Chapter 7
Differentiation and Brand Positioning
I. “A Sustainable Retailer? Marks & Spencer Says “Yes” in Tangible Ways” discusses how
M&S, the venerable operator of department and food stores in the United Kingdom and abroad,
announced plans to become the world’s most sustainable retailer. M&S uses less energy in its
stores and its fleet (down 20 percent), reduces packaging (down 19 percent in its food business
and 35 percent in general merchandise), and even sends its food waste to anaerobic digestion
plants, which turn it into energy, instead of to landfills.
II. Strategic Challenges Addressed in Chapter 7
Brand positioning refers to both the place a brand occupies in customers’ minds relative
to their needs and competing brands and to the marketer’s decision making intended to
create such a position.
oThus, positioning comprises both competitive and customer considerations.
Brand positioning is basically concerned with differentiation.
Ries and Trout, who popularized the concept of positioning, view it as a creative
undertaking whereby an existing brand in an overcrowded marketplace of similar brands
can be given a distinctive position in the minds of targeted prospects.
Drawing on decisions made about target markets, as discussed in Chapter 6, this chapter
addresses the critical question: “How should a business position its product offering—
whether goods or services—so customers in the target market perceive the offering as
providing the benefits they seek, thereby giving the product an advantage over current and
potential future competitors?”
III. Differentiation: One Key to Customer Preference and Competitive Advantage
In today’s highly competitive markets, consumers have numerous options.
In most cases, consumers or organizational customers choose what they buy for one of two
reasons:
oWhat they choose is better
oWhat they choose is cheaper
In either case, the good or service they choose is, in some way, almost always different
from others they could have chosen: differentiation is why people buy.
A. Differentiation among Competing Brands
Customers in one market segment have wants and needs that differ in some way
from those of customers in other segments.
oBrand positioning allows marketer to take advantage of and be responsive to
such differences and position particular goods and services to better meet the
needs of customers in one or more of these segments.
Creating both physical and perceptual differences, using all elements of the
marketing mix—product, pricing, promotion, and distribution decisions—is what
effective brand positioning seeks to accomplish.
IV. Physical Positioning
One way to assess the current position of a brand relative to competitors is on the basis of
how various brands compare on some set of objectives physical characteristics.
In many cases, a physical positioning analysis:
oProvides useful information to a marketing manager, particularly in the early stages
of identifying and designing new product offerings.
oContributes to a better marketing/R&D interface by determining key physical
product characteristics
oHelps define the structure of competition by revealing the degree to which the
various brands compete with one another
oMay indicate the presence of meaningful product gaps, which, in turn, may reveal
opportunities for a new product entry
A. Limitations of Physical Positioning
A simple comparison of only the physical dimensions of alternative offerings
usually does not provide a complete picture of relative positions because
positioning ultimately occurs in customers’ minds.
Customers’ attitudes toward a product are often based on social or psychological
attributes not amenable to objective comparison.
oConsequently, perceptual positioning analysis—whether aimed at
discovering opportunities for new product entries or evaluating and adjusting
the position of a current offering—is critically important.
V. Perceptual Positioning
Consumers often know very little about essential physical attributes of many of the brands
they buy.
Many consumers do not want to be bothered about a product’s physical characteristics
because they are not buying these physical properties but rather the benefits they provide.
While the physical properties of a product certainly influence the benefits provided, a
consumer can typically evaluate a product better on the basis of what it does than what it
is.
The evaluation of many goods and services is subjective because it is influenced by factors
other than physical properties, including the way the products are presented, our past
experiences with them, and the opinion of others.
VI. Levers Marketers Can Use To Establish Brand Positioning
Marketing decision makers seeking to win a particular position in customers’ minds will
seek to endow their brand with various kinds of attributes, which may be categorized as
follows:
oSimple physically based attributes
oComplex physically based attributes
oEssentially abstract attributes
oPrice
The importance of perceptual attributes with their subjective component varies across
consumers and product classes.
Perceptual attributes must be considered in positioning must products because of the
growing similarity of the physical characteristics of more and more brands.
VII. Preparing the Foundation for Marketing Strategies: The Brand Positioning Process
Positioning a new brand in customer’s minds or repositioning a current brand involves a
series of steps:
oIdentify relevant set of competitive products serving a target market
oIdentify the set of determinant attributes that define the “product space” in which
positions of current offerings are located
oCollect information from a sample of customers and potential customers about
perceptions of each product on the determinant attributes
oDetermine brand’s current location (positioning) in the product space and intensity
thereof
oDetermine customers’ most preferred combination of determinant attributes
oExamine the fit between preferences of market segments and current position of
brands
oWrite positioning statement or value proposition to guide development and
implementation of marketing strategy
These steps are applicable to goods and service, in domestic or international markets, and
to new and existing brands.
A. Step 1: Identify a Relevant Set of Competitive Products
Positioning analyses are useful at many levels.
oAt the company or business unit level, such analyses are useful to determine
how an entire company or business unit is positioned relative to its
competitors.
oAt the product category level, the analysis examines customers’ perceptions
about types of products they might consider as substitutes to satisfy the same
basic need.
oAt product or brand level, an analysis can be helpful to better understand how
various brands appeal to customers, to position proposed new products or
reposition current ones, and to identify where new competitive opportunities
might be found.
At whichever level the position analysis is to be done, the analysts’ choice of
competing products is critical.
oMarketers who omit important substitute products or potential competitors
risk being blindsided by the unforeseen competition.
B. Step 2: Identify Determinant Attributes
Positioning, whether for goods or services, can be based on a variety of attributes—
some in the form of surrogates that imply desirable features or benefits as a
positioning base. Some common bases are the following:
oFeatures are often used in physical product positioning and, hence, with
industrial products.
oBenefits, like features, are directly related to the product.
oParentage includes who makes it and prior products.
oManufacturing process is often the subject of a firm’s positioning efforts.
oIngredients as a positioning concept is illustrated by some manufacturers’
saying their products are made only of a particular kind of material.
oEndorsements are of two types—those by experts and those via emulation.
oComparison with a competitor’s product is common.
oProenvironment positioning seeks to portray a company as a good citizen
oPrice/Quality is used in cases such as Walmart successfully positioning itself
as the lowest-price seller of household products.
Theoretically, consumers can use many attributes to evaluate competing brands, but
the number actually influencing a consumer’s choice is typically small, partly
because consumers can consider only attributes of which they are aware.
The positioning effort must be kept as simple as possible and complexity should
generally be avoided at all costs.
In using one or more attributes as the basis of a brand’s positioning effort, it is
important to recognize that the importance attached to these attributes often varies.
The determinant attribute plays a major role in helping customers to differentiate
among the alternatives and to determine the product they prefer.
Marketers should rely primarily on determinant attributes, whether benefits or
features, in defining the product space in a positioning analysis.
C. Step 3: Collect Data about Customers’ Perceptions for Brands in the Competitive
Set
Having identified a set of competing brands, the marketer needs to know what
attributes are determinant for the target market and product category under
consideration.
oThe marketer also needs to know how different brands in the competitive set
are viewed on these attributes.
Typically, this market knowledge is developed by first conducting qualitative
research, perhaps interviews or focus groups, to learn which attributes are
determinant.
oThen quantitative research follows, perhaps a survey of consumers about their
perceptions, to gather data on how competing brands score on these attributes.
D. Step 4: Analyze the Current Positions of Brands in the Competitive Set
There are two useful tools for developing a clear understanding of the positioning
of the existing brands in the competitive set:
oPositioning grid—also called a perceptual map provides a visual
representation of the positions of various products or brands in the
competitive set in terms of (typically) two determinant attributes. When more
than two attributes are to be considered in a positioning analysis,
multidimensional grids, or multiple grids, are produced.
oValue curve—where more than two attributes are to be considered in a
positioning analysis, a value curve, which comprises of more than just two
dimensions, can also be generated.
Building a Positioning Grid
oStore positioning provides useful information about possible opportunities for
the launching of a new store or the repositioning of an existing one.
oPositioning for a new store could be done by examining the positioning map
for empty spaces (competitive gaps) where no existing store is currently
located.
Building a Value Curve
oValue curves indicate how products within a category compare in terms of the
level—high or low—of as many attributes as are relevant.
oSometimes, value is best delivered by eliminating or reducing the level of
some attributes, especially those not really desired or appreciated by the target
customer, and increasing the level of others, the ones the customer really
wants.
Marketing Opportunities to Gain a Distinct Position
oIn situations where one or a limited number of brands dominate a product
class (or type) in the minds of consumers, the main opportunity for
competitors generally lies in obtaining a profitable position within a market
segment not dominated by a leading brand.
oIn such situations, it is better to concentrate on an attribute prized by
members of a given market segment.
Constraints Imposed by an Intense Position
oRepositioning carries with it the threat of alienating part or all of the product’s
current users regardless of success with its newly targeted group.
oAnother concern is the dilution of an existing intense position as a result of
consolidation.
oAnother danger associated with an intensely positioned brand is the
temptation to overexploit that position by using the brand name on line
extensions and new products.
Limitations of Product Positioning Analysis
oThe product positioning analysis does not tell the marketer which positions
are most appealing to customers. Thus, there is no way to determine if there is
a market for a new brand or store that might locate in an “open” position or
whether the customers in other market segments prefer brands or stores with
different attributes and positions.
To solve such problems, it is necessary to measure customers’
preferences and locate them in the product space along with their
perceptions of the positions of existing brands. This is called a market
positioning analysis.
E. Step 5: Determine Customers’ Most Preferred Combination of Attributes
There are several ways analysts can measure customer preferences and include
them in a positioning analysis.
oFor instance, survey respondents can be asked to think of the ideal brand
within a category—a hypothetical brand possessing the perfect combination
of attributes (from the customer’s viewpoint).
oRespondents could then rate their ideal product and existing products on a
number of attributes.
An alternative approach is to ask respondents not only to judge the degree of
similarity among pairs of existing brands, but also to indicate their degree of
preference for each.
Another method of assessing customers’ preferences and trade-offs among them is a
statistical technique called conjoint analysis.
oCustomers are surveyed and asked their preferences among various real or
hypothetical product configurations, each with attributes that are
systematically varied.
oBy analyzing the resulting data, the marketer can learn which of several
attributes are more important than the others.
Using price as one dimension of a positioning grid, or a key dimension on which a
brand is positioned, is typically not very useful unless price is a key driver of the
marketing strategy. This is the case for two reasons:
oPrice is easily imitable by competitors.
oClaims that one’s brand—whether a good or a service—is low-priced are
sometimes not very credible because so many marketers make such claims.
F. Step 6: Consider Fit of Possible Positions with Customer Needs and Segment
Attractiveness
An important criterion for defining market segments is the difference in the benefits
sought by different customers.
Because differences between customers’ ideal points reflect variations in the
benefits they seek, a market positioning analysis can simultaneously identify
distinct market segments as well as the perceived positions of different brands.
Step 6 not only concludes the analysis portion of the positioning process and
crystallizes the decision about the positioning a brand should hold, but it also can
uncover locations in the product space where additional new brands could be
positioned to serve customer needs not well served by current competitors.
G. Step 7: Write Positioning Statement or Value Proposition to Guide Development
of Marketing Strategy
The final decision about where to position a new brand or reposition an existing one
should be based on both the market targeting analysis and the results of a brand
positioning analysis.
The position chosen should:
oMatch the preferences of a particular market segment and should take into
account the current positions of competing brands
oReflect the current and future attractiveness of the target market (its size,
expected growth, and environmental constraints)
oReflect the relative strengths and weaknesses of competitors
Most successful products are positioned based on one or, at most, two determinant
attributes, whether physical or perceptual.
When there are no real product differences, as in me-too products, or no
differential benefits to the user, not only is success hard to achieve, but also ethical
issues may arise.
Once the desired positioning for the product is determined, it’s a good idea to write
it down so those charged with developing and implementing the marketing strategy
have a clear understanding of what is intended for the product and where it will fit
its competitive set. Two approaches are commonly used for doing so:
oIn the classical approach, a positioning statement is written.
oA more recent approach, one adopted by a growing number of firms, involves
writing a value proposition for the product.
Writing a Positioning Statement or a Value Proposition
oA positioning statement is a succinct statement that identifies the target
market for which the product is intended and the product category in which it
competes and states the unique benefit the product offers.
oBoth positioning statements and value propositions should generally reflect a
unique selling position (USP) that the product embodies.
oIt is important that the positioning statement or value proposition states
benefits that the user will obtain, rather than features or attributes of the
product itself or vague or ambiguous platitudes about high quality or
excellent service.
oThe positioning statements and value propositions are short and succinct and
are typically not written in catchy consumer language, though catchy slogans
and tag lines for communication with customers often follow.
oThe positioning statement or value proposition constitutes the foundation
upon which the marketing strategy is built.
oWhen used at the business level, these statements articulate the strategic
direction toward which the company’s activities in all arenas should be
directed.
VIII. The Outcome of Effective Positioning: Building Brand Equity
Brand equity is the term marketers use to refer to the value created by establishing
customer preference for one’s brand.
It reflects how consumers feel, think, and act toward the brand, and it has implications for
the prices and profits the brand can achieve in the marketplace.
When companies create differences between their brands and other brands, differences that
consumers view as meaningful, brand equity is the result.
A. Managing Brand Equity
While brand positioning decisions are crucial in large companies and to the
development of new brands, whether goods or services, in entrepreneurial start-ups,
there are two ongoing issues that are essential if whatever brand value that has been
built is to be maintained and grown:
oBrand reinforcement
oBrand revitalization
Brand positioning is an ongoing, never-ending process, one in which the best
marketers keep abreast of market and competitive changes in order to maintain and
grow the brand equity they have built.
X. Positioning Decisions in Global Markets
As many industries have undergone consolidation in recent years, the consolidators have
found themselves managing a plethora of brands.
Over time, as the globalization of most media make it possible for consumers to understand
what’s available elsewhere and see how it is positioned, marketers will have to be careful
that marketing messages in one part of the world don’t conflict with established positioning
in another.
IX. Some Caveats in Positioning Decision-Making
It is generally desirable to identify a unique selling proposition that clarifies how the
product is differentiated from others.
oPatrick Barwise and Seán Meehan argue that contrary to conventional wisdom,
buyers rarely look for uniqueness.
oThey argue that the degree to which a brand can grow to dominate its category is a
reflection of how many users in the category believe it delivers the main category
benefits.
A second caveat is the question of whether, if one is to differentiate, the focus should be on
features—tangible attributes of the good or service itself, or the benefits the features
deliver.
The challenge for marketing strategists is to keep benefits as the focus of the value
proposition and at the top of everyone’s mind and find a way to credibly support and
effectively communicate the benefits that are claimed.