1.1.3 Market Positioning Flashcards
What is Market Positioning?
Considers where a product is placed in the market relative to its competitors.
What is a Market Map?
A diagrammatic technique that compares two aspects of different products or brands in a market.
What do market maps do?
- Market maps can reveal gaps in the market
- Market maps can show a business who its closest competitors are.
- If sales of a product are declining, the business might use a market map to find out how customers
view their product and then try to reposition it on the map. - Market maps show how much customers expect to pay
What are the advantages of market mapping?
- Identifies potential gaps in the market
- -> Start up – get initial sales
- -> Existing – reposition brand (via product) - Identifies area in market which may be overcrowded
- -> Avoids poor investment - Simple methods to analyse competitors
- -> Easy Market Research tool to inform managers or owners
- -> ⬆️Market Research = ⬇️Risk
What are the disadvantages of market mapping?
- Gaps in the market have no guarantee of success
- -> May be less demand (for a reason) - Only two variable
- -> Over-simplistic?
- -> Can’t handle more complex markets - It depends on who created the market map
- -> could be based off of Opinion
- -> could be Biased
- -> No data/statistics may have been used - Poor accuracy of market map = poor decisions
What is a Competitive Advantage?
An advantage a business has over its competitors, allowing it to generate more sales or be more profitable than its rivals.
What are the ways that a business can achieve a competitive advantage?
- Lower costs
- Product innovation
- Mass advertising and marketing
- Product differentiation
- More reliable and better quality compared to competitors products
- Good customer service
- Convenient for customers
- Adding value
What factors contribute to a competitive advantage?
- Product differentiation
- Ability to add value
- Operational efficiency
- Position relative to competitors
What is Adding Value?
Means increasing the difference between the cost of making the product and the selling price. This usually increases profits
What is the added value equation?
Added value = price product is sold for – cost of making product
How can adding value be achieved?
- Increasing the selling price of the product or by reducing the costs of making the product
How can a business add value?
- Design
- -> Develop new technology
- -> Design features to make their product unique (differentiation advantage)
- Production
- -> Achieving quality and efficiency adds value
- -> Quality will ensure a higher price (differentiation advantage)
- -> Efficiency helps cut costs of the input (cost advantage)
- Marketing
- -> Creating an image that makes the product more desirable (brand advantage
What are the advantages of adding value?
- The more value that is added –> the higher the price that can be charged –> which means higher
profit margins - Customer loyalty –> results in repeat business –> further leads to increase profit
- Its protection against competitors offering lower prices –> this means a competitive advantage
What is Product Differentiation?
Where businesses distinguish their products from competitors’ product.
What is the purpose of product differentiation?
The purpose of product differentiation is to create a competitive advantage or to make your product superior to alternatives on the market.
