©2006 Prentice Hall ELC 310 Day 10

©2006 Prentice Hall Agenda Assignment 3 posted Due Oct 21 (one week from now) Exam # 2 will be on October M/C (40 points) and 6 Essays (60 points) from chapters 6-11 Open book, open notes 70 Min You should be working on your eMarketing Plans Due Nov 4, In class Presentations of your marketing plans will on be on Nov. 1 & 4 Volunteers for Nov. 1?? Today we will be discussing Differentiation And Positioning Strategies (part of Tier 1) Next discussion is on Product, Price and Distribution (part of Tier 3) in Chaps 10, 11& 12

©2006 Prentice Hall9-1 E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 9: Differentiation and Positioning Strategies

©2006 Prentice Hall Differentiation is what you do to the product. Positioning is what you do to the customer’s mind. It is the art of getting in and out of the mind - Jack Trout

©2006 Prentice Hall9-2 Chapter 9 Objectives After reading Chapter 9 you will be able to: Define differentiation and positioning and explain why they are important elements of marketing strategy. Identify dimensions of differentiation and Internet- specific differentiation strategies. Discuss how companies can position or reposition themselves on the basis of attributes, technology, benefits, user category, relation to competitors, or integrator capabilities.

©2006 Prentice Hall9-3 The J. Peterman Story The J. Peterman Company is a classic example of successfully combining clever differentiation with powerful positioning. The founder established his company as a breed apart from ordinary competitors. Visit jpeterman.com and discuss what makes their products “unique.” bin/sgdynamo.exe?UID= &HTNAME=\html\j p-products/OM\1371.htmlhttp:// bin/sgdynamo.exe?UID= &HTNAME=\html\j p-products/OM\1371.html

©2006 Prentice Hall9-4 Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish the product from the competition. There are a number of differentiation dimensions and strategies for their accomplishment. Differentiation

©2006 Prentice Hall9-5 Differentiation Dimensions A firm can differentiate along 5 dimensions: Product Services Personnel Channel Image

©2006 Prentice Hall Product Differentiation Product differentiation: Includes customization and bundling, Offers a combination of products/services that the individual consumer needs + at attractive prices, Supports one-to-one relationship building with each customer, critical for a company’s long-term success. Product packaging: Offline: packaging are design to appeal to consumers, be eye- catching, compete with other products on store shelves, and sell the product. Online: consumers might require products with more utilitarian packaging + products will be shipped from the distributor directly to the consumer and thus never appear on retailers’ shelves.

©2006 Prentice Hall Product Differentiation  Results:  Products don’t need the expensive, colorful packaging for store display.  Products only need a size and shape that is functional and useful for the consumer.  Packaging minimization will reduce waste and reduce packaging costs.  Lower prices, or more reinvestment in higher-quality, single-layer packaging enhancements.

©2006 Prentice Hall Service Differentiation Customer service: Ability to receive customer feedback through 24 hours a day, Ability to respond more rapidly to customer concerns. The distribution of products ordered online: A way to differentiate services from traditional companies. Shop at home groceries Online services, such as online banking and securities trading: Are becoming increasingly popular, Are differentiated both by the features they offer and the service consumption experiences. Supplement traditional offline services, but replace the traditional offline services.

©2006 Prentice Hall Channel Differentiation The Internet: = a distribution channel + a communication channel + a relationship channel, Used to forge one-to-one relationships with individual customers. The Internet expands: Companies’ geographic range + business hours + assortment of products available The channel through which it can reach customers +display a diversified assortment of offerings + differentiate itself.

©2006 Prentice Hall Channel Differentiation There are multiple levels of online channel differentiation: Product or service information online = advantage over companies with no Web presence,  Exploits the Internet as a communication channel. Commercial transactions online,  Exploits the Internets as a transaction and distribution channel. The differentiation of competitors’ Internet-related service offerings.

©2006 Prentice Hall9-9 Image Differentiation A company can differentiate itself by creating a unique experience online, called “experience branding.” The Internet’s interactivity allows companies to respond more quickly to customer requests. Faster communication. Retain current customers and attract new ones.

©2006 Prentice Hall9-10 Differentiation Strategies Differentiation strategies are particularly important on the Internet. Internet marketing strategy revolves around company image and product information available on the Web. Specific strategies may include: 1.Being the first to enter the market. 2.Owning a product attribute or quality in the mind of the consumer.

©2006 Prentice Hall9-11 Differentiation Strategies, cont. 3.Demonstrating product leadership. 4.Utilizing an impressive company history or heritage. 5.Supporting and demonstrating the differentiating idea. 6.Communicating the difference. Amazon.com and Monster.com have successfully differentiated themselves. A strong brand image helps to attain “ownership” of a product. (Amazon.com),Amazon.com Customers are drawn to brands they trust, an attraction that is enhanced by a positive company history. Monster.com has essentially gained ownership of online job searches.Monster.com

©2006 Prentice Hall9-12 There are 6 differentiation strategies unique to online businesses. 1.Site Environment/Atmospherics Easy downloads; easy navigation. 2.Making the Intangible Tangible Virtual tours, 3-D images, trial downloads. 3.Build Trust Strong brand recognition. Privacy policy. Internet-Specific Differentiation Strategies

©2006 Prentice Hall9-13 Internet-Specific Differentiation Strategies, cont. 4. Efficient and Timely Order Processing Deliver timeliness as an important benefit. 5. Pricing In the early days of the Web, companies offered discounts as purchase incentives. Majority of firms today differentiate themselves in other ways besides pricing. 6. Customer Relationship Management Managing long term relationships with customers.

©2006 Prentice Hall Internet-Specific Differentiation Strategies 1. Site Environment/ Atmospherics (Watson et al. 2000) 2. Tangibilize the Intangible (Watson et al. 2000) 3. Trust  Look and feel of site  User friendly  Accurate portrayal of company and product  Images  Virtual tours  Realistic descriptions  Clearly state privacy policy  Use encryption for secure transactions 4. Efficiency and Timeliness 5. Pricing6. CRM  Deliver what is promised to customers  Deliver in a timely manner  Be aware of competitor pricing  Potential customer savings  Customer tracking  Seamless communication  Greater relationship efficiency

©2006 Prentice Hall9-14 Enhancing the Experience The E-Marketing Opportunity Model (Feeny, 2001) helps companies differentiate using e- marketing opportunities for enhancing: The selling process. The customer buying process. The customer usage process. Online differentiation involves: Creation of a distinctive customer experience. Development of one-to-one relationships with customers.

©2006 Prentice Hall9-15 Positioning is the process of creating a desired image among its competitors in the public’s mind. The e-marketer’s goals is to build a position on one or more bases that are relevant and important to the consumer. Positioning

©2006 Prentice Hall Product or service attribute. 2.High-tech image. 3.Benefits. 4.User categories. 5.Comparison with competitors. 6.Integrator position. Bases and Strategies for Positioning

©2006 Prentice Hall9-17 Product or Service Attribute May include features such as size, color, speed, etc. Amazon’s one-click check-out process is an example of a positioning attribute. Tylenol does not sell online, but provides useful one-to-one features for pain relief and health information.

©2006 Prentice Hall9-18 Technology Positioning Shows that a firm is on the cutting edge of technology. At Lands’ End, consumers can build virtual models of themselves and try on virtual outfits. At American Airlines, customers can store seating preferences and frequent flier account information.

©2006 Prentice Hall9-19 Benefit Positioning Benefit positioning is generally a stronger basis for positioning, because it answers the consumer question: What will this do for me (the customer)? Miller Lite offers software that can be used as a social organizer. On the Valvoline motor oil site, visitors can send greeting cards, download racing screensavers and sign up for newsletters.

©2006 Prentice Hall9-20 User Category User category positioning relies on customer segments. Kellogg’s has an interactive site for children. Yahoo! Geo Cities hosts pages organized by neighborhoods and specific interests.

©2006 Prentice Hall9-21 Competitor Positioning Many firms position by benefits that provide advantages over their competitors. Companies may position themselves against An entire industry. A particular firm. Relative industry position. “I Can’t Believe It’s Not Butter” margarine positions itself against other margarines. Avis:”We try harder” x.htmlhttp:// x.html

©2006 Prentice Hall9-22 Integrator positioning We can expect to see more integrator positioning in the lending, jewelry and hospitality industries. Lending Tree helps brokers find clients more quickly and cheaply. Blue Nile sells an estimated $129 million of jewelry that would require 116 retail stores. Web travel agencies can move market share to hotels that give them discounts.

©2006 Prentice Hall9-23 Repositioning is the process of creating a new or modified brand, company or product position. A company may enhance or modify a position, based on market feedback,. Yahoo! repositioned from online guide to Web portal. Amazon repositioned from world’s largest bookstore to “Earth’s biggest selection.” Repositioning Strategies