Competitive Positioning and Competitive Advantage Professor Chip Besio Cox School of Business Southern Methodist University

Review of STP Segmentation Segmentation –Identify basis(bases) for segmenting the market –Develop profiles of segments Targeting Targeting –Determine segment attractiveness –Select segment(s) to target Positioning Positioning –Develop product positioning for each target segment –Develop marketing mix for each target segment

Positioning The place that the product or service occupies in the customer’s mind relative to competing products Positioning should be superlative –Most –Best –Strongest –Fastest Is the positioning believable?

Positioning HOW DO YOU DO IT? Differentiate the product Differentiate the product Step 1 - Identify a set of possible advantages relative to competitors Step 2 - Select the competitive advantage(s) most important to the target market Communicate the selected positioning Communicate the selected positioning Step 3 - Effectively communicate and deliver the chosen positioning in the market

Differentiation is Based on Competitive Advantage Competitive Advantage Competitive Advantage - An advantage enjoyed by a single product relative to other products in the market General sources of competitive advantage: –Overall cost leadership –Overall cost leadership - can offer best value; lowest prices –Product differentiation –Product differentiation - unique product characteristics or associations –Narrow customer focus (niching –Narrow customer focus (niching) - addresses wants and needs of particular customer segment(s) Adapted from: Michael Porter

Sustainable Competitive Advantage Is the competitive advantage difficult for competitors to emulate? –Can competitors copy you? –How quickly? –How much investment is required? –Can the company continue to improve on its advantage?

Positioning Strategy Development Process 1 Identify the competitors. 2 Assess perceptions of them. 3 Determine their positions. 4 Analyze consumer preferences. 5 Make the positioning decision.

Positioning PERCEPTUAL MAP A spatial representation of how target Definition: A spatial representation of how target customers perceive competing brands customers perceive competing brands – Brands that are perceived to be similar are located close to each other – Brands that are perceived to dissimilar are further apart Use the perceptual map to: – Determine how target customers perceive the product – Identify competitors – Select a positioning

Using positioning and perceptual maps to increase milk sales to children and adults

Strategies for positioning dairy drinks for kids and repositioning chocolate milk to reach adults

Select a Positioning Selection of a positioning depends on: Ideal point for target customers Current perceptions of the product Product’s competitive advantage(s)

Select a Positioning There are four general positioning strategies: Head-on With an Idea For Social Accountability U.S.P. - Unique Selling Proposition

Select a Positioning Against a Competitor Against a Competitor Product Usage Product Usage Away from Competitors Away from Competitors Product Attribute(s) Product Attribute(s) Value Benefit(s) Offered Benefit(s) Offered Product User B B A A E E D D C C H H G G F F Adapted from: Prentice Hall Cultural Symbols

Communicate a Positioning USP Establishing the product’s positioning in the mind of the target customer requires the communication of a: Unique Selling Proposition (USP) * Why should the customer choose your product?

USP Example CAR RENTAL Match the USP on the left to the car rental company on the right The standard for reliability and convenience in car rental We work harder to provide the best possible service We get the car to you, whenever, wherever you need it Enterprise Hertz Avis

Use the Marketing Mix to Support the Positioning Based on the positioning and unique selling proposition, develop a marketing mix plan for each targeted segment Segment 1 Segment 2 Segment 3 Marketing Mix 1 Marketing Mix 2 Marketing Mix 3

STP Review 1. Divide market into segments, each of which behaves differently vis-à-vis your product 2. Select certain segment(s) and focus on them 3. Tailor a marketing mix for each segment 4. Think small!