Differentiation & Brand Positioning (Final Exam) Flashcards
What is the purpose of a Corporate Strategy?
The goal of a corporate strategy is to be unique and to create unique value for the customers you are serving.
Michael Porter states,
The starting point of a market-driven strategy is to ask,
- “What industry should we be in?”
- “How should the company be positioned within the selected
industry?”
Michael Porter’s Generic Competitive Strategies
- Cost Leadership (being the lowest price).
- Differentiation – (building customer perceptions of superior product quality, design or service).
- Focus (concentrating on narrowly defined market niches)
Differentiation
- Differentiation is the preference of one product, good or service, over another
- Reasons why consumers choose what they buy
- What they choose is better or cheaper
- Perceived difference
- Important in business strategies and marketing
- Requires that a firm can properly communicate with its customers, which is why advertising is important. Advertising CONVINCES customers that differences exist, even if they don’t.
Bases of Differentiation
A differentiated product fills one or more needs better than the products of competitors.
Three Categories
-
Product Attributes
* Exploiting the actual product -
Firm-Customer Relationships
* Exploiting relationships with customers -
Firm Linkages
* Exploiting relationships within the firm and/or relationships with other firms
A base of differentiation must fill some customer need:
- Hunger
- Comfort
- Cleanliness
- Beauty
- Status
- Style
- Taste
- Safety
- Quality
- Service
- Accuracy
- Furthering a cause
- Reliability in use
- Nostalgia
- Belonging
- Image
Why should we do differentiation?
- Product differentiation creates customer preferences
- Preferences allow firms to make above-normal profits
- Almost anything can be a base of differentiation
- Bases of product differentiation that meet the VRIO criteria may generate competitive advantage
- A product differentiation strategy is only as good as its implementation
Product differentiation principles can be applied to your personal and professional lives.
Physical Positioning
- Assessing product offering based on a set of objective physical characteristics
- Limitations
- Does not provide a complete picture of relative positions
- Customers may perceive some of the brand characteristics differently from how the marketers intended
Perceptual Positioning
Includes product presentation, past experiences and opinion of others
Kinds of Brand Attributes
- Physical - Directly related to a single physical dimension
- Complex physical - Used by consumers to evaluate competitive offerings
-
Abstract - Influenced by physical characteristics
- Not related in any direct way
- Price - Implies high or low quality
BRANDING
Branding occurs in the minds of your consumers
Branding is akin to “emotional scarring”
The more often this chainlink of neuron pathways is used, the stronger the connection, and the more easily remembered, and better learned as the branded reputation in someone’s mind.
The more times we repeat the message, the stronger the connection will be
Our positioning strategy is to occupy a specific position in the consumer’s mind.
Tools to Understand Your Company’s Positioning
Positioning Grid (AKA Perceptual Map): Visual representation of the positions of various products or brands in the competitive set in terms of two determinant attributes
Value curve: Comprises more than just two dimensions that can be generated
Why is Repositioning So Difficult?
A shift in the market environment may cause customers to reduce the important they attach to each attribute.
If your position is intensely perceived, it’s difficult to reposition a brand. Neurons that fire together are wired together and are hard to untangle in the brain.
Branding & Associative Learning
Branding Involves Associative Learning
- Based on the premise that learning takes place as the result of “observable/perceptual” responses to external stimuli.
Halo Effect
- The halo effect is a cognitive bias that claims that positive impressions of people, brands, and products in one area positively influence our feelings in another area.
- At the product level, any attribute of a product can affect how people perceive its other attributes, and the product as a whole
Positioning Strategy at Marketing Plan Level
So, a positioning strategy—also known as a market or brand positioning strategy—is a type of marketing strategy that focuses on distinguishing a brand from its competitors. The goal of a positioning strategy is to influence consumer perception by effectively communicating a brand’s competitive advantage. This is what it is at a marketing plan level.
At a promotional plan level, you’re still trying to influence consumer perception and create a specific position in their perpcetions, attitudes and minds, but you might not be communicating the brand’s competitive advantage. Sometimes the market position you choose, is exactly what you communicate.
A good example is a wine company. Their objective might be to enter the market and to be perceived very differently from the vast majority of wine brands, which all sell complicated products with sophisticated and hard-to-understand wine terminology (their differentiation from the competition). X company focused their positioning strategy on being perceived as “approachable, easy-to-choose, and fun”. This is the marketing plan level positioning. NOW in order to achieve this in the minds of consumers, they have to enact positioning at a promotional plan level. X company would make their brand message “approachable, easy-to-choose and fun.” They would do everything with the branding (promotions, ads, packaging–communication to the customer) to reflect this idea. This would mean that their market and promotional plan levels are the same.
Sometimes–less common–the marketing and promotional plan levels can be different. If we continue with the wine example, X company wants to make their position in relation to their competition “cheaper, accessible, and sweet.” Now, they might not want their customers to think of them as the cheaper alternative–in wine that’s not so great. So they’d make their branding and messaging about accessibility and their sweet taste–or even about their process (so that it can be more affordable). This promotional plan level of position in the customers’ minds is different from the market plan level positioning.
Extensions
Family Branding
Family Branding is the number of product lines offered by a company.
Product Line Extensions
These are extensions of the product. It can be used to reduce risk of failure by using the original product name as reference for consumers
Be careful as product line extensions can cannibalize some of your customers from the original product
Natural Product Line Extension
makes sense as a product line extension
Disadvantages of Brand Name Extensions
- Brand Name Extensions that are not a natural fit often hurt the parent brand due to diluting the brand meaning which in turn hurts differentiation.
- Sometimes no association is made between the parent brand and the new product.
(thus, lots of money can be wasted promoting the brand) - A bad negative association can be transferred back onto the parent brand.
