Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Differentiation and Brand Positioning 7 C H A P T E R SEVEN

7-2 What is Positioning? o oThe place a product or brand occupies in customers’ minds relative to their needs o oRefers to competing products or brands o oComprises both competitive and customer need considerations

7-3 Differentiation o oDifferences in scope–Broad or narrow competitive scope o oDifferent ways in which companies can compete for target markets o oDifferentiation in Business Strategies o oDifferentiation among Goods and Services

7-4 Physical and Perceptual Positioning o oPhysical positioning o oAssessing product offering based on a set of objective physical characteristics o oPerceptual positioning o oIncludes product presentation, past experiences and opinion of others

7-5 Comparison of Physical and Perceptual Positioning Analysis Exhibit 7.2 Comparison of Physical and Perceptual Positioning Analysis Physical PositioningPerceptual Positioning Technical orientationConsumer orientation Physical characteristicsPerceptual attributes Objective measuresPerceptual measures Data readily availableNeed for marketing research Physical brand propertiesPerceptual brand positions and positioning intensities Large number of dimensionsLimited number of dimensions Represents impact of product specs Represents impact of product specs and communication Direct R&D implicationsR&D implications need to be interpreted

7-6 Kinds of Attributes o oSimple physically based attributes o oDirectly related to a single physical dimension o oComplex physically based attributes o oUsed by consumers to evaluate competitive offerings o oEssentially abstract attributes o oAre influenced by physical characteristics, but not related in any direct way o oPrice o oImplies high or low quality

7-7 Steps in the Positioning Process 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.

7-8 Steps in the Positioning Process Exhibit 7.4 (2 of 2) Steps in the Positioning Process 4. Determine product’s current location (positioning) in the product space and intensity thereof. 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.

7-9 Tools used to understand the positioning of products o oPositioning grid o oAlso called perceptual maps o oValue curve

7-10 Neiman Marcus Saks Bloomingdale’s Hit or Miss The Limited Macy’s Nordstro m Garfinkels Kmart Casual corner Britches Sears L&TMarshall’s Hecht’ s Woodwar d & Lothrop JC Penny Talbots The Gap Dress Barn T.J. Maxx Sassafras Loehmann’s Worst value Best value Women’s-wear value for the money Women’s-wear fashionability Conservative versus current versus very latest Washington 1990 Women’s fashion market Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992) p Perceptual Map of Women’s Clothing Retailers in Washington, D.C.

7-11 Building a value curve

7-12 Guiding Development of Marketing Strategy o oTwo common approaches: o oPositioning statement o oIdentifies the target market o oStates unique benefits of the product o oValue proposition o oSimilar to positioning statement o oIncludes information about pricing relative to competitors o oBoth approaches reflect the unique selling proposition (USP) of the product

7-13 Positioning Statement for Volvo in North America o oFor upscale American families, Volvo is the family automobile that offers maximum safety o oGeneric format for positioning statements: For (target market), (brand) is the (product category) that (benefit offered)

7-14 Value Proposition for Volvo in North America o oTarget market: Upscale American families o oBenefits offered: Safety o oRelative price: 20% premium to domestic family cars o oGeneric format for value propositions: o oTarget market o oBenefits offered (and sometimes not offered) o oRelative price

7-15 Some Key Questions Concerning Positioning Decisions o oFor whom are they written? o oIn what sort of language? o oShould they focus on features or benefits? o oHow many differentiating attributes should anchor them?

7-16 A Useful Tool for Positioning Decision Making: Perceptual Maps Where would you plot your favorite cereals? Your kids’ favorites? Your grandma’s? NutritiousNot Nutritious Sweet Not Sweet

7-17 The Outcome of Positioning: Brand Equity o oBrand equity is the term marketers use to refer to the value created by establishing customer preference for one’s brand. o oBrand equity must be managed to retain and grow its value;