1. Chapter 11 Positioning and Differentiating the Market Offering Through the Product Life Cycle

2. Kotler on Marketing
Watch the product life cycle; but more important, watch the market life cycle.

3. Chapter Objectives
In this chapter, we focus on the following questions:
How can the firm choose and communicate an effective positioning in the market?
What are the major differentiating attributes available to firms?
What marketing strategies are appropriate at each stage of the product life cycle?
What marketing strategies are appropriate at each stage of the market’s evolution?

4. Developing and Communicating a Positioning Strategy
Value proposition

5. Table 11.1: Examples of Value Propositions Demand States and Marketing Tasks
Company and Product
Target Customers
Benefits
Price
Value Proposition
Perdue (chicken)
Quality-conscious consumers of chicken
Tenderness
10% premium
More tender golden chicken at a moderate premium price
Volvo
(station wagon)
Safety-conscious “upscale” families
Durability and safety
20% premium
The safest, most durable wagon in which your family can ride
Domino’s (pizza)
Convenience-minded pizza lovers
Delivery speed and good quality
15% premium
A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price

6. Developing and Communicating a Positioning Strategy
Positioning According to Ries and Trout
Strengthen own current position
Grab an unoccupied position
De-position
Re-position
Product ladders
Positioning According to Treacy and Wiersema
Value disciplines
Product leader
Operationally excellent firm
Customer intimate firm

7. Developing and Communicating a Positioning Strategy
Treacy and Wiersema propose that a business should follow four rules for success
Become best at one of the three value disciplines.
Achieve an adequate performance level in the other two disciplines.
Keep improving one’s superior position in the chosen discipline so as not to lose out to a competitor.
Keep becoming more adequate in the other two disciplines, because competitors keep raising customers’ expectations.

8. Developing and Communicating a Positioning Strategy
Positioning: How many ideas to promote?
Unique selling proposition
Four major positioning errors
Underpositioning
Overpositioning
Confused positioning
Doubtful positioning

9. Discussion Question
Can you think of any companies that market the same product or service offering to multiple segments using different strategies? Are the different segments being offered different value propositions?

10. Figure 11.1: Perceptual Map

11. Developing and Communicating a Positioning Strategy
Theme park’s positioning possibilities:
Attribute positioning
Benefit positioning
Use or application positioning
User positioning
Competitor positioning
Product category positioning
Quality or price positioning
Which Positioning to Promote?

12. Table 11.2: Method for Competitive-Advantage Selection
(1)
(2)
(3)
(4)
(5)
Competitive Advantage
Company Standing
Competitor Standing
Importance of Improving Standing
(H-M-L)*
Affordability and Speed
(H-M-L)
Technology 8 L
Cost 6 H M
Quality
Service 4 3
H=high, M=medium, L=low
See text for complete table

13. Adding Further Differentiation
Differentiation criteria:
Important
Distinctive
Superior
Preemptive
Affordable
Profitable

14. Adding Further Differentiation
Exceed customer expectations with a three-step process
Defining the customer value model
Building the customer value hierarchy
Basic
Expected
Desired
Unanticipated
Deciding on the customer value package

15. Figure 11.2: The BCG Competitive Advantage Matrix
Differentiation Tools
Figure 11.2: The BCG Competitive Advantage Matrix

16. Table 11.3: Differentiation Variables
Product
Services
Personnel
Channel
Image
Form
Ordering ease
Competence
Coverage
Symbols
Features
Delivery
Courtesy
Expertise
Media
Performance
Installation
Credibility
Atmosphere
Conformance
Customer training
Reliability
Events
Durability
Customer consulting
Responsiven-ess
See text for complete table

17. Differentiation Tools
Product Differentiation
Form
Features

18. Table 11.4: Measuring Customer Effectiveness Value
Company Cost
Customer Value
Customer Value/Customer Cost
Feature
(a)
(b)
(c=b/a)
Rear-window defrosting
$100
$200 2
Cruise control
600 1
Automatic transmission
800
2,400 3

19. Differentiation Tools
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Design: The Integrating Force
Services Differentiation
Ordering Ease

20. Differentiation Tools
Delivery
Quick response system
Installation
Customer Training
Customer Consulting
Maintenance and Repair
HP’s online support page

21. Discussion Question
Many e-commerce ventures fail because of distribution problems in the so-called “last mile” (the local distribution portion of shipping of online purchases). Can a marketing plan help offset some of these potential pitfalls?

22. Differentiation Tools
Miscellaneous Services
Personnel Differentiation
Competence
Courtesy
Creditability
Reliability
Responsiveness
Communication

23. Differentiation Tools
Channel Differentiation
Image Differentiation
Identity
Image
Symbols, Colors, Slogans, Special Attributes
Physical plant
Events and Sponsorship
Using Multiple Image-Building Techniques

24. Discussion Question
Which differentiation tool would be most useful for a dot.com startup? Why?

25. Product Life-Cycle Marketing Strategies
To say that a product has a life cycle asserts four things
Products have a limited life.
Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller.
Profits rise and fall at different stages of the product life cycle.
Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

26. Figure 11.4: Cost Product Life-Cycle Patterns
Product Life-Cycle Marketing Strategies
Figure 11.4: Cost Product Life-Cycle Patterns

27. Figure 11.5: Style, Fashion, and Fad Life Cycles
Product Life-Cycle Marketing Strategies
Figure 11.5: Style, Fashion, and Fad Life Cycles

28. Product Life-Cycle Marketing Strategies
Marketing Strategies: Introduction Stage
The Pioneer Advantage
Inventor
Product pioneer
Market pioneer
Figure 11.6: Long-Range Product Market Expansion Strategy (P = Product; M = Market)

29. Product Life-Cycle Marketing Strategies
Marketing Strategies: Growth Stage
Improve product quality and add new product features and improved styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage and enter new distribution channels
Shift from product-awareness advertising to product-preference advertising
Lower prices to attract next layer of price-sensitive buyers

30. Product Life-Cycle Marketing Strategies
Marketing Strategies: Maturity Stage
Market Modification
Expand number of brand users by:
Converting nonusers
Entering new market segments
Winning competitors’ customers
Convince current users to increase usage by:
Using the product on more occasions
Using more of the product on each occasion
Using the product in new ways

31. Product Life-Cycle Marketing Strategies
Product modification
Quality improvement
Feature improvement
Marketing-Mix Modification
Prices
Distribution
Advertising
Sales promotion
Personal selling
Services

32. Product Life-Cycle Marketing Strategies
Marketing Strategies: Decline Stage
Increase firm’s investment (to dominate the market and strengthen its competitive position)
Maintain the firm’s investment level until the uncertainties about the industry are resolved.
Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches
Harvesting (“milking”) the firm’s investment to recover cash quickly
Divesting the business quickly by disposing of its assets as advantageously as possible.

33. Product Life-Cycle Marketing Strategies
Product Life-Cycle Concept: Critique
Market evolution

34. See text for complete table
Table 11.5: Summary of Product Life-Cycle Characteristics, Objectives, and Strategies
Introduction
Growth
Maturity
Characteristics
Sales
Low sales
Rapidly rising sales
Peak sales
Costs
High cost per customer
Average cost per customer
Low cost per customer
Profits
Negative
Rising profits
High profits
Customers
Few
Growing Number
Stable number beginning to decline
See text for complete table

35. Market Evolution Growth Maturity Diffused-preference market options
A single-niche strategy
A multiple-niche strategy
A mass-market strategy
Growth
Market-growth stage options
Single-niche strategy
Mass-market strategy
Multiple-niche strategy
Maturity

36. Market Evolution Dynamics of Attribute Competition Decline
An Example: The Paper-Towel Market
Dynamics of Attribute Competition
Customer expectations are progressive
Approaches to discover new attributes:
Customer-survey processes
Intuitive processes
Dialectical processes
Needs-hierarchy process