Positioning

PRODUCT POSITIONING

WHAT IS PRODUCT POSITIONING? • It all started with a couple of guys named Trout and Reis. Beginning in 1969 and then into the early 70s, these two young marketing geniuses, Jack Trout and Al Ries, wrote, spoke and disseminated to the advertising and PR world about a new concept in communications called positioning. Until then, agencies had primarily been basing their media campaigns on internally conceived benefits of the client's product.

The game had changed. If you wanted to reach your prospect, the focus of your campaign could no longer be based on internally conceived benefits,- what management thought was cool , the target was now the mind of the prospect. You had to focus on the perceptions of the prospect. You had to find a place in the mind of your public in which to put your product.

Trout and Reis described positioning as follows: "... positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position (place) the product in the mind of the prospect." L Ron Hubbard Business management expert, The unfamiliar is rapidly introduced or communicated by comparing it to a familiar.

THE EASY WAY TO POSITION A PRODUCT The easy way to position a product is to get into the mind first Ex: Coke in COLAs. Bayer in aspirin. Disney in theme parks. Kleenex in tissues. Philadelphia in cream cheese. Webster in dictionaries and Gillette in razor blades. The advantage is that people start to relate other products to the leader. Ex: The "against" position taken by Avis against Hertz. They wisely didn't try to take Hertz head on, they said "Avis is only No. 2 in rent-a-cars, so why go with us? We try harder."

WHAT IF YOU'RE NOT FIRST? "To find a unique position, what you must do is look inside the prospect's mind. You won't find an 'uncola' idea inside a 7-Up can. You find it inside the cola drinker's head." Said Trout and Reis. Ex: VW took an immensely successful "small and ugly position" in the late 60s and early 70s (They have recently returned to after trying unsuccessfully to move out of the small position. VW means small car).

• At the other end of the price spectrum, a few brands with a "top-of-the-line/luxury position" are; Rolls Royce in automobiles, Ritz Carlton or the Four Seasons in hospitality, Chivas Regal in scotch, and Sax Fifth Avenue in retail, Tiffanies in Jewelry, Mont Blanc in pens. • Head and Shoulders took a huge bite out of the shampoo market with the "anti dandruff" position. But this is not easy Internet users will be besieged with 3,000 advertising messages every single day--about 1,000 on line and 2,000 off line. Assuming 16 hours a day of ears and eyeballs, that's 3 ads a minute ALL DAY LONG

NARROWING THE FOCUS You strengthen your brand by narrowing your focus. Chevrolet used to be the number one selling car in America. It had a "reliable and reasonably priced" position. In 1986 they sold 1,718,839 cars. But expanding their line and trying to be all things to all people undermined the power of the brand. Chevys are all over the spectrum today with countless sub-brands and now they sell less than a million cars a year. They have fallen to second place behind Ford. • In the mid 90s, Levi Strauss had 31 percent of the blue jean market. Then, in an effort to appeal to a wider market, they introduced a number different styles and options--baggy, zippered, wide-leg and so on. Today they have 19 percent of the market.

What happens when your focus is narrow • Delicatessen shops have a history of selling "everything". Fred DeLuca narrowed the focus to one type of sandwich--submarine. Subway has grown to be a huge success--the eighth largest fast-food chain in America with 13,000 units worldwide. • The Children's Super mart used to sell all kinds of children's furniture and toys. They wanted to grow. They narrowed their focus and changed their name. Toys R Us now sells 20% of the toys in the US.

Product Positioning Surveys Finding an exact position for a product or service is done by conducting surveys of a company's customers and prospects Positioning lets you create a place for your product in the mind of your prospect. Without it, your marketing, advertising and Public Relations money is at risk. With it, the sky's the limit.

5 Steps to Improving Your Company’s Market Positioning

The Perils of Poor Positioning Symptoms of weak companies: • • • • •

Margins are low Product introductions are rough on company internal operations and launches never seem to meet expectations Significant competitors are numerous and keep increasing Training sales people becomes more difficult—they don’t seem to get it Company professionals suffer from burnout

Positioning is More Important than Ever Even small market niches are usually served by at least 2-3 competitors In stable markets, each of these companies owns and defends a segment of the market. And even though the companies are prospering, it is rare for management to be satisfied with their market niche. Large companies want to take over smaller niches, and small companies want to get a piece of the big market.

Strategy Behind Good Positioning The fundamental idea behind positioning is the idea of competitive advantage. When two forces meet, the overwhelming force wins. Ex: A football game. The next idea behind positioning relates to customers’ inability to think of your company in more than one way. The choice : Do you compete where you can dominate? Or, do you want to face the double penalty of leaving your core market undefended while you pursue markets that you can never dominate?

THE FIVE STEPS Step 1: Research the Competition You need to develop a strength and weakness profile of the competition Ex:” We are the leading supplier of spray paint equipment." Another important area is their future products and development plans. Ex: Software companies usually give about a year’s notice of future platforms and products

Step 2: Research Customers The most valuable asset you have is your share of mind and positioning with your customers It is important to structure your research properly Ex: Most high-tech and industrial markets have a few large customers who account for most of the sales. If you have the budget, it can be beneficial to use a qualified outside researcher,

Step 3: Research your Company Company research is best done after the competitive and customer research • What you need to find is the truth about your company and how it really works. • In objective terms, who is directing the future? • Are there unrecognized strengths? • What accounts for the good and bad points brought up by the competitors and customers? • And a really important question: What product lines account for most of the revenue? You should interview all senior management, other managers, key professionals, and line personnel.

Step 4: Decision to Focus 1. Look at where you make your money: If 80% of your revenue is in a certain area, then that is the natural area on which to focus. 2. Leverage your differences: Your uniqueness is what gives you an advantage. Ex: If you have a big expensive sales force that gives you pains, you should think twice before you downsize, because it may be the major source of market strength. 3. Under-focus is a much more likely problem than over-focus

4. Try to avoid change: Change if you must, but the best positioning strategy is one that uses your current strengths—not some speculative strength you hope to have in the future. The most important and hard to change part of your positioning is the perceptions of your customers and prospects. 5. Avoid obvious mistakes: Technology continues to evolve. If you don’t keep up, you lose. So don’t use the positioning argument to lag behind. Rather, use your positioning strategy to help meet technical requirements. Staying current is much easier if you focus.

Step 5: Spread the Word The fastest way to spread the word is to involve all the key people in the decision making process.

Mapping Methods in Marketing

Perceptual Maps

Preference Maps

Joint Space Maps

Similarity-based methods

Ideal-point model (unfolding model)

External analysis using PREFMAP-3

Attribute-based methods

Vector model

Simple “joint space maps” using modified perceptual mapping methods

Common

Easy setup

Slow

•

Toshiba 1960CT

Performance •Ι Β Μ 701

“Butterfly”

Elegant

Looks

C

Value

Light

Interpretation The arrow indicates the direction in which that attribute is increasing (The attribute is decreasing in the direction opposite to the arrow). The length of the line from the origin to the arrow is an indicator of the variance of that attribute explained by the 2D map. The longer this line, the greater is the importance of that attribute.

Attributes of Laptops on a Perceptual Map (Plain) Common

Easy setup

Slow

•

Toshiba 1960CT

Performance •Ι Β Μ 701

“Butterfly”

Elegant

Looks

C

Good Value

Light

Interpreting Perceptual Maps • Attributes that are both relatively important and close to the horizontal (vertical) axis help interpret the meaning of the axis. • To position a laptop on each attribute, draw an imaginary perpendicular line from the location of the laptop onto that attribute. (These are shown by dashed lines on the map).

Perceptual Map of Beer Market (only Brands)

•

Old Milwaukee

Budweiser

•

Meister Brau

•

Miller

Beck’s

•

• Heineken

• •

•

Coors

Stroh’s

• Michelob •

•

Old Milwaukee Light

Miller Lite

•

Coors Light

Perceptual Map of Beer Market (Only attributes) Heavy

Full Bodied

Popular with Men

Special Occasions Good Value

Blue Collar

Dining Out Premium

Budget

Premium Popular with Women

Pale Color On a Budget

Light

Light

Less Filling

Perceptual Map of Beer Market (both products & attributes)

Heavy Heavy

•

Full Bodied Old Milwaukee

Budweiser

•

Meister Brau

•

Good Value

Popular with Men

Miller Blue Collar

•

Beck’s

•

Stroh’s

Budget

• Heineken

Special Occasions

• Coors

•

Dining Out Premium

Premium

• Michelob •

On a Budget

•

Pale Color

Old Milwaukee Light

Light

Miller Lite Light

•

Coors Light

Less Filling

Popular with Women

Two Preference Models Ideal-Point Preference Model

Vector Preference Model

Increasing Preference Preference Decreasing Preference Ideal Point Attribute (eg, sweetness)

Attribute (eg, service speed)

Limitations of Preference Mapping • Provides a static model—ignores dynamics of customer perceptions. • Interpretation is sometimes difficult. • Does not incorporate cost or likelihood of being able to achieve a desired positioning. • Does not incorporate a “probability model” to indicate goodness of a map. • Generally, need about 6 to 8 products to make the technique useful.