Marketing Management – POSITIONING

中国经济管理大学 名课教辅

KNOWLEDGE OBJECTIVES

1. Present the Concept of Positioning & Its Importance
2. Explain Perceptual Maps
3. Perceptual Maps Variations
4. Introduce the Positioning Matrix
5. Discuss Positioning Statements
6. Summary

CHAPTER OUTLINE

 What is Positioning
 Importance
 Perceptual Maps
 Positioning Matrix
 The Positioning Statement

1.  Positioning Defined

Section relates to knowledge objective #1

Positioning in essence is “who a product is in the marketplace” relative to it competitors.  Positioning involves both physical and perceptual elements.  It involves each of the mix elements: product design, pricing, availability and communication.

2.  Perceptual Maps

Section relates to knowledge objective #2

Perceptual Maps are a XY graphical representation of a group of products, lines, brands or firms positions on a set of dimensions (typically 2).   The pictures help envision how customers think about the products.

 Figure 4.1 Competition in Perceptual Maps

This figure applies to knowledge objectives #1, #2, and #3.

Figure 4.1 shows the positions for four hotels (Motel 6, Hilton, Marriot, and Ritz) on the dimensions of service level and price as well as two customer segments.  Motel6 is positioned as a low service and low priced provider.  Marriot and Hilton are positioned closely together as offering mid-level service for a mid-level price.  Ritz is positioned as a high service and high priced provider.   The first customer segment seeks a service level between the level offered by Hilton and Marriott and the level offered by Ritz at a price in line with Hilton and Marriott.  The second segment seeks a service level just slightly below that of the first segment but at a price more in line with Motel6.  The figure shows that the use of positioning maps can provide gaps in the market where there are a lack of products.  These gaps may provide opportunities for new market offerings.

Figure 4.2 Positioning Via Perceptual Maps

This figure applies to knowledge objectives #1, #2, and #3.

Figure 4.2 provides a perceptual map of various vacation destinations.  Using the dimensions of Price on the vertical axis and Beaches/Points of Interest of the horizontal axis, positions Ft. Lauderdale as a low priced beach vacation, as a near competitor (slightly more expensive and slightly more towards “points of interest”), while Maui located identically on the horizontal axis as Nassau is much more expensive.  London and New York are similarly positioned as high priced and high “points of interest”.  Washington, D.C. is seen as a less expensive destination and a high degree of “points of interest.”  Cancun is positioned near the center of the map possessing both beaches and points of interest as a modest price.   Map indicates that customer segment 1 is better served than customer segment 2. Customer segment 1 seeks a beach destination with a price slightly higher than Nassau, but still well below Maui, while customer segment 2 seeks a degree of points of interest similar to Washington, D.C. but at a price lower than Washington, D.C. or more in line with Ft. Lauderdale. 

TEACHING NOTE: Figures 4.1  and 4.2 can be used for in-class discussion by asking students to add other hotels such as RedRoof, Budget, Days Inn, or Hyatt OR changing one or both of the dimensions.  For example, the service dimension could be switched to personal/business travel.  For Figure 4.2 students could be asked to think of destinations that they perceive to be similar to Maui, or attempt to identify locations consistent with the desires of the two customer segments.  Alternatively, students could conceive of other dimensions such as: season of year, relaxation vs. adventure or planned (itinerary) vs. unplanned destinations.  Students could also be posed the question of how the map could be changed if for example European or Asian travelers were considered.

3. Perceptual Maps for Competitive Analysis – Mapping Strength and Weakness

This section relates to knowledge objective #3

Customer perceptions of product attributes or dimensions can be plotted in order to examine a product’s strengths and weaknesses. Such maps can also be used for competitor analysis.    

Figure 4.3  Perceptual Map: Strengths and Weaknesses of Spa 1

This figure applies to knowledge objectives #1, #2, and #3.

Customers rate a spa on several aspects and their importance – peacefulness, variety of services, and location.  Peacefulness is deemed to be very important with services and location much less important.  The spa rates rather weakly on peacefulness and variety of services, but rates very strong on location.  Given the rating on peacefulness and its importance, it is apparent that the spa needs to take action.

 Figure 4.4  Perceptual Map: Competition

This figure applies to knowledge objectives #1, #2, and #3.

The figure examines 3 spas on number of services and price.  Spa1 is priced as high as spa3 but is perceived to offer far fewer services than either spa2 or spa3.  Spa2 seems to have a distinct competitive advantage as it is perceived to offer nearly the number of services as spa3 and is priced much lower than either spa3 or spa1. 

One of the limitations of perceptual maps as presented is that they typically look at only two attributes at a time. 

Figure 4.5  Competitor Analysis

This figure applies to knowledge objectives #1, #2, and #3.

Figure provides a bar chart of the three spas on four attributes – price, location, peacefulness, and variety of services.  Figure provides a demonstration of alternative ways of performing competitor analysis.  Graph clearly shows that spa1 has a competitive advantage on location, but is not competitive on either level of services offered or being viewed as peaceful.

4.  Positioning Matrix

Section relates to knowledge objective #4

A positioning matrix is a 2 x 2 matrix.  Using two attributes creates four quadrants or possible positions for the firm or product. 
 
Figure 4.6  Marketing Management Framework Product Quality by Price

This figure applies to knowledge objective #4

Using price (high or low) and quality (high or low) creates four possible positions.  A low price-low quality product could be considered a “basics”, while a low quality-high priced produced would be “overpriced”.  Higher quality goods could be considered either “hi-end” (high priced) or a “good value” (low priced). 

Figure 4.7  Marketing Management Framework Promotion by Distribution

This figure applies to knowledge objective #4

Provides another example of a positioning framework.  The figure uses promotion and distribution intensity.  Heavy promotion and distribution would be a “mass” positioning, low promotion with heavy distribution an “under-advertised” position a heavily promoted and light distribution a “hard to get” position and a light promotion and light distribution a “niche” position. 

Figure 4.8  Marketing Management Framework: A 4P’s-Product by Price by Promotion by Price

This figure applies to knowledge objective #4

Incorporating all of the mix elements creates 16 possible combinations.  The matrix can be examined to determine what combinations might be more likely to be pursued than others. 

Figure 4.9  Some Strategies Don’t Make Sense

This figure applies to knowledge objective #4

Examining the matrix reveals that some combinations such as low price, with exclusive positions irrespective of promotional intensity and product quality do not make business sense and should be eliminated from consideration.  So, four of the sixteen combinations should not be pursued.

Figure 4.10  Some Strategies Don’t Make Sense

This figure applies to knowledge objective #4

Low quality, high priced strategies should also not be pursued, further reducing the number of possible positioning strategies to eight.

Figure 4.11  Some Strategies Don’t Make Sense

This figure applies to knowledge objective #4

Figure suggests that heavy promotion and exclusive distribution positioning strategies should not be pursued, so as to not frustrate potential customers.   This reduces the number of feasible positioning strategies to seven. 

Figure 4.12  Some Strategies Are Hard to Sustain

This figure applies to knowledge objective #4

While figures 4.8 through 4.11 identify poor strategic positioning combinations, figure 4.12 identifies combinations that may not be feasible long term.  Argues that low price – high quality “value” positions may not be sustainable in the long run. 
Figure 4.13  Some Strategies Are Hard to Sustain

This figure applies to knowledge objective #4

Argues that light promotion – heavy distribution position strategies are “passive” strategies and most likely will not be sustainable in the long run. 

Figure 4.14  Quality and Price Tend to Realign (see Figures 4.10 and 4.12)

This figure applies to knowledge objective #4

Two of the four likely positioning strategies low quality-high price “overpriced” and high quality-low price “good value” will likely become either low quality-low priced “basics” or high quality-high price “hi-end” positions. 

Figure 4.15  Promotion and Distribution Tend to Realign (see Figures 4.11 and 4.13)

This figure applies to knowledge objective #4

As in Figure 4.14 the figure contends that light promotion – wide distribution position strategies and heavy promotion – exclusive distribution positioning strategies will likely become either heavy promotion – wide distribution “mass” or light promotion  - exclusive distribution “niche.”

TEACHING NOTE:  Using figure 4.14 and/or figure 4.15 students may be asked to identify companies that use any of the 8 strategies (other than those subsequently listed in figure 4.17). Students should be more able to identify “basics”, “high-end”, “mass”, and “niche” positioning strategies.  For those identified as “overpriced”, “good value”, “under-advertised” and “hard to get” students should be asked how long the product has been positioned in that manner.   Examples: Smart car “niche” – no advertising and limited distribution.  Budweiser, Coca-Cola, Pepsi “mass” heavy promotions and wide distribution.  High-end Sony’s XEL-1  11inch OLED TV “hi-end” and store brand hot dog rolls “basics”.

 Figure 4.16  Two Strategies Make Perfect Sense

This figure applies to knowledge objective #4

Points out that of the 16 potential combinations of positioning strategies there are only 2 positioning strategies that are viable in the long run.  These two positioning strategies lie on opposite ends of the spectrum.  The “mass” strategy is a lower quality, lower price, heavy promotion and wide distribution position, while the “hi-end” strategy is a high quality, high price, light promotion, and exclusive distribution position.

Figure 4.17  Example Brand in the Framework

This figure applies to knowledge objective #4

Provides examples of the 16 possible positioning strategies.  Examples include: Wal-Mart (low quality, low price, heavy promotion, wide distribution), Hershey’s (low quality, low price, wide distribution, light promotion), Starbucks (high quality, high price, wide distribution, light promotion), and Cartier (high quality, high price, light promotion, exclusive distribution). 

Section concludes by mentioning that other managerial or strategic frameworks are consistent with the two basic positioning strategies proposed.  Treacy and Wiersema in “The Discipline of Market Leaders” identify three strategies: operational excellence (good production and delivery – price and convenience) as exemplified by Dell and Wal-Mart, product leadership (quality and innovation) Johnson & Johnson, and customer intimacy (tailoring products for specific needs) Nordstrom and Amazon.  Porter through his writings on competitive strategy identifies a cost, differentiation, and niche strategies.  All of these strategies fit into the two positioning strategies proposed in figure 4.16. 

In concluding it is noted that it is possible to deviate from the two strategies noted in figure 4.16, but that there must be a reason for doing so.  Is it what customers want?  Can it be profitable?

5.  Positioning Statement

Once a position has been staked out, the position must be communicated to all audiences (customers, suppliers, competitors, employees, shareholders, etc.).   The statement begins by identifying the target segments and should be written to address those segments.  It should include the unique selling proposition (USP), this is the product’s competitive advantage.  It should be clearly expressed.  It should state why customers should buy the product and not a competing product.  It should clearly explain why the product is the better choice.  Statement should be short and simple.  Keeping it short should avoid any confusion.  Thinking in terms of benefits rather than attributes can be beneficial.  Identifying benefits and ranking them can also help.  Positioning statements can be advertising tag lines such as Pepcid AC’s, “Just ONE and heartburn’s done,” or more extensive statements. 

6. Summary

Positioning.  Perceptual maps are a graphical representation of a products position on a set of attributes relative to competitors.  The positioning matrix identifies potential positioning strategies.  A “mass” positioning strategy or “hi-end” positioning strategy are the two most common and viable long-term strategies.  Positioning statements help communicate a product, brand, or firm’s positioning strategy to the market and its constituents.

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

1.   If you were to create a perceptual map for the product category of sports cars, what attributes should you include to illustrate the similarities and differences among the brands?

 Typical attributes might include: handling, acceleration, top speed, passing time (acceleration from 40 to 60mph), 1/4 mile time, slalom time, horsepower, number of cylinders, stability control, price, roof type (convertible or hardtop), transmission type, or number of gears, and braking distance. 

2.   Find five companies or brands that fit each of the low-low-low-low and high-high-high-high cells in the matrix in Figure 16.  Find a company that belongs in one of the other suboptimal cells.  Is this company successful?  Do you think the company would be more successful if it changed the P that is out of alignment?

 Non-premium store brands within the consumer packaged goods industry would fit that requirement of being low quality, low price, low distribution, and low communication.  Also, “off-brand” products found in “off-price” stores would also fit the criteria.  Such merchandise as found in “dollar” stores typically are of lower quality, lower priced, aren’t promoted and aren’t widely available through multiple outlets (on dollar-type stores).  These are NOT well known brands.  These might also fall under the category of “generics.” Malt-O-Meal cereal products might also fall the category of being low quality, low priced, light distribution, and light communication.  This is the “cereal in the bag” you find in grocery stores.   It is difficult to find examples of high quality, high priced, intensive distribution and heavily promoted products.  Under Armour and Nike apparel “might” fit the criteria as they are priced above similar products,  widely available, heavily promoted, and deemed to be of superior quality.  The same could be said of Nike shoes.  Porsche and Corvette automobiles could be considered as fitting the bill as being high priced, high quality, and highly promoted products but with (especially with Porsche) limited distribution. To some extent Rolex could fit this category as well as the product is promoted rather heavily in magazine ads, upscale sporting events (both onsite and TV ads during the event), and through sponsorships.    It is unlikely that Porsche or Corvette would benefit from be more widely available as the luster of the product is in part due to its rather exclusive nature.  Same holds with Rolex.  
 
3.   Write a positioning statement for yourself to convince your favorite company to hire you:

a. Who is your target segment?  (What do you know about the company, their corporate culture, what they’re looking for?)
b. With whom are you competing? (Students are your university and other universities, but is there anyone else?)
c. What is your unique selling proposition-your competitive advantage?  (Why should they hire you, what strengths do you have, how do you dominate the company’s other interviewees?)

a. Student positioning statements will differ due to the nature of their backgrounds and skills AND the target company they are seeking to obtain a position with.  Understanding the company and the position is where social networking plays a key role.  Contact alumni, consult with career services to try to find that internal information.   Students could in fact, use a modified version of some of the more “abstract” positioning statements.  A take on Bose :Intelligent, Creative, Performance.”  Or Mayo’s “Results for Better Performance.”  ‘Results could be changed to “insight”.  Alternatively, students could use a variation of either Kraft or Movie.com or Red Lobster, ‘Great Decisions, Great Business.”  The challenge is to clearly convey ones abilities in a succinct manner without coming off as arrogant, cocky or full of one’s self. 
b. The student could and likely would be competing with current employees with the company that are looking for a job change within the firm.  In this case, students would have to recognize that these individuals would have “inside” information as to haw the company operates (culture)and more knowledge of what the potential job would entail.  In addition, students would be competing against professionals currently employed with other firms.  These people would have the “professional experience” (specific experience and skills suited for the position) advantage.  Students would also be competing with “career changers” who would have a “professional experience” (general corporate experience) advantage and those returning to the professional arena.  Students would also be competing against MBA students.
c. USP should focus on a critical aspect of the job in question.  It should be as specific and as “tangible” (skill-based) as possible.  Students should recognize the situational or contingent nature of the USP.  What is a strength or USP for one position is most likely NOT going to be a USP or strength in another.

SUGGESTED ANSWERS TO MARKETING PLAN QUESTIONS

Positioning:
Strategically choose high-quality/high price or basic-product/low-price position:

Position 1:
Show how strategic position compares to competitors’ position

Given the suggested concept of an energy drink for women, it is unlikely that the product would be positioned as a basic product/low-priced product.  It would more than likely be positioned as a high-quality/high priced product.  The rationale is to simply ask students these 2 questions.  For an energy drink what attributes or benefits would comprise low quality?  Then ask would you drink an energy drink that was lacking those dimensions/attributes?  It is possible that the product “could” be lower in caffeine.  So that it is positioned for example with 60mg of caffeine per serving rather than the 80 mg per serving that most other brands have (RockStar, Red Bull, Full Throttle, Monster, AMP, etc).  Question would be why the firm would intentionally market the product with less caffeine?  The product could also be marketed with less sugar, but that does NOT necessarily mean that the product is viewed as being less quality.  Although sugar is energy. So less sugar, less energy.  Most products are priced between $1.99 and $2.99 per unit.  The question is how much further below the $1.99 would the product have to be priced to be viewed as low priced?  $.10 ? 10%?  Get students to reflect upon that. 

Position 2:
Show how strategic position compares to competitors’ positions: 
Students should develop a 2 dimensional perceptual map.
Aggressive/threatening versus passive/accommodating could be one dimension and caffeine or calories or grams of sugar could be the other dimension.  It would most likely be that the new product would be in a quadrant by itself, with possibly Red Bull being the closest competitor?

Position 3: 
Sketch distribution (wide or exclusive) and promotion plans (mass, light):
Students would likely comment that wide distribution would mimic a distribution strategy similar to Red Bull, utilizing convenience outlets, grocery stores, and large multi-format stores like Target and Wal-Mart in which multi-packs and single cans would be available.  Conversely, a exclusive distribution strategy would focus on a single style of outlet, mainly health clubs, or boutique grocery stores, or convenience stores only (such as your local gas-n-go).  Mass promotion plans would simply entail a media blitz of most outlets available TV, print, Web, event sponsorship, product placement and the like.  A light promotion plan would quite possibly focus on print (magazine) only to niche vehicles (Self or More magazines).

SUGGESTED ANSWERS TO MINI-CASE: “VALUE” AND “QUALITY” – SEEKING SEGMENTS IN THE POSITIONING MATRIX

As we now know, when marketers talk about segments, it’s nothing mysterious. Segments are just groups of customers who seek similar benefits. A product’s price is definitely one of its most important attributes. A low price can be a benefit. A high price can still provide a benefit if the customer thinks that product delivers good value (i.e., is worth the price).
In the positioning matrix, price means every effort the customer expends. Thus, price definitely includes the financial cost to the customer but also things like:
• How far did they have to drive to a store?
• How much time did they have to spend researching (e.g., online, in newspaper weekend supplements, clipping coupons, etc.)?
• Were the salespeople at the store or on the phone helpful or rude?
• Was the parking lot crowded?
• If the purchase was online, was the website difficult or easy to navigate.
By the quality or value of the purchase obtained, we mean everything good the customer gets, such as:
• They get the product.
• They might feel good about the brand.
• They might have their friends compliment them.
• The product might last a long time because it is reliable, etc.
The following figure has four segments:
A. Rare: Those who are willing to pay a high price and obtain low quality.
B. Loyals: Those who seek high quality and are willing to pay a high price.
C. Convenience: Those who seek low price and are willing to take low quality. 
D. Value: Those who seek low price and look for high quality.
As discussed in the chapter, products mostly appear in the low-price/low-quality and high-price/high-quality quadrants. Thus, few products will be available for the “Rare” and “Value” segments. Pick any product category that you like and map some products into both the "Loyals" and "Convenience-seekers" quadrants.

LOYALS: Swiss-made watches (ROLEX), Luxury Automobiles, Fine Wines, hand-rolled Cuban cigars, 5 star hotels, 5 star restaurants.  Convenience: Little Debbie Snack Foods, B-Bats taffy candy pops, Tootsie Pops, fast food restaurants dollar menu items.

A. If you were a brand manager of one of the products you just mapped, who would you target first? Why?
LOYALS: Loyals want quality and are WILLING TO PAY FOR IT!  This means a higher margin per transaction.  It also means prestige in the market place.

B. Who would target next? Why?
While some of this depends on the size of the segment, RARES would seem a likely choice because of their willingness to pay a high price.  Given that, it would seem reasonable that they would be willing to accept high quality in lieu of low quality and would be willing to pay for high quality. This would NOT require any marketing mix adjustment.  By serving the first segment, you should also be able to serve the second.  The least desired segment is the value segment.  They will seek a bargain and will be demanding as they seek quality, but don’t want to pay for it.