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.
Positioning 41 customers and the delivered product in keeping them’ and even ‘the way a company manages its marketing can become the most powerful form of differentiation’. He describes the total product concept as a generic, offered, and augmented product. This approach suggests that the most influential factor in competitive differentiation is more than the product or service, and even the generic, expected, or augmented product; it is the business itself that makes a difference. This emphasizes aspects of values and beliefs such as attitudes and the ability/willingness to consider new ideas, proposals and resolve problems. These might represent traits of a business personality because they will vary from business to business within an industry and the outcome of these differ- ences in approach is likely to differentiate competitors and their prod- ucts: ‘In this unceasing effort of the manager [to influence buyers to choose one’s products instead of the competitor’s], the way in which he operates becomes an extension of the idea of product differentiation itself’ (Levitt, 1980: 91).
Differentiation strategies result in lower break-even points than cost leadership strategies because of the need for capital-intensive processes to obtain low variable costs, although the choice of differentiation or cost leadership will be the result of judgement and specific preferences (Buzzell and Gale, 1987). Similarly to positioning, there are alternative views of the meaning of differentiation and the terminology relating to differentiation, positioning and segmentation tends to be interchangeable and interactive: ‘Companies are increasingly embracing market segmen- tation strategies as a result of the dissatisfaction they have experienced with product differentiation’ (Tynan and Drayton, 1987: 303).
Differentiation can be ‘real’ or ‘imagined’; it is sometimes seen as an alternative strategy to market segmentation, and sometimes as a com- plementary means of implementing segmentation (Dickson and Ginter, 1987). The effect of brand positioning strategies on consumers indicates that there is a focus on the brand with differentiated strategy focusing on the product group. The use of differentiating features communicated over a range of communications gives the subtype prominence instead of differentiating the brand (Sujan and Bettman, 1989). This positioning approach is similar to the internally orientated business that ‘assume[s]
that price and product performance/technology are the keys to most sales’ rather than ‘focus on a package of values that includes product performance, price, service, applications’ (Day, 1990: 367).
Differentiation and perception built into strategy are the building blocks of positioning based on customer aspirations, problems or needs identified through market segmentation (Kramer, 1991). ‘Differentiation
advantage is conferred by brand reputation, proprietary technology or an extensive sales and service network’ (Grant, 1991: 117). This type of differentiation is only available to business organizations with specific characteristics such as an emphasis on research and development, capital investment or an enthusiasm for particular aspects of a business.
Kardon (1992) makes the suggestion that differentiation requires the creation of a distinctive ‘personality’ in the marketplace through the clear identification of distinct attributes rather than broad generic descriptions. This needs a mix of creativity and good market analysis as well as institutional change to reflect a true institutional position set apart from competitors. Differentiation provides value as a result of the solutions that a product or service provides to customers because whereas customers are able to recognize a problem, they are usually not able to identify a solution (Havener and Thorpe, 1994). The promises and claims of communication are an integral part of both differentiation and positioning. Brand positioning is a kind of product differentiation in design and communication related to market segmentation (Van Raaij and Verhallen, 1994). The methodology for analysing market structure and vendor positioning is based on identifying promises and claims that not only occupy a preferred and unique (unfulfilled) niche in the consumer’s mind, but also serve as a means of exploring differentiated concepts (Naudé, 1995).
If ‘market segmentation and differentiation stand out as the two pillars each positioning decision is based on’ (Muhlbacher, Dreher and Gabriel-Ritter, 1994: 288), then positioning can be described as the combination of knowledge and distinct attributes. Esslemont (1995) wryly observes that no one has ever shown that segmentation leads to more effective marketing decisions than the alternative strategy of product differentiation. Differentiation offers the opportunity to avoid head-on competition by offering something different with the purpose of segmentation to identify a segment of the market where, by virtue of the company’s distinctive strengths, it is able to satisfy customer needs better than (or at least as well as) its competitors (Brooksbank, 1995).
There is a suggestion that positioning is the means of making brands distinctive through the use of comparative advertising. Whilst differenti- ation emphasizes a unique set of attributes to create premium perception and increase brand equity, positioning differentiates brands on the basis of attributes and/or image, highlighting similarities between market competitors or focusing on promotional price. This approach to pos- itioning affects both the advertiser’s brand and other competitive offer- ings in the marketplace by means of contrasting tangible or perceived
Positioning 43 attributes and making price comparisons that effect an overall category- level price in consumer markets (Kalra and Goodstein, 1998).
The use of image and perception in markets may be the cause of some problems in the establishment of trust between companies and customers.
Whilst companies know more about their customers than ever before, consumers describe feelings of confusion, stress, and being trapped and victimized in an insensitive and manipulative marketplace (Fournier, Dobscha and Mick, 1998). It is difficult to describe this relationship as the personification of customer orientation or the foundation of trust and intimacy with the customer. Trout and Rivkin (2000) suggest that positioning is about understanding how the mind works in the differ- entiating process, defining differentiation as being first, owning a discernible attribute, having heritage, or even being the most recent arrival in a market. Differentiation may be achieved through ‘altering any aspect of the offering (not just product features)’ (Sharp and Dawes, 2001: 755). The suggestion that positioning is limited to image and perception, while differentiation relates to the values of a customer orien- tation, is an important observation apparently influenced by the conventional teaching of the process of STP. Even Trout (1969; 1971), as the founding author of ‘the game of positioning’, now talks of ‘the importance of being different . . . differentiating yourself in the mind of your prospect . . . everyone is busy building “differentiation” into their plans’ (Trout and Rivkin, 2000: vii).
Sustainability of competitive advantage is fundamental to strategic fit, and sustainability is more likely for positions built on systems of activities rather than individual activities (Porter, 1996). If positioning is the means of bringing together the knowledge and understanding gained from segmentation and the distinct attributes from differenti- ation, then it is impossible to see the role of positioning as anything other than operational. However, it is important to identify strategic positioning as meaningful rather than cosmetic, serving as a means of consolidating the understanding (Cavangh and Clifford, 1986; Narver and Slater, 1990; Chisnall, 1995; Esslememont, 1995; Shunglu and Sarker, 1995) and knowledge (Normann and Ramirez, 1993; Johnson, 1995) gained from the segmentation process. The source of strategic positioning is reviewed in further detail in the next section.