Once
the organization has decided which customer groups within which market segments
to target, it has to determine how to present the product to this target
audience. This allows to exactly addressing the needs and expectations of the
target groups with a tangible marketing mix that consists of product
characteristics, price, promotional activities and places to present the
product.
These
statements about the relation to other elements of the marketing plan already
point to an important element of positioning: customers’ perception. Dibb et al
define positioning as the process of creating an image for a product in the
minds of target customers. Any offer has to have particular characteristics
that set it apart from competition in the eyes of the customers.
Since
positioning is based on customers’ perceptions, it is only partly within the
control of marketers. External developments could change the way customers
think about a product. This can be so diverse things like for instance changes
in price or characteristics of competing products and substitutes, tests by
independent magazines and institutions, new legal requirements, or changes in
customers’ preferences.
What you Should Keep in Mind when Planning
Positioning
Positions
are described by variables and within parameters that are important to the
customers. Common examples are price, supporting services, quality,
reliability, and value for money. Often, customers position a product in
relation to a brand or product that is especially visible to them. This could be
the market leader or any other offer with a high media exposure and an above
average marketing budget. Therefore, it is advisable to use in-depth market
research to determine relevant parameters in order to understand how customers
rate different products and marketing variables.
The
number of relevant parameters is normally low. Most often, they can be
described with a two- or three-dimensional matrix. This tool to visually depict
customers’ perceptions of a product and its position is called perceptual mapping.
Normally,
most suppliers in a market or in a market segment will be positioned along the diagonal.
This diagonal is called the Value-Equivalence-Line (VEL), since value and price
are balanced there.
In
our example, product A is positioned unfavorably. It is too expensive for the
mass market and its quality is not good enough for the premium segment. In
general, there are the following strategies for repositioning; however, their
feasibility will depend on the particular situation.
·
Change the relation of price and quality for
the existing brand; e.g. product relaunch with improved characteristics
·
Change the relation of price and quality by
introducing a new brand; e.g. introduction of clone under a ‘cheap’ brand or a
retailers own brand
·
Alter believes about the brand; e.g. image
campaign, creation of a ‘hype’
·
Alter believes about competitive brands; e.g. comparing
advertisements
·
Alter customers’ rankings of important factors;
e.g. focus on additional features and characteristics (example: car
manufacturers focus on very different product characteristics in their
commercials, for instance security, fuel consumption, image, luxury interior,
fun)
·
Introduction of new or neglected attributes;
e.g. product relaunch with new features that are new for the whole market segment.
When
planning such activities it is critical to think about possible reactions of competitors.
A shift of a product into a more favourable position in the price-quality-map
above the diagonal (e.g. into position B) will normally lead to in shift of
market shares in favour of this product. Competitors could react with a
reduction of general price level, thus moving the VEL to the left. Product B
would lose its superior position.
Moreover,
it is advisable to keep in mind that customers and their individual preferences
of a price-quality-combination are not distributed equally along the VEL. Neglecting
the distribution of customers could lead to the following problems:
·
Positioning in a segment with very few
potential customers (e.g. positioning in a middle-segment in a market where
customers prefer either the budget-product or the premium product)
·
Positioning in a too low or too high
price-value-combination (segments a and b in our example). This product does
not appeal to a large proportion of the market, since customers either expect a
higher quality (a) or are not willing to pay that high prices (b)
Steps for Positioning a Product
Dibb et al recommend the following steps for
determining and implementing the positioning of a product. Although they focus
on new product development, these steps are applicable to a relaunch with new
features or for a repositioning of an existing product too.
1. Define the segments in a particular market.
2. Decide which segments to target.
3. Understand what the target consumers expect and believe to be the most
important considerations when deciding on the purchase.
4. Develop a product (or products) that caters specifically for these needs
and expectations.
5. Evaluate the positioning and images, as perceived by the target
customers, of competing products in the selected market segments.
6. Select an image that sets the product apart from the competing products,
thus ensuring that the chosen image matches the aspirations of the target
customers.
7. Inform target customers about the product (promotion).
© Dagmar Recklies, July 2001
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Literature
Recommendation:
Dibb,
Simkin, Pride and Farrell:
Marketing – Concepts and Strategies
Ralf
Leszinski and Michael v. Marn: Setting value, not price. In The McKinsey
Quarterly, 1997 (1), pp. 98–115
Some links for your own research:
