Positioning and Differentiating the market offering through Product life Cycle

Chapter 3hapter 4

Developing and Communicating a Positioning StrategyAll 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) --------------------

DifferentiationDifferentiation: 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.

DifferentiationFactors 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 ToolsProduct 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 ToolsProduct 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 ToolsServices 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 ToolsServices 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 ToolsPersonnel 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 ToolsImage 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

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

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.

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Low sales Low sales

High cost per customerHigh cost per customer

NegativeNegative

Create product awareness and trial

Create product awareness and trial

Growth stage of PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize 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 growthIt improves product quality and add new product feature

and improved stylingIt adds new models, product of different sizes, flavorsIt enters new market segmentsIt increases its distribution coverage and enters new

distribution channelsIt lower prices to attract the next layer of price-sensitive

buyers

Maturity Stage of PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh 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 usersVolume 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 stageMarketing 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 stageSales decline for a number reasons

Technology advancesShift in consumer tastesIncrease 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.