Chapters 8 & 9 Differentiation, Positioning & Product Market Analysis.

Chapters 8 & 9

Differentiation, Positioning & Product

Market Analysis

Exhibit 8.1

Generic Competitive Strategies

Lower Cost Differentiation

Broad TargetCost

Leadership Strategy

Differentiation Strategy

Narrow TargetFocus

Strategy

Focus Strategy (Differentiation

Based)

Competitive Advantage

CompetitiveScope

Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.

Note similarity to theCompetitive StrategyGrid in Exhibit 3.2

Product Market Grid

Products

Markets (Customer Groups)

P1

P2

P3

M1 M2 M3

Product Market Analysis:Quick Service Dining

Locat

ion

Mea

l

Occasion

Home

Away

Breakfast

Lunch

Dinner

Family Social Business

What do we mean by positioning?

• The act of designing the firm’s market offering so that it occupies a distinct and valued place as perceived by the target customer.

• Key Components: – distinct and valued – physical and perceptual – differences between one’s product and its

competitors.

Exhibit 8.3

Comparison of Physical and Perceptual Positioning Analysis

Physical positioning

• Technical orientation• Physical characteristics• Objective measures• Data readily available• Physical brand properties• Large number of dimensions• Represents impact of product

specs and price• Direct R&D implications

Perceptual positioning

• Consumer orientation• Perceptual attributes• Perceptual measures• Need for marketing research• Perceptual brand positions

and positioning intensities• Limited number of dimensions• Represents impact of product

specs and communication• R&D implications need to be

interpreted

Exhibit 8.5

Product Positioning Map (Women’s Clothing Retailers in Washington, D.C.)

Washington 1990 Women’s fashion market

Women’s-wear value for the moneyWorst value Best value

Wo

men

’s-w

ear

fash

ion

abil

ity

Neiman-MarcusSaks

Bloomingdale’s

Hit or Miss

The Limited

Macy’sNordstrom

Garfinkels

Casual Corner

Kmart

Britches

Sears

DressBarn

The GapLoehmann’s

TJ MaxxSassafras

Talbots

Woodward & Lothrop

JC Penney

Hecht’sL&T Marshalls

Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September 1990, as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992), p. 205.

Latest Style

Current

Conservative

Exhibit 8.7

Perceptual Positioning Map (Women’s Clothing Retailers and Segments Based on Ideal Points)

Washington 1990 Women’s fashion market

Women’s-wear value for the moneyWorst value Best value

Neiman-Marcus2

SaksBloomingdale’s

Hit or Miss

The Limited

Macy’sNordstrom

Garfinkels

Casual Corner

Kmart

Britches

Sears

DressBarn

The GapLoehmann’s

TJ MaxxSassafras

Talbots

Woodward & Lothrop

JC Penney

Hecht’sL&T Marshalls

Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September 1990.

4

5

1

3

Wo

men

’s-w

ear

fash

ion

abil

ity Latest Style

Current

Conservative

Positioning Statement for Volvo in North America

• For upscale American families, Volvo is the family automobile that offers maximum safety

• Generic format for positioning statements: For (target market), (brand) is the (product category) that (benefit offered).

Value Proposition for Volvo in North America

• Target market: Upscale American families• Benefits offered: Safety• Relative price: 20% premium to domestic

family cars• Generic format for value propositions:

– Target market– Benefits offered (and sometimes not offered)– Relative price

Exhibit 9.1

Categories of New Products Defined According to Their Degree of Newness to the

Company and Customers in the Target Market

High

Low

Low HighNewness to the market

Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).

New

nes

s to

th

e co

mp

any

26% 26%

20%New product

lines

Revisions/improvements to existing products

11%Cost

reductions

7%

Additions to existing product

lines

Repositionings

10%New-to-the

world products

Exhibit 9.4

Potential Advantages of Pioneer and Follower Strategies

Pioneer• Economies of scale and

experience• High switching costs for early

adopters• Pioneer defines the rules of

the game• Possibility of positive network

effects• Distribution advantage• Influence on consumer choice

criteria and attitudes• Possibility of preempting

scarce resources

Follower• Ability to take advantage of

pioneer’s positioning mistakes• Ability to take advantage of

pioneer’s product mistakes• Ability to take advantage of

pioneer’s marketing mistakes• Ability to take advantage of

pioneer’s limited resources

Exhibit 9.5

Marketing Strategy Elements Pursued by Successful Pioneers, Fast Followers,

and Late EntrantsThese marketers...

Successful pioneers

Successful fast followers

Successful late entrants

are characterized by one or more of these strategy elements:

• Large entry scale• Broad product line• High product quality• Heavy promotional expenditures

• Larger entry scale than the pioneer• Leapfrogging the pioneer with superior:

product technologyproduct qualitycustomer service

• Focus on peripheral target markets or niches

Advice for Would-Be Pioneers• First mover advantage is often trumped

by followers who are better. – Best beats first. Concentrate on being best.– Best and first is the ideal.

• Being a pioneer without the basis for sustainable competitive advantage is a trap!

New Product Development

Key success criteria include:– Product fit with market need– Product fit with capabilities– Product or cost superiority– Cross-functional team approach– Clear vision of future market based on

customer feedback– Continuous, quality-based process