978-0132539302 Chapter 9 Lecture Note Part 1

subject Type Homework Help
subject Pages 9
subject Words 4066
subject Authors Kevin Lane Keller, Philip Kotler

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Chapter 9 - Crafting the Brand Positioning and Competing
Effectively
I....................................Chapter Overview/Objectives/Outline
A. Overview
achieve Points-of-Difference
In the marketplace, many companies develop effective products, channels, pricing, and
advertising. However, many of these companies lose in the marketplace. There may be many
reasons, but a critical variable may be an inability to understand the competitive environment
and to gather and utilize data on that environment.
should identify its competitors by using both an industry and market-based analysis.
A company should gather information on competitor strategies, objectives, strengths, weak-
nesses, and reaction patterns. The company should study and understand competitor strategies
in order to identify its closest competitors and take appropriate action. The company should
choose and time its moves.
The firm should collect, interpret, and disseminate competitive intelligence continuously.
Company marketing executives should be able to obtain full and reliable information about any
competitor that could have bearing on a decision. As important as a competitive orientation is
in today’s markets, companies should not overdo their focus on competitors. Changing
considerations are practicing effective market orientation.
B. Teaching Objectives
Stimulate students to recognize and evaluate the critical issues in positioning a product,
along with the research and analysis that goes with it.
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Understand how to identify competitor strategies.
Understand how to determine competitor objectives.
Understand how to estimate competitor reaction patterns.
Know how to design competitive intelligence systems.
Know how to select competitors to attack or avoid.
C. Chapter Outline
I. Introduction
II. Developing and Establishing a Brand Positioning
Positioning is the act of designing the company’s offering and image to occupy a
distinctive place in the mind of a target market. The result of positioning is the
firms have defined their value propositions.
A. Competitive frame of reference –
the competitive analysis focus.
with and which function as close substitutes.
3. Examine competition from both an industry and a market point of view.
a) Industry – group of firms offering a product or class of products
that a re close substitutes for one another.
b) Market approach – define competitors, as companies that satisfy
the same customer need. Refer to the Marketing Insight: High
Growth through Value Innovation.
c) Dynamic markets may require multiple frames of reference
B. Points-of-parity and points-of-difference
1. Points-of-difference (PODs) are attributes or benefits consumers
calories with a great taste)
2. Three criteria determine whether a brand association can function as a
point-of-difference
a) Desirable to consumer
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b) Deliverable by the company
c) Differentiating from competitors
3. Points-of-Parity (POPs) are associations that are not necessarily unique
not necessarily sufficient for brand choice. Category POPs are
dynamic
points-of-difference
C. Choosing POPs and PODs
also have the capability to deliver
2. Consumer criteria for POD - relevant, distinct, believable
communicability, sustainability
4. Perceptual Maps can be used as part of the positioning strategy.
D. Brand Mantras
2. Define the product or benefit space
3. Clarifies what the brand is so employees can act accordingly
4. Good brand mantras communicate the category and clarify the brand’s
uniqueness.
E. Establishing Brand Positioning- ensure that consumers understand what the
brand offers and what makes it a superior competitive choice. Typical approach
is to inform consumers of a brand’s category membership before stating its
point-of-difference. Several ways to convey a brand’s category membership:
1. Announce category benefits - define how specific product or service
offerings link to benefits perceived by the respective category
2. Comparing to exemplars - associate brand with known brands in
category
3. Rely on product descriptor - descriptor that follows a brand’s name can
convey category origin (e.g. XM Satellite Radio places XM in category
that delivers radio via satellite)
III. Differentiation Strategies – Competitive advantage is a company’s ability to perform in
one or more ways that competitors cannot or will not match. A leverageable advantage
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can be used as a springboard to new advantages. TO be effective positioned, customers
must any competitive advantage as a customer advantage.
A. Dimensions of differentiation - products will vary in their ability to be
differentiated. They can be differentiated via:
1. Employee differentiation – e.g. better trained employees who provide
superior customer service
a) Competence (skill and knowledge)
b) Courtesy (respect and consideration)
c) Credibility (trustworthy)
consumers
e) Responsiveness (quick to respond)
f) Communication (ability to understand consumer need)
2. Channel differentiation optimize value chain to maximize value
delivered to customer
a) Amount of market coverage
b) Expertise present throughout channel
integration relative to differentiation strategy
3. Image differentiation - appeal to consumer’s social and psychological
needs.
4. Services differentiation - deliver more effective and efficient solutions to
consumers
a) Ordering ease
b) Delivery - speed, accuracy, and care
c) Installation - making a product operational
services
f) Maintenance and repair - keeping products in good working
order
B. Rational and emotional Components of Differentiation Brand positioning
should have both rational and emotional components with POD’s and POPs that
mind in this industry”.
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3. Share of Heart – Percentage of customers who named the competitor in
responding to the statement, “Name the company from which you would
prefer to buy the product”.
.........................................................................................................................
A. Expanding the Total Market
1. When the total market expands, the dominant firm usually gains the
most.
2. A Market Leader growth may grow by looking for new customers by
using different strategies
use but do not
b) New-market segment strategy i.e. those who have never used it
c) Geographical-expansion strategy i.e. those who live elsewhere
3. A Market Leader may also try to increase the amount, level, or
frequency of product consumption
a) Increase package size generate more consumption
c) To increase frequency
(1) Identify additional opportunities to use the brand in the
same way
(2) Identify completely new and different ways to use the
brand
consumer’s minds
2. Flank Defense – erect outposts to protect a weak front or support a
possible counter attack
3. Preemptive Defense – attack competitor (s) first, achieve broad market
envelopment that signals competitors not to attack
4. Counteroffensive Defense – meet attacker frontally
competitor product
c) Lobby for political action to inhibit the competition
5. Mobile Defense – stretch into new territories
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“energy” company
b) Market Diversification – shift into unrelated industries
6. Contraction Defense – in planned contraction, give up weaker markets
and reassign resources to stronger ones
C. Increasing Market Share – Because the cost of buying higher market share may
far exceed its revenue value, firms should consider four factors first:
1. The possibility of provoking antitrust action – frustrated competitors are
likely to cry “monopoly” and seek legal action
2. Economic cost
a) Cost of gaining further share might exceed the ensuing value
b) Pushing for higher share is less justifiable when there are
unattractive segments, buyers who want multiple sources of
supply, high exit barriers and few economies of scale
c) Increase profitability by selectively decreasing market share in
weaker areas
3. Pursuing the wrong marketing activities
a) Firms that gain share typically outperform competitors in
new-product activity, relative product quality and marketing
expenditures
b) Cutting prices may not yield significant gains because
competitors may match price cuts
4. Effect of increased market share on actual and perceived quality – too many
customers increase the risks of strained resources resulting in overall
poor product quality and service delivery
V. Other Competitive Strategies - firms trailing market leader can attack the leader in an effort
to further market share, i.e. be a market challenger, or settle for being a market
follower.
A. Market Challenger Strategies
1. Frontal attack – match opponents marketing mix. Price cuts may work if
opponent does not retaliate and if the challenger can convince the market
that is mix is equal to the leader’s.
2. Flank attack
a) Identify shifts that are causing gaps the fill gaps
b) Attractive to challenger who is weaker than leader
3. Encirclement attack – launch offensive on multiple fronts
4. Bypass attack –shift battle ground to a place where challenger has
advantage
a) Diversify into unrelated products
b) Diversify into new geographical markets\leapfrog into new
technologies
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5. Guerrilla attack small intermittent attacks, conventional and
unconventional. For example:
a) Selective price cuts
b) Intense promotional blitzes
c) Occasional legal action
B. Market Follower Strategies – not a financially attractive strategy
1. Can be profitable strategy as leader bears expense of developing new
product, establishing distribution and informing the market
2. May be attractive strategy when:
a) Few opportunities exist for product and image differentiation
b) Service quality is comparable
c) High price sensitivity exists
market
4. Cloning strategy – emulate leader’s solutions with slight variations
5. Imitating strategy – copy a few things from the leader but maintain
differentiation of packaging, advertising, pricing or location
6. Adapter strategy take leader’s products and adapt or improve them for
different markets
no interest to larger rivals
2. Larger firms may use niche strategy for some business units
3. Risks – niche may “dry-up” or be attacked
4. Nichers must create new niches, expand existing niches and protect
niches
VI. Executive Summary
II. Lectures
A. “Competitive Intelligence”
should consider the process and implications.
Teaching Objectives
To stimulate students to think about the need for and value of competitive analysis.
To present points to consider in proceeding with development of a competitive analysis
program.
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Discussion
INTRODUCTION
In the textbook and several of the applications exercises, it is clear that segmentation is an
important element in managing a new or existing market. Image, perceived rank, customer
perception, product features, and competitive advantages are the primary tools for positioning a
positioning choice.
There are many examples of positioning strategies that have either succeeded or failed. The
business literature is replete with winners and losers, but the process by which the positioning
strategy has been implemented proves by far to be the most critical variable for determining
success.
discussion, we will look at some of the issues and questions behind choosing the right
sources as well as approaches that might be useful in preparing the competitive
intelligence program that will do the job.
First, the Kotler text gives some excellent examples of how to scan the competitive
in perspective.
THE POSITIONING CONCEPT
Positioning as a strategy started with positioning the product itself. Positioning refers to efforts
to position the product in the mind of the consumer. As Reis and Trout pointed out in the 1960s
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For example, a shampoo cannot maintain a strong position by claiming as its primary benefit
its ability to get the consumer’s hair clean.
Many companies have repositioned, or are attempting to reposition, their products in recent
years. A growing number of firms have repositioned based on one or more service variables.
focusing on a specialty or specific service in their marketing as the means to get the customer
mentally repositioned on who and what they are, compared to their competitors.
To conclude, the primary means for promoting differences include focusing on those
differences that are important, distinctive, superior, communicable, preemptive, affordable, and
profitable.
reposition in the future. For example, few would argue that Trix is positioned as a kid
cereal or that Colgate fights cavities. Nevertheless, there likely will be disagreement
about what Colgate (P&G) is going to do now that it is losing market share, and fighting
cavities is a less important position than whiter teeth and other positioning variables used
hospitals, lawyers, and ice cream.
COMPETITIVE ANALYSIS
The logical starting point for the strategy analysis is to understand effectively the
competitive structure and attractiveness of the industry. It is important to recognize that
some industries are and will be more profitable than others. It is important also to know
Threat of new entrants
Rivalry among existing competitors
Bargaining power of suppliers
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Bargaining power of buyers
Threat of substitutes
loss of confidence that they could produce a profit against the existing competition. This,
in turn, led to massive dot-com failures, consolidation in the industry, and finally the
successful entrance of many major retailers with name, cash, and ability to stay the
course.
At this point, you should be able to develop a thorough analysis of the following, for the
past, present, and future:
Degree of industry concentration
Changes in type and mix of products
Company market shares and share changes
New technology substitution
Each firm’s vulnerability to new technology
In addition to these specific competitive characteristics, the firm should focus on the
various financial, economic, technological, and socio-political factors in the industry
Company Web sites and literature
Industry trade show observation and contacts
Online databases, including Lexis-Nexis, EBSCO, First Source, PROMPT, Trade &
Industry, and Investext, along with various other online sources, such as the TV networks,
Hoover, investment houses (Schwab, Merrill Lynch, etc.), The Wall Street Journal (WSJ),
BusinessWeek (BW), etc.
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what it takes to be a superior performer in industry. Information that may assist in this
process might include some or all of the following:
How the industry might change, in the short to long term.
How the competing firms within an industry differ in the way in which the
competitive forces influence each of the competitors.
This should lead to a clear understanding and listing of market position by product, citing
product strengths and weaknesses individually and in the overall product line.
Among the sources for this information are company Web sites, company product
literature, WSJ, BW, and online databases including DIALOG, LEXIS-NEXIS, and
Hoover.
analysis. Some of the better sources for this could include: Claims, World Patent Index,
Derwent, and IFI/Plenum Claims. Company Web sites and trade show industry contacts
also can provide valuable clues in this part of the effort.
The last piece of information needed in this section of the competitive intelligence
insight.
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