A Customer’s Perception of Value

The Marketing Dilemma

Owing to:

Buyers being too numerous, too widely

scattered and too varied in their needs and
buying practices
and

Companies varying widely in their ability to

serve different segments of the market
Companies recognize that they cannot
appeal to all buyers in the marketplace

OR

To all buyers in the same way

 Target Marketing

• Companies must design customer –driven

marketing strategies that build the right
relationships with the right customers

• Hence they have moved away from mass

marketing to target marketing =identifying
market segments , selecting one or more of them
and marketing programmes tailored to each. A
rifle vs. shotgun approach.
 Designing a Customer driven
Marketing strategy
Select customers to serve Decide on a Value Proposition

Segmentation Differentiation
Divide market into Differentiate the market offering
Smaller segments to create superior value

Creating Value
for targeted customer

Targeting Positioning
•Select the segment or Position the market offering
Segments to enter In the minds of target
 Differentiation and Positioning

Beyond deciding which segments of the

market to target to the customer must decide
on a Value Proposition : how it will create
differentiated value for targeted segments and
what positions it wants to occupy in those
segments.
 A Product’s Position is…

The way the product is defined by

consumers on important attributes - the
place the product occupies in consumers’
minds relative to competing products.

“ Products are created in the factory, but

brands are created in the mind”
 Positioning
• Tide is positioned as a powerful, all –
purpose family detergent
• Ariel as the gentle detergent for fine
washables and baby clothes.
• Dalda “ Maternal love”
• Tata Indica and Maruti Suzuki 800
Economy
• Mercedes and Cadillac Luxury
• Volvo Safety
• Toyota Fuel Efficient
 Consumer Behaviour
• Customers cannot re evaluate products every
time they make a buying decision. To simplify
the buying process, consumers organize
products, services and companies into
categories and position them in their minds.

• A product’s position is the complex set of

perceptions, impressions, and feelings that
consumers have for the product compared with
competing products
 Marketing implication
• Though consumers position products with
or without the help of Marketers marketers
do not want to leave their products’
positions to chance.

• They must plan positions that will give

their products the greatest advantage in
selected target markets and they must
design marketing mixes to create these
planned positions.
 Positioning Maps
• Perception maps show consumer perceptions of
their brands versus competing products on
important buying dimensions.

• In the positioning map of the US large luxury

Sport Utility vehicle market the position of each
circle on the map indicates the brand’s
perceived positioning on 2 dimensions : price
and orientation( luxury vs. performance). The
size of each circle indicates the brand’s relative
market share.
 Fig 6.3 Positioning map luxury
SUVs
Why would
“Expensive”
be better than
“Price”
 Product space (positioning) for bar
soaps
High Zest
Tone moisturizing
7
4
Lever 2000
Dove
5 2

Safeguard
Coast
Lux 8
Nondeodorant 3 Deodorant

1
Dial
Lifebuoy
Lava
6

Low moisturizing
 Competitive positioning:
1. Some positions may make no sense

Low Service High Service

Competitor D
High
price
Competitor B

Economy Who Competitor C

wants high
price Competitor A
price/low
service?
 Competitive positioning:
2. Usually best to avoid head-to-head
Low Service High Service
Competitor D
High No one in
price this
segment Competitor B

Economy Competitor C
price Competitor A
 Repositioning:
You can move, but not leap:
Soggy Crunchy
“Ideal cereal
for kids”
Sweet Where we
are

Not
sweet
 Repositioning:
You can move, but not leap:
Soggy Crunchy
“Ideal cereal
for kids”
Sweet Where we
are

Not Not going to

sweet happen!
 Repositioning:
You can move, but not leap:
Soggy Crunchy
“Ideal cereal
for kids”
Sweet Where we
are

Not This might be

sweet possible
 Positioning is in the eye of the beholder

1. Most products can be positioned in several different ways

—choose one

2. A good “positioning’ is credible that is, it is linked to the value

proposition

3. Some positions involve giving up others

4. Some positions may have been pre-empted by other firms

Good marketers understand what to do to effectively position their

products—an array of “Attributes and Associations”

You can move (or develop) your position, but you can’t do a magic
leap
 Choosing a Differentiation and
Positioning strategy
A firm well known for quality in certain segments
will go for this position in a new segment if there
are enough buyers seeking quality. In most cases,
however, two or more firms will go after the same
position.

Each will need to set itself apart.

Hence each firm must differentiate its offer by

building a unique bundle of benefits that appeals to
a substantial group within the segment.
 Above all…
A brand’s positioning must serve the needs of well –
defined markets.

The Differentiation and positioning task is

a 3 step one :

1. Identifying a set of differentiating competitive

advantages upon which to build a position

2.Choosing the right competitive advantages

3.Selecting an overall positioning strategy

The company must then effectively
communicate and deliver the chosen
position to the market.
 Identifying possible value differences and
competitive advantages

• To build profitable relationships with target

customers marketers must understand
customer needs better than competitors
and deliver more customer value.

• To the extent a company can differentiate

and position itself as providing superior
customer value it gains competitive
advantage.
SOLID POSITIONS CANNOT BE
BUILT ON EMPTY PROMISES
If positioned as offering the best quality
and service, it must actually differentiate
the product so that it delivers the promised
quality and service.

Companies must live the slogan.

Ways of differentiation
Product

Services

Channels

People

Image
 Product differentiation

• Features

• Performance

• Style

• Design
 Service

• Speedy

• Convenient

• Careful
 Channel Differentiation

• Channel coverage

• Expertise

• Performance
 People Differentiation

Hiring and training better people than the

competition.
 Image differentiation

• A company or brand image should convey the

product’s distinctive benefits and positioning.

Distinctive symbols, celebrities, colours can all

be used for this and also other image elements
must be communicated through advertising to
convey the company’s brand personality
 Choosing the right competitive
advantage

• Assume company has identified several

potential differentiators. It must now
choose the ones on which it will build its
positioning strategy.

• It must decide how many differences to

promote and which ones.
How many differences to promote?
• Many marketers think that companies
should aggressively promote only one
benefit to the target market

• Ad man Rosser Reeves said a company

should develop a Unique Selling
Proposition for each Brand and stick to it.

• Each brand should pick an attribute and

tout itself as number one on that attribute.
The logic behind this view is that buyers
tend to remember number one better ,
especially in the face of the general over –
communication. Thus Wal - Mart promotes its
low prices and Burger King promotes – “Have it
your way”.

Other marketers feel that companies should

position themselves on more than one
differentiator especially when two or more
companies are claiming to be the best on the
same attribute.
Another reason : Mass markets are
fragmenting into small segments and
companies are trying to broaden their
positioning strategies to appeal to more
segments. Many buyers want
these multiple benefits.

But as claims increase, disbelief and loss

of clear positioning is the risk
 Which differences to promote

• Important

• Distinctive

• Superior

• Communicable

• Preemptive

• Affordable

• Profitable
Important : The difference delivers a highly valued
benefit to target buyers

Distinctive: Competitors do not offer the difference,

or the company can offer it in more distinctive way.

Superior: The difference is superior to other ways

that customers might obtain the same benefit.

Communicable: The difference is communicable and

visible to buyers
Preemptive: Competitors cannot easily
copy the difference

Affordable : Buyers can afford to pay for

the difference

Profitable: The company can introduce the

difference profitably.
 Selecting an overall positioning
statement

• The full positioning of a brand is called the

brand’s value proposition – the full mix of
benefits upon which the brand is
differentiated and positioned.

• It answers the customer’s question” Why

should I buy your brand?”
• The Figure on the next slide shows
possible value propositions upon which a
company may position its products
 4. Positioning should match the
Value Proposition

Copyright 2007, A&K Figure 6.4

Prentice-Hall, Inc.
• The five green cells represent winning
value propositions – differentiation and
positioning that give the company
comparative advantage.

• The blue cells represent losing value

propositions.

• The pink cell is at best a marginal

proposition
 More for more

Upscale products : Ritz Carlton, Mont Blanc,

Mercedes, Viking appliances.

Each product claims superior quality, craftsmanship,

durability, performance or style and charges a price
to match. High quality plus prestige. Status and a
loftier lifestyle.

Often the price difference exceeds the actual

increment in quality.
• Companies should look out for opportunities
to introduce a more for more brand in any
underdeveloped product or service category.
( Eg. Starbucks, I phone)

• Risk : Competition providing the same quality

at a lower price and economic downturn
 More for the same

• More for more can be attacked by giving

comparable quality at a lower price than
the competition.

• Eg Toyota introduced Lexus with a more

for the same value proposition versus
Mercedes and BMW.
 The same for less

• Everyone likes a good deal. Discount

stores such as Wal Mart and Big Bazaar
are category killers. Croma and E Zone
also use this positioning.
 Less for much less

• Very few people need ,want or can always

afford the very best in everything they buy.
Hotel chains like Ginger Hotels suspend
some amenities and charge less. Other
examples: Maruti 800 – no frills, Indigo
Airlines
 More for less

• The winning value proposition! Eg Tata

Indica – more space and better fuel
economy at a lower price.

• In the long run this position is very difficult

to maintain since offering more usually
costs more.
 Moral of the story?

• In any market there is usually room for

many different companies, each
successfully occupying different positions.

• The important thing is that each company

must develop its own winning positioning
strategy, on that make sit special to its
target consumers.
 Developing a
Positioning statement

• To (target segment and need) our (brand)

is (concept) that ( Point of difference)
 Blackberry

“To busy, mobile professionals, who need

to always be in the loop, Blackberry is a
wireless connectivity solution that gives
you an easier, more reliable way to stay
connected to data, people and resources
while on the go.”
• Positioning first states the product’s membership
in a category( wireless connective solution) and
then shows its point of difference from other
members of the category( easier , more reliable
connections to data, people, resources).

• Placing a brand in a specific category suggests

similarities that it might share with other products
in the category. But the case for a brand’s
superiority is made on its points of difference.
 Sometimes, however…
• Marketers put a brand in a surprisingly different
category before indicating the points of
difference.

• Dove soap : Dove soaps ads originally showed

Dove’s key benefits as mild leaving the skin soft.

Dove was promoted as better for the skin than

soap as it had one quarter cleansing cream.
This was later changed to one quarter
moisturizing cream
 In India

• Many Dove Ads show cream being pored into

the Dove bar. Taglines like, “Try the Dove
Face Test and soon you’ll never wash with
soap again” positions the bar away from
soap into the moisturizing lotions category.

• This strategy has been extremely successful.

 Communicating and delivering the
chosen position
• After the company has chosen a position it
must take strong steps to deliver and
communicate the desired position to target
customers. The marketing mix must
support the positioning strategy.

• Once the company’s position has been

built it must maintain that position through
consistent performance and
communication.
• The company must monitor and adapt the
position gradually overtime to match
changes in consumer needs and
competitors’ strategies.

• However, it should avoid abrupt changes

so as not to confuse consumers.