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    IKEA used a reverse positioning strategy when entering the American market. Rather than providing all the expected features of furniture retailers, IKEA stripped some elements down, such as not offering assembly of furniture. However, IKEA augmented its offering with unique attributes like low prices and a showroom experience not found elsewhere. This creative combination allowed IKEA to position itself in a category of its own, below high-end retailers but above low-cost players. The document discusses positioning and how firms augment their products over time to shift consumer expectations.

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    IKEA used a reverse positioning strategy when entering the American market. Rather than providing all the expected features of furniture retailers, IKEA stripped some elements down, such as not offering assembly of furniture. However, IKEA augmented its offering with unique attributes like low prices and a showroom experience not found elsewhere. This creative combination allowed IKEA to position itself in a category of its own, below high-end retailers but above low-cost players. The document discusses positioning and how firms augment their products over time to shift consumer expectations.

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    29 views26 pages

    Session 2 - Edited

    Uploaded by

    A
    IKEA used a reverse positioning strategy when entering the American market. Rather than providing all the expected features of furniture retailers, IKEA stripped some elements down, such as not offering assembly of furniture. However, IKEA augmented its offering with unique attributes like low prices and a showroom experience not found elsewhere. This creative combination allowed IKEA to position itself in a category of its own, below high-end retailers but above low-cost players. The document discusses positioning and how firms augment their products over time to shift consumer expectations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 26

    IKEA Invades America

    Positioning ?
    • Positioning is the process by
    which a firm designs its product
    offering to occupy a distinctive
    place in the target consumer’s
    mind.

    Firms race to identify new


    features and benefits to add to
    product offerings
    Positioning

    Hotels have
    raced to be
    the first to
    provide
    internet
    access
    Positioning

    Automobile
    makers have
    raced to be
    the first to
    offer airbags
    Positioning

    Online retailers
    have raced to
    be the first to
    provide one-
    click shopping.
    Positioning

    Branding
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning Process
    Positioning
    The Augmented Product Concept
    Basic Product

    Expected Product

    Augmented Product

    Potential Product

    Source: Adapted from Levitt (1980) and Kotler (1989)


    The Augmented Product Concept
    • Core Benefit Offered
    • Hotel Room
    providing Shelter:
    Bed & Bathroom
    • An automobile
    provides
    transportation: Four
    wheels and a mortor

    Source: Adapted from Levitt (1980) and Kotler (1989)


    The Augmented Product Concept
    • A set of attributes
    consumers expect
    when they purchase
    the product. E.g. –
    Packaging, Quality,
    Brand name
    • Hotel: Clean Sheets
    & Fresh Towels
    • Cars: Air conditioning
    & music system

    Source: Adapted from Levitt (1980) and Kotler (1989)


    The Augmented Product Concept
    • It exceeds the
    customers’
    expectations. E.g.
    Installation, After-sales
    service, Warranty,
    Delivery & Credit
    • Hotel: Restaurant, Gym,
    City Map
    • Car: After sales service,
    Open roof, insurance
    coverage

    Source: Adapted from Levitt (1980) and Kotler (1989)


    The Augmented Product Concept
    • Encompasses all the
    augmentations and
    transformations that
    the product might
    undergo in the future
    • Hotel: different gift
    placed in the room
    each time a
    customer stays,
    massager bed
    • Car: Electric Car,
    Driver-less cars,
    Interactive cars

    Source: Adapted from Levitt (1980) and Kotler (1989)


    The Augmentation Trend

    Augmented Product
    Augmented Product

    Augmented Expected Expected


    Product Product Product

    TIME
    Continuous upward shift of the category expectation over time
    Due to Augmentation Trend, Brand Hierarchy develops in the market
    Four
    Seas
    ons, • Market Leaders
    • Appeal to the most attractive customers
    Merc • Customers are willing to pay a premium
    edes price for the augmented product
    Benz, • Expanding their product selections
    Jorda • Pleasurable service experience (in-store
    and outside)
    n's
    furnit
    ure • Low cost players: rely on cut-rate
    pricing
    • Focus on least attractive customers
    Motel Six, • Customer Purchase decision based
    on price rather than brand
    Tata Nano, • Dull product selections
    • Miserable shopping experience
    Wal-Mart
    IKEA positioning strategy
    • A Reverse positioning strategy
    • Counter-intuitive: Moves in an opposite direction in which the rest of the market is
    moving.
    • Doesn’t offer the expected value proposition that customers have come to expect
    from the leading providers in the category.
    • It supplements its “stripped-down” value proposition with one or more carefully-
    selected attributes, typically associated with a highly-augmented product offering,
    attributes that are unheard of when it comes to low-cost players.
    • Creative combination of Attributes: Unique positioning within the category, one that
    cant be categorized as either high-end or low-end
    Elements of a Reverse Positioning Strategy
    Withhold
    elements of the
    compensates
    expected value
    the stripped-
    proposition Augmented Product down value
    proposition
     with highly-
    augmented
    Expected attributes,
    Product some of which

     may not even


    be offered by
    high-end
     competitors.
    Other Examples of Reverse Positioning
    JetBlue
    X Unabashedly selective about cities and airports to which it flies
    X Eliminated round trip pricing
    X Eliminated Meal service
    X Eliminated the segregation between economy and business class
     Leather chairs throughout the plane
     High-end personal entertainment system at every seat
     Consumer- friendly policy of never bumping a passenger: JetBlue never overbooks

    Google
    X Before Google, homepage of Internet service providers like MSN & Yahoo! were cluttered
     Homepage consist of just a single element: Text box with a search button

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