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Chapter 9 Objectives
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E-MARKETING 5/E
JUDY STRAUSS AND RAYMOND FROST

After reading Chapter 9, you will be able to:

Define differentiation and positioning and explain why they are important elements of marketing strategy. Identify dimensions of differentiation and internetspecific differentiation strategies. Discuss how companies can position or reposition themselves on the basis of attributes, technology, benefits, user category, relation to competitors, integrator capabilities, or reverse positioning.

2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 9: Differentiation and Positioning Strategies

2009 Pearson Education, Inc. Publishing as Prentice Hall

The J. Peterman Story

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Differentiation

The J. Peterman Company is a classic example of successfully combining clever differentiation with powerful positioning.
The founder established his company as a breed apart from ordinary competitors. Every item has a description that communicates nostalgia and romance.

Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish the companys offering from the competition. There are a number of differentiation dimensions and strategies for their accomplishment.

Visit www.jpeterman.com and discuss what makes their products unique.

2009 Pearson Education, Inc. Publishing as Prentice Hall 2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Focusing Marketing Strategy with Segmentation and Positioning

Segmentation, Targeting, Positioning Process

Differentiation Dimensions
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Product Differentiation

A firm can differentiate along 5 dimensions:

Product Service Personnel Channel Image

Product line differentiation is an important emarketing strategy. Differentiation may include customization, bundling, and attractive pricing of products. Internet sales may not rely as heavily on product packaging and displays as do traditional retailers. Packages shipped to households may require additional packing materials not required in bulk case shipments to wholesalers and retailers.
2009 Pearson Education, Inc. Publishing as Prentice Hall

2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Service Differentiation
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Personnel Differentiation

Customer service can be enhanced by 24-hour customer feedback through e-mail and the ability to respond more rapidly to customer concerns. Home delivery of groceries, online banking, and securities trading are becoming increasingly popular. Today such services supplement traditional services, but may someday replace them.
2009 Pearson Education, Inc. Publishing as Prentice Hall

The internet allows companies to deliver products more efficiently.

Low-cost channels Automated processes Reduced dependence on personnel Lower transaction cost

2009 Pearson Education, Inc. Publishing as Prentice Hall

Channel Differentiation
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Image Differentiation

The internet:
Is a location-free, time-free distribution and communication channel. Functions as a communication channel for companies that provide product or service information online. Serves as a transaction and distribution channel for companies that conduct online commercial transactions. Becomes the entire distribution channel for digital products.

2009 Pearson Education, Inc. Publishing as Prentice Hall

A company can differentiate itself by creating a unique experience online, called experience branding. Through experience branding firms can better retain customers, target key segments, and enhance profitability.

Build-a-Bear extends its offline experience online. Some Web sites invite users to upload content and comments, which gives them a competitive edge.
2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Brand
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Differentiation Strategies

Trout and Rivkin proposed specific differentiation strategies common to offline and online businesses:
Being the first to enter the market. Owning a product attribute in the mind of the consumer. Demonstrating product leadership. Utilizing an impressive company history or heritage. Supporting and demonstrating the differentiating idea. Communicating the difference.

2009 Pearson Education, Inc. Publishing as Prentice Hall

Internet-Specific Differentiation Strategies

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Internet-Specific Differentiation Strategies, cont.

There are 6 differentiation strategies unique to online businesses. Site Environment/Atmospherics Easy downloads, accurate and clear information, easy navigation. Build Trust Strong brand recognition. Privacy policy. Safe and encrypted payment process for transactions.
2009 Pearson Education, Inc. Publishing as Prentice Hall

Efficient and Timely Order Processing Pricing In the early days of the Web, companies offered discounts as purchase incentives. Majority of firms today differentiate themselves in other ways besides pricing.

Customer Relationship Management

Managing long-term relationships with customers. Invite User-generated Content The key is to trust customers, listen, respond, and learn. 2009 Pearson Education, Inc.
Publishing as Prentice Hall

11/25/2011

Internet-Specific Differentiation Strategies

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Positioning

Exhibit 9.2

Positioning is the process of creating a desired image for a company and its products in the minds of a chosen user segment. The e-marketers goal is to build a position on one or more bases that are relevant and important to the consumer. Firms can position brands, the company, the CEO, or individual products.
2009 Pearson Education, Inc. Publishing as Prentice Hall

2009 Pearson Education, Inc. Publishing as Prentice Hall

Positioning

Positioning

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Positioning Steps
1. Determine consumers perceptions and evaluations in relation to competitors. 2. Identify competitors positions 3. Determine consumer preferences. 4. Select the position. 5. Monitor the positioning strategy.

Perceptual Maps

Product Space Representation of Positioning ( Positioning and Advertising

High moisturizing
Tone Dove 5 Lux 3 1 Dial Lifebuoy Lava 6 Coast 8 2 7 Zest Lever 2000 Safeguard

Sensitive

Nondeodorant

Deodorant

low moisturizing
2011 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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Bases and Strategies for Positioning

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Bases and Strategies for Positioning

Positioning strategies generally focus on either how the product or service affects the consumer or how it is better than competitors products and services. When positioning against competitors, the objective is to play up how the brand being marketed provides the desired benefits better than do those of competitors.

Product or service attribute Technology positioning Benefit positioning User category Competitor positioning Integrator positioning

2009 Pearson Education, Inc. Publishing as Prentice Hall

2009 Pearson Education, Inc. Publishing as Prentice Hall

Product or Service Attribute

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Value

May include features such as size, color, ingredients, speed, etc.

Amazons 1-click checkout process is an example of a positioning attribute. iVillage allows users to build personalized mean menus. Tylenol does not sell online, but provides useful one-toone features for pain relief and health information and Tylenol greeting cards.

Meet Grandpa Tony, now retired: He knows the price of everything. He clips coupons. He goes to multiple stores to get the best price. He is willing to pay more for quality. He trusts brand names.

How can marketers appeal to price sensitive customers like Grandpa Tony?

2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Value
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Technology Positioning

Meet Celia, college freshman: Reasons for her college choice: Close to home. Good academic reputation. Good financial aid package. Did we mention cute guys?

Positioning on the basis of technology shows that a firm is on the cutting edge.
At Lands End, consumers can build virtual models of themselves and try on virtual outfits. At American Airlines, customers can store seating preferences and frequent flier account information.

What were the salient attributes of your college choice?

2009 Pearson Education, Inc. Publishing as Prentice Hall

Benefit Positioning
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User Category

Benefit positioning is generally a stronger basis for positioning because it answers the consumer question: What will this product/service do for me?
Miller Lite offers software that can be used as a social organizer. On the Valvoline motor oil site, visitors can send greeting cards, download racing screensavers, and sign up for newsletters.

User category positioning relies on customer segments.

Kelloggs has an interactive site for children. Yahoo! Groups hosts forums organized by specific interests. Eons is a social network for baby boomers.

2009 Pearson Education, Inc. Publishing as Prentice Hall

2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Competitor Positioning
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Competition

Many firms position by benefits that provide advantages over their competitors. Companies may position themselves against:
An entire industry. A particular firm. Relative industry position.

Position against a specific competitor Position against an entire product classification

I Cant Believe Its Not Butter margarine positions itself against other margarines.
2009 Pearson Education, Inc. Publishing as Prentice Hall

Integrator positioning
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Integrator positioning, cont.

Integrators provide everything a consumer needs in a particular product category, industry, or even in general. Consumers want convenience and one-stop shopping:
Martha Stewarts Web site brings together business units in one place. TheKnot.com offers everything to do with weddings.

We can expect to see more integrator positioning in the real estate, lending, jewelry, and hospitality industries.
zipRealty uses software that reduces the agents' work. LendingTree and HomeGain.com help brokers find clients more cheaply and quickly. Blue Nile sells an estimated $129 million of jewelry that would require 116 retail stores. Web travel agencies can move market share to hotels that give them discounts.

2009 Pearson Education, Inc. Publishing as Prentice Hall

2009 Pearson Education, Inc. Publishing as Prentice Hall

11/25/2011

Repositioning Strategies
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Repositioning
Disposal freshener Fridge freshener Tooth cleaner

Repositioning is the process of creating a new or modified brand, company, or product position. A company may enhance or modify a position, based on market feedback.
Yahoo! repositioned from online guide to Web portal. Amazon repositioned from worlds largest bookstore to Earths biggest selection. Facebook now hosts many business page profiles and third-party applications.

2009 Pearson Education, Inc. Publishing as Prentice Hall

Baking

Stain remover

Cleaner

Volcano maker

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