POSITIONING ANALYSIS AND STRATEGY Yoram J. Wind INTRODUCTION Positioning, the place a product occupies in a given market—as perceived by its target segment(s)—is the product's reason for being, the reason ‘why consumers buy it. In this context, the word positioning encompasses most of the common meanings of the word position—as a place (What place does the product occupy in its market?), a rank (How does the product fare against its competitors in various evaluative dimensions?), and a mental attitude (What are consumer attitudes—the cognitive, af- fective, and action tendencies toward the given product?) Given this view, the product (brand) positioning is assessed by measur- ing the target market segment’s perceptions of and preferences for the product in relation to its competitors. Such understanding of the current. positioning of a product—the degree to which the target market seg- ‘ment perceives the product as being distinguished from its competitors ‘on attributes considered important to the segment—is a necessary input to any positioning strategy. Meaningful objectives for positioning strat- ‘egy and an effective positioning strategy is, in turn, critical to the accom- plishment of the firm's marketing and business objectives. ‘The purpose of this chapter is to outline the key points of interface 887 The Tater face bt Marketing Strat. 1 Day, ans wensley THE Press (790.388 YORAM J. WIND between positioning and marketing and business strategy. To accomplish this, the chapter includes: 1. A brief highlight of the role of positioning in product, marketing, and business strategy formulation; 2. An approach to the generation and evaluation of positioning op- tions which include—in addition to a methodology and frame- work for making these decisions—a proposed taxonomy of vari- ous bases for positioning, as well as a set of criteria for selecting a positioning strategy; 8. A brief discussion of the objectives of positioning analysis and the various approaches to and issues to be addressed in these analyses; 4. An overview of positioning strategies, including a taxonomy of positioning/segment strategies and a discussion of some of the key issues involved with the three strategies of reinforcement of cur- rent positioning, repositioning, and introduction of a new posi- tioning. In addition, this section also addresses the question of how to effectively implement positioning strategy; 5. A brief outline highlighting the value of extending the concept of product positioning to corporate positioning and; 6. Conclusions presented for the practitioner as a set of guidelines for increasing the effectiveness of positioning strategies and, for the academic researchers as directions for future research. ‘THE ROLE OF POSITIONING IN STRATEGY FORMULATION Positioning, the reason a target segment is interested in buying the prod- uct, is the foundation of product, marketing, and business strategy. At the product level, it is the desired positioning for a target segment that provides the guidelines for product design. The specific product at tributes should assure the delivery of the desired benefits. In this con- text, itis important to note that an effective product design and differ. entiation requires that the product's physical, functional, and structura characteristics be consistent with consumers’ perception of and prefer ence for the products. Chemically, for example, two brands of aspirin can be identical, yet they might be perceived differently by differen consumer segments. Conversely, two brands that are dissimilar in s« hysical characteristic might be perceived as similar if their differen ing characteristics are viewed by consumers as unimportant. Product differentiation and positioning, therefore, is a meaningful concept only to the extent that itis based on consumer perceptions of the difle among competing products or brands and their preferences for it (ove1Positioning Analysis and Strategy 389 all preference as well as preference for various usage conditions). This is based on the premise that customer behavior is a function of perceptions and preferences, and the recognition that buyers may differ with respect to both. At the marketing strategy level, positioning by segment is the foundation upon which the rest of the marketing mix program is built. It is the product positioning, which offers guidelines for pricing the product, direction and tone for the advertising, and promotion of the product and blueprint for the distribution strategy. All of these elements of the marketing mix should be consistent with the selected positioning. For example, a status positioning requires in addition to product design, packaging and name that connotes such a positioning, a relatively high price, an upscale/prestigious advertising and distribution. ‘At the business unit level, the selected positioning by target segment provides both the foundation for the entire strategy and guidelines for marshalling the needed resources (e.g., R & D, manufacturing, finance, tc.) for the development and implementation of the SBU’s marketing driven strategy. ‘The importance of positioning in product and business strategy is obvious if one examines the literature on the determinants of product and business success and failures. Cooper & Kleinschmidt (1987) for example, in a summary of a study of 208 successful and unsuccessful new products, conclude that the major factor influencing commercial success is product superiority— ‘The product offered unique features for the customer; was higher quality; reduced customer cots: was innovative; was superior 1 competing product inthe eyes of | the customer; and solved a problem faced by the customer. Similar conclusions have been reached by most other studies of the determinants of new product success and failure (see, for example, Link (1987). At the business uni PIMS principles, state: level, Buzzell and Gale (1987) in summarizing the 29 the long run, the most important single factor affecting 2 busines units perfor mance isthe quality ofits products and services, relative to that of competitors. is obvious that in both of these cases, it is the customer's perception of the product (vs, its competitors) on its ability to deliver the desired benefits—its positioning—that makes the difference. Positioning can further be viewed as one of the major “invisible assets” of the firm. Hiroyuki Itami (1987), who coined the term “invisible as- sets,” did not use the term positioning but did refer to customer trust390 YORAM J. WIND and brand image and matching the bundle of customer desires, re- sponding to changes in them and utilizing their interdependencies~all, of which are critical aspects of any positioning strategy—as key aspects of the information resources which are the real source of competitive power and the key to corporate success, GENERATING AND EVALUATING POSITIONING OPTIONS Much of the positioning literature has focused on approaches to the assessment of a brands’ current posi i tant input to the positioning decision, it is only one required input. Equally important are (a) the determination of the desired positioning objectives which should, in turn, reflect the business and corporate ob- Jectives, strategies, and resources, and the requirements for success un- der the expected environmental conditions, and (b) the benefits sought by the target customer segments and other relevant stakeholder (such as the trade). All these inputs should be used to generate positioning options. In ‘generating creative options, most of the methods used to generate new product ideas (see, for example Wind [1982] Chapter 9) can be utilized. Relying only on the current positioning of the firm's product may often result in “me too” positioning and lost opportunities of more innovative positioning strategies. Following the generation of a large set of possible positioning strat- egies, itis essential to evaluate the options on a set of criteria linked to the objectives of the firm. Figure 1 outlines the set of key decisions involved in the development of a positioning strategy. The remaining of this section briefly focuses on three items: 1. An approach, Analytic Hierarchy Process (AHP), which can be used to help generate and evaluate positioning options using man- ‘agement subjective judgment and all available information. 2. A taxonomy of various bases for positioning and of consumer benefits, which can help in identifying positioning options. 3. Asset of criteria for evaluation of positioning options, which can be used in structuring the hierarchy for the selection of positioning strategies. ‘An Approach to the Generation and Evaluation of Positioning Strategy ‘The Analytic Hierarchy Process (AHP)—a group decision aid, which was developed by Thomas Saaty in the mid-70'—has been used as an“The business & corporate “The expected em objectives strategies, re- |__| ment (politcal, soci sources, and idiosyncratic ‘economic, technological, leverage points. land business environ: ment) during the pla ing hi 3 i “The requirements for success under the ex- pected environmental | conditions. “The current positioning “The Benefies sought by of the products of the the target customer seg firm and its competitors ments and other relevant _= “Generate a set of posi tioning strategies. 8 T (= [raluate the positioning {| options and select 2 posi tioning strategy ° Develop creative execu: tion for the selected positioning. 10 Develop an implement tion program and set up control mechanism. Figure 1. Key Decisions in the Development of Positioning Strategy. 39392 YORAM J. WIND 1 Mision Profitable Leadership of the XY2 Market 2 2. Planning Horizon: i ‘Short term | [Tmicrmediawe | (Long term Term ‘ 3. Expected Environmental Pessimistic ] [Status quo] [Optimistic Scenarios Seenario_| | Scenario | | Scenario 4. Obj : Profit | [Sales : growth t 5. Grteria for Segment ‘Segment ‘Serenguh in Evaluation: auractiveness | [segment Market Segments: Positioning ‘Compatiblcy ‘Rly 0 ‘bly 0 Evaluation with needs of generate level | | generate 2 target of sales premium 3 segment(s) price : 6b. Positioning Strategies: Psi] [PSs Figure 2. “Kn Analytic Hierarchy Process Formulated for the Genera- tion and Evaluation of Positioning Strategies. approach to the generation and evaluation of marketing strategies (Dunn and Wind, 1986) and a variety of other marketing and business decisions (Wind and Saaty, 1980), It-can and has been used to help ‘management generate creative positioning options, evaluate them on a set of criteria, and select the best strategy. Figure 2 illustrates three formulations of hierarchies for the selectionPositioning Analysis and Strategy 398 of positioning strategies. Common to all three formulations are the first four levels of the hierarchy. This is similar to the generic hierarchy formulation for a marketing-driven business strategy proposed else- where (Wind, 1987). These four steps assure that the relative impor- tance of the objectives (line 4) reflect management's evaluation of their importance under a variety of expected environmental scenarios and the relative importance of short-, intermediate-, and long-term considera- tions in achieving the corporate mission. The first formulation (Lines 5, 6, and 7) focuses first on the selection of target segments and then evaluates positioning options on their ability to meet the needs of the various segments. (An example of this approach 10 the selection of positioning strategies for a Planned Parenthood orga- nization is discussed elsewhere (Dunn and Wind, 1987). The second formulation identifies separately the set of positioning by segment. This can be done by developing a preliminary matrix, such as, the one presented in Figure 8, and inchuding in the hierarchy (as line 8a) the selected cells from this matrix. These cells—the various positioning by Expected Sie and Characterinia of Selected Segments Posiionings jnioning | Ps Pe Ps Pe % Price | Convenience | Performance | Status, | Owner Segmentati Image Si: Heavy Users Satisfied ‘Se Heavy Users Vulnerable Sy Ligh Users Vulnerable ‘Se: Non Users Potential ‘Sy: Non-Users Limived Potential Source: Wind de Roberuon (1983) Figure 3. A Positioning by Segment Matrix.394 YORAM J. WIND segment options—can then be evaluated on the objectives (line 4), or if this is too difficult, on a set of criteria such as the ones included in line 5. ‘The third formulation (lines 5b and 6b) establishes a set of criteria for evaluating alternative positioning strategies and evaluates directly the various positioning options on these criteria. The criteria are evaluated on their relative importance in achieving the objectives (Line 4), and they include as one of them the compatibility with the needs of the target segments. The selection of one of these three formulations or some other hier- arehy is up to the management involved. All three have been utilized in various applications and resulted in useful guidelines for management. A Taxonomy of Bases for Positioning Generating positioning options is often the most difficult part of the process. To help stimulate the generation of positioning of desirable to offer management 2 taxonomy of alternative ways of posi- tioning a product or service. ‘Table 1 presents one such taxonomy. (For alternative taxonomies of positioning strategies, sce Crawford, 1985 and Friedmann and Lessig, Table I. A Taxonomy of Bases For Positioning Focus on Benefits Sough/Problen Solutions (No or Limited Ye Product Product Features Product Related Benefits Problems Product clas disassociation Solutions User Identification of and with a user Benefits for specific weer (sing demographic or psycho- segments ‘graphic descriptions of an tltimate user 0F an endorser) rage Occation/ Positioning for a specific usage Benefit for specific usage Application occasion/application coceation Competition Implicit comparison With a focus on dhe benefits Explicit comparison derived from using this product “To atrzet the competitor's rather than the competitors ‘customers (The Pepsi Challenge) ‘As way to communicate a feature or benefit VW witha ‘bigger Trunk than a Rell Royce)Positioning Anais and Strategy 895 1987). This taxonomy is based on the premise that effective positioning has to be centered on meeting the bundle of current and expected benefits sought by the target segment and on which the given product is likely to be differentiated from its competition. Thus a positioning that does not focus on benefits has to be modified. ‘The evidence supporting the value of benefit-driven positioning and the inappropriateness of positioning that does not stress benefits is over- whelming, both for consumer and industrial products and services. ‘Whereas no general classification of benefits is currently available, Table 2 offers one benefit classification system, which has to be tailored to the specific situation (e.g., the preference of the target segment for @ prod- uct or service under certain purchase usage conditions). Despite the overwhelming importance of benefits as the basis for positioning, there are cases in which focusing on benefits is not enough, and itis important to address also any likely problems which members f the baying center may have that could prevent them from buying the product or service. In these cases, a secondary positioning focusing on a resolution of these problems would be required. Criteria for Selecting Positioning Strategy The selection of a positioning strategy requires the explicit evaluation of the generated positioning options on a set of criteria. The specific criteria and their importance in accomplishing the firm's objective should be determined by management. As a starting point, the criteria listed in Table 3 can be useful. The selected criteria can then be incorpo- rated in a decision hierarchy such as the one illustrated in Figure 2 Table 2. A Benefit Classification Performance Benefits “The degree 10 which the product or servce works and meet the specific Functional usage requirements and expectations ofthe target segments ‘Convenience “The convenience in buying the product, storing it, using it, monitoring its perfor mance, and disposing of Price-V ‘The degree o which the product offers the right price-value, This includes considers tion—both on the low (discount) side as well as on the high {premium price) sie Prenige/Social Acceptablty/Sell-Esteem/SelF-Actabiztion “The degree to which the product or service help achieve the consumers needs for prestige, social acceptatility self-esteem, and self396 YORAM J. WIND. Table 3. Criteria for Selecting A Posi |. The compatibility of the desired posit fics and current perception of the product's postioning versus its competitors. ‘The positioning used by current competitors. ‘The ability to generate the desired level of sales ‘The ability to reduce the cost of reach segments “The resources available to communicate the postvoning effectively ‘The compaiibiliy of the positioning with the firm's marketing strategy . The “newness” of the considered basis for pottioning and its departure from the ‘current practice in the market. ‘The firm's market position. Is the product 2 leader, a contending Number Two, or fone of the smaller bra 10, The firms desire for an innovative versus “me too” image. 11. The ability 10 develop an effective creative execution fot the chosen positioning. 12, The legal environment, i, Wkely defense against a competitor's legal action against the propored positioning. POSITIONING ANALYSIS ‘As mentioned earlier, most of the discussion of positioning analysis in the literature focuses on the assessment of a brand's current positioning. Figure 4 presents a broader view of positioning analysis focusing on the ‘most appropriate approaches for each of four objectives—the genera- tion of positioning options, assessing current positioning, the forecasting, of the likely impact of positioning strategy, and determining the desired sitioning. Pete remainder of the discussion in this section briefly addresses the key methods one can use for each of these objectives. This is followed by a discussion of some of the key issues involved with positioning analysis which should be addressed by any positioning research and modeling effort. Approaches for Generating Positioning Options ‘As mentioned in our discussion of Figure 1—the key decisions in- volved in the development of a positioning strategy—for the generation of positioning options one can employ most of the approaches for the generation of new product ideas. In addition, 2 major approach to help identify the desired benefits is conjoint analysis based studies (Green and Wind, 1975 and Green and Srinivasan, 1978 and 1988), which allow the determination of the rela- tive importance of each benefitPurpose of Analysis Possible ‘Approaches Positioning Analysis Generating] [Assessing | [Forecasting] [Determin- Positioning} |Current | |the likely | | ing the d Options "| | Positioning} | impact of a} | sired posi positioning| | tioning strategy Same ap- Indirect, = MDS MDS: proaches approaches used for Econometric Conjoint generating Market new product share ideas Brand switching Conjoin Direct Analysis approaches Implications Conven- of the tional ap- analysis of |_ proaches, current positioning | Disc. analysis Normative} MDS, models such] clustering, as Defender | & corre- spondence analysis, Advanced approaches ping clus- tering forecasting analysis methods optimization Experimen- Reach opti- ation mization methods Conjoint. AHP analysis based simulation & optimization methods Figure 4. The Range of Approaches for Positioning Analysis. 397398 YORAM J. WIND Also of importance in this context is the analysis of the results of studies aimed at the determination of the brand’s current positioning. Such analysis can suggest useful direction for repositioning or discuss attractive opportunities for 2 new ing. OF special value in this ‘context are the outcome of multidimensional scaling studies (see discus- sion in Wind, 1982), and more recently, studies which combine MDS and conjoint analysis (Green et al., 1987). ‘OF somewhat different nature, but yet of significant value as hypoth- eses for positioning strategies, is the normative analytical methods, which suggest specific positioning strategies for specific conditions. Foremost among the efforts in this area is the work of Hauser and his colleagues, which focused on the question of how a brand should re- spond (in terms of positioning and price) to a competitive new product, entry. (Hauser and Shugan, 1983; Hauser, 1986; and Hauser, 1987). Approaches for Assessing Current Positioning As outlined in Figure 4, this approach includes both indirect and direct methods. The indirect approaches are brand share studies and brand switching matrices which offer some general information on the strength of a brand's positioning (e.g., the larger the share relative to competitors, the more it attracts customers from other brands and the less it loses customers to others). Yet these methods are not enough for assessing a brand's positioning since they do not offer sufficient diag- nostic insights. To determine the why, direct, consumer-based surveys are called for. Multiple discriminant analysis (MDA) and any of the large number of multidimensional scaling programs (MDS), clustering algorithms, and correspondence analysis, have long been used to establish the current, positioning of a brand against its competitors. These are by now stan- dard procedures (for a discussion of these and related approaches, see Wind et al., 1979), and positioning can be determined using any com- bination of the following: Distance from other brands in the designated spaces. Position on the identifiable dimensions. Distance from the ideal point of target segments. Projected relative position (vs. other brands) on attribute/benefit vectors. Membership in a cluster of brands. + Attributes/benefits that best discriminate between the given brand and its competitors.Positioning Analysis and Strategy 999 For a detailed discussion of these methods, see any of the marketing research articles and texts that focus on MDA, MDS, clustering and correspondence analysis. (In the context of positioning, see Wind, 1982; Hauser, 1987; and Green, 1975.) In using MDS, it is especially noteworthy to consider specific exten- sions of the approaches to: Autribute/benefit space and not only brand space. New product concepts and not only existing brand. Brands across product categories and not only within the same product Category—for example, place soft drinks in the broader context of drinks including coffee, tea, milk, wine coolers, beer, and other possible substitutes. + Analysis of perceptions, appropriateness and preferences for spe- fic usage occasions and not only overall similarity and overall preference. ‘Of special interest among the direct approaches to assess a brand's positioning are approaches which overcome some of the limitations of the more conventional approaches. For example, the assumption that a brand can be grouped with one and only one other set of products can be relaxed by using the algorithm for overlapping clustering (Arabie et al., 1981), which allow a brand to be positioned against different sets of brands. Approaches for Forecasting the Likely Impact of a Positioning Strategy Many of the approaches for assessing the current positioning of a brand, such as MDS, can be used to forecast what an expected position might accomplish. To the extent that historical data are available on performance and marketing mix variables, including positioning of the brand and its competitors, econometric approaches can be used to fore- cast expected performance of a change in positioning. Given the limited availability of historical data on qualitative variables, such as the type of positioning, this is not a frequently used method, ‘A much more appropriate approach to the forecasting of a likely pact of a target positioning is by using conjoint analysis-based simula- tion or optimization model (Green and Krieger, 1987). When using these approaches, the researcher can determine what is the likely share that a change in positioning will achieve. Some of the more interesting applica tions in this area include not only the assessment of the expected share in response to a change in the brand's positioning, but the assessment of its,400 YORAM J. WIND expected share given changes in the positioning of competing brands (by changing the specification of the competitor's position on the various attributes/benefits) or in the environmental conditions (by changing the consumer utility function to reflect expected environmental changes. For example, if one expects a worsening of the economics conditions, it is possible to increase the relative importance of price for all consumers). Approaches for Determining the Desired Positioning Both MDS and especially conjoint analysis-based simulation and op- mization models can be used direcdy to determine the desired positioning. ‘A more recently developed set of approaches is an optimization ap- proach similar in concept to the media selection models. This approach, developed by Paul Green, uses simple-to-collect data (even in a tele- phone interview) on the attributes/benefits most preferred by con- sumers and the consumers’ perceptions of the various brands on these attributes/benefits. Given such data, the algorithm identifies the set of attributes/benefits, which will allow one to reach the largest. number of consumers who: + View these benefits as the most important, or ‘+ View these benefits as the most important and the current brand as possessing them, or ‘+ View these benefits as the most important and the current brand as not possessing them. A number of algorithms in this set of approaches have been developed and implemented (Green et al. 1985) and are of great practical value determining the optimal positioning based on the benefits most desired by a target segment and their perception of the brand and its competi- tors, Since the determination of @ positioning strategy must indude not only consumers’ perceptions and preferences, but also the cost of imple- menting the positioning and other management considerations, ap- proaches such as the AHP which’ were discussed earlier, have been found to be of great managerial value. Issues to be Addressed by Positioning Analysis Many of the approaches to positioning analysis and especially the MDS-based approaches have been implemented using a number of sim- plifying assumptions. To gain better insights and guidance from thePositioning Anaijss and Strategy 401 various approaches used in positi ing analysis, it would be useful to relax assumptions, such as the following si 1 5. The output of MDS and related techniques offer both the neces- sary and sufficient conditions for positioning strategy. Unfortu- nately, such studies offer at most the necessary conditions. In fact, in many of the cases in which the positioning analysis resus only in two key dimensions, positioning on these two dimensions will NOT offer sufficient guidelines for positioning. Consider the often quoted case of soft drinks, which has the two dimensions of Cola/Uncola and Diet/Nondiet. How helpful is such a map in positioning a new diet cola drink against the established brands of Diet Coke, Tab, etc. It is obvious that in this case, focusing on secondary, more discriminating benefits is a must. Structured data collection (brands evaluation on a set of at- tributes/benefits) is the most appropriate approach. Since studies hhave shown that MDS using open-ended responses (evoked at- tributes in response to a set of brands) tend to generate higher dimensionality then structured type data, (Green and 1974), itis desirable to consider among the various approaches the use of open-ended data collection. Most of the approaches for positioning analysis are deterministic and static in nature. It would be of great value if the models were ‘modified to reflect dynamic and stochastic considerations. These are especially critical given that desired consumer benefits and competitive and environmental conditions change over time and given these changes the uncertainty involved in any positioning decision is significant. ‘Most approaches for positioning analysis do not link explicitly ‘change in positioning to change in the marketing mix activities of the firm and its competition. Such linkage is a must if one is to be able to assess the likely impact of a positioning and to be able to effectively implement a positioning driven marketing strategy. Most positioning studies focus on a single product, not a product line. Yet given that most business operations involve product lines ‘with multiple products, it would be desirable to extend the current work on product line selection (e-g., Green and Krieger, 1985) to product line positioning. Most positioning studies rely on a single method (e.g., one MDS approach). Since the various approaches are based on different assumptions and measure different aspects of positioning it is ‘often desirable to use more than one approach and look for con- vergence validity.402 YORAM J. WIND POSITIONING STRATEGIES Having completed the needed positioning analysis, the most critical deci- sion facing management is the determi of the desired positioning strategy. The key positioning related decisions were outlined in Figure 1. ‘The AHP framework and methodology for reaching the decision using both empirical data on consumer preferences and perceptions and man- agement subjective judgment was outlined in Figure 2. In considering the various positioning strategies, it is useful, however, to examine the range of possible positioning strategies. This is done by reviewing a taxonomy of positioning strategies and is followed with a brief discussion. ‘of the key issues involved with the three key positioning strategies— those of reinforcing current positioning, repositioning, and an introdue- ion of a new positioning. This section concludes with a discussion of the implementation of positioning strategies. A Taxonomy of Positioning! Segmentation Strategies As discussed before, the development of effective benefit-centered positioning requires three things. First; you have to understand what ~ benefits are sought by the consumers and what the relative importance of those benefits is. Second, you have to understand how consumers perccive you and your product versus your competitors on these bene- fits. Third, you have to know what products and services they buy and use. This information provides the necessary input for effective posi- tioning of a product or service. From this information at least six generic positioning strategies can be developed, as outlined in Figure 5. These strategies are based on answers to three questions: 1, What is the buyer's status? The segmentation of buyers can focus on heavy vs. light users, loyal vs. split loyalty vs. switches, and so ‘on, but for the purpose of illustration, we focus here on the sim- plest segmentation: buyer vs. nonbuyers. 2. Which benefits are important? $8. How do the buyers and nonbuyers perceive you and the other products? yed at clients. “The first two positioning strategies are + For those who buy your product and perceive you as having the benefits that they consider important; use a reinforcement straiegy. Reinforce the benefits you offer that they consider important. + For customers who do not perceive you as having the benefits theyPositioning Anabss ond Strategy 403, Buyer Staus Important Benes Perceptions Of Yet No fee Ny Currently Used Brand ‘As Dominant On Importane Ye Current Or Benefits Likely Pereep- tion OF Brand XAs Dominant On ‘The Impor tant Benefits Suraegy: rnovate Buia) | [Drop Or Bul] Jon Important || On tmporcant New Benefits | |[ New Benefus (racion [Change Per- (Communicate | [ception OF [The Bencfus| | Brand X Fo- JOF Brand x jeusing On ‘The Impor- tant Benefis Figure 5. Benefit-driven Competitive Positioning Strategies. ‘Souree:V. Wind, 1987) "A Marketing Perspective for Compete Strategy.” In J+. Roe (EA, ‘Concur Anahue Walters Nordhel consider important, engage in a reduced vulnerabiiy strategy You haave to change their perceptions of your product before they drop you.404 YORAM J. WIND ‘The next four strategies—for nonclients—focus on what's important for them, how they perceive their current supplier/products, and how they perceive you. ‘+ If they perceive both their current supplier and you as providing the important benefits, you need an innovative strategy that will induce thém to switch to you. Without an important new benefit, there is litde reason for them to switch. + Lf they perceive their current product to offer and your product not to offer the specific benefits they consider important, the strategy should be to drop this segment because their current supplier is considered superior to you. Consider keeping this segment only if you can introduce a new innovative and important benefit. + If they perceive their current supplier as not offering important benefits that you are perceived as offering, you have a straightfor- ward attraction strategy. + Ifboth their current supplier and you are perceived as not offering ~~ important-benefits; you-have-to try to change the perception of your product to meet the specific benefits they desire. An obvious question here is: "what specific benefits are we talking about?” For all products and services, there are basically four sets of benefits one can consider (these are listed in Figure 5 and have, of course, to be tailored to the specific product and situation). Issues Regarding Positioning Reinforcement In the dynamic and constantly changing environment of our times, it is often tempting to change a strategy, including the positioning strategy of a brand. This is especially so when management is changed. Yet there are a number of conditions that would call for reinforcement of the existing positioning strategy. These conditions include: + The benefits emphasized by the positioning are the ones consid- ered by the target segment as the most important ones, + The brand is perceived as having a distinct advantage over its com- petitors on the important benefits. + The expected environmental conditions (¢.g., consumer tastes, competitive conditions, ete.) are not likely to change the desirability of the current positioning. + The future plans of the firm in terms of new product lines and portfolio of segments do not change the desirability of the current Positioning.Positioning Analysis and Strategy 405, Reinforcing the current positioning strategy does not suggest, however, that there is no need to change the advertising and other promotional ways of executing the positioning. Issues Concerning Repositioning ‘The pitfalls of a repositioning strategy are many. It is important, therefore, to consider before undertaking a positioning strategy, factors such as: + Is the repositioned product likely to aitract the (new) target seg- ment, i¢., meet their desired benefits and be perceived by them as superior to other products, especially the ones they currently use? + Are the current customers likely to continue-to-buy and use the product? + Of critical importance in answering these two questions is the ques tion whether or not the new repositioning is credible? + Does the expected value of the repositioning exceed the cost of implementing it and the required associated changes in the market- + Is the repositioned product consistent with the expected future plans of the firms? + How well does the repositioning strategies protect the firm against the offensive and defensive strategies of its competitors? Issues Concerning Introduction of a New Positioning The choice of a new positioning, where the firm is introducing a new product is the simplest case. 1t basically requires following the procedure ‘outlined in Figures 1 and 2 and is not constrained by the positioning of the established products. “The dificulty, however, in this case is thatthe level of uncertainty i the highest and that whatever decision is made should not restrict undu- ly the product and marketing options the firm may consider in the foture. Implementation Strategies The selection of a positioning strategy is not likely 10 lead to the desired outcome unless it is accompanied by creative execution and an ‘effective implementation strategy and program.406 YORAM J. WIND ‘The execution of a positioning strategy should encompass all the ele- ments of the marketing program of the firm, incuding: The Product, The product design should reflect its positioning. A product emphasizing status, achievement should have a distinct and Prestigious design, colors, shape, and packaging, etc. The Brand Name. Although from a legal point of view (trademark protection), it is often desirable not to have too descripti ‘often advantageous to have a name that connotes a positioning. Consid- cr, for example, the following names and their associated positioning: Leggs, DicHard, Head & Shoulders, Glamour, Cosmopolitan, Playboy, Playgirl, etc. Advertising. The advertising of the product should effectively com- municate the desired positioning. Often this is the most visible part of the positioning. It is equally critical in the advertising of imagery type products (perfumes, liquors, cigarettes, fashions, etc.) as well as that of “rational” type products (e.g., industrial products). In both cases, the advertising should communicate effectively the reason for buying the product. To be effective, it should follow, at the minimum, the four “rules” suggested by Schramm (1954): + The message (posit gain the attention of the intended desti + The message (positioning) must employ signs that refer to experi- ence common to source and destination, 50 as to get the meaning across. + The message (positioning) must arouse personality needs in the destination and suggest some ways to meet those needs. + The message (positioning) must suggest a way to meet those needs that is appropriate to the group situation in which the destination finds himself at the time he is moved to make the desired response. Pricing. The pricing of any product and service should be consistent with the intended positioning. A prestige positioning requires a°rela- tively high price, whereas an economy positioning would require a cor- responding low price. Promotion. ‘The product promotion mix, including temporary dis- counts, point-of-purchase promotional displays, etc. These should all be consistent with the desired positioning. Distribution. Since each distribution outlet has its own positioning (and image), itis important that the selected distribution outlets be con- sistent with the desired positioning of the product. A Neiman Marcus orPositioning Analysis and Strategy 407 Saks Fifth Avenue are appropriate for certain positioning whereas dis- tributing through the “Sharper Image” catalog and stores suggest a different image. In considering the most appropriate distribution outlet, which is consistent with the desired product positioning, itis important to consider the newer distribution approaches, such as TV shopping, direct mail, computer shopping, etc. In addition, the matching of the positioning of the product with that of the distribution outlet should not ‘exclude the consideration of the specific department or part of the dis- tribution outlet in which the product will be sold, since placing the same Jacket or dress in a “sport” vs. an “elegant” department of a department ‘store may connote a different image and affect the perceived positioning of the product. All of these components of the marketing mix should be well-coordi- nated and all geared to offer a synergistic plan aimed at communicating the desired poskioning to the vargetregments. Given the strong rel. tionship between segmentation and positioning, the two decisions should be made jointly, In fact, management can approach these deci- question addressed by management is: Given a target market segment, which product positioning (and its associated marketing strategy) is likely to be most effective in reaching the firm's objectives? or 2. Given a target product positioning, which market segment is most likely to be responsive to this positioning? In both cases (positioning-segmentation or segmentation-positioning) the two decisions are closely related. Furthermore, regardless of which of the two approaches is followed, it is desirable to follow a complete iterative process involving both approaches. In the context of a joint space configuration, positioning-segmenta- tion strategies may indude:! . 1, Move the product closer to the “adi point” of a target segment. This can be done by product repositioning strategies, which may or may not involve actual physical product changes. 2. Introduce a new product near the target segment’ ideal point, in addition to the current product. 3. Move the ideal point of a target segment closer to the positioning of the brand. This is a difficult task involving @ change in the consumer belief system toward the given product category. 4, Introduce an innovative product that may change the consumers’ perceptions of the market structure by changing the salient di- mensions in the market. For example, when Kodak introduced its408 YORAM J. WIND no-light movie camera, it also introduced a new dimension to the marketplace. This dimension, through promotional effort, was important in strengthening Kodak's market position. Each of these possible strategies has its associated pros and cons, and ‘management should carefully examine the costs, risks, and benefits ass0- ciated with repositioning attempts (a position could be lost without the desired new position being captured, or “cannibalization” could occur). Given the company’s unique objectives, resources, and market position, the considerations of a dominant firm may be different than those of a ‘marginal firm in the market, especially given the differences involved in the relative strength of the firm versus that of its competitors. This integrated positioning-segmentation-driven marketing strategy should be carefully planned and executed. Its successful implementation does require, however, careful planning of the implementation plan, including identification of all those, both inside and outside the firm, who could prevent the implementation of the positioning strategy, un- derstanding of the reasons for their resistance, and the development of courses of action to overcome this resistance, ——-————— EXTENSIONS TO CORPORATE POSITIONING AND OTHER STAKEHOLDERS? Corporate positioning is the implicit focus of most public relations de- partments, but beyond that, most corporations devote precious little 0 the activity, either in terms of resources or in terms of attention by top managers. Some companies, especially in the retail and service industries, are the exceptions. Saks Fifth Avenue, Neiman Marcus, I. Magnin, and Dunhill all work hard at maintaining their images as purveyors of the carriage trade. The name, K mart, on the other hand, conjures up an entirely different image, one that the company’s executives work equally hard to maintain in the minds of the American public. (One of the problems that Sears has had in the apparel area has been the lack of a clear identity as to the type, quality, and range of merchandise it offers.) Some manufacturing companies also have a firm position in the public mind, usually related to the corporation's major line of products. IBM is an example. Many companies, however, especially conglomerates, have no corporate positioning to speak of. (Can you identify, for example, the positioning or even the lines of business of conglomerates, such as Tele- dyne, Avco, Lear Siegler, Raytheon, and Scott & Fetzer—the five most profitable conglomerates of the early eighties.)Positioning Analysis and Strategy 409 Corporate positioning can be a useful adjunct to product positioning: it is also essential for the corporation as it attempts to deal with the large number of constituencies that affect its operations. Consider, for exam- ple, the following case: Ina recent study of attributes used by security analysts in evaluating various companies in a given industry, it was found that a firm's inno- vativeness was one of the major determinants of the security analyst's recommendations whether to buy, hold, or sell the firm’s stock. The ‘company that had sponsored the study was perceived to be nonin- novative, and that perception was clearly hurting the company’s stock. ‘The company decided to embark on a campaign, aimed at security ana- lysts, that focused on its activities in research and development. Within a few months the price of the firm’s stock increased, to a point consider- ably above the average for the industry. ‘A positioning move that appeals to a security analyst may have entirely different effects on other constituencies of the firm—workers, suppliers, and trade, government officials, environmentalists. It is important to segment the company's constituencies and to understand the different benefits sought by the various segments and their perception of the Table 4. Guidelines for Increasing the Effectiveness of Positioning Strategies 1. The current product positioning is only one of the determinants of 2 positioning strategy. (ee 1) 2. The selection of posiioning strategy can be aided by an explicit process and model hich allows forthe generation of creative positioning options (Tables 1 and 2) and their rigorous evaluation (Fable 8). The Analytic Hierarchy Process (Table 2) offers such an approach, 8. Given the heterogenchy of every market, effective positioning has to be analyzed by and designed for target regents. (Figure 3) 4, Positioning Strategies should be based on the bundle of benefits sought by the target segiment(s} and on the segments perceptions of your product as superior to that of your competiors. (Tables 1, 2 and Figure 5) 5. Positioning analysis should encompass not only the assessment of the produe'’scur- ‘ent positioning, but alo approaches to the generation of posioning strategies, for Forecasting the likely impoet of «positioning strategy, and for determining the desired positioning. (Figure 4) 6, Postoning analysis should recognize the heterogeneity ofthe markets dynamic and uncertain nature, and not be limited to the conventional static and deterministic ‘model. Eee bee rep the implementation strategy and synergistic and effective linkages of all the mar ini nlategie (eg. prodees, brand nate, pie advising. promotion, nd dist tion) 10 the selected positioning by segment410 YORAM J. WIND Table 5. Directions for Research and Modeling 1 Conespualy, re-examine the axonomies suggested in this haper Cables 1,2 and oduct an analysis of the determinants of succesful we. unsuccessful poskioning strategies 4. Develop research detigns and models; which overcome the sx iss identified in the section on portioning analysis 4. Provide beter inks between the normative modeling approaches and the empirically bated postioning analy 5 Eatblth ae of empirical generalizations regarding dhree ses of relaonships a) the link between changes in marketing strategy (product formulation, pricing, promodon, and distribution) ofthe firm and ts competitors and changes inthe ims positioning {Oy segrend, (the corresponding ink bevween change in psiioning and ehange in product and marketing srnegy variables, and (e the ink beeen changes in post Toning (strategy and execution) and changes in ales, marketshare, and proftabiiy Jy, (orany other dependent variable of inerext to managemen. 6, Develop an exper system forthe determination of poaldoning strategies, which would _ummariz the published conceptual and empirical findings concerning porioning. firm, How, for instance, do they perceive the firm at present? What ‘criteria do they use in making decisions relevant to the firm? The mod- ern corporation does not have the luxury of ignoring any of these « stituencies. This is especially critical when one considers the implications ‘of a marketing-hype type strategy (Wind and Mahajan, 1987). It is thus essential to develop a marketing strategy which will produce an effective positioning for each segment. CONCLUSIONS Positioning (by segment) is increasingly recognized as one of the founda- tions of all marketing strategies and product and business strategy. Yet, lite attention has been given in the marketing and strategy literature to ways in which the effectiveness of positioning strategies can be en- hanced. It is my hope that the discussion in this chapter will hel crease the effectiveness of positioning analysis and strategy. In this re- spect, Table 4 offers a set of guidelines, which summarize much of the material discussed in this chapter and that, if followed, could enhance the effectiveness of positioning strategies. These and related guidelines have, of course, major implications for directions for future research in these areas. Some of these areas are identified in Table 5. It is my hope that following the suggestions in the two summary tables (4 and 5) will enhance the effective interface be-Positioning Anabyis and Strategy au tween marketing and strategy and, by increasing the effectiveness of the positioning decisions, improve the overall effectiveness of the firm's mar- keting and business strategy. NOTES 1. This section based on Wind, 1982, 2. This section is based on Wind, 1980 REFERENCES W. DeSarbo, and ¥. Wind (1981). “Overlapping Clustering: A New yet Positioning." journal f Marketing Research Bunzell,R.D., and B. 7: Gale (1987). The PIMS Principles Linking Strategy to Performance. "New York: The Free Prest 1 and E. J. Kleinschmidt (1987), “New Products: What Separates Winners "Journal of Product Innovation Managemen Crawford, C. M. 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