‘Shortsighted managements often fail to recognise that in fact there is no such thing as a growth industry’ (Levitt, 1960: 45).
Marketing has long advocated the need to avoid narrow, product-oriented industry and in the search for growth it has leaned heavily upon a con- cept that is admitted to be ‘manipulative’ and ‘cosmetic’ to the point that
‘tactics should dictate strategies’ (Ries and Trout, 1989: 4). Man ‘modifies, embellishes, rewrites, and repackages an otherwise crude, drab, and general oppressive reality’ (Levitt, 1969: 331–2), and yet it is important to recognize the entire corporation as ‘viewed as a customer-creating and customer-satisfying organism . . . providing customer-creating value satisfactions’ (Levitt, 1960: 56). It may be time to mediate narrow, customer-oriented industry definitions that rely on cosmetic and manipulative communications sometimes disconnected and unrelated to the ability of either the product or the supplier. In contrast to a communications approach, the key to growth and survival is the ability to choose and establish a position that is less vulnerable to attack from direct competitors and less vulnerable to erosion from buyers, suppliers and substitute goods using several ways to determine the position (Porter, 1979).
Distinctive competencies, also called resource deployments, are described as ‘the level and patterns of the organization’s past and present resource and skill deployments that will help it achieve its goals and objectives’ (Hofer and Schendel, 1978: 25). In their investigation of the life insurance industry, Crosby and Stephens (1987: 411) identify that a buyer–seller relationship needs more than a social or interactive response, ‘shielding buyers from reality’, but requires real substance that can be ‘rationally’ perceived as an objective standard of core service.
The roots of competitive advantage depend on the ability to consolidate core competencies that allow a business to adapt quickly to changing opportunities (Prahalad and Hamel, 1990). These core competencies, and particularly some technologies and production skills, should be difficult for competitors to imitate and should make a significant contribution to the perceived customer benefits of the end product (ibid., 84). A company is unlikely to have more than five or six fundamental competencies. As Day (1990: 9) argues:
The essence of competitive advantage is a positioning theme that sets a business apart from its rivals in ways that are meaningful to the target customers. The most successful themes are built on some combination of three thrusts; better (through superior quality or service), faster (by being able to sense and satisfy shifting customer requirements faster than competitors), and closer (with the creation of durable relationships). The task for management is to simultaneously find a
Positioning 37 compelling theme and ensure continuing superiority in the skills, resources, and controls that will be the source of advantage over target competitors.
There is the suggestion that positioning in the mind of the customer can be achieved using ‘meaningful’ themes. Undoubtedly these have to be perceived but they must have their basis in reality denoted by actual skills, resources and controls of the business. The avoidance or mitigation of competition can be achieved through product performance benefits that others are unable to match as well as equivalent product perform- ance benefits at a price that others are unable to match (Czepiel, 1992).
Flexibility in the range and synergy of products, forward or backward integration, or new technologies can all lead to a competitive advantage (El-Namaki, 1992). The reason why some businesses are more skilful than others at delivering both superior value to customers as well as profitability is raised by Czepiel (1992), who points out that the choice of value and managing activities involved in providing the value, whether through the benefits or the cost route, will determine the set of target customers, and the communication of the value to customers will be determined by the particular choice of target market. This implies that a business’s preference will not only influence the way to conduct business within those markets but also the choice of target market.
A positioning programme built around core strengths of the organization, strengths that cannot easily be claimed by competitors, is a strategy that sets a business and product apart from the competition (Kardon, 1992).
Webster (1992: 10) points out:
Marketing as culture, a basic set of values and beliefs about the central importance of the customer that guide the organization (as articu- lated by the marketing concept), is primarily the responsibility of the corporate and SBU-level managers. Marketing as strategy is the emphasis at the SBU level, where the focus is on market segmentation, targeting, and positioning in defining how the firm is to compete in its chosen businesses. At the operating level, marketing managers must focus on marketing tactics, the ‘4Ps’ of product, price, promo- tion, and place/distribution, and the elements of the marketing mix.
Each level of strategy, and each dimension of marketing, must be developed in the context of the preceding level. As we move down the levels of strategy, we move from strategy formulation to strategy implementation.
Webster (1992) acknowledges that the values and beliefs of a business permeate all levels of thinking from the choice and selection of target market to the way that it satisfies those markets through an integrated strategy. The choice of competence is subject to similar influences, as Czepiel (1992: 129) argues:
A key strategic issue in positioning is the need to stay with one’s own distinctive competencies. This requires that competency be replen- ished and maintained. Since competence is the underlying rationale for a company’s ability to deliver superior value, any diminution in that competence represents a weakening in competitive advantage.
The rule for positioning, therefore, is to play your own game and resist temptations to try to be all things to all people.
Replenishment and maintenance of competencies may not be enough to sustain position in a changing environment: ‘There’s no such thing as “sustaining” leadership; it must be regenerated again and again’
(Hamel and Prahalad, 1994: 127). This underlines the almost constant need for adjustment of competencies, skills and capabilities. If there is the need for this form of ongoing transformation, then the business is going to have to change in order to maintain a preferred position. An effective position is one that enables a brand or service to occupy a pre- ferred and unique niche in a customer’s mind that is consistent with the overall marketing strategy (Lautman, 1993). All elements of a com- pany’s behaviour can affect the position in the mind of customers and this view holds positioning as a concept of predominant strategic rele- vance (Muhlbacher, Dreher and Gabriel-Ritter, 1994).
Brooksbank (1994) describes positioning as a creative process with no right or wrong ways of interpreting marketing research to understand the marketplace in the formulation of positioning strategy. The positioning in the mind, the need for a customer relationship and the intimacy of a relationship is determined by differentiation strategies but ‘differenti- ation on an irrelevant attribute – “meaningless” differentiation – can create a valued difference between brands and, in the process, a meaningfully differentiated brand’ (Carpenter, Glazer, and Nakamoto, 1994: 339).
The central positioning question is: ‘Does an attribute appear to have value?’
The application of the term ‘strategy’ as applied by a senior marketing manager to positioning as a part of the segmentation, targeting and positioning process is indicative of a broader approach to future intentions and competitive advantage than just a cosmetic approach. Positioning
Positioning 39 strategy only applies at the level of a particular product and/or service operating within a particular market and it should not be confused with the broader concept of ‘corporate’ strategy, or with the more specific concepts of strategy as related to each individual element of the marketing mix, such as a ‘promotional’ or ‘pricing’ strategy (Brooksbank, 1994). As Porter (1994: 37) says: ‘At the heart of positioning is competitive positioning . . . positioning embodies the firm’s overall approach to competing.’
The approach to competing seems to include the prospect of an overall approach to core strategy that includes a willingness and expectation to answer such questions as ‘what new core competencies will we need to build? What new product concepts should we pioneer? What alliances will we need to form? What nascent development programs should we protect? What long-term regulatory initiatives should we pursue?’
(Hamel and Prahalad, 1994: 123). The choice of a unique position is not enough to guarantee a sustainable advantage because it will be imitated.
Porter (1996) subscribes to the view that a strategic position is not sus- tainable because competitors seek to reposition or ‘straddle’ by the add- ition of new features. Porter (1996: 68) advocates the use of trade-offs or
‘more of one thing necessitates less of another’ and provides three reasons for managers to make trade-offs:
1. A company with an image or reputation for delivering a particular value may lack credibility, confuse customers, and even undermine its reputation if it delivers an alternative value or two inconsistent attributes simultaneously.
2. A different position requires different product configurations, differ- ent equipment, different employee behaviour, different skills, and dif- ferent management systems.
3. Trying to be all things to all customers risks confusion amongst employees trying to operate without a consistent and unambiguous framework.
The emphasis of positioning strategy is long term. Positioning is neither unique nor valued if differences in needs are not translated into mean- ingful positions rather than perceived positions, and organizational priorities have to remain clear through the choice of competing in one way, and not another. Initial market perceptions influence price sensitivity and a unique attribute to a minor brand has a greater impact on its price sensitivity than adding the same feature to a premium brand (Nowlis and Simonson, 1996). Penetration pricing, product proliferation
and wide distribution are identified as forming part of a positioning strategy requiring investment in production capacity, product develop- ment and market share building. It is important therefore to choose strategies that are fitted to the capabilities of the firm rather than choosing a segment just because it is profitable or not served by the competition (Hill, 1997). Positioning is developed to achieve the object- ives laid down under the core strategy (Hooley, Saunders and Piercy, 1998). Doyle (1998: 86) points out: ‘The choice of target market segments, which determines where the business competes, and the choice of differential advantage, which dictates how it competes.’
As if to underline the need for businesses to reflect their true capabilities, Prahalad and Ramaswany (2000: 83) recognize that ‘customers are not prepared to accept experiences fabricated by companies’. This is recog- nition that the manipulation of customer perceptions is not sufficient as a strategic tool – the ability to fulfil and deliver promises is the basis of competitive advantage and strategic positioning.