1.1.3 Market Positioning Flashcards
What is market positioning?
- Refers to the process a business goes through when launching a new product or serivce
Business decides where they want to position product in market with regard to price,quality branding etc.
What is market mapping?
- A tool for identifying the position of a product within a market
What are the usefulness & limitations of market mapping?
Usefulness
* Gaps can be identified which may enable a business to come up with ideas for new products
* Comparisons can be made between a businesses & its rivals products- where are they positioned?
Limitations
* Just because there is a gap in the market doesnt mean it should be filled
* Markets are often dynamic & a market map only provides insight at a specific point in time
* Market mapping may require primary research which can be expensive
Define ‘competitive advantage’
- Refers to the features of a business & its products that are percieved as superior to its rivals by customers
What does competitive advantage lead to?
- Leads to a higher market share and have more sales revenue over your competitors
What are some of the main sources of competitive advantage?
- Price leadership
- Added value
- Innovation
- Reliability
- Quality
- Advertising
- Branding
- Convenience
- Customer service
How can you gain a competitve advantage through price leadership?
- By consistently offering the lowest prices for its products or services within a specific market or industry.
This can gain a competitive advantage and attract a large customer base
How can you gain a competitive advantage through 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
How can you gain a competitive advantage through advertising & branding?
- Building brand identification & customer loyalty to the brand allows the firm to charge a higher price
for its products.
thus increasing the added value
What is product differentiation?
- Distinguishing a product or service from rival firms
What are the advantages of product differentiation?
- Competitive advantage over rivals
- Spreads good word of mouth
- Could strengthen brand image
How can businesses differentiate their product from other firms?
- By creating functions or features of the product which help it to stand out from competitors
What can is the purpose of product differentiation?
- Help a business to develop a competitive advantage
- Help the firm create a USP- stand out from competitors
What is meant by a business ‘adding value’?
- The process by which firms increase the price that the consumer is willing to pay
What are the benefits to a business ‘adding value’?
- More value that is added- the higher the price can be charged
- Protection against competitors offering lower price leading to a competitive advantage
- Customer loyalty - means repepeated business
