Positioning and Differentiating the market offering through Product life Cycle Chapter 3hapter 4

Developing and Communicating a Positioning Strategy All Marketing strategy is built on STP (Segmentation, Targeting and Positioning). Company first segment the market and then select the market (customers) it decides to serve (targeting) and after that it chooses the value proposition. After the organization has selected its target market, the next stage is to decide how it wants to position itself within that chosen segment. Positioning refers to ‘how organizations want their consumers to see their product’. What message about the product or service is the company trying to put across? Car manufacturer Daewoo in the UK, has successfully positioned themselves as the family value model. Positioning: Is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

Positioning Strategy "A Positioning Strategy results in the image you want to draw in the mind of your customers, the picture you want him/her to visualize of you what you offer, in relation to the market situation, and any competition you may have". You will be faced with three main options while designing your Positioning strategy. 1. Positioning your product against your competitors, " Our prices are half of that you may find else where for similar products" 2. Emphasizing a distinctive unique benefit “12.1 Mega Pixel Camera in Mobile” 3. Affiliating your product with something the customer knows and values “Kardan is offering the same course outline offered by Oxford University"

Positioning Strategy Writing a positioning statement: firm must decides the following: Your customer: The type of customer you target. The benefits: What you can do for your customers. The method: How you do it. The USP: Why you do it better than the competitors. (As you may know, USP stands for "unique selling proposition".) Your positioning statement reflects what you need to communicate about a specific product, and to whom, so you will always hit the right button, communicating the right message to the right customer at the right time.

Positioning strategy cont…. Fill in the blanks and you will get your positioning strategy Our product offers the following benefits: To the following customers (your target market_: Our product is better than the competitors in the following manner: We can prove our product is the best because (evidence, differences, testimonials..etc)

Differentiation Differentiation: The process of adding a set of meaningful and valued differences to distinguish the company’s offering from competitors offering. For example IKEA: the world largest furniture retailer. Positioned its company’s offering “good quality furniture at low price” It operates an excellent restaurant in each store It offer child care services while the parents shop It offers a membership program entitling members to special discounts on their purchases.

Differentiation Factors should consider while differencing the company’s offering from competitors offering. Important: The difference delivers a highly valued benefit to a sufficient number of buyers. Distinctive: The difference is delivered in a distinctive way Superior: The difference is superior to other ways of obtaining the benefit. Pre-emptive: The difference cannot be easily copied by competitors. Affordable: The buyer can afford to pay for the difference. Profitable: The company will find it profitable to introduce the difference.

Differentiation Tools Product: Form, Feature, Performance, conformance, Durability, Reliability, Reparability, Style and Design Services: Ordering Ease, Delivery, Installation, Customer Training, Customer Consulting, Maintenance and repair Personnel: Competence, Courtesy, Credibility, Reliability, Responsibility and Communication Channel: Distribution and Coverage. Image: Symbols, Events and Sponsorships.

Differentiation Tools Product Differentiation: Form : Many products can be differentiated in form: such as size, shape, or physical structure of a product. For example Aspirin, it can be differentiated by dosage size, shape, color, coating or action time. (for example, a cup of coffee can be short, tall, etc.); Features : That supplement the products basic functions. Such as Automatic transmission, rear window defrosting. Performance Quality: Low, average, high, or superior. Conformance Quality (performance consistency ): Is the degree to which all the produced units are identical and meet the promised specification. Suppose a Porsche 944 is designed to accelerate to 60 mile/hour within 10 seconds. If every Porsche 944 coming off the assembly line does this.

Differentiation Tools Product Differentiation: Durability (life cycle of a product): A measure of the product’s expected operating life under natural or stressful conditions. Buyers willing to pay premiums for the products that are highly durable. Reparability: Buyers prefer products that are easy to repair. Reparability is a measure of the ease of fixing a product when it fails. Design: In increasingly fast-paced markets, price and technology are not enough, design is the factor that will often give a company its competitive edge and affect how a product looks and functions in terms of customer requirements.

Differentiation Tools Services Differentiation Ordering Ease: Ordering ease refers to how easy it is for the customer to place an order with the company. Such as internet banking. Consumers are now even able to order and receive groceries without going to the supermarket. Delivery: Refers to how well the product or service is delivered to the customer. It includes speed and care attending the delivery process. Installation: Refers to the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service.

Differentiation Tools Services Differentiation Customer training: Refers to training the customer’s employees to use the equipment properly. General Electric not only sells and installs expensive X-rays equipment in hospitals, it also gives extensive training to users of this equipment. Customer consulting: Refers to data, information systems, and advice services that the seller offers to buyer. Maintenance and Repair: Describes the service program for helping customers keep purchased products in good working order. Such as Dell and HP e-support system.

Differentiation Tools Personnel Differentiation : Companies can gain strong competitive advantage through having better trained people. Competence: possess the required skills and knowledge. Courtesy: Friendly, respectful Credibility: Trustworthy Reliability: Perform the service consistently and accurately. Responsiveness. Respond quickly to customer’s requests and problems. Communication: Understand the customer and communicate clearly.

Differentiation Tools Channel Differentiation: Companies can achieve competitive advantage through the way they design their distribution channels and coverage. Distribution of your products in more location than your competitors. Dell in computers distinguish itself from the competitors by developing and managing high quality direct marketing channels.

Differentiation Tools Image Differentiation : Is the way the public perceives the company or its product. Symbols: identity can be built by strong symbols. Apple (Apple Computer) Colors: Companies may choose a color identifier such as blue for IBM, Yellow for Kodak. Slogans: Every company would benefit by adopting and repeating a short slogan or tagline. Such as AT&T called itself “The right choice”. Ford said “Quality is our Number one job”. Events and Sponsorships: A company can build its brand image through creating or sponsoring various events. Such as Bank Alfala Cup. Pepsi sponsoring major sports events.

Product Life Cycle Time Product Develop- ment Introduction Profits Sales GrowthMaturityDecline Losses/ Investments ($) Sales and Profits ($)

Introduction Stage of the PLC Marketing Strategies: Introduction Stage Sales growth tends to be slow at this stage because it takes time to roll out a new product and fill dealer pipelines. Costs are high per customer as customers are not that much in introduction stage, and promotional expenditures are at their highest ratio to sales. Profits are negative or low in the introduction stage. The companies must plan before introducing new product to the market. To be first can be highly rewarding but risky as well. Sales Costs Profits Marketing Objectives Low sales High cost per customer Negative Create product awareness and trial Create product awareness and trial

Growth stage of PLC Sales Costs Profits Marketing Objectives Rapidly rising sales Average cost per customer Rising profits Maximize market share The growth stage is marked by a rapid climb in sales and profits. Early adopter and additional consumers start buying it. Profits increase during this stage as promotion costs are spread over a large volume. Attractive stage for competitors. Prices remain where they are or fall slightly, depending on how fast demand increase. Average cost per customer: customers increase so cost is equally divided by them.

Marketing strategies for the growth stage During this stage, the firm uses several strategies to sustain rapid market growth It improves product quality and add new product feature and improved styling It adds new models, product of different sizes, flavors It enters new market segments It increases its distribution coverage and enters new distribution channels It lower prices to attract the next layer of price-sensitive buyers

Maturity Stage of PLC Sales Costs Profits Marketing Objectives Peak sales Low cost per customer High profits Maximize profit while defending market share Maximize profit while defending market share

Marketing Strategies Maturity Stage The maturity stage divides into three phases 1. Growth: the sales growth rate starts to decline. There are no new distribution channels to fill. 2. Stable: sales flatten on a per capita (per person) basis because of market saturation. Most consumers have tried the product. 3. Decaying maturity: the absolute level of sales starts decline, and customer begin switching to other products. The company should adopt innovative culture.

Marketing strategies for the maturity stage Market modification. The company might try to expand the market for its mature brand. For example: Johnson and Johnson successfully promoted its baby shampoo to adult users Volume can also be increased by convincing current users to increase their brand usage; For example: Safe Guard and life boy Gold convincing their users to wash hands frequently. Product modification: Managers also try to increase sales by modifying the product’s characteristics through quality improvement, feature improvement, or style improvement. For example: Nokia N 95 simple one modified to N 95 Black with 8GB memory. Nokia N73 simple and Nokia N73 Music addition the black one.

Marketing strategies for the maturity stage Marketing Mix modification: product managers might also try to increase sales by modifying other marketing mix element: Price: would a price cut attract new buyers? Decrease the price or give discounts on volume. Distribution: can the company introduce the product into new distribution channels? Advertising: Should advertising expenditures be increased? Should the timing or size of ads be changed? Sales promotion: Should the company step up sales promotion? Services: Can the company speed up delivery? Can it extend more technical assistance to customers?

Marketing strategies for the decline stage Sales decline for a number reasons Technology advances Shift in consumer tastes Increase domestic and foreign competition. Sales and profits decline, some firm withdraw from market Some firm may withdraw from smaller market segments and weaker trade channels. Some may cut their promotional budgets and reduce prices further.