Market positioning. Flashcards
What is market mapping? How is a market map laid out?
A market map shows extremes for two measures that are important to customers eg low price vs high price and low quality vs high quality.
- It is laid out like a matrix and the products or brands are positioned on it according to where where they are judged to lie between each pair of extremes.
What information can Market maps provide businesses?
They can reveal gaps in the market, if a business decides to fill the gaps with new products or brands, they can do so knowing they won’t have any competition. Other market research will be needed to find out if there is actually demand for a product in that gap though.
They can show businesses who it’s closest competitors are and help them to plan their best strategy from that point on.
If a product is struggling, business could place it on a marketing map to reposition it based on customer views and make the necessary actions to reposition it on the map so their products are meeting customer demands.
- It can help businesses with pricing stratergies by comparing all the products on the market to gain a general idea on the price equilibrium by mapping competitor pricing.
What are the limitations Market positioning?
It can be too simple to be effective - there are other factors which a business must consider and often mapping is subjective so unclear.
What is a competitive advantage?
This is a condition which allows a business to generate more sales or be more profitable than rivals. To achieve this, a firm must be doing something different to their rivals.
How can Lower costs give a Comp ADV?
Charge a lower price for a similar product to competition due to lower costs; increase demand and sales. Or could charge the market rate but lower costs of production means better profit per unit - both cases are beneficial.
How can increased innovation give a CA?
Consumers will often buy new and exciting products; a business innovating and bringing something new to the market is likely to create demand and increase sales - CA.
How can advertising and marketing give a CA?
More advertisement should theoretically make products more attractive provided it’s done well. The firm can also use this to create a strong brand image to attract consumers and gain establishment - more known brand - more trust - more sales - CA.
How can product differentiation give a CA?
This is when businesses distinguish their products from competitors products. They can do this by creating a USP, which can be advertised to make people see products stand out.
How can quality products and good customer service give a CA?
Customers will often pay more for a perceived ‘more reliable’ or ‘higher quality’ product. As it provides a good reputation which can cause more repeat sales. Also allows for higher prices - CA. The same applies where customers like good quality customer service.
What is adding value?
Adding value means increasing the difference between the cost of making the product and the price that the customer pays - should make a business more profitable.
What is the formula for added value?
Added value = Price - cost
How can a business add value to a product?
Increasing selling price or reducing cost of production - the aforementioned strategies can provide a business with a competitive advantage, allowing them to add value to their product.
