Chapter 5 Flashcards
Product differentiation
The purpose of product differentiation is to produce a product that the target market sees as different to similar products of competitors.
The company will be able to charge a premium price for a unique product because it adds additional value.
The premium price will be able to cover the costs that were incurred to make the product unique. Volvo, for example, differentiates itself from other vehicles as being the safest car to drive.
The company spends extra money on ensuring that its cars are the safest on the market, with extra airbags and other safety-related specifications. Volvo can therefore charge a premium price for its cars.
There are different dimensions whereby a product can be differentiated. The prescribed book deals with the following differentiation dimensions in detail:
brand product features quality distribution consumer orientation
Product positioning
The positioning of a product refers to the place a product has in the mind of the consumer in relation to other similar products in the market. You would have noticed that marketers attempt to position their products so that they hold a unique position, not in use by any other product in the marketplace.
It is also possible for the same product to be positioned differently for different segments of the market.
Positioning Maps
Visual representations of the market (maps), they help marketers develop focused marketing mixes or strategies. It makes it easier for marketers to spot gaps in the market. Study the positioning map in your prescribed book and see if you can identify the gaps in the market.
In order to position a product successfully, the positioning process needs to be followed. This process consists of the following six steps:
Identifying a relevant set of competitive brands
Identifying relevant differentiation dimensions
Determining consumer perceptions
Analysing the intensity of the brand’s current Position y analysing the brand’s current position
Determining the customers’ most preferred combination of attributes
Identifying a relevant set of competitive brands
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Identifying relevant differentiation dimensions
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Determining consumer perceptions
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Analysing the intensity of the brand’s current
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Position y analysing the brand’s current position
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Determining the customers’ most preferred combination of attributes
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There are seven different positioning methods that a company can follow to position its product in the marketplace. The positioning methods are as follows:
Attribute positioning
Benefit positioning
Use application positioning y user positioning
Competitor positioning
Product category positioning y quality/price positioning
Attribute positioning
A company can identify an attribute that will set it apart from its competitors and position itself in terms of this exceptional attribute.
Benefit positioning
The distinctive benefits of a product or company can also be used to position itself.
Use application positioning y user positioning
A company can utilise the product use or application pos- sibility to position itself.
