113 Market Positioning AS Edexcel 2015 Business Theme

113 Market Positioning AS Edexcel 2015 Business Theme 1 – Marketing and people Ms Haron

From the specification 1. Market mapping 2. Competitive advantage of a product or service 3. The purpose of product differentiation 4. Adding value to products/services

Lesson Objectives ü To be able to identify how market mapping might be used by a business ü To be able to describe how a business could gain competitive advantage ü To be able to discuss the purpose of product differentiation ü To be able to identify ways that a business can add value to products or services Ø To be able to answer exam questions based on the topic area

Starter • The Mars bar was manufactured in 1932. Imagine you were Frank Mars and in teams come up with as many new product ideas for Mars as you can in 3 minutes:

How did Mars spot a gap in the market?

From the specification 1. Market mapping 2. Competitive advantage of a product or service 3. The purpose of product differentiation 4. Adding value to products/services

1. Market mapping • A grid that measures two different aspects of the brands within the market (e. g. young/old compared with luxury/economy) • In order to identify a gap in the market, it may be useful for a business to construct a diagram of where competitors are on two axis (for example price and quality): Premium Price • Jimmy Choo • Ugg • Nike Functiona l • Clarks Luxury (a treat) Budget Price • Primark

Market Map High Price Low High Quality Low Price

Create a market map (5 mins) • Create a market map for these clothes shops (add others that you know) George Peacocks Sports Direct Lipsy Topshop Primark Dorothy Perkins Chanel Marks & Spencer Next Matalan Debenhams

Market Map: Clothing retail UK High Price Dior Top Shop Low Quality Matalan George Peacocks Sports Direct Primark Low Price Next High Quality

From the specification 1. Market mapping 2. Competitive advantage of a product or service 3. The purpose of product differentiation 4. Adding value to products/services

2. Competitive advantage • An advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry • A way that the business can makes its products or services appear superior to the competition to the target market. • Competitive advantage is achieved by using resources to achieve either: 1. Cost advantage (Porter) – a business has skilled worked force and efficient operations to provide low cost value to consumers e. g. ASDA, Nissan, Nike, Ryanair 2. Differentiation advantage (Porter) resources are used by a business to create superior value for the consumer

From the specification 1. Market mapping 2. Competitive advantage of a product or service 3. The purpose of product differentiation 4. Adding value to products/services

3. Product differentiation • Where a business tries to make its product different from the competition in some way • Consumers must be able to perceive this difference and may be willing to pay a premium price for the product. Bugatti veyron – website here which outlines its features, including 1200 bhp (average car is about 104) Article of cost of a Veyron here

Methods of differentiation • Through reputation (hair salon, restaurant) • Through customer service or after sales service (Marks and Spencer) • Through value for money (ASDA, Lidl, Aldi) • Through product features (Cars, mobile phones)

From the specification 1. Market mapping 2. Competitive advantage of a product or service 3. The purpose of product differentiation 4. Adding value to products/services

4. Adding value Value added is when a business chooses to enhance the quality of a core product by providing extras to improve a customer’s utility/experience • Design – develop new technology/design features to make their product unique (differentiation advantage) • Production – achieving quality and efficiency adds value. – Quality will ensure a higher price can be charged (differentiation advantage) – Efficiency helps cut costs of the input (cost advantage) • Marketing – creating an image that makes the product more desirable, a brand differentiation advantage)

Adding value • How can you add value to a potato?

Adding value • Production processes add cost at each area but also add value to the raw material:

Benefits of adding value 1. Charge a higher price – increase profit 2. Protection against competitors offering lower prices 3. Customer loyalty Input for handbags Radley have added value to leather, these bags cost £ 300

Value is added by: Process e. g. cooking, slicing, canning Additional ingredients e. g. cake mix Convenience e. g. In supermarket Packaging e. g. Handy cake slice in plastic Finished goods

Homework • No new HW today • Homework set last Thurs is due this Thursday Be more • Visit this link to further your knowledge on competitive advantage http: //www. quickmba. com/strategy/competitiveadvantage/ (this ppt will be on warrenbusiness. weebly. com so you don’t need to copy the link down from this slide)

Revision Video

Glossary 1. Market mapping: Market mapping is about positioning the products/service a business plans to provide 2. Competitive advantage: An advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry 3. Product differentiation: How a business differentiates its products; through reputation, service, features or value 4. Added value: value added is when a business chooses to enhance the quality of a core product by providing extras to improve a customer’s utility/experience