Mkt Mgt # Chap11

Chapter # 11 Positioning and differentiating the market offering through the product life cycle

Positioning

Product’s Position – the act of designing the company’s offering and image to occupy a distinctive place in the mind of target market. i.e. Volvo positions on “safety”.

How many ideas to promote ? • Unique selling proposition (UPS) – Mercedes promotes its great engineering, Crest toothpaste promotes its anticavity protection. • Double benefit positioning – Volvo “safest & most durable” • Triple-benefit positioning- Smith Kline beecham promotes its aquafresh toothpaste - anticavity protection, better breath and whiter teeth.

Major positioning errors • Under-positioning – buyer have vague idea of the brand. • Over-positioning – buyer may have too narrow an image of the brand. • Confused positioning - buyer might have a confused image of the brand resulting from company’s making too many claims or changing the brand’s positioning frequently. • Doubtful positioning – buyer may find it hard to believe the brand claims about product.

How do companies select their positioning

Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning

Which position to promote Competitive Company Competitor Importance Affordabilit Competitor’s Recommof advantages standing standing y and speed ability to ended Improving standing action standing Technology

8

8

L

L

M

Hold

Cost

6

8

H

M

M

Monitor

Quality

8

6

L

L

H

Monitor

Service

4

3

H

H

L

Invest

H = High, M= Medium & L= Low

Adding Further differentiation Important

Profitable

Affordable

Criteria for determining which difference to promote

Preemptive

Distinctive

Superior

Communicable

Adding further differentiation Crego and schiffrin – Customer-centered organizations should following three step process: Define the customer value model Building customer value hierarchy  Basic  Expected  Desire  Unanticipated Deciding on customer value package

Number of approaches to achieve advantages Few Small Large

Size of the advantages

Differentiation tools

Many

Volume

Specialized

Stalemated

Fragmented

Product Differentiation Variables Form Features Performance Conformance Durability Reliability Repairability Style Design

Service Differentiation Variables Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Miscellaneous

Personnel Differentiation Variables Competence Courtesy Credibility Reliability Responsiveness Communication

Channel Differentiation Variables Coverage Expertise Performance

Image Differentiation Variables Symbol Media Atmosphere Events

Product Life Cycle Sales and Profits ($)

Sales Profits

Losses

Introduction

Growth

Maturity

Decline

Time Sales and Profits Over the Product’s Life From Introduction to Decline

Introduction Stage of the PLC Summary of Characteristics, Objectives, & Strategies

Sales

Low sales

Costs

High cost per customer

Profits

Negative

Marketing Objectives

Create product awareness and trial

Product

Offer a basic product

Price

Use cost-plus

Distribution

Build selective distribution

Advertising

Build product awareness among early adopters and dealers

Growth Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales

Rapidly rising sales

Costs

Average cost per customer

Profits

Rising profits

Marketing Objectives

Maximize market share

Product

Offer product extensions, service, warranty

Price

Price to penetrate market

Distribution

Build intensive distribution

Advertising

Build awareness and interest in the mass market

Maturity Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales

Peak sales

Costs

Low cost per customer

Profits

High profits

Marketing Objectives

Maximize profit while defending market share

Product

Diversify brand and models

Price

Price to match or best competitors

Distribution

Build more intensive distribution

Advertising

Stress brand differences and benefits

Decline Stage of the PLC Summary of Characteristics, Objectives, & Strategies Sales

Declining sales

Costs

Low cost per customer

Profits

Declining profits

Marketing Objectives

Reduce expenditure and milk the brand

Product

Phase out weak items

Price

Cut price

Distribution

Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

Advertising