principles - ch4 - positioning

Marketing Modeling coursePositioning is alive and well.
Some have said that in a consumer-centric marketplace the positioning concept is dead. Actually, positioning is alive and well. Successful brands are still the ones that found a way to occupy a distinct and important position in the minds of their customers. In increasingly crowded markets, there is really no alterative but to develop a clear positioning strategy for the brand and the company.
One of the best-selling advertising books continues to be Positioning: The Battle for Your Mind written by Al Ries and Jack Trout, first published 22 years ago.
Typically, companies conceptualize positioning from their own point of view (i.e., and inside-out view): “We want to position our brand as the premier product in the category.” What’s wrong with a positioning statement like this? Everything. It leaves the customer out of the equation. In reality, positioning is what customers will “grant the company” (i.e., an outside-in view). So, the trick is to figure out what options are available to position a brand that will be acceptable to customers, and at the same time would be profitable for the company.
(Some people claim that in today’s world, things like targeting and positioning are dated ideas, because they are based on outmoded concepts, such as “targeting” (metaphorically “hunting” for customers). What we need in today’s world are metaphors related to managing an ecosystem consisting of company, customers, competitors, and vendors (metaphorically, seeding, feeding, and weeding). A company should see itself as part of a market ecosystem. But, this argument supports the concept of positioning as an “outside-in” view of the company and its brands as seen by consumers).
Principles Chapter 4: Positioning - *
© DecisionPro 2007
Key Concepts
Differentiation (What you do to an offering): Creating tangible or intangible differences on one or more attributes between a focal offering and its main competitors.
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In the world of keyword-based searching, it becomes important to be able to be found – again this calls for good positioning. In a search engine, if you say you are a consultant, that will get a million hits, but no one will find you! What kind of a consultant are you? What is unique about you as a consultant?
Unique (Only supplier offering true, four color packaging)
Superior (Relative to competition, we deliver 20% more on time delivery)
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Over 9,000 mutual funds
Over 30,000 products in a typical grocery store
Over 100,000 prescription drugs
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Here are six generic approaches to positioning (from Reis and Trout).
1. The Open Hole Position.
Price is the easiest hole in the mind to understand and it’s one of the easiest holes to fill. Haagen-Dazs’ decision to introduce a more expensive line of ice cream set up the "premium" ice cream position for the brand and made Haagen-Dazs one of the enduring marketing successes of the past several decades. What Haagen-Dazs did in ice cream, Heineken did in beer, Rembrandt in toothpaste, Evian in water, Orville Redenbacher in popcorn, Rolex in watches, Mercedes-Benz in automobiles. High price is only one of the open holes in the mind. Low price is another. What Haagen-Dazs did at the high end, brands like Wal-Mart and Southwest Airlines are doing at the low end.
2. The New Category.
Sometimes there are no open holes in the prospect’s mind and you have to create one. We call this positioning strategy, “create a new category you can be first in.” Gatorade, for example, was the first sports drink. PowerBar was the first energy bar. Red Bull was the first energy drink. UnderArmour was the first in performance workout clothing. Zima was the first ... well, what was Zima the first of? The label said “ClearMalt,” but nobody knew what that meant. The television announcement ads were no help either. “What’s in it?” asked a bartender. “It’s a secret. It’s something different,” replied a mysterious pitchman in his white suit and black hat.
3. The Number-two Brand.
Consumers like choice. Sometimes you can build a powerful brand just by giving consumers an alternative to the leading brand. But what strategy can best deliver the No. 2 position? “Maybe if we can produce a better product than the leader,” goes the thinking, “we won’t necessarily overtake them, but we will wind up in the number two position.” This is the worst possible approach. Why is this so? Because the leader in your field already has the perception of producing the better product. Then how do you become a strong number two brand? You become the opposite of the leader. Coke was for older people, so Pepsi became the cola for younger people. Listerine was the bad-tasting mouthwash that killed germs and odor in your mouth. So Scope became the good-tasting mouthwash and a strong number-two brand. Home Depot is the leading home-improvement store, but its crowded aisles and jammed shelves appeal more to men than women. So Lowe’s became the home-improvement store for women with clean layouts and wide aisles.
4. The Specialist.
Every coffee shop in America sells coffee, but they also sell hamburgers, hot dogs, French fries, apple pie, donuts and dozens of other foods and beverages. So Starbucks specialized in coffee and became a very successful brand. So did McDonald’s which specialized in hamburgers. And Dunkin’ Donuts which specialized in donuts. And Subway which specialized in submarine sandwiches. Enterprise Rent-A-Car specialized in the “insurance replacement” business and became the largest car rental company in America.
5. The Channel Brand.
Sometimes you can position a brand to fill a channel hole. L’eggs, the first supermarket panty-hose brand, became the largest-selling panty-hose brand in the country. Today there are opportunities to create Internet channel brands. Amazon.com, eBay, Monster.com and Salesforce.com are just some of many successful “Internet-only” brands. Paul Mitchell became a $600 million hair and skin-care brand by focusing on the professional hair salon channel. Ping did the same in golf clubs by focusing on the pro-shop channel.
6. The Gender Brand.
Sometimes you can build a big brand by focusing on half the market.
Marlboro because a big brand by positioning itself as the first cigarette for men.
Virginia Slims became a big brand by positioning itself as the first cigarette for women.
Curves became a big brand by positionging itself as the gym for women.
Secret became a big brand by positioning itself as the first deodorant for women.
Determine potential differentiator-dimensions
Select sample of customers in target segment and get ratings of competitors on the selected dimensions
“View” the results (Perceptual Maps)
Relate to preference, choice, or market share (Preference Maps)
Develop positioning statement and associated strategies
A 7-Step Process for Positioning
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Our software mirrors this process—encouraging the user to follow a disciplined approach to positioning
© DecisionPro 2007
Select a set of airlines which are of interest to the target group of customers (including AA).
Identify a set of key attributes on which these airlines are evaluated by the target group (e.g., through focus groups).
Ensure that customers are familiar with all airlines (e.g., through video presentation).
Have customers evaluate each airline on the attributes:
Poor Excellent
Convenience 1 2 3 4 5 6 7 8 9
Punctuality 1 2 3 4 5 6 7 8 9
Service 1 2 3 4 5 6 7 8 9
Quality 1 2 3 4 5 6 7 8 9
Measure preferences also…
Low High
Likelihood of use 1 2 3 4 5 6 7 8 9
Example: Positioning American
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C1
C2
Generate a matrix of inputs for the analysis consisting of each customer’s (C1, C2,...) ratings of each brand on each of the attributes:
View the Results (How???)
Convenience 6 3 7 2 6
Punctuality 4 3 4 1 4
Service 5 7 3 6 5
Quality 3 6 2 7 5
Convenience
Punctuality
Service
Quality
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AA UA US Con SW
Convenience 5.0 8.0 3.0 3.0 3.0
Punctuality 6.0 5.0 5.0 4.0 8.0
Overall Service 8.0 7.0 5.0 4.0 6.0
Comfort/Quality 6.0 6.0 4.0 4.0 3.0
Can You “View” These Data?
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Map shows that United and AA compete with each other; US Airways and Continental are likely to compete more directly with each other, and Southwest has a relatively unique position.
Positioning Chart Data
Variance explained as a function of the number of dimensions
Dimensions / Items
Attribute
Mean
Variance
Dimensions / Brands
Variance explained
No
of
cases
Average
fit
Average
variance
accounted
for
30
0.796
0.667
Data
A copy of the data used to run the Positioning analysis is provided here for your convenience.
Updating the data here will NOT update the charts.
Workbook generated on Friday, May 11, 2007 10:55:52 PM
Perceptual Data
Average score each brand achieves on each attribute from your sample of respondents
Brands / Attributes
Brands / Respondents
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Southwest dominates on Performance (punctuality, here) and United has the edge in terms of Comfort and Convenience. Map also shows that the horizontal dimension explains about 55% of the variance in the data, and the vertical dimension explains about 32% of the variance in the data.
Dimensions / Items
Attribute
Mean
Variance
Dimensions / Brands
Variance explained
No
of
cases
Average
fit
Average
variance
accounted
for
30
0.796
0.667
Data
Perceptual Data
Brands / Attributes
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Perceptual maps can help you find “gaps in a market.” Preference maps help you find “markets in a gap.”
AirlinesPref30
Dimensions / Items
Attribute
Mean
Variance
Dimensions / Brands
Variance explained
No
of
cases
Average
fit
Average
variance
accounted
for
30
0.796
0.667
Data
Perceptual Data
Brands / Attributes
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American Airlines is caught in the middle of two different sub-segments. It can position itself further on the “Ease” dimension competing more directly with United, or position itself more on the performance dimension, and compete more directly with the likes of Southwest airlines.
Dimensions / Items
Attribute
Mean
Variance
Dimensions / Brands
Variance explained
No
of
cases
Average
fit
Average
variance
accounted
for
30
0.796
0.667
Data
Perceptual Data
Brands / Attributes
(This slide shows only the products)
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(This slide shows only the attributes)
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A perceptual map is a succinct representation of data on a number of attributes. People typically collapse their beliefs and perceptions into a smaller number of “dimensions” that enable them to reduce the cognitive effort involved in making decisions (e.g., brand choice decisions).
Perceptual Map of Beer Market
(This slide includes both products and attributes)
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Interpreting Perceptual Maps
The arrow indicates the direction in which that attribute is increasing (The attribute is decreasing in the direction opposite to the arrow). Thus, airlines positioned farther to the South direction are perceived as being more punctual and those positioned in the North direction are less punctual.
The length of the line from the origin to the arrow indicates the variance of that attribute explained by the 2D map. The longer this line, the greater is the relevance of that attribute in helping you to interpret the map.
Attributes that are both relatively relevant and close to the horizontal (vertical) axis help determine the meaning of the axis.
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Uses of Mapping
Check how customer perceptions of client products compare to perceptions of competitors.
Identify product strengths and weaknesses.
Select competitors to compete against.
Determine how much change is needed on key product attributes to move products to more favorable positions.
Visually determine impact of communications programs on market perceptions.
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just clever slogans or gloss
what you push on your customers -- it is what customers will realistically grant you
a one-time activity
an appeal to everyone
a way to make your product superior -- it is about finding a superior position in the minds of your customers.
Positioning is a way to “live your brand.”
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Interpretation is sometimes difficult.
Does not incorporate cost or likelihood of being able to achieve a desired positioning.
Does not incorporate a “probability model” to indicate goodness of a map.
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Four questions that could trigger positioning analyses
Who do we need to target?
What do they think now?
What do we want them to think, now and from now on? Why?
How do we do that?
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Ratings of nine brands of notebook computers on several attributes
B1 B2 B3 B3 B4 B5 B6 B7 B8 New
Attractive 5.1 3.6 3.5 5.4 3.9 4.8 5.2 4.0 5.2 4.0
Light 6.0 3.5 5.0 3.9 3.3 5.3 5.0 2.5 5.5 2.5
Unreliable 3.4 4.1 4.5 2.1 4.5 2.7 4.5 3.7 2.5 3.8
Plain 1.5 4.1 2.9 2.3 4.5 2.7 3.5 4.3 2.2 5.2
Battery life 3.3 4.9 4.3 4.1 3.9 3.0 3.5 6.2 3.5 4.0
Screen 3.5 5.3 3.4 6.4 5.4 5.2 3.3 6.0 3.3 4.8
Keyboard 2.6 3.5 2.5 3.4 3.8 3.3 2.8 5.0 4.3 4.7
Roomy 5.5 4.3 5.4 3.1 3.4 3.3 4.7 3.5 4.3 4.2
Easy service 4.5 4.9 3.3 5.0 4.4 4.5 3.3 4.7 3.8 4.5
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An Electrical Engineer reads diagrams such as the one here
An organic chemist reads diagrams such as the one here
Why Mapping?
1. Company provides adequate insurance coverage for my car.
2. Company will not cancel policy because of age, accident experience, or health problems.
3. Friendly and considerate.
4. Settles claims fairly.
5. Inefficient, hard to deal with.
6. Provides good advice about types and amounts of coverage to buy.
7. Too big to care about individual customers.
8. Explains things clearly.
10. Has personnel available for questions all over the country.
11. Will raise premiums because of age.
12. Takes a long time to settle a claim.
13. Very professional/modern.
15. Quick, reliable service, easily accessible.
16. A “good citizen” in community.
17. Has complete line of insurance products available.
18. Is widely known “name company”.
19. Is very aggressive, rapidly growing company.
20. Provides advice on how to avoid accidents.
Does not
Conventional Mapping Using

principles - ch4 - positioning

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