1.1.3 Market positioning

Question 1

What is Marketing positioning?

Answer 1

Refers to the process a business goes through when launching a new product or service
- The business decides where they want to position the product in the market with regard to price, quality, branding, and customer perception

Question 2

What is Market mapping?

Answer 2

Tool for identifying the position of a product within a market
- A market map refers to a two-dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals’ products
- Only two criteria can be chosen e.g. price and quality, age and income, etc.

Question 3

Market map analysis

Answer 3

• If there were no spaces left on the market map, it indicates that the market is saturated and so means that there are no opportunities to exploit a market niche in the market and competition is likely to be high and profits low
• The existence of a space on the market map may indicate the existence of a market niche and this needs to be researched carefully before the business commits.

Question 4

Usefulness of Market mapping

Answer 4

• Market gaps can be identified which may enable a business to come up with ideas for new products
• Comparisons can be made between a business’ products and those of its rivals
• Market maps are simple to construct and offer a visual illustration of the position of a product in the market

Question 5

Limitation of Market mapping

Answer 5

• A gap in the market may exist because it is not profitable to fill
• Mapping a market may require primary research which can be expensive
• Only two criteria can be chosen which may prove too simplistic
• Markets are often dynamic and a market map only provides insight at a specific point in time

Question 6

What is meant by Competitive advantage of a product/service?

Answer 6

Refers to the features of a business and its products that are perceived as superior to its rivals by customers. - It is how a firm’s product is made both distinctive (it is different from the competitors) and defensible
(business can prevent competitors from copying it)

Question 7

Examples of sources of Competitive advantage

Answer 7

• Quality e.g. Audi is well known for the exceptional quality of the finishing inside their cars
• Delivery times e.g. Amazon Prime delivers products within 24 hours of ordering
• Low Price e.g. Primark is considered to provide the best value/low price combination
• Reliability e.g. Apple Macs have an excellent reputation for long life and reliability
• Ethical stance e.g. Tony’s Chocolonely only uses cocoa in their chocolate which is 100% free of slave/child production
• Design e.g. Dyson vacuum cleaners stand out from the crowd with their original design

Question 8

What is meant by Product differentiation?

Answer 8

An attempt by a business to distinguish its products from those of competitors (USP) and it could be tangible (clearly visible) or it may be a perception that is created about the product in the consumer’s mind

Question 9

Advantages of Product differentiation

Answer 9

Helps the business to increase demand for its products, increase brand loyalty, and allow the business to charge higher prices

Question 10

What is meant by Added value?

Answer 10

The difference between the price that is charged to the customer and the cost of inputs required to create the product or service

Question 11

Methods of Adding value

Answer 11

• Marketing and branding which help to build brand identification and customer loyalty to the brand and allows the firm to charge a higher price for its products
• Unique functions and features allows the firm to charge a higher price for its products thus increasing the added value
• Customer service. Businesses that ensure they have a good reputation for customer service can charge a higher price for their products thus increasing the added value
• Customisation as allowing customers to design or create their products allows the firm to charge a higher price thus increasing the added value
• Superior packaging creates an exciting opening experience for the customer. This allows the firm to charge a higher price for its products thus increasing the added value

Question 12

Examples of actual product differentiation

Answer 12

• Design
• Different functions
• Taste
• Performance

Question 13

Examples of perceived product differentiation

Answer 13

• Branding
• Advertising
• Sponsorship
• Celebrity endorsement