MARKETING MANAGEMENT Crafting the Brand Positioning Marketing Strategy

MARKETING MANAGEMENT Crafting the Brand Positioning

Marketing Strategy Segmentation Targeting *Positioning* 2

Chapter Questions • How can a firm choose and communicate an effective positioning in the market? • How are brands differentiated? • What marketing strategies are appropriate at each stage of the product life cycle? • What are the implications of market evolution for marketing strategies? 3

Developing and Communicating a Positioning Strategy • Positioning: The act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market. • Value proposition: a cogent reason why the target market should buy the product. 4

Positioning for Competitive Advantage • Market positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products, In the minds of target consumers, • Formulating competitive positioning for a product, and creating a detailed marketing mix • Marketers must: – Plan positions to give products the greatest advantage – Develop marketing mixes to create planned positions typically defined by consumers on the basis of important attributes. – Involves & implanting the brand’s unique benefits and differentiation in the customer’s mind. 5

Value Propositions • Perdue Chicken – More tender golden chicken at a moderate premium price • Domino’s – A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price 6

Examples of Value Propositions Company and Product Target Customers Diff. Benefits Price Value Proposition Perdue (chicken) Quality. Tenderness conscious consumers of chicken 10% premium More tender golden chicken at a moderate premium price Volvo (station wagon) Safetyconscious “upscale” families Durability and safety 20% premium The safest, most durable wagon in which your family can ride Domino’s (pizza) Convenienceminded pizza lovers Delivery speed and good quality 15% premium A good hot pizza, delivered to your door within 30 minutes of 7

Positioning: example 8

Writing a Positioning Statement – Positioning statement format: “To (target market and need) our (brand) is (concept) that (point of difference)” 9

Writing a Positioning Statement Mountain Dew: “To young, active soft-drink consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine. ”? ? (www. mountaindew. com; fun, exhilaration, energy) 10

Positioning Errors • Under positioning: Failing to really position the brand at all (vague idea) • Over positioning: Giving buyers too narrow image of the brand. • Confused Positioning: Leaving buyers with a confused image of the company. 12

Differentiation • Differentiation: the process of adding a set of meaningful and valued differences to distinguish a company’s offering from competitors’ offerings. – Differentiation strategies: • • • Product Services Personnel Channel Image 13

2. Consumer Goods Classifications Classified by shopping habits Convenience goods Shopping goods Specialty goods Unsought goods

2. Consumer Goods Classification 2. 1 Convenience goods : Staples Goods: Goods consumers purchase on a regular basis (Toothpast). Impulse Goods: Purchased without any planning or search efforts (Magazines). Emergency Goods: Are purchased when a need is urgent (umbrellas during a rainstorm).

2. Consumer Goods Classification 2. 2 Shopping goods : The bases are the suitability quality, price and style Homogeneous shopping goods: Are similar quality but different enough in price to justify shopping comparisons. Heterogeneous shopping goods: Offer in product features & services that maybe more important than

Comparative Between Convenience & Shopping Goods Convenience Goods Limit Distribution Convenience Distribution High Price Reasonable Price Low life cycle High life cycle Needs planning or search efforts Purchased without planning or search efforts Selective distribution policy Intensive distribution policy

Form Feature Performance quality Durability Many products can be differentiated in form (Size, shape, physical structure of a product. The company should consider how many people want each feature, how much it would take to introduce each feature, and think of feature bundles or packages. Most products are established at one of four performance levels: Low, average, high or superior. A measure of the product's expected operating life under natural or stressful conditions, is a valued attribute for certain products.

Reliability Style Measure of the probability that a product will not fail within a specified time period. Describe the product's look and feel to the buyer. Conformance Quality Is the degree to which all the produced units are identical and meet the promised specifications Repairability Is a measure of the ease of fixing a product when it malfunction or fails.

Services Differentiation: Ordering ease: refers to how easy it is for the customer to place an order with the company. Delivery: to how well the product or service is delivered to the customer. Installation: refers to the work done to make a product operational in its planned location.

Services Differentiation: Customer training: refers to training the customer’s employees to use the vendor’s equipment properly and efficiently. Customer consulting: refers to data, information systems, and advice services that the seller offers to buyers. Maintenance & repair: describes the service program for helping customers keep purchased products in good working order.

Brand Decision The AMA definition of a brand: “A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition. ”

Packaging and Labeling Packaging : Is all the activities of designing and producing the container for a product.

Packaging includes: Ø The primary package Ø The secondary package Ø The shipping package Packaging has become as marketing tool, well designed packages can create convenience & promotional value.

The label may be a simple tag attached to the product or an elaborately designed graphic that is part of the package.

Labeling functions: Identifies the product or brand May identify product grade May describe the product May promote the product Legal restrictions impact packaging for many products.

Warranties & guarantees Warranties: are formal statements of expected product performance by the manufacturer. Guarantees are most effective in two situations: The company or the product is not well know. The product's quality is superior to the competition.

Warranties and guarantiees • Guarantees 1 - Reduce the buyer perceived risk. 2 - Suggest that the product is of high quality. 3 - Company and its service performance are dependable. 4 - Enables the company to charge a higher price than a competitor who is not offering an equivalent guarantee. 28

Defining Associations Points-of-parity Points-of-difference (PODs) (POPs) • Attributes or benefits • Associations that are consumers strongly not necessarily unique associate with a brand, to the brand but may positively evaluate, and be shared with other believe they could not brands find to the same extent with a competitive brand 29

Conveying Category Membership • Announcing category benefits • Comparing to exemplars • Relying on the product descriptor 30

Consumer Desirability Criteria for PODs • Relevance • Distinctiveness • Believability 31

Deliverability Criteria for PODs • Feasibility • Communicability • Sustainability 32

Examples of Negatively Correlated Attributes and Benefits • Low-price vs. High quality • Taste vs. Low calories • Nutritious vs. Good tasting • Efficacious vs. Mild • Powerful vs. Safe • Strong vs. Refined • Ubiquitous vs. Exclusive • Varied vs. Simple 33

Addressing negatively correlated PODs and POPs • Present separately • Leverage equity of another entity • Redefine the relationship 34

Adding further differentiation Important Profitable Affordable Preemptive Criteria for Determining Which Differences to Promote Distinctive Superior Communicable 35

• Important the difference delivers a highly valued benefit to a sufficient number of buyers. • Distinctive the company can offer it in a more distinctive way. • Superior the difference is superior to other ways that customers might obtain the same benefit. 36

• Preemptive competitors cannot easily copy the difference. • Affordable buyers can afford to pay for the difference. • Profitable the company can introduce the difference profitably. 37

Differentiation Strategies Product Personnel Channel Image 38

Differentiation Variables Product Services Personnel Channel Image Form Ordering ease Competence Coverage Symbols Features Delivery Courtesy Expertise Media Performance Installation Credibility Performance Atmosphere Conformance Customer training Reliability Durability Customer consulting Responsiven ess Events 39

Product Differentiation ‘Dunkin’ Donuts’ 40

Product Differentiation • • Product form Features Performance Conformance Durability Reliability Reparability • • Style Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance 41

Personnel Differentiation: Singapore Airlines 42

Channel Differentiation 43

Image Differentiation 44

Product Life Cycle The product life cycle begins when the company finds and develops a new product idea. During product development, the company accumulates increasing investment costs. After the company launches the product, sales pass through an introductory period, then through a period of strong growth, followed by maturity and eventual decline. Meanwhile profits go from negative to positive, peak in the growth or mature sales stages, and then decline. 45

Claims of Product Life Cycles • Products have a limited life • Product sales pass through distinct stages each with different challenges and opportunities • Profits rise and fall at different stages • Products require different strategies in each life cycle stage 46

The Product Life Cycle Concept is Based on Four Premises: Products have a limited life Profits from a product vary at different stages in the life cycle Product sales pass through distinct stages, each with different marketing implications Products require different strategies at different life cycle stages 47

Product life cycle stages: 1. Introduction: A period of slow sales growth as the product is introduced in the market, profit nonexistent because of the heavy expenses of product introduction. 2. Growth: A period of rapid market acceptance & substantial profit improvement. 3. Matiurity: A slowdown in sales growth because the product has achieved acceptance by most potential buyers, profit stabilize or decline because of increased competition. 4. Decline: Sales show a downward drift & profit erode. 48

Product Life Cycle 49

PLC Stages and Characteristics 50

Introduction Stage of the PLC Sales Low sales Costs High cost per customer Profits Product Negative Create product awareness and trial Offer a basic product Price Use cost-plus Distribution Build selective distribution Build product awareness among early adopters and dealers Marketing Objectives Advertising 51

Growth Stage of the PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Product Maximize market share Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market 52

Strategies for Sustaining Rapid Market Growth • Improve product quality, add new features, and improve styling • Add new models and flanker products • Enter new market segments • Increase distribution coverage • Shift from product-awareness advertising to product-preference advertising • Lower prices to attract the next layer of pricesensitive buyers 53

Maturity Stage of the PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Product Price Distribution Advertising Maximize profit while defending market share Diversify brand models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits 54

Maturity Stage: Strategies Marketers can extend the life of the brand by the following methods: § Market modification: converting nonusers & entering new market segments. § Product modification: quality and features improvements. § Marketing-mix modification: Price, distribution, advertising, sales promotion, services. 55

Ways to Increase Sales Volume • • Convert nonusers Enter new market segments Attract competitors’ customers Have consumers use the product on more occasions • Have consumers use more of the product on each occasion • Have consumers use the product in new ways 56

Decline Stage of the PLC Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Product Price Distribution Advertising Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers 57

Product in Decline 58

Decline Stage: Strategies • Increasing the firm's investment ( to dominate the market or strengthen its competitive position. ) • Maintaining the firm’s investment level until the uncertainties about the industry are resolved. • Decreasing the firm’s investment level selectivity, by dropping unprofitable customers, while simultaneously strengthening the firm’s investment in lucrative niches. • Harvesting the firm’s investment to recover cash quickly. • Divesting the business quickly by disposing of its assets as advantageously as possible. 59