Chapter 3- Market Positioning

Question 1

Market positioning

Answer 1

concern with the perceptions consumers have about products.

Market positioning is an effort to influence consumer perception of a brand or product, relative to the perception of competing brands or products.

It is achieved through product differentiation and adding value

Question 2

Consumer product categories

Answer 2

• Quality
• Status
• Value for money

Question 3

Approaches a business may use to position its product:

Answer 3

• Highlight the benefits offered by the product. E.g. some manufacturers
emphasise safety, other quality but most value for money

• Identify the USP, manufacturers will describe key aspects of the product
that sets it apart from those of its competitors.

• Highlight the attributes of the product, the products size, colour,
functionality + features that affect the products appeal or acceptance.

• State the origin of the product, e.g. Wensleydale cheese
• Classify the product, what is it? E.g. ‘I can’t believe it’s not butter’.

Question 4

Repositioning

Answer 4

• Occurs when markets change due to shifting consumer demand +
some businesses need to change the position of their products.

• Involves changing their target market, feature of the product or image of the product. E.g. Napisan was a detergent for washing baby’s nappies, when disposable nappies came out; they successfully repositioned the brand for a new use – tough stains.

Question 5

Market mapping

Answer 5

This is a way of the business finding out where they are perceived by the consumer to be in the market in relation to other brands. This can be done through market research and be displayed on a ‘perceptual map’.

X AXIS - Price
Y AXIS - Quality

A business may see its brand as high quality and upmarket, but if customers see it as low quality and down-market, it is their views that will influence sales

Question 6

The limitations of Perceptual Maps:

Answer 6

• They are 2 dimensional so only 2 attributes can be analysed on the
same map
• Information needed can be expensive as needed for both primary and
secondary research

Question 7

What is a Competitive Advantage?

Answer 7

A set of unique features of a company + its products that are perceived by customers as significant + superior to competition. E.g. a product may save time, save money, improve health, be more convenient etc.

Question 8

A business can develop competitive advantage in a number of ways:

Answer 8

• Product design – create superior design of a product, emphasising a
specific feature to try and gain an advantage, could be the aesthetics of
the product.

• Product quality – offering high-quality is a common way of gaining a
competitive edge; then a premium price can be charged.

• Promotion - effective advertising could mean more people have a good
image of product and are inclined to buy it.

• Customer service – some businesses may rely on customer service to
gain a competitive e.g. enterprise (car hire) delivers and collects cars
from convenient location such as home or work.

• Delivery times – where delivery speed is important, prompt services will
gain a competitive advantage. Or weekend delivery slots.

• Economies of scale – business with low efficiency costs = can charge
lower prices and gain competitive advantage (usually large firms can do
this).

Question 9

Porter suggests there are 3 ways of gaining a competitive advantage:

Answer 9

• Become a cost leader in the market
• Differentiate the products from those of rivals
• Focus on a particular market segment

Question 10

What is product differentiation?

Answer 10

The degree to which consumers perceive your brand as different from its competitors. E.g. a products USP – Product differentiation is used by businesses to gain a competitive edge over their rivals.

In highly competitive markets, where lots of firms produce similar products, firms will try to make their product unique in some way so that it stands out from the pack.

Question 11

Creating Product Differentiation

Answer 11

Create genuine customer benefits:
• A unique design
• Unique function
• Unique taste
Creating differences that exist in the mind of the consumer
• Imaginary product differentiation e.g. through celebrity endorsement

Question 12

The purpose of Product Differentiation:

Answer 12

• To protect the product from then competitive market

* To enable the business to increase its prices if costs go up

Question 13

Adding value to products and services:

Answer 13

The business provides ‘extra’ features for the customer that go beyond their standard expectations e.g. MOT centres valeting cars as part of MOT

Ways of adding value:
• Bundling – putting together a package of benefits or services that
make up the whole product e.g. tour operators offer flights,
accommodation. Transfers and insurance = cheaper.

• Customer service – Friendly, attentive and professional staff with good
image and make customers feel at ease with a willingness to go out of
their way to help customer.
• Speed of response to customers – reducing or eliminating waiting
times can add value.

• Packaging – present in attractive wrapping or gift wrap.

• Frequent buyer offers – reward customers for repeated service e.g.
free products or air miles.

• Customisation – customising products e.g. embedding a customer’s
logo or brand in product or adapting product designs to suit the needs
of the individual customers.

Question 14

Why add value?

Answer 14

• To charge premium price
• Differentiate and gain competitive edge
• Protect itself from customers by charging lower prices therefore
stealing customers
• May focus more on its target market segment by adding value

Question 15

What is the marketing mix?

Answer 15

The decision-making process in what will be offered to consumers Is known as the marketing mix

Known as the 4/7 P’s of marketing

Key:
• Product/service – decisions about the design,
features and image of products.
• Promotion – How information about the product
will be communicated
• Price - Deciding the price strategy the business will
- adopt in the market
• Place (distribution) – determining the locations the
product will be available from

Question 16

What influences the marketing mix?

Answer 16

• Market position. Refers to how customers perceive the product. High quality? Technologically superior? Budget friendly? Depending on the market position the business is trying to take up, different marketing mix decisions will need to be made. Business wishing to be luxurious may have a very different marketing strategy.
• Competitors. In industries where firms are competing with each other on prices, pricing strategies are extremely important to ensure that firms don’t lose their competitiveness and experience falling sales and market share.
• Product life cycle. Different market mixes may be used at different times In the stages of a products life cycle. Some products may be more heavily promoted when they are first launched, during more mature stages of their life cycle they may not be as widely distributed.
• Target market. A fashion retailer targeting consumers aged 14-25 is more likely to create a different marketing mix to a fashion retailer supplying the 50+ age group. Each company is likely to supply different products depending on the tastes of the target group, use different promotional and pricing strategies.

Question 17

What element of the marketing mix is most important?

Answer 17

-It could be argued that all elements of the marketing mix
are of equal importance and they must all complement
each other in order to make a coherent marketing mix.

-Alternatively, it may be argued that in different scenarios, one aspect of the marketing mix may be more important than others. In some industries, the product may be considered by far the most important aspect in determining the sale in a market such as luxury cars or electronics. For products that cannot be differentiated such as milk, place may be the most important element

Question 18

What is the greatest influence on the marketing mix of a business?

Answer 18

The most important influence tends to be the target market as the wide range of marketing decisions are dependent on the market being targeted.

When designing the product, deciding the promotional mix and pricing strategy and creating a distribution strategy etc, must meet the target market demands.