978-0134058498 Chapter 10 Lecture Notes

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LEARNING OBJECTIVES

In this chapter we will address the following questions:

1. How can a firm develop and establish an effective positioning in the market?

2. How do marketers identify and analyze competition?

3. How are brands successfully differentiated?

4. How do firms communicate their positioning?

5. What are some alternative approaches to positioning?

6. What are the differences in positioning and branding for a small business?

SUMMARY

1. To develop an effective positioning, a company must study competitors as well as

actual and potential customers. Marketers need to identify competitors’ strategies,

objectives, strengths, and weaknesses.

2. Developing a positioning requires identifying a frame of reference—by locating the

target market and the nature of the competition—and the optimal points-of-parity and

points-of-difference brand associations.

3. A company’s closest competitors are those seeking to satisfy the same customers and

needs and making similar offers. A company should also pay attention to latent

competitors, who may offer new or different ways to satisfy the same needs. Industry-

and market-based analyses both help uncover competitors.

4. Points-of-difference are those associations unique to the brand that are also strongly

held and favorably evaluated by consumers. These differences may be based directly

on the product or service itself or on other considerations related to employees,

channels, image, or services. Points-of-difference must be desirable (from a consumer

standpoint), deliverable (from a company standpoint), and differentiated (from a

competitor standpoint).

5. Points-of-parity are those associations not necessarily unique to the brand but perhaps

shared with other brands. They help to negate any potential weaknesses for the brand.

Category point-of-parity are associations consumers view as being necessary to a

legitimate and credible product offering within a certain category. Correlational

points-of-parity are associations designed to overcome perceived weaknesses or

vulnerabilities of the brand. Competitive point-of-parity are associations designed to

negate competitors’ points-of-difference.

6. Emotional branding is becoming an important way to connect with customers and

create differentiation from competitors. Emotional differences are often most powerful

when they are connected to underlying functional differences.

7. Several different alternative approaches exist to position a product or service. These

less structured, more qualitative approaches are based on concepts such as brand

C H A P T E

R 1

CRAFTING THE BRAND

POSITIONING

narratives and storytelling, brand journalism, and cultural branding.

8. Although small businesses should adhere to many of the branding and positioning

principles larger companies use, they must place extra emphasis on their brand

elements and secondary associations, be more focused, and create buzz for their brand.

OPENING THOUGHT

A barrier to effective learning that can be experienced by students in this chapter comes

from the concept of “positioning.” Students will be familiar with different products or

services, but having them realize what the products and services “positions are” within

their frame of references is challenging to verbalize. The instructor is encouraged to use a

number of examples of products or services familiar to the students to get this concept

fully across.

Secondly, the understanding of the terms point-of-differences (PODs) and points-of-parity

(POPs) can easily be confused. The instructor is encouraged to use a number of similar

products (computers, cell phones, pens, tablets for example) and ask students to differentiate

these products in terms of the product’s POPs and PODs; and why these concepts are so

important to the marketing of products. A key example of a new product with a pronounced

POD is Apple’s iPhone 6.

The third challenge presented in this chapter is an understanding that products and markets

have a life cycle and undergo changes throughout that process. Again, the use of product or

service examples familiar to the students is encouraged to communicate the different stages of

a product’s life cycle.

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS

1. At this point in the semester, student projects should be completed to include their

fictional product or service’s brand positioning. In relationship to the material

contained in the chapter, students should have delineated and designed a

differentiated brand positioning for their project.

2. Relevant to the opening vignette of the chapter concerning The Public Broadcasting

Service’s positioning and differentiation, students are to devise a positioning and

differentiation strategy for their own local PBS system (radio or television). Students

should arrange to meet with local PBS management to elicit information on what

challenges their local station(s) is/are having in increasing their viewership/listeners.

What stage in the product’s life cycle (PBS is the product) does your local station

fall? What level of competitive advantage, if any, commensurate with the position in

the life cycle, does your local PBS station(s) command? What can be done to reverse

or continue these trends?

3. Sonic PDA Marketing Plan: The third part of STP is to select and communicate an

effective positioning to differentiate your offering from competitors’ offerings. The

marketer must also plan for appropriate marketing strategies for each stage of the

product life cycle. As you continue your work to develop Sonic’s marketing plan for

launching Sonic 1000, consider these questions about differentiation and life-cycle

strategies:

Which of the differentiation variables related to product, services, personnel,

channels, and image are best suited for Sonic’s situation, strategy, and marketing

objectives? Why?

Knowing the stage of the product life cycle for Sonic 1000, what are the

implications for the marketing mix, product management strategy, service

strategy, and R&D strategy?

Record your answers in a written marketing plan or type them in the Positioning section

of Marketing Plan Pro. Note any additional research you may need in the Marketing

Research section of Marketing Plan Pro.

ASSIGNMENTS

The Web site www.allaboutbranding.com lists a number of articles and books about

branding products today. Assign students the objective of reading four articles from the

Web site and commenting in class about the information contained in the articles and

what new information about branding they learned.

Most campus communities have their own radio and/or television broadcasting stations.

If one is present on your campus, students are to define the college or university’s

station(s) in terms of positioning and differentiation strategy. What stage in the product’s

life cycle are the station(s)? What can be done to reposition the station(s) to attract more

viewership? What is the competitive advantage present in their operations?

Determining the proper competitive frame of reference requires understanding consumer

behavior and the consideration sets consumers use in making brand choices. For a set of

three products or services (selected by the students) students should research these

companies and provide the companies (and its products) value proposition in a matrix

similar to Table 10.1.

Consultants Michael Treacy and Fred Wiersema, in their book, The Disciplines of Market

Leaders (Reading, MA: Addison-Wesley, 1994) proposed a positioning framework called

value disciplines. Within its industry, a firm could aspire to be the product leader,

operationally excellent firm, or customer intimate firm. Choosing an industry, each

student is to identify one or more firms operating within that industry that fits each of

these three value disciplines. Students should define their reasoning for selecting each

firm and its placement as either the product leader, operationally excellent or customer

intimate.

Points-of-differences and points-of-parity are two important concepts of brand

development and are driven by two differing strategies—inclusion and differentiation.

Students should devise a list of at least five other products/services that they believe

demonstrate points-of-differences and points-of-parity in their brand positioning. Student

must include their reasoning behind the inclusion of these products/services into a

category. Good students will present “proof” of their correct selection by including

advertising copy supporting the product or services POD or POP.

Styles, fashions, and fads fall into special categories when talking about product life

cycles. Some may have a product life cycle measured in weeks, others in months, and yet

others in years. Ask the students to list the current fads, fashions, and styles prevalent

around campus today. Do any of these fashions, styles, or fads meet or satisfy a strong

need? If so, can they predict the length of the life cycle of the ones that satisfy a strong

need? Which of the fashions, styles, or fads do the students predict will have longevity?

Why or why not?

DETAILED CHAPTER OUTLINE

Opening vignette: A company can benefit if it has a compelling, well-differentiated brand

position, but it can only uncover the most powerful brand positioning with awareness of

its capabilities, competition, and its consumers’ needs and wants.

I. Developing a Brand Positioning

A. Marketing strategy is built on segmentation, targeting, and positioning (STP)

B. Positioning is the act of designing a company’s offering and image to occupy

a distinctive place in the minds of the target market

i. Brand substitution test: if a brand were replaced by a competitive

brand, the marketing activity should not work as well in the

marketplace

ii. Positioning should be forward-looking but obtainable

iii. A value proposition is a reason why the target market should buy a

product or service

C. Positioning requires that marketers define and communicate similarities and

differences between their brand and its competitors

i. Choose a frame of reference by identifying the target market and

relevant competition

ii. Identify the optimal points-of-parity and points-of-difference brand

associations given that frame of reference

iii. Create a brand mantra summarizing the positioning and essence of the

brand

II. Choosing a Competitive Frame of References

A. A competitive frame of reference defines which brands a brand competes with

—the focus of competitive analysis

B. The target market decision helps define competitors

i. Category membership: products or set of products with which a brand

competes and that function as close substitutes

ii. Actual and potential competitors may not be obvious, and broad

competitive frames can result in advantageous comparisons

iii. An industry is a group of firms offering a product or class of products

that are close substitutes for one another, classified based on:

1. Number of sellers

2. Degree of product differentiation

3. Presence or absence of entry, mobility and exit barriers

4. Cost structure

5. Degree of vertical integration

6. Degree of globalization

iv. Competitors are companies that satisfy the same customer need

v. Marketing myopia is near sightedness/a narrow focus where you miss

substitutes

C. Map the buyer’s steps in obtaining and using a product to profile direct and

indirect competitors

i. Analyze competitors real and perceived strengths and weaknesses

ii. Ascertain strategies and objectives of primary competitors

iii. Determine what drives the competitor’s behavior

iv. Define the competitive frame of reference to guide positioning

D. Identify potential points-of-difference

i. Points of difference (PODs) are attributes attributes or benefits that

consumers strongly associate with a brand, positively evaluate, and

believe they could not find to the same extent with a competitive

brand.

ii. Strong brands often have multiple points-of-difference.

iii. Creating strong, favorable, and unique associations is a real challenge,

but an essential one for competitive brand positioning.

iv. Three criteria determine whether a brand association can truly function

as a point-of-difference: desirability, deliverability, and

differentiability.

1. Desirable to the consumer: personally relevant and there must

be a compelling reason to believe and an understandable

rationale for why the brand can deliver the desired benefit

2. Deliverable by the company: The company must have the

internal resources and commitment to feasibly and profitably

create and maintain the brand association in the minds of

consumers.

a. The product design and marketing offering must

support the desired association.

b. The ideal brand association is preemptive, defensible,

and difficult to attack.

3. Differentiating from competitors. Consumers must see the

brand association as distinctive and superior to relevant

competitors.

E. Identify Points-of-Parity (POPs)

i. Points-of-Parity are attribute or benefit associations that are not

necessarily unique to the brand but may in fact be shared with other

brands

ii. These types of associations come in three basic forms: category,

correlational, and competitive.

1. Category points-of-parity are attributes or benefits that

consumers view as essential to a legitimate and credible

offering within a certain product or service category. They

represent necessary—but not sufficient—conditions for brand

choice.

2. Correlational points-of-parity are potentially negative

associations that arise from the existence of positive

associations for the brand (research trade-offs consumers make

in their purchasing decisions)

3. Competitive points-of-parity are associations designed to

overcome perceived weaknesses of the brand in light of

competitors’ points-of-difference.

a. One good way to uncover key competitive

points-of-parity is to role-play competitors’ positioning

and infer their intended points-of-difference.

b. Competitor’s PODs will suggest the brand’s POPs

iii. Often, the key to positioning is not so much achieving a

point-of-difference as achieving points-of-parity

F. It is not uncommon for a brand to identify multiple frames of reference

i. Some POPs and PODs will be unique to one competitive frame of

reference; others might be shared

ii. A firm can develop the best possible positioning for each type or class

of competitors and then see whether there is a way to create one

combined positioning robust enough to effectively address them all

iii. If the competition is too diverse, it may be necessary to prioritize

competitors and then choose the most important set of competitors to

serve as the competitive frame

iv. Try to be all things to all people—that leads to

lowest-common-denominator positioning, which is typically

ineffective.

v. It may be useful to either develop the positioning at the categorical

level for all relevant categories or with an exemplar from each

category

G. Straddle positioning: a company straddles two frames of reference with one

set of points-of-difference and points-of-parity

i. The points-of-difference for one category become points-of-parity for

the other and vice versa

ii. Straddle positions allow brands to expand their market coverage and

potential customer base

iii. It carries an extra burden: if the points-of-parity and

points-of-difference are not credible, the brand may not be viewed as a

legitimate player in either category

H. Choosing Specific POPs and PODs

i. Competitive advantage is a company’s ability to perform in one or

more ways that competitors cannot or will not match

ii. Few competitive advantages are inherently sustainable

iii. A leverageable advantage is one that a company can use as a

springboard to new advantages

iv. Marketers typically focus on brand benefits in choosing the

points-of-parity and points-of-difference that make up their brand

positioning.

v. Brand attributes generally play more of a supporting role by providing

“reasons to believe” or “proof points” as to why a brand can credibly

claim it offers certain benefits.

vi. Means of Differentiation

1. Any product or service benefit that is sufficiently desirable,

deliverable, and differentiating can serve as a

point-of-difference for a brand

2. The most compelling means of differentiation for consumers

are benefits related to performance

3. Often a brand’s positioning transcends its performance

considerations/appeals to consumers’ social and psychological

needs.

4. To identify possible means of differentiation, marketers have to

match consumers’ desire for a benefit with their company’s

ability to deliver it

vii. Perceptual maps are visual representations of consumer perceptions

and preferences

1. They provide quantitative pictures of market situations and the

way consumers view different products, services, and brands

along various dimensions

2. By overlaying consumer preferences with brand perceptions,

marketers can reveal “holes” or “openings” that suggest unmet

consumer needs and marketing opportunities

viii. Brand positioning should have both rational and emotional

components/should contain points-of-difference and points-of-parity

that appeal to both the head and the heart

1. Authenticity can evoke trust, affection and strong loyalty

2. Authenticity also has functional value

3. Emotional brands can also provide financial payoffs

I. Brand Mantras: three- to five-word articulations of the heart and soul of the

brand

i. Closely related to other branding concepts like “brand essence” and

“core brand promise”

ii. Ensures that all employees within the organization and all external

marketing partners understand what the brand is most fundamentally

to represent with consumers so they can adjust their actions

accordingly

iii. They provide guidance about what products to introduce under the

brand, what ad campaigns to run, and where and how to sell the brand

by highlighting PODs

iv. They create a mental filter to screen out brand-inappropriate marketing

activities or actions of any type that may have a negative bearing on

customers’ impressions.

1. Brand mantras are designed with internal purposes in mind

2. Three key criteria for a brand mantra:

a. Communicate—clarify what is unique about the brand.

b. Simplify—memorable; short, crisp, and vivid in

meaning

c. Inspire—brand mantra should stake out ground that is

personally meaningful and relevant to as many

employees as possible

III. Establishing a Brand Positioning

A. A brand bull’s-eye provides content and context to improve everyone’s

understanding of the positioning of a brand in the organization

i. The inner two circles is the heart of the bull’s-eye—key

points-of-parity and points-of-difference as well as the brand mantra

1. Points-of-parity and points-of-difference should be made as

specific as possible without being too narrow

2. Points-of-parity and points-of-difference should be constructed

in terms of the benefits a customer would actually derive from

the product or service.

3. Points-of-difference should also be stated in positive,

aspirational terms

ii. In the next circle out are the substantiators or reasons-to-believe (RTB)

—attributes or benefits that provide factual or demonstrable support

for the points-of-parity and points-of-difference.

iii. Finally, the outer circle contains two other useful branding concepts:

1. The brand values, personality, or character—intangible

associations that help to establish the tone for the words and

actions for the brand

2. Executional properties and visual identity—more tangible

components of the brand that affect the way customers see it

iv. Three boxes outside the bull’s-eye provide useful context and

interpretation.

1. One includes the consumer target and a key insight about

consumer attitudes or behavior that significantly influenced the

actual positioning

2. One box provides competitive information about the key

consumer need the brand is attempting to satisfy and some

competitive products or brands that need suggests

3. One box offers a “big picture” view of the output—the ideal

consumer takeaway if the brand positioning efforts are

successful

B. Often a good positioning will have several PODs and POPs, but two or three

really define the competitive battlefield and should be analyzed and developed

carefully

i. A good positioning should follow the “90–10” rule and be highly

applicable to 90 percent (or at least 80 percent) of the products in the

brand

ii. The remaining 10 percent or 20 percent of products should be

reviewed to ensure they have the proper branding strategy and to see

how they could be changed to better reflect the brand positioning

C. Brands need to communicate category membership, which may or may not be

obvious

i. The typical approach to positioning is to inform consumers of a

brand’s membership before stating its point-of-difference.

ii. There are three main ways to convey a brand’s category membership:

1. Announce category benefits—reassure consumers that a brand

will deliver on the fundamental reason for using a category,

2. Compare to exemplars—Well-known, noteworthy brands in a

category can also help a brand specify its category membership

3. Rely on the product descriptor

D. One common challenge in positioning is that many of the benefits that make

up points-of-parity and points-of-difference are negatively correlated.

i. Much of the art and science of marketing consists of dealing with

trade-offs, and positioning is no different.

ii. The best approach clearly is to develop a product or service that

performs well on both dimensions.

iii. Other approaches include

1. Launching two different marketing campaigns, each devoted to

a different brand attribute or benefit

2. Linking the brand to a person, place, or thing that possesses the

right kind of equity to establish an attribute or benefit as a POP

or POD

3. Convincing consumers that the negative relationship between

attributes and benefits, if they consider it differently, is in fact

positive.

E. It is important to regularly research the desirability, deliverability, and

differentiability of the brand’s POPs and PODs in the marketplace to

understand how the brand positioning might need to evolve or, in relatively

rare cases, be completely replaced.

i. In assessing potential threats from competitors, three high-level

variables are useful:

1. Share of market

2. Share of mind

3. Share of heart

Companies that make steady gains in mind share and heart share will inevitably make

gains in market share and profitability

IV. Alternative Approaches to Positioning

A. Brand Narratives and Storytelling: rather than outlining specific attributes or

benefits, some marketing experts describe positioning a brand as telling a

narrative or story.

i. Narrative branding is based on deep metaphors that connect to

people’s memories, associations, and stories.

ii. Five elements of narrative branding:

1. The brand story in terms of words and metaphors

2. The consumer journey or the way consumers engage with the

brand over time and touch points where they come into contact

with it

3. The visual language or expression for the brand

4. The manner in which the narrative is expressed experientially

or the brand engages the senses

5. The role the brand plays in the lives of consumers

iii. Framework for a brand story:

1. Setting: time, place, and context

2. Cast: The brand as a character, including its role in the life of

the audience, its relationships and responsibilities, and its

history or creation myth

3. Narrative arc: The way the narrative logic unfolds over time,

including actions, desired experiences, defining events, and the

moment of epiphany

4. Language: The authenticating voice, metaphors, symbols,

themes, and leitmotifs

B. Primal branding views brands as complex belief systems

i. Seven assets make up this belief system or primal code: a creation

story, creed, icon, rituals, sacred words, a way of dealing with

nonbelievers, and a good leader

C. Cultural Branding suggests that for companies to build iconic, leadership

brands, they must assemble cultural knowledge, strategize according to

cultural branding principles, and hire and train cultural experts

i. Brands are seen as sociocultural templates

ii. Experts who see consumers actively cocreating brand meaning and

positioning refer to this as “Brand Wikification,” given that wikis are

written by contributors from all walks of life and points of view

V. Positioning and Branding for a Small Business

A. Building brands is a challenge for a small business with limited resources and

budgets

i. Focus and consistency in marketing programs become critically

important

ii. Creativity is also paramount—finding new ways to market new ideas

about products to consumers

B. Specific branding guidelines for small businesses.

i. Find a compelling product or service performance advantage

ii. Focus on building one or two strong brands based on one or two key

associations

iii. Encourage product or service trial in any way possible

iv. Develop cohesive digital strategy to make the brand “bigger and

better”

v. Create buzz and a loyal brand community

vi. Employ a well-integrated set of brand elements

vii. Leverage as many secondary associations as possible

viii. Creatively conduct low-cost marketing research