GRADE 11

BUSINESS STUDIES
UNIT- 1 MARKETING AND PEOPLE

CHAPTER -3 . MARKET POSITIONING

Market positioning

Market positioning is an effort to influence consumer perception of a brand or product, relative to the
perception of competing brands or products.It is achieved through product differentiation and adding
value

Approaches a business may use to position its product:

• Highlight the benefits offered by the product. E.g. some manufacturers emphasise safety, other quality
but most value for money

• Identify the USP, manufacturers will describe key aspects of the product that sets it apart from those
of its competitors.

• Highlight the attributes of the product, the products size, colour,functionality + features that affect the
products appeal or acceptance.

• State the origin of the product, e.g. Wensleydale cheese

• Classify the product, what is it? E.g. ‘I can’t believe it’s not butter’.

Repositioning

• Occurs when markets change due to shifting consumer demand +some businesses need to change the
position of their products.

• Involves changing their target market, feature of the product or image of the product. E.g. Napisan
was a detergent for washing baby’s nappies, when disposable nappies came out; they successfully
repositioned the brand for a new use – tough stains.

Market mapping

This is a way of the business finding out where they are perceived by the consumer to be in the market
in relation to other brands. This can be done through market research and be displayed on a ‘perceptual
map’.

X AXIS - Price

Y AXIS - Quality

A business may see its brand as high quality and upmarket, but if customers see it as low quality and
down-market, it is their views that will influence sales

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The limitations of Perceptual Maps:

• They are 2 dimensional so only 2 attributes can be analysed on the same map

• Information needed can be expensive as needed for both primary and secondary research

Market segmentation

division of people according to social class etc. Different types of segmentations are

• Geographic – Different customer groups are likely to have different needs depending on where they
live – e.g. people living in hot climates, such as Australia or South Africa have different needs to people
in temperate climates – different cuisine depending on region

• Demographic – Age, Gender, income, social class, and ethnicity are all important e.g. luxury watches,
types of clothing

• Psychographic – groups according to attitudes, opinions and lifestyles: e.g. clothes may be geared
towards those who are interested in retro fashions from earlier decades

• Behavioural – attempts to segment markets according to how consumers relate to a product – There
are a number of different methods of behavioural segmentation such as usage rate (BA with its
Executive Club to encourage and develop the custom of regular business travel), loyalty: E.g Tesco
clubcard)

What is a Competitive Advantage?

A set of unique features of a company + its products that are perceived by customers as significant +
superior to competition. E.g. a product may save time, save money, improve health, be more convenient
etc.

How to develop competitive advantage

A business can develop competitive advantage in a number of ways:

• Product design – create superior design of a product, emphasising a specific feature to try and gain an
advantage, could be the aesthetics of the product.

• Product quality – offering high-quality is a common way of gaining a competitive edge; then a
premium price can be charged.

• Promotion - effective advertising could mean more people have a good image of product and are
inclined to buy it.

• Customer service – some businesses may rely on customer service to gain a competitive e.g.
enterprise (car hire) delivers and collects cars from convenient location such as home or work.

• Delivery times – where delivery speed is important, prompt services will gain a competitive advantage.
Or weekend delivery slots.

• Economies of scale – business with low efficiency costs = can charge lower prices and gain competitive
advantage (usually large firms can do this).

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Porter suggests there are 3 ways of gaining a competitive advantage:

• Become a cost leader in the market

• Differentiate the products from those of rivals

• Focus on a particular market segment

What is product differentiation?

The degree to which consumers perceive your brand as different from its competitors. E.g. a products
USP – Product differentiation is used by businesses to gain a competitive edge over their rivals.

In highly competitive markets, where lots of firms produce similar products, firms will try to make their
product unique in some way so that it stands out from the pack.

Creating Product Differentiation

Create genuine customer benefits:

• A unique design

• Unique function

• Unique taste

Creating differences that exist in the mind of the consumer

• Imaginary product differentiation e.g. through celebrity endorsement

The purpose of Product Differentiation:

• To protect the product from then competitive market

• To enable the business to increase its prices if costs go up

Adding value to products and services:

The business provides ‘extra’ features for the customer that go beyond their standard expectations e.g.
MOT centres valeting cars as part of MOT

Ways of adding value:

• Bundling – putting together a package of benefits or services that make up the whole product e.g. tour
operators offer flights,accommodation. Transfers and insurance = cheaper.

• Customer service – Friendly, attentive and professional staff with good image and make customers
feel at ease with a willingness to go out of their way to help customer.

• Speed of response to customers – reducing or eliminating waiting times can add value.

• Packaging – present in attractive wrapping or gift wrap.

• Frequent buyer offers – reward customers for repeated service e.g.free products or air miles.

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• Customisation – customising products e.g. embedding a customer’s logo or brand in product or
adapting product designs to suit the needs of the individual customers.

Why add value?

• To charge premium price

• Differentiate and gain competitive edge

• Protect itself from customers by charging lower prices therefore stealing customers

• May focus more on its target market segment by adding value