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Chapter 10.ppt
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Chapter 10: Crafting the Brand Positioning
Developing and communicating a positioning strategy
• Competitive frames of reference
• Establishing category membership
• PODs and POPs
Differentiation strategies
• Product differentiation
• Personnel differentiation
• Channel differentiation
• Image differentiation
Product life-cycle marketing strategies
• Product life cycles
• Style, fashion and fad life cycles
• Introduction stage
• Growth stage
• Maturity stage
• Decline stage
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Positioning
All marketing strategy is built on STP – Segmentation, Targeting and
Positioning.
Positioning is the act of designing the company’s offering and
image to occupy a distinctive place in the mind of consumers in the
target market.
The goal is to place the brand in the minds of consumers in such a
way as to maximize the potential benefit to the firm.
A good brand positioning helps guide marketing strategy by
clarifying how the brand can satisfy consumers in a unique way – a
customer-focused value proposition.
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Competitive frames of reference
Points-of-difference (PODs)
• Attributes or benefits
consumers strongly
associate with a brand,
positively evaluate, and
believe they could not find
to the same extent with a
competitive brand
Points-of-parity (POPs)
• Associations that are not
necessarily unique to the
brand but may be shared
with other brands
• Can be “category” or
“competitive”
A starting point in defining the competitive frame of reference for
a brand position is to determine category membership (products
or sets of products with which a brand competes and which
function as close substitutes).
Defining associations:
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Establishing category membership
Consumers must often be informed of category membership.
Can be conveyed by:
Announcing category benefits
Comparing to recognized members of the category
Relying on the product description
Choosing POPs and PODs
Points-of-parity are often driven by the needs of category
membership and the necessity of negating competitors’ PODs
In choosing PODs, it is important that the consumers find the
POD desirable and that the firm can deliver on the POD.
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Criteria for choosing PODs
There are different levels at which the brand’s PODs can be
anchored:
Lowest level: Brand attributes
Next level: Brand’s benefits
Top level: Brand’s values
Sometimes brands can be differentiated on seemingly irrelevant
attributes if this nevertheless implies benefit for the consumer.
Consumer desirability criteria Deliverability criteria
• Relevance • Feasibility
• Distinctiveness • Communicability
• Believability • Sustainability
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Creating POPs and PODs
• Low-price vs. high quality
• Taste vs. low calories
• Nutritious vs. good tasting
• Effective vs. mild
• Powerful vs. safe
• Ever-present vs. exclusive
• Varied vs. simple
A difficulty in creating a strong competitive brand positioning is
that many of the attributes or benefits that make up the POPs
and PODs can be negatively correlated.
• Consumers rate the brand highly on one particular
attribute/benefit, but rate it poorly on another important
attribute/benefit
• Consumers typically want to maximize both attributes and
benefits (consumers do not like “trade-offs”)
Examples of negatively correlated attributes and benefits:
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Exercises
1. Define in your own words a brand’s
– Attribute
– Benefit
– Value
Exemplify your descriptions with brands, products or services
you know.
2. Discuss the points-of-parity and points-of-difference for the
free newspapers which are becoming increasingly present on
the Danish market. At which level are the PODs anchored?
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Differentiation strategies
Ways of differentiating
• Product (or service) differentiation
– Most obvious, often most compelling
– Many dimensions, typically quality
• Personnel differentiation
– Better trained staff
• Channel differentiation
– Competitive advantage through distribution channel’s coverage,
expertise and performance
• Image differentiation
– Different response to company and brand images
Identity Image
• The way a company aims to
identify or position itself or its
products
The way the public perceives the
company or its products
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Product Life Cycle
A company’s positioning and differentiation strategy must change
as the product, market and competitors change over the product
life cycle (PLC).
There are four stages:
The PLC concept can be used to analyze a product category, a
product form, a product, or a brand.
Note: See Figure 10.2 for 3 common alternative patterns.
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Facts about life cycles
• Products have a limited life.
• Product sales pass through distinct stages.
• Profits rise and fall at different stages.
• Products require different marketing, financial,
manufacturing, purchasing, and human resource strategies in
each stage.
• Note: Like products, markets evolve through 4 stages:
emergence, growth, maturity and decline.
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Style, fashion and fad life cycles
• A style is a basic and distinctive mode of expression
• A fashion is a currently accepted or popular style
• Fashions pass through 4 stages:
1. Distinctiveness
2. Emulation
3. Mass fashion
4. Decline
• The length of a fashion cycle is hard to predict
• Fads are fashions that come quickly into public view, peak
and decline very fast. They do not normally satisfy a strong
need.
• See Figure 10.3
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Marketing strategies in the introduction stage
• Profits are negative or low.
• Promotional costs are at their highest ratio to sales because
of the need to:
– Inform potential consumers
– Encourage product trial
– Secure distribution in retail outlets
• Timing is important. Quick innovation time is essential.
• To be first is rewarding but can be expensive and risky.
• To come in later makes sense if the firm can bring superior
technology, quality or brand strength.
• “Pioneer’s advantage”
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Marketing strategies in the growth stage
Characterized by rapid climb in sales. Early adopters like the product,
and additional consumers start buying it. New competitors enter.
• Prices remain where they are or fall slightly.
• Companies keep promotional expenditures at same or slightly higher
level
• Sales rise much faster than promotional expenditures
• Profits increase
• Manufacturing costs fall faster than price declines
• Strategies to sustain rapid market growth:
– Improve product quality, new features, improved styling
– Add new models and flanker products
– Enter new market segments
– Increase distribution coverage, enter new channels
– Shift from product-awareness advertising to product-preference
advertising
– Lowers prices to attract next layer of price-sensitive buyers
• Trade-off between high market share and high current profits.
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Marketing strategies in the maturity stage
Sales growth slows; a phase which normally lasts a long time and
presents big challenges
• Three phases:
– Growth, but rate starts to decline
– Stable; sales flatten because of market saturation
– Decaying maturity; absolute level of sales declines,
customers begin switching to other products
• Sales slowdown creates overcapacity, which leads to
intensified competition
• A few giants typically dominate and make profit through high
volume
• Many market nichers
• Decision: To become one of the “big three” or follow a niche
strategy
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Marketing strategies in the maturity stage (continued)
Strategies can include:
• Market modification: Expand the market by converting non-users,
entering new market segments, winning competitors’ customers or
encouraging greater use.
• Product modification: Stimulate sales by modifying product
characteristics through better quality, features or style.
• Marketing program modification: Stimulate sales by modifying
other elements:
• Prices
• Distribution
• Advertising
• Sales promotion
• Personal selling
• Services
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Marketing strategies in the decline stage
Sales decline for a number of reasons, including technological
advances, shifts in tastes and increased competition. All lead to
overcapacity, increased price-cutting and profit decrease.
• Strategies may include:
• Increase investment in the product
• Maintain current level until uncertainties are resolved
• Decrease investment by dropping unprofitable
customer groups
• Harvesting the firm’s investment to recover cash
quickly
• Divesting the business as advantageously as possible
• The strategy selected depends on the industry’s relative
attractiveness and the company’s competitive strength in the
industry.
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Exercise
1. Discuss the current life cycle stage of the following:
• CD
• DVD
• Amazon.com
• Google
2. Discuss the observed marketing strategy for one of the following
products:
• Coca Cola Zero
• Gillette Fusion