School of Marketing 1 While we wait … can you see the man in the picture ?

School of Marketing 2 Admin reminder If for some reason you want to withdraw from a course … any course.. Make sure you have officially withdrawn thru campus services - Some people just ‘stop’ and get a “withdraw fail’ on their academic record

School of Marketing 3 Lecture 5 Chapter 10 p Chapter 12 p Positioning The Product Life Cycle

School of Marketing 4 Chapter Objectives In this chapter, we focus on the following questions: –What is ‘positioning’ ? –How does ‘differentiation’ work ? –Why is the Product Life Cycle important ?

School of Marketing 5 Developing and Communicating a Positioning Strategy Positioning - designing the company’s offering and image to occupy a distinctive place in the mind of the buyer –Through a value proposition: reason for purchase in the mind of the customer –“Positioning is not what you do to the product, its what you do to the mind of the consumer”

School of Marketing 6 Examples: value propositions

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8 Identifying Possible Competitive Advantages Consumers choose products and services that give them the greatest value. Marketers need to understand customers’ needs and buying processes better than competitors and to deliver more value. This is gaining competitive advantage. This is from the text and we don’t necessarily agree (short presentation later)

School of Marketing 9 Developing and Communicating a Positioning Strategy: How to do it Start with the competitive frame of reference confirm what buyers you are interested in understand consideration sets that buyers use understand substitutes that they use This gives you the target market, and the competitors that your target market consider & buy

School of Marketing 10 Developing and Communicating a Positioning Strategy: How to do it cont’d Then - define the ‘points of parity’ and ‘points of difference’ you want to communicate Cannot just focus on the differences between your brand and competitors, as in the text –Need to convey points of difference –and convey points of parity –Points of parity: category - essential to be credible for the category –Points of parity: competitive - negate the things the competitor tries to make their point of difference

School of Marketing 11 Developing and Communicating a Positioning Strategy: How to do it cont’d So ideally your brand is equal on most attributes and is stronger on something at least The points of difference you use might not be really points of difference because the competitors use them too !!!!! – but that’s okay ….. because people do not recall everything they have ever seen

School of Marketing 12 Differentiation If there are perfect substitutes for your product, competitive intensity is extreme So you try to ‘differentiate’ – make other brands less perfectly substitutable for yours How ? It might not be possible to make it really different to others. But you must make it identifiable. Pushing on your POD and POP’s through marketing communication will differentiate it – Because then people will know and recognise it. If they know it / recognise it, it is differentiated from brands they know about less, or don’t recognise. = greater probability of purchase.

School of Marketing 13 Example of a positioning issue: 0 18 In the news this year - a company extracts water from fruit It has special qualities: 50x the level of water molecule 0 18 It evaporates more slowly; stays in body longer

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School of Marketing 15 Your ideas Should 0 18 change its positioning? Why? What is its parity What is its difference? What should be its new slogan?

School of Marketing 16 Comments on 0 18 So positioning at present: “look good - feel better” Too vague (why?) Their real issue is, who is target market and how to position this product

School of Marketing 17 “I’m part of the category” Talk about points of parity first; then points of difference. Become a credible member of the category: by… Announcing category benefits –What are the basic things people expect from this category ? Comparing to exemplars –Associate with things / people that are known to be (relevant and) good Product description –The way you describe it, e.g a “sports wagon” [for a product that straddles 2 categories].

School of Marketing 18 Points of difference Are they desirable ? Do you have capabilities to deliver ? 3 key criteria for desirability: –Relevant –Distinctive [the text also says ‘superior’ but is this always possible ??] –Believable

School of Marketing 19 Points of difference Then three criteria for deliverability –Feasible: is what you are saying consistent with what the product actually is, or does ? Or do you have to change the product too ? –Communicable: how can you foster the belief ? [is there a proof point] –Sustainable: defensible, difficult to attack, can you build on it over time ? * Note also that brands can also be differentiated on “seemingly irrelevant attributes” (p. 316) - ‘mountain grown coffee’

School of Marketing 20 Examples of differing emphasis (POP vs POD) Hyundai Sonata: ‘intelligent design’ ‘engineering’ 173 kw World class environmental standards These are all POP – this is the emphasis (Hyundai is building overall image) POD is the ‘image’ – “evolved driving” com.au/landing.html Renault Megane ‘big bold and beautiful’ emphasis on the appearance of the car, its unusual look More emphasis on POD m.au/renault/vehicles /megane/tv-ad.asp

School of Marketing 21 Don’t try to mix things that don’t mix Some positioning points don’t go together e.g. low price & high quality; “exclusive” but available everywhere Don’t position the brand on attributes that don’t easily mix.

School of Marketing 22 Figure 10.4: Identifying a Positional Direction

School of Marketing 23 Figure 10.5: Identifying a Repositioning Direction Where would you put Harris Scarfe?

School of Marketing 24 Product Life-Cycle Marketing Strategies The basis of the product life cycle concept : 1.Products have a limited life. 2.Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. 3.Profits rise and fall at different stages of the product life cycle. 4.Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

School of Marketing 25 Managing Products over Their Life Cycles

School of Marketing 26 Product Life Cycles: 4 stages Introduction: slow growth, low profits Growth: rapid acceptance, profit improvement Maturity: growth slows, profits stabilise Decline: downward drift in sales, profits erode

School of Marketing 27 Product Life Cycle The actual shape of the curve can differ Some products take years to get through ‘growth’ phase, some take much less Some product categories are in the mature phase for years… and years… Single product or product category?

School of Marketing 28 Managing Products over Their Life Cycles: typical scenarios (1) IntroductionGrowthMaturityDecline SalesLowRapidly growing PeakDecline Costs per customer HighAverageLow ProfitsNegativeRisingHighDeclining CompetitorsFewGrowingStableDeclining ObjectivesCreate awareness and trial Maximise Share Maximise profit but defend share Reduce expenditure / ‘milk’ the brand

School of Marketing 29 Product Life-Cycle Marketing Strategies Why an important concept ? If your goal is growth … then you need to look at whether your mix of products contains enough that are in the “growth” phase to get some growth ! What’s wrong with the concept?