DIFFERENTIATION AND POSITIONING
Value proposition: How a company will create differentiated value for targeted segments and
what positions it wants to occupy in those segments.
A product’s position is the way the product is defined by consumers on important attributes.
Use Key Term Product Position here.
Use Chapter Objective 4 here.
Positioning Maps
Perceptual positioning maps show consumer perceptions of their brands versus competing
products on important buying dimensions.
Choosing a Differentiation and Positioning Strategy
The differentiation and positioning task consists of three steps:
1. Identifying a set of differentiating competitive advantages upon which to build a position,
2. Choosing the right competitive advantages, and
3. Selecting an overall positioning strategy.
Use Figure 6.3 here.
Use Key Term Competitive Advantage here.
Identifying Possible Value Differences and Competitive Advantages
To the extent that a company can differentiate and position itself as providing superior customer
value, it gains competitive advantage.
It can differentiate along the lines of product, services, channels, people, or image.
Choosing the Right Competitive Advantages
How Many Differences to Promote
Ad man Rosser Reeves believes a company should develop a unique selling proposition (USP)
for each brand and stick to it.
Other marketers think that companies should position themselves on more than one
differentiator.
Which Differences to Promote
A difference is worth establishing to the extent that it satisfies the following criteria:
Important: The difference delivers a highly valued benefit to target buyers.
Distinctive: Competitors do not offer the difference, or 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.
Communicable: The difference is communicable and visible to buyers.
Preemptive: Competitors cannot easily copy the difference.
Affordable: Buyers can afford to pay for the difference.
Profitable: The company can introduce the difference profitably.
Use Discussion Question 6-6 here.
Selecting an Overall Positioning Strategy
The full positioning of a brand is called the brand’s value proposition. (See Figure 6.4)
Use Figure 6.4 here.
Use Key Term Value Proposition here.
Use Critical Thinking Exercise 6-9 here.
More for More positioning involves providing the most upscale product or service and charging
a higher price to cover the higher costs.
More for the Same positioning involves introducing a brand offering comparable quality but at
a lower price.
The Same for Less positioning can be a powerful value proposition—everyone likes a good
deal.
Less for Much Less positioning is offering products that offer less and therefore cost less.
“Less-for-much-less” positioning involves meeting consumers’ lower performance or quality
requirements at a much lower price.
More for Less positioning is the winning value proposition.
In the long run, companies will find it very difficult to sustain such best-of-both positioning.
Use Marketing at Work 6.2 here.
Developing a Positioning Statement
Company and brand positioning should be summed up in a positioning statement.
The statement should follow the form: To (target segment and need) our (brand) is (concept)
that (point of difference).
Communicating and Delivering the Chosen Position
Once it has chosen a position, the company must take strong steps to deliver and communicate
the desired position to target consumers. All the company’s marketing mix efforts must support
the positioning strategy.
Use Key Term Positioning Statement here.
Video Case: Sprout
In the world of children’s television programming, Sprout is a relative newcomer. Owned by
NBCUniversal, Sprout airs PBS Kids programming as well as additional acquired material. A
true multi-platform network, Sprout can be accessed as regular cable programming, as
on-demand programming through Comcast, and online through Sproutonline.com.
Sprout does not target only kids, however. It targets preschool families—households that have
one or more preschool-age children. Parents need to be involved with their children’s viewing of
interactive content, multiple access points, and 24-hour programming. For this reason, Sprout’s
promotional efforts are geared toward parents as well as children.
After viewing the video featuring Sprout, answer the following questions:
6-15. Why does Sprout target preschool families rather than focusing solely on children?
Give examples.
6-16. Which target marketing strategy best describes Sprout’s efforts? Support your
choice.
6-17. How does Sprout use differentiation and positioning to build relationships with
target customers?
Company Cases
6 Virgin America/7 Target/11 Sears
See Appendix 1 for cases appropriate for this chapter.
Case 6, Virgin America: Flight Service for the Tech Savvy. Fighting since 2007 for a place in
the air travel market, Virgin America has found a profitable niche by providing
exceptional customer service for Silicon Valley clientele.
Case 7, Target: Where Store Brands Offer More than Low Prices. In addition to carrying
popular national brands, Target has built its own house for brands by moving store
brands upscale.
Case 11, Sears: Why Should You Shop There? Once “Where America Shops,” the former
largest retailer is struggling to find its place among Millennials and other shoppers in today’s
market.
MyMarketingLab
6-18. Describe how marketers segment international markets. What is intermarket
segmentation? (AACSB: Communication)
6-19. Discuss ideas for applications of the Google Glass device among the business and
institutional markets. How can these applications be incorporated into online, mobile, and social
media marketing? (AACSB: Written and Oral Communication; Information Technology;
Reflective Thinking)
GREAT IDEAS
Barriers to Effective Learning
1. Understanding the concept of a market segment can be very difficult for students.
Working through breaking down a market, such as their own university, into separate
groups can help tremendously, as can drawing a big box on the board, and then breaking
the box down into separate sections to represent pieces of a larger market.
2. Also difficult to understand is the concept that there is no one, single way to segment a
market. Students will often point out that companies segment on a single variable
frequently, not understanding that the concept is much broader than that. Using a simple
pen as an example, you can point out the various segmentation variables, such as income,
occasion (such as graduations), and lifestyle that a pen manufacturer could study to
determine effective segments. While Mont Blanc might segment based on income and
occasion factors, Bic could very well look at lifestyle or even age.
3. Segmenting business markets could also pose some problems, particularly in the
discussion of operating characteristics and purchasing styles. It would be helpful to
contrast large corporations with small, local enterprises or to ask students about their
parents’ business lives and any responsibilities they have in purchasing goods and
services for their employers.
4. If anyone knows anything about target marketing before coming to class, they will think
of it as simply selling to one type of customer. But most students will never have heard of
this concept, either. Students may understand more clearly if you use the “box” principle
in #1 to illustrate how a company could choose one or more of the sections to target. This
can also be expanded to show how companies might move from focusing on one target
segment to moving along to another when penetration of the first has been accomplished,
even though this goes beyond the scope of this textbook.
5. Development of a positioning statement is also a difficult concept. It requires students to
boil down a company’s strategy into one sentence, which can be quite tricky. Going
through the examples in the book, and then applying them to something within the
students’ sphere of knowledge (books, soft drinks, breakfast foods, coffee, etc.) can
enrich the explanations in the text.
Student Projects
1. Go to Apple Music (www.apple.com/music) or Spotify (www.spotify.com). What unique
market segments appear to be the target of specific genres of music? How did you
determine the segments?
2. You’ve agreed to help a friend with a home furnishings business to segment her market.
Suggest a way to segment the market for her. Select a target market to go after, keeping in
mind segment size and growth, structural attractiveness, and probable company
resources. What target marketing strategy would you use (using Figure 6.2)? Explain
your answers.
3. There are many ways to segment a market. Using the four segmentation variables
discussed in the chapter, discuss which variables would be most important for
segmenting (a) candidates for cataract surgery and (b) possible enrollees in a culinary
school. Explain your choices.
4. Collect advertisements that demonstrate the positioning of different watch brands. Sort
the various brands into categories of brands with similar positions.
5. Find ads for several different types of watches. For instance, select one diver’s watch, one
prestige watch, one economy watch, and one avant garde watch. What market is each
trying to reach? What type of segmentation is the advertiser using?
Small Group Assignment
Form students into groups of three to five. Each group should read the opening vignette to the
chapter on Dunkin’ Donuts. Each group should then answer the following questions:
1. What is Dunkin’ Donuts’ strategy?
2. What is unique about their market segmentation strategy?
3. Are there weaknesses in the Dunkin Donut strategy? If so, what are they?
4. Do you see any uncovered market segments? If so, what are they? How would you
exploit this?
Each group should share its findings with the class.
Individual Assignment
You have been asked by your college/university to help develop a market segmentation strategy
for them. What market segments would you encourage them to pursue and why?
Think-Pair-Share
Consider the following questions, formulate answers, pair with the student on your right, share
your thoughts with one another, and respond to questions from the instructor.
1. How would you define market segmentation?
2. How does geographic segmentation differ from demographic segmentation?
3. Which one segmentation form do you consider the most valuable? Why?
4. What is benefit segmentation? Give a good example.
5. List the requirements for effective segmentation.
Classroom Exercise/Homework Assignment
Review the requirements for effective market segmentation. Now, log on to Spotify
(www.spotify.com). How are they attempting to segment their markets? Rate Spotify on each of
the five requirements for effective segmentation. Do you believe they are doing a good job on
each? What suggestions for improvement would you recommend?
Classroom Management Strategies
Most students will still be thinking, even at this point in the semester, that marketing is all about
getting everyone to buy your product. This chapter will set them straight. It uses three sections to
discuss the three important topics of segmentation, targeting, and positioning.
1. Divide this chapter up equally. Spend about 20 minutes on market segmentation, with the
majority of that time spent on segmenting consumer markets. Students will understand
geographic and demographic segmentation fairly quickly, but benefit and occasion
segmentation will take a little more time. Business and international markets can be
covered fairly quickly.
2. Target marketing should also take about 20 minutes. It is important for the students to
grasp that once they’ve divided the market they then need to decide which of those
segments to address. Evaluating and selecting segments to target should be the primary
topics in this section.
3. Finally, positioning should take the remainder of the class. Discussing a brand you are
especially loyal to, so you can speak about it emotionally, often helps the students realize
the importance of positioning, and also how dependent positioning is on the responses of
the consumer to the product itself as well as the messaging about the product.
PROFESSORS ON THE GO
Customer Driven Marketing Strategy: Creating Value for Target Customers
Key Concepts
Segmenting consumer markets
Requirements for effective segmentation
Briefly define the four sets of primary segmentation variables. If you could only use
one set of variables to segment prospective students for the part-time MBA Program
at your university or college, which would it be? Why?
The chapter discusses requirements for effective segmentation. Suppose you are a
product manager in a regional fast-food restaurant company. You are listening to a
presentation on a new sandwich wrap idea (chicken breast and okra), and it is your
turn to ask questions. Write five questions that you would ask the person presenting
this product idea. Each question should be directed at one of the five segmentation
requirements.
Go to a retail bookstore and survey the magazine section. What unique market
segments appear to be the target of specialty magazines? How did you determine the
segments?
Find ads for several different types of cars. For instance, select one mini-van, one
SUV, one sports car, and one sedan. What market is each trying to reach? What type
of segmentation is the advertiser using?
Key Concepts
Evaluating marketing segments
Selecting target market segments
Identifying and choosing competitive advantages
Is it a good idea for a small company to adopt a differentiated segmentation strategy?
Explain.
You’ve gone to work for a shoe designer who is just launching her business. Suggest
a way to segment the market for her. Then, select a target market to go after, keeping
in mind segment size and growth, structural attractiveness, and probable company
resources.
What is the best way to evaluate a target market?
How is competitive advantage obtained?
How does a company choose the right competitive advantage to promote?