on a visual representation around two determinant attributes

Value curve
Value curves indicate how products within a category compare (high or low) in terms of a number of attributes
Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Perceptual Map of Womens Clothing Retailers in Washington, D.C.


Washington 1990 womens fashion market

The Limited

Womens-wear fashionability Conservative versus current versus very latest

Neiman Marcus Macys Saks Bloomingdales

Nordstro m
Source: Adapted from Douglas Tigert and Stephen Arnold, Nordstrom: How Good Are They? Babson College Retailing Research Reports, September 1990. as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992) p. 205.

Hit or Miss Dress Barn Casual corner Garfinkels T.J. Maxx Sassafras The Gap L&T Britches Kmart Sears JC Penny Marshalls Hecht Loehmanns s Woodwar d & Lothrop

Talbots

Worst value

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

Womens-wear value for the money

Best value 7-12

A Useful Tool for Positioning Decision Making: Perceptual Maps


Where would you plot your favorite cereals? Your kids favorites? Your grandmas?

Not Sweet

Sweet Nutritious

Not Nutritious

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Guiding Development of Marketing Strategy


Two common approaches:
1. Positioning statement
Identifies the target market States unique benefits of the product

2. Value proposition
Similar to positioning statement Includes information about pricing relative to competitors

Both approaches reflect the unique selling proposition (USP) of the product

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Positioning Statement for Volvo in Australia


For well-to-do Australian families, Volvo is the car that offers the utmost in customer safety and security Generic format for positioning statements: For (target market), (brand) is the (product category) that (benefit offered) Remember a case of selling benefits rather than features and attributes

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Value Proposition for Volvo in Australia


Target market: professional and wealthy Australian families Benefits offered: safety and security Relative price: 20% premium over similar cars Generic format for value propositions: Target market Benefits offered (and sometimes not offered) Price range (relative to competitors)

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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Some Key Aspects of Positioning Statements and Value Propositions


Short and succinct Not written in catchy consumer language, though catchy slogans and tag lines for communication with customers often follow They are commonly written for product line or brand name (Volvo), but sometimes for a single product or a business as a whole In a very real sense, the positioning statement or value proposition constitutes the foundation upon which the marketing strategy is built

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Marketing Strategy: A Decision-Focused Approach by Walker Prepared by Anton Kriz, The University of Newcastle

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