Chapter # 11

Positioning and differentiating the market offering through the product life cycle

Positioning

Product’s Position – the act of designing the company’s offering and image to occupy a distinctive place in the mind of target market. i.e. Volvo positions on “safety”.

How many ideas to promote ?
• Unique selling proposition (UPS) – Mercedes promotes its great engineering, Crest toothpaste promotes its anticavity protection. • Double benefit positioning – Volvo “safest & most durable” • Triple-benefit positioning- Smith Kline beecham promotes its aquafresh toothpaste - anticavity protection, better breath and whiter teeth.

Major positioning errors
• Under-positioning – buyer have vague idea of the brand. • Over-positioning – buyer may have too narrow an image of the brand. • Confused positioning - buyer might have a confused image of the brand resulting from company’s making too many claims or changing the brand’s positioning frequently. • Doubtful positioning – buyer may find it hard to believe the brand claims about product.

How do companies select their positioning

Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning

Which position to promote
Competitive Company Competitor Importance Affordabilit Competitor’s Recommof advantages standing standing y and speed ability to ended Improving standing action standing Technology Cost Quality Service 8 6 8 4 8 8 6 3 L H L H L M L H M M H L Hold Monitor Monitor Invest

H = High, M= Medium & L= Low

Adding Further differentiation
Important

Profitable

Affordable

Criteria for determining which difference to promote

Distinctive

Superior

Preemptive

Communicable

Adding further differentiation
Crego and schiffrin – Customer-centered organizations should following three step process: Define the customer value model Building customer value hierarchy  Basic  Expected  Desire  Unanticipated Deciding on customer value package

Differentiation tools
Number of approaches to achieve advantages Few
Small Large

Size of the advantages

Many Specialized Fragmented

Volume Stalemated

Product Differentiation Variables
Form Features Performance Conformance Durability Reliability Repairability Style Design

Service Differentiation Variables
Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Miscellaneous

Personnel Differentiation Variables
Competence Courtesy Credibility Reliability Responsiveness Communication

Channel Differentiation Variables
Coverage Expertise Performance

Image Differentiation Variables
Symbol Media Atmosphere Events

Product Life Cycle
Sales and Profits ($)
Profits Sales

Losses

Introduction

Growth

Maturity

Decline

Time
Sales and Profits Over the Product’s Life From Introduction to Decline

Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies Sales Costs Profits Marketing Objectives Product Price Distribution Advertising Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers

Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies Sales Costs Profits Marketing Objectives Product Price Distribution Advertising Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Build intensive distribution Build awareness and interest in the mass market

Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies Sales Costs Profits Marketing Objectives Product Price Distribution Advertising Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits

Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies Sales Costs Profits Marketing Objectives Product Price Distribution Advertising Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

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