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WEEK SEVEN

Differentiation and Brand Positioning

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
What is Positioning?

o The place a product or brand occupies

in customers’ minds relative to their
needs
o Refers to competing products or
brands
o Comprises both competitive and
customer need considerations

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Differentiation

o Differences in scope–Broad or narrow

competitive scope
o Different ways in which companies
can compete for target markets
oDifferentiation in Business Strategies
oDifferentiation among Goods and
Services

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Physical and Perceptual Positioning

o Physical positioning
o Assessing product offering based on a
set of objective physical characteristics
o Perceptual positioning
o Includes product presentation, past
experiences and opinion of others

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Exhibit 7.2
Comparison of Physical and Perceptual Positioning Analysis
Physical Positioning
Technical orientation
Physical characteristics
Objective measures
Data readily available
Physical brand properties
Large number of dimensions
Represents impact of product
specs
Direct R&D implications
Perceptual Positioning
Consumer orientation
Perceptual attributes
Perceptual measures
Need for marketing research
Perceptual brand positions and
positioning intensities
Limited number of dimensions
Represents impact of product
specs and communication
R&D implications need to be
interpreted
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Kinds of Attributes

o Simple physically based attributes

o Directly related to a single physical dimension
o Complex physically based attributes
o Used by consumers to evaluate competitive
offerings
o Essentially abstract attributes
o Are influenced by physical characteristics, but not
related in any direct way
o Price
o Implies high or low quality

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Exhibit 7.4 (1 of 2)

Steps in the Positioning Process

1. Identify relevant set of competitive

products serving a target market.

2. Identify the set of determinant attributes that define

the “product space” in which positions of current
offerings are located.

3. Collect information from a sample of

customers and potential customers about
perceptions of each product on the
determinant attributes.

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Exhibit 7.4 (2 of 2)

Steps in the Positioning Process

4. Determine product’s current location

(positioning) in the product space and intensity
thereof.

5. Determine customers’ most preferred

combination of determinant attributes.

6. Examine the fit between preferences of market

segments and current position of product (market
positioning).

7. Write positioning statement or value proposition

to guide development and implementation of
marketing strategy.

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A Useful Tool for Positioning Decision Making:
Perceptual Maps

Not Sweet

Sweet

Nutritious Not Nutritious

Where would you plot your favorite cereals?
Your kids’ favorites? Your grandma’s?
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 Perceptual Map of Women’s Clothing Retailers in
Washington, D.C.
Women’s fashion market

The Limited
Conservative versus current versus very latest

Neiman
Marcus Macy’s
Bloomingdale’s
Women’s-wear fashionability

Saks
Nordstro
m

Hit or Miss Dress Barn

T.J. Maxx

Sassafras
Casual corner
The Gap
Garfinkels
L&T Marshall’s
Loehmann’s
Hecht’
Britches s
Kmart
Sears Woodwar
JC Penny d
&
Lothrop

Talbots
Women’s-wear value for the money
Worst value Best value
Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, 7-10
September 1990. as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992) p. 205.
Guiding Development of Marketing Strategy

o Two common approaches:

o Positioning statement
o Identifies the target market
o States unique benefits of the product
o Value proposition
o Similar to positioning statement
o Includes information about pricing relative to
competitors
o Both approaches reflect the unique selling
proposition (USP) of the product

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Positioning Statement for Volvo in North America

o For upscale American families, Volvo is the

family automobile that offers maximum
safety
o Generic format for positioning statements:
For (target market), (brand) is the (product
category) that (benefit offered)

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Value Proposition for Volvo in North America

o Target market: Upscale American families

o Benefits offered: Safety
o Relative price: 20% premium to domestic
family cars
o Generic format for value propositions:
o Target market
o Benefits offered (and sometimes not
offered)
o Relative price

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The Outcome of Positioning: Brand Equity

o Brand equity is the term marketers

use to refer to the value created by
establishing customer preference for
one’s brand.
o Brand equity must be managed to
retain and grow its value;

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