CHAPTER 10 CRAFTING THE BRAND POSITIONING DEVELOPING AND

CHAPTER 10 CRAFTING THE BRAND POSITIONING

DEVELOPING AND COMMUNICATING A POSITIONING STRATEGY Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target markets. “Positioning is not what you do to a product, it is what you do to the mind of the prospect. ”- Ries & Trout The result of positioning is the successful creation of customer-focused value proposition.

1. Competitive frame of reference A competitive frame of reference can be determined by the following ways – n By determining category membership The products or sets of products with which a brand competes and which function as close substitutes. n By identifying target markets and competition

2. Points-of-Difference (POD) PODs are attributes or benefits consumers strongly associate with a brand, positively evaluate and believe that they could not find to the same extent with a competitive brand.

3. Points-of-Parity (POP) POPs are associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms – n Category points-of-parity n Competitive points-of-parity

n Category points-of-parity These are associations consumers view as essential to be a legitimate and credible offering within a certain product/service category. n Competitive points-of-parity These are associations designed to negate competitors’ points-of-difference. If a brand can “break even” in those areas where the competitors have failed to find an advantage, the brand should be in a strong competitive position.

DIFFERENTIATION STRATEGIES 1. Product differentiation Brands can be differentiated on the basis of a number of different product/service dimensions. One general positioning for brands is as “best quality” which has positive correlation with ROI. o Quality can be communicated by actual product performance, physical signs and cues, high price, packaging, distribution, and promotion.

2. Personnel differentiation Companies can gain a strong competitive advantage through having better trained people. Better trained personnel exhibit six characteristics a. Competence b. Courtesy c. Credibility d. Reliability e. Responsiveness f. Communication

3. Channel differentiation Companies can achieve competitive advantage through the way they design their distribution channels’ coverage, expertise, and performance. 4. Image differentiation Companies and brands can be differentiated through identity and image.

PRODUCT-LIFE-CYCLE (PLC) MARKETING STRATEGIES The positioning or differentiation strategy must change as the product, market and competitors change over the PLC. ¨ Products have a limited life. ¨ Product sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller. ¨ Profits rise and fall at different stages of PLC. ¨ Products require different strategies in each stage

Primary Recycle Sales volume PLC curves can take different shapes based on product category and includes three patterns- Time a. Growth-slumpmaturity pattern b. Cycle-recycle pattern c. Scalloped pattern

Most PLC curves are portrayed as bell-shaped Sales & profits Profits 0 Time Introduction Growth Maturity Decline

1. Introduction stage n Characteristics- n Marketing objectives- Low sales High costs Negative profits Customers – innovators Few Competitors Create product awareness and trial

n Strategies¨ Product Offer a basic product ¨ Price Use cost-plus ¨ Distribution Build selective distribution ¨ Advertising Build product awareness among early adopters & dealers ¨ Sales promotion Use heavy sales promotion to entice trial

n Pioneer’s advantages ¨ Early users will recall the pioneer’s brand name. ¨ The pioneer’s brand establishes the attributes the product class should possess. ¨ The pioneer’s brand captures more users. ¨ The pioneer’s brand enjoys higher rates of consumer repeat purchases. ¨ Producer gain advantage such as economies of scale, technological leadership, patents, and ownership of scarce assets.

2. Growth stage n Characteristics n Marketing objectives- Rapidly rising sales Average Costs Rising profits Customers - Early adopters Growing number of competitors Maintaining market share

n Strategies¨ The firm improves product quality and adds new product features and improved styling ¨ It adds new models and flanker products ¨ It enters new market segments ¨ It increases its distribution coverage and enters new distribution channels ¨ It shifts from product-awareness advertising to product-preference advertising ¨ It lowers prices to attract the next layer of pricesensitive buyers

3. Maturity stage n Characteristics n Marketing objectives Peak sales Low costs High profits Customers – Middle majority Stable number of competitors beginning to decline Maximize profit while defending market share

n Strategies- 1. Market modification n Expanding the number of brand users by – -- Converting nonusers -- Entering new market segments -- Winning competitors’ customers n Increasing the brand usage rate by convincing users to – -- Use the product on more occasions -- Use more of the product on each occasion -- Use the product in new ways

2. Product modification n Quality improvement n Feature improvement n Style improvement 3. Marketing program modification Modifying other marketing program elements such as -- Prices -- Distribution -- Advertising -- Sales promotion -- Personal selling -- Services

4. Decline stage n Characteristics Marketing objectives Declining sales Low Costs Declining profits Customers – Laggards Declining numbers of Competitors Reduce expenditure and milk the brand

n Strategiesn Product Phase out weak items n Price Cut price n Distribution Go selective: phase out unprofitable outlets n Advertising Reduce to level needed to retain hard-core loyal n Sales promotion Reduce to minimal level