DIFFERENTIATION AND POSITIONING

No company can win if its products and offerings resemble every other product and offering.

Developing and Communicating a Positioning Strategy

Differentiation Strategies

Marketing strategy formulation consist of

1) STPD 2) Marketing Mix formulation

Positioning is the act of fixing the locus of the product offer in the minds of the target consumers. The marketer decides how and around what parameters, the products offer will be placed before the target consumer. He is seeking a platform for his offer. But the platform is in the mind of the consumer.

Differentiation and positioning are related

While in differentiation the work mainly revolves around endowing the offer with certain differential advantage, in positioning the attempt is to reach this offer to a particular place in the prospects mind through an appropriate positioning logic/theme consistent with the product value proposition E.g Nestle-Maggie Kellogs- cereals as breakfast food. Cadbury

How to spot the differing value needs of consumer?

Consumer research technique such as

Perceptual mapping, Conjoint analysis, Trade off analysis, Focus group , Laddering, TAT

and a variety of observation techniques are available to the marketer to locate the differing value needs of buyers.

Developing and Communicating a Positioning Strategy

Competitive Frame of Reference Points-of-Parity and Points-of-Difference
points-of-parity points-of-difference points-of-parity versus points-of-difference

Establishing Category Membership

Choosing POPs and PODs

Creating POPs and PODs

Developing and Communicating a Positioning Strategy

All marketing strategy is built on STPSegmentation, Targeting, and Positioning. A company discovers different needs and groups in the marketplace, targets those needs and groups that it can satisfy in a superior way, and then positions its offering so that the target market recognizes the company's distinctive offering and image. If a company does an excellent job of positioning, then it can work out the rest of its marketing planning and differentiation from its 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 market. The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. The word "positioning" was popularized by two advertising executives, Al Ries and Jack Trout. They see positioning as a creative exercise done with an existing product

According to virtually all approaches, positioning requires that similarities and differences between brands be defined and communicated. Specifically, deciding on a positioning requires determining a frame of reference by identifying the target market and the competition, and identifying the ideal points-ofparity and points-of-difference brand associations.

Competitive Frame of Reference A starting point in defining a competitive frame of reference for positioning is to determine category membershipthe products or sets of products with which a brand competes and which function as close substitutes.

Points-of-Parity and Points-of-Difference Once the competitive frame of reference for positioning has been fixed by defining the customer target market and nature of competition, marketers can define the appropriate points-of-difference and points-of-parity associations. Points-of-Difference (USP) Points-of-difference (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. Strong, favorable, and unique brand associations that make up points-of-difference may be based on virtually any type of attribute or benefit. Examples are FedEx {guaranteed overnight delivery), Nike {performance), and Lexus {quality). Creating strong, favorable, and unique associations as points-of-difference is a real challenge, but essential in terms of competitive brand positioning.

Points-of-Parity Points-of-parity (POPs), on the other hand, 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: category and competitive.

Category points-of-parity are associations consumers view as essential to be a legitimate and credible offering within a certain product or service category. In other words, they represent necessarybut not necessarily sufficientconditions for brand choice. Consumers might not consider a travel agency truly a travel agency unless it is able to make air and hotel reservations, provide advice about leisure packages, and offer various ticket payment and delivery options. Category pointsof-parity may change over time due to technological advances, legal developments, or consumer trends, but they are the "greens fees" to play the marketing game.

Competitive points-of-parity are associations designed to negate competitors' points-of-difference. In other words, if a brand can "break even" in those areas where the competitors are trying to find an advantage and can achieve advantages in other areas, the brand should be in a strongand perhaps unbeatable competitive position. As another example, consider the introduction of Miller Lite beer.

MILLER LITE The initial advertising strategy for Miller Lite beer had two goalsassuring parity with key competitors in the category by stating that it "tastes great," while at the same time creating a point-of-difference: It contained one-third less calories and was thus "less filling" than regular, full-strength beers.

As is often the case, the point-of-parity and point-of-difference were somewhat conflicting, as consumers tend to equate taste with calories. To overcome potential resistance, Miller employed credible spokespeople, primarily popular former professional athletes, who would presumably not drink a beer unless it tasted good. These ex-jocks humorously debated which of the two product benefits"tastes great" or "less filling"was more descriptive of the beer. The ads ended with the clever tagline "Everything You've Always Wanted In a Beer ... And Less."
Dettol and Savlon

POINTS-OF-PARITY VERSUS POINTS-OF-DIFFERENCE

To achieve a point-of-parity (POP) on a particular attribute or benefit, a sufficient number of consumers must believe that the brand is "good enough" on that dimension. There is a "zone" or "range of tolerance or acceptance" with points-ofparity. The brand does not literally have to be seen as equal to competitors, but consumers must feel that the brand does well enough on that particular attribute or benefit. With points-of-difference, however, the brand must demonstrate clear superiority. Consumers must be convinced that Louis Vuitton has the most stylish handbags, Energizer is the longest-lasting battery, and Merrill Lynch offers the best financial advice and planning. Often, the key to positioning is not so much in achieving a point-of-difference (POD) as in achieving points-of-parity!

VISA VERSUS AMERICAN EXPRESS Visa's POD in the credit card category is that it is the most widely available card, which underscores the category's main benefit of convenience. American Express, on the other hand, has built the equity of its brand by highlighting the prestige associated with the use of its card. Having established their PODs, Visa and American Express now compete by attempting to blunt each others' advantage to create POPs. Visa offers gold and platinum cards to enhance the prestige of its brand and advertises, "It's Everywhere You Want to Be" in settings that reinforce exclusivity and acceptability.

American Express has substantially increased the number of vendors that accept its cards and created other value enhancements through its "Make Life Rewarding" program.

Choosing POPs and PODs Points-of-parity are driven by the needs of category membership (to create category POPs) and the necessity of negating competitors' PODs (to create competitive POPs).

In choosing points-of-difference, two important considerations are that consumers find the POD desirable and that the firm has the capabilities to deliver on the POD
There are three key consumer desirability criteria for PODs.

1)Relevance. 2)Distinctiveness. 3)Believability.

There are three key deliverability criteria. 1)Feasibility. 2)Communicability. 3)Sustainability.

1.Relevance. Target consumers must find the POD personally relevant and important. The Westin Stamford hotel in Singapore advertised that it was the world's tallest hotel, but a hotel's height is not important to many tourists. 2. Distinctiveness. Target consumers must find the POD distinctive and superior. When entering a category where there are established brands, the challenge is to find a viable basis for differentiation. Splenda sugar substitute overtook Equal and Sweet 'n Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar, without any of the associated drawbacks.

3. Believability. Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. Mountain Dew may argue that it is more energizing than other soft drinks and support this claim by noting that it has a higher level of caffeine.

1. Feasibility. The firm must be able to actually create the POD. The product design and marketing offering must support the desired association. Does communicating the desired association involve real changes to the product itself, or just perceptual ones as to how the consumer thinks of the product or brand? It is obviously easier to convince consumers of some fact about the brand that they were unaware of and may have overlooked than to make changes in the product and convince consumers of these changes. General Motors has had to work to overcome public perceptions that Cadillac is not a youthful, contemporary brand. 2. Communicability. It is very difficult to create an association that is not consistent with existing consumer knowledge or that consumers, for whatever reason, have trouble believing. Consumers must be given a compelling reason and understandable rationale as to why the brand can deliver the desired benefit. What factual, verifiable evidence or "proof points" can be given as support so that consumers will actually believe in the brand and its desired associations? Substantiators often come in the form of patented, branded ingredients, such as Nivea Wrinkle Control Creme with Q10 co-enzyme or Herbal Essences hair conditioner with Hawafena.

3. Sustainability. Is the positioning preemptive, defensible, and difficult to attack? Can the favorability of a brand association be reinforced and strengthened over time? If yes, the positioning is likely to be enduring. Sustainability will depend on internal commitment and use of resources as well as external market forces. It is generally easier for market leaders such as Gillette, Intel, and Microsoft, whose positioning is based in part on demonstrable product performance, to sustain their positioning than for market leaders such as Gucci, Prada, and Hermes, whose positioning is based on fashion and is thus subject to the whims of a more fickle market.

Creating POPs and PODs One common difficulty in creating a strong, competitive brand positioning is that many of the attributes or benefits that make up the points-of-parity and points-ofdifference are negatively correlated. If consumers rate the brand highly on one particular attribute or benefit, they also rate it poorly on another important attribute. For example, it might be difficult to position a brand as "inexpensive" and at the same time assert that it is "of the highest quality." Table 10.2 displays some other examples of negatively correlated attributes and benefits. Moreover, individual attributes and benefits often have positive and negative aspects. For example, consider a long-lived brand that is seen as having a great deal of heritage. Heritage could suggest experience, wisdom, and expertise. On the other hand, it could also easily be seen as a negative: It might imply being old-fashioned and not up-to-date. 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

Development of a positioning platform can be broken into a six-step process: 1. 2. 3. 4. 5. Identifying competitors. Assessing consumers perceptions of competitors. Determining competitors positions. Analyzing the consumers preferences. Making the positioning decision. 1. Is the segmentation strategy appropriate? 2. Are there sufficient resources available to communicate the position effectively? 3. How strong is the competition? 4. Is the current positioning strategy working? 6. Monitoring the position.

A number of positioning strategies might be employed in developing a promotional program. Positioning by Product attributes, Price/quality, Use, Product class, Users, and Competitor. Positioning by cultural symbols.

Positioning by Product Attributes and Benefits A common approach to positioning is setting the brand apart from competitors on the basis of the specific characteristics or benefits offered. Sometimes a product may be positioned on more than one product benefit. Marketers attempt to identify salient attributes (those that are important to consumers and are the basis for making a purchase decision). For example, when Apple first introduced its computers, the key benefit stressed was ease of usean effective strategy, given the complexity of computers in the market at that time. Consider, the example of Ariel that offers the specific benefit of cleaning even the dirtiest of clothes, because of the micro cleaning system in the product.

Colgate offers benefits of venting cavities and ensuring fresh breath. Promise, Balsara's toothpaste, could break Colgate's hold by being the first to claim that it contained clove.
Maruti offers benefits of maximum fuel efficiency and safety over its competitors..

Positioning by Price/Quality

Marketers often use price/quality characteristics to position their brands. One way they do this is with ads that reflect the image of a high quality brand where cost, while not irrelevant, is considered secondary to the quality benefits derived from using the brand. Premium brands positioned at the high end of the market use this approach to positioning.
Another way to use price/quality characteristics for positioning is to focus on the quality or value offered by the brand at a very competitive price. Remember that although price is an important consideration, the product quality must be comparable to, or even better than, competing brands for the positioning strategy to be effective.

Positioning by Use or Application Another way to communicate a specific image or position for a brand is to associate it with a specific use or application. For example,

For example, Arm & Hammer baking soda has been promoted for everything from baking to relieving heartburn to eliminating odors in carpets and refrigerators
Surf Excel is positioned as stain remover Surf Excel haina!

Consider, the example of Rasna, the soft drink concentrate. None of the soft drink brands offer the convenience, economy, and range of flavours that Rasna does. Hence, its positioning as a soft drink when one is fatigued after shopping or a day's work, when there is a party, when guests arriving suddenly or when one feels thirsty. The brand's claim is that it is so simple to make, that even a child can do it. Rasna was the first brand of soft drink concentrate to position itself in this manner.
For example, video cassette recorders (VCR) could be used for playing, recording, and regulating the pace at which different scenes can be watched (like pause, fast forward).

Positioning by Product Class

Often the competition for a product comes from outside the product class. For example, airlines know that while they compete with other airlines, trains and buses are also viable alternatives.

Amtrak has positioned itself as an alternative to airplanes, citing cost savings, enjoyment, and other advantages.
Manufacturers of music CDs must compete with MP3 players; many margarines position themselves against butter. Rather than positioning against another brand, an alternative strategy is to position oneself against another product category..

Positioning by Product User

Positioning a product by associating it with a particular user or group of users is yet another approach.

Bullet, Rajdoot A firm may even position the brand as a lifestyle conceptcontemporary or futuristic. Many of today's new kitchen appliances (like the microwave oven), ready made garments, textiles and, watches are positioned accordingly.

Positioning by Competitor

Competitors may be as important to positioning strategy as a firms own product or services. As Trout and Ries observe, the old strategy of ignoring ones competition no longer works.

Perhaps the best-known example of this strategy was Avis, which positioned itself against the car-rental leader, Hertz, by stating, Were number two, so we try harder Onida was positioned against the giants in the television industry through this strategy, ONIDA colour TV was launched with the message that all others were clones and only Onida was the leader. neighbours Envy, Owners Pride.

Positioning by Cultural Symbols Aaker and Myers include an additional positioning strategy in which cultural symbols are used to differentiate brands An additional positioning strategy where in the cultural symbols are used to differentiate the brands. Examples would be Humara Bajaj, Tata Tea, Ronald McDonald. Each of these symbols has successfully differentiated the product it represents from competitors. Similarly Air India advertises with the use of the Maharaja as its symbol thereby associating itself with the Indian heritage. Chevrolet Optra used this to position its luxury car in the young, successful, and upwardly mobile Indian professionals' market. Taking the situation of a wife waiting for the moon to appear on Karva Chauth night (the day when North Indian married women, fast above daylong for their husband's long life), it shows the young Indian male professional taking her out for a drive in his Chevrolet Optra, until she is able to sight the moon from the car.

High Moisturizing Tone 4 5 Coast Non Deodorant Lux 3 8 Dove 2 Safeguard Deodorant 1 Dial Lifebuoy Lava 6 7

Zest Lever

Low Moisturizing

Mc Carthy

Has a touch of class A car I would be proud to own Distinctive looking

Lincoln
Cadillac Mercedes Chrysler BMW Lexus Porsche

Oldsmobile

Buick

Pontiac Honda Chevrolet Nissan

Conservative Looking Appeals to older people

Toyota
Dodge Plymouth

High Spirited Performance Appeals to young people fun to drive sporty looking
Hyundai

VW

Very Practical Provides good gas mileage Affordable

Differentiation Strategies

Brands can be differentiated on the basis of many variables. Southwest Airlines has differentiated itself in several different ways.

SOUTHWEST AIRLINES

The Dallas-based airline carved its niche in short-haul flights with low prices, reliable service, and a healthy sense of humor. Southwest keeps costs low by offering only basic in-flight service (no meals, no movies) and rapid turnaround at the gates to keep the planes in the air. Southwest knew that it could not differentiate on price alone because competitors could try to muscle into the market with their own cheaper versions. The airline has also distinguished itself as a "fun" airline, noted for humorous in-flight commentary from pilots and cabin crew members. Another popular feature of Southwest flights is the first-come, first-served open seating: Passengers are given numbered cards based on when they arrive at the gate. Southwest is now the nation's sixth-largest airline in revenue, and holds the distinction of being the only low-fare airline to achieve long-term success.

Product Differentiation Personnel Differentiation Channel Differentiation Image Differentiation

Product Differentiation Brands can be differentiated on the basis of a number of different product or service Dimensions: Product form, Features, Performance, Conformance, Durability, Reliability, Reparability, Style, and Design,

Service dimensions as Ordering ease, Delivery, Installation, Customer training, Customer consulting, and Maintenance and repair.

-A brand is a outcome of all the differentiator infused into the product. A brand can be viewed as the sum of the various differentiator that are bundled into the offering.
- A strong differentiator is a real challenge to competition. When multiple differentiator are added to the product the brand becomes unassailable. When such differentiator add value for the customer the brand succeeds. Product lends the maximum scope for differentiation. While all the 4 Ps (7 Ps) of marketing are important in rendering a market offer distinct, the remaining 3 PS normally go as elaboration of the core of the offer- the product. Product differentiation is based on - Tangible product attributes. - Intangible attributes & emotional association

Product differentiation is based on - Tangible product attributes. 1) Ingredient and formula 1) Close up gel. 2) TTK prestige with gel. 3) Vatika with herbal ingredient. 4) Ariel with carezyme 5) Promise Clove. 6) Neem tooth paste. 2) Functional Features 1) Paint with insecticide. 2) South west airline 3) Paint which keeps home cool 3) Differentiation based on Additional features 1) Size as differentiator (TV Fridge). 2) Suitcase with wheel. 3) Mobile phone with additional features. 4) Differentiation on Packaging 1) Tetrapack 2) Ease of opening & pouring or eating ( Biscuit Tray).

5) Differentiation through product design/Styling 1) Kinetic Honda scooter (Auto start, Autostart, automatic gear shifting . 2) Titan Watches. 3) Apple Mac book. 4) M & M Scorpio. 5) Bajaj Pulsar. 6) Differentiation on product quality/ Technology 1) LG refrigerators bets on Technology (Antibacterial shield with silver ion technology and ice beam for door cooling. 2) DTSI/MPFI 3) Dolby Digital

7) Differentiation on customer care and service 1) LG 2) Dominos pizza 3) Air express companies

Product differentiation is based on - Intangible product attributes.

1) Prestige/ Status
2) Sentiments 3) Beliefs Image Differentiation

Marlboro's "macho cowboy" image has struck a responsive chord with much of the cigarette-smoking public. Wine and liquor companies also work hard to develop distinctive images for their brands.

Identity and image need to be distinguished. Identity is the way a company aims to identify or position itself or its product. Image is the way the public perceives the company or its products.

Personnel Differentiation 1. McDonald's people are courteous, 2. IBM people are professional, and Disney people are upbeat. 3. The sales forces of such companies as General Electric, Cisco, Frito-Lay, Northwestern Mutual Life, and Pfizer enjoy an excellent reputation. 4. L&T, the engineering firm, recruits engineers with excellent qualification & claims superiority on executing projects. 5. Singapore Airlines enjoys an excellent reputation in large part because of its flight attendants.

Better-trained personnel exhibit six characteristics: 1) 2) 3) 4) 5) 6) Competence: They possess the required skill and knowledge Courtesy. They are friendly, respectful, and considerate Credibility. They are trustworthy Reliability. They perform the service consistently and accurately Responsiveness: They respond quickly to customers' requests and problems Communication: They make an effort to understand the customer and communicate clearly

Channel Differentiation

Companies can achieve competitive advantage through the way they design their distribution channels' coverage, expertise, and performance. Caterpillar's success in the construction-equipment industry is based partly on superior channel development. Its dealers are found in more locations than competitors' dealers, and they are typically better trained and perform more reliably. Catterpillar , the global leader in earth moving equipment, made a mark through its distribution efficiency and top class maintenance service. Dell in computers and Avon in cosmetics distinguish themselves by developing and managing high-quality direct-marketing channels

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