1.1.3 Market Positioning

Question 1

What is market mapping?

Answer 1

Finding the variables which differentiate brands in a market and then plotting them on a map to identify a gap in the market.

Question 2

Uses of market mapping

Answer 2

• Identify gap in the market.
• Identify which products to produce/ service to provide; so they are market orientated.
• Reposition itself in the market (north face).

Question 3

Definition of competitive advantage

Answer 3

An advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry, either in low cost leadership or price leadership.

Main idea = business can win by being cheaper or by being different.

Question 4

Ways a business can achieve competitive advantage

Answer 4

Price - some businesses choose to use a very low cost model and compete on price.
Added value - can be achieved through a process.
Innovation - when an invention is brought to the market.
Reliability - attracts more customers + gain trust/loyalty.
Quality - high quality standards attracts customers.
Reputation - the better the reputation, the more likely people are to buy/use the product/service.
Advertising - raise awareness of brand, remind/inform customers of product features.
Branding - unique branding makes it more memorable.
Convenience - customers are more likely to interact as its easier for them and fits in their schedule.
Customer service - consumers want a business to get things right first time and dealing with their complaints faster/efficiently.

Question 5

What is product differentiation?

Answer 5

Where a product is different from the competition in some way.
Consumers must be able to perceive this difference if they’re going to pay premium price for the product.

Question 6

What are some methods of differentiation?

Answer 6

• Through reputation.
• Through customer service or after sales service.
• Through value for money.
• Through product features.

Question 7

Definition of added value

Answer 7

The process by which a business adds to the price that a consumer is willing to pay for the product.

Question 8

How can a business add value?

Answer 8

Design - make product more unique (differentiation adv).
Production - achieving quality and efficiency adds value.
Marketing - create an image that makes the product more desirable, a brand differentiation advantage.

Question 9

Benefits of adding value

Answer 9

1. The more value added, the higher the price that can be charged = higher profit margins.
2. Protection against competitors offering lower prices = competitive advantage.
3. Customer loyalty means repeat business.