Theme 1 - 1.1.3 Market Positioning

Question 1

What is market mapping ?

Answer 1

• Market mapping is the process of finding the variables which differentiate brands in a market and then plotting them on a map – to identify a gap in the market

It’s when you do the cross with different variables like cheap/expensive and high quality/low quality

Question 2

What are the uses of market mapping ?

Answer 2

• Market mapping could be used to identify a gap in the market

• It could also be used by a start-up to identify which products to produce or which services to provide – so they are market orientated (not product orientated)

• It could also be used by a traditional brand to reposition itself in the market - for e.g. north face when they went from climbing gear to tracksuits

Question 3

What is the definition of competitive advantage ?

Answer 3

• It is an advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry, either in low cost leadership or on price leadership
• The main idea is that a business can win by being cheaper or by being different

Question 4

What are the ways that a business can achieve a competitive advantage ?

Answer 4

• Price
• Added value
• Innovation
• Reliability
• Quality
• Reputation
• Advertising
• Branding
• Convenience
• Customer service

Question 5

How can price give the business a competitive advantage ?

Answer 5

• Some businesses choose to use a very low cost model and compete on price
• This can be found in many industries including retail and the holiday market

Question 6

How can added value help a business achieve a competitive advantage ?

Answer 6

• Added value can be achieved through a process
• Birds Eye takes Cod and Pollock and adds value to the fish and produces a range of fish products

For e.g. adding breadcrumbs to fish and then selling it - this is adding value to the product

Question 7

How can innovation help a business achieve a competitive advantage ?

Answer 7

It can help a business a lot because for e.g. Dyson innovated the vacuum cleaner with the bags and he made it better by making is wireless and bagless which attracted lots of attention and he sold a lot of unit - he made billions.

However innovation could take a lot of hard work and persistence because it took Dyson 5 years to make his first final product after over 5000 prototypes.

Question 8

How can reliability help a business achieve a competitive advantage ?

Answer 8

Reliability is defined as the probability that a product, system, or service will perform its intended function adequately for a specified period of time, or will operate in a defined environment without failure.

And customers search for something like this as they don’t want for example their car breaking down in 2 years of use - they would rather buy something reliable that will for example have enough space for groceries but at the same time be able to travel long distances without burning a lot of fuel etc

Question 9

How can quality help a business achieve a competitive advantage?

Answer 9

It can help you gain a competitive advantage because obviously if you have a better quality than your competitors then there will be a lot of people that will purchase your product /service over someone else - think about Emirates vs Ryanair obviously the quality is better in emirates but more expensive so some people are willing to pay extra for that luxury. Also having products at a high quality will make huge customer satisfaction as the products will be made durable and long lasting - think about Vileda - the best cleaning equipment.

Question 10

How can reputation help a company achieve a competitive advantage?

Answer 10

Well if you take for e.g. Lego - it’s reputation is really good as it produces high quality toys that all children love so you would rather buy a kid Lego than some off brand Lego as you know that Lego is the best and is high quality etc. The reputation attracts more customers. Legos famous saying ‘only the best is good enough’

Question 11

How can advertising help a business achieve a competitive advantage ?

Answer 11

• A business can advertise to raise awareness of the brand, remind customers or inform them of product features

Making a good advertisement can really attract a lot of customers for example adding a cute advert can gain you a competitive advantage as you are playing with the customers feelings which causes them to be encouraged to buy the product

Question 12

How can branding help a business gain a competitive advantage?

Answer 12

• Superdry is an exciting contemporary brand which focuses on high-quality products
• Such distinctiveness has gained the brand exclusive appeal as well as an international celebrity following

Branding can also cause customer loyalty so if you have very good branding it can cause more customers to buy your product as it stands out more or it looks better etc

Question 13

How can convenience help a business gain a competitive advantage ?

Answer 13

• Tesco’s - Originally a UK-focused retailer specialising in food and drink, it has diversified both geographically and by product, into areas such as clothing, electronics, financial services, telecoms, home, health, car and dental insurance, retailing and renting DVDs, CDs, music downloads, Internet services and software

It’s very convenient so it has everything you need in one shop for example it has a bakery
Gift cards etc so more people will come to your shop and buy things as it has a large selection of things that can suit your needs. It can gain you a competitive advantage as if you have a convenient shop and you open next to a bakery for example then you might take the bakery’s customers as your shop just has much more things including a bakery that is probably far cheaper than the bakery.

Question 14

How can customer service give a business a competitive advantage ?

Answer 14

• Customer service can provide a business with competitive advantage

• Consumers want a business to get things right first time and dealing with their complaints
faster and more efficiently.

• Amazon for example their vision/mission statement states: “to be earth’s most customer-centric company.”

Question 15

What is product differentiation ?

Answer 15

• Where a product is different from the competition in some way

• Consumers must be able to perceive this difference and may be willing to pay a premium price for the product

For e.g. why would people pay £200 for headphones instead of £10

Question 16

What are the methods of differentiation ?

Answer 16

• Through reputation (hair salon, restaurant)
• Through customer service or after sales service (Marks and Spencer)
• Through value for money (ASDA, Lidl, Aldi, Primark)
• Through product features (Cars, mobile phones)

Question 17

What is the definition of added value ?

Answer 17

• Added value is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service

• This can be achieved through the product itself or the way that consumers perceive the product

Question 18

How can a business add value ?

Answer 18

Design - develop new technology/design features to make their product unique (differentiation advantage)

Production - achieving quality and efficiency adds value.
• Quality will ensure a higher price can be charged (differentiation advantage)
• Efficiency helps cut costs of the input (cost advantage)

Marketing - creating an image that makes the product more desirable, a brand differentiation advantage

Question 19

How can value be added ?

Answer 19

Processes such as cutting or adding other ingredients to the finished product for e.g. instead of potatoes you could buy chips

Question 20

What are the benefits for adding value ?

Answer 20

1. The more value that is added, the higher the price that can be charged, which means higher profit margins
2. Protection against competitors offering lower prices which means competitive advantage
3. Customer loyalty which means repeat business