5. Is this value worth the investment in time and effort?(i.e.
either as straight profit or as a stepping stone to others in a cherry picking strategy, OR as a block to stop your competition getting a toehold in your market etc).
If still no, then go back to item No.1. and start again. If yes to any of the above, proceed to discover:
How best can you communicate?
6. Research:
– What media do they consume? For example, not just read, but also believe, internalize and act upon.
– Are there databases, mailing (or other types of) lists avail- able to buy or hire?
– How many browse the Internet? How frequently?
State these, and if you can do so with confidence (it’s your money) you have defined a segment/niche, or cherry.
NOTE:In some cases in business to business markets it is often possible to go through the whole exercise with only one major customer – this will be a so called Key Account. However, that’s another topic entirely.
about how well the product satisfies their needs compared to how well competitor products do this. Positioning is crucially important since, over time, it measures the relative effectiveness of a company’s strategy versus the competition.
Often a product may occupy different positions in different markets.
For example, Mercedes is perceived as a good taxi in Germany – but an up-market car in much of the rest of the world.
Positioning strategies involve communicating to customers unique or superior offerings tailored to their needs. Positioning should reflect genuine attributes of the product and be matched to buyer preferences and characteristics. Customers cannot be fooled for long, if at all.
Thus in the car business:
• Porsche targets ‘wealthy sporty’ users with its high performance.
• Volvo targets the safety conscious with tough, crumple-zone safety features.
• Rolls-Royce targets the ‘wealthy’ who want status with ultra- quality throughout.
Establishing a good ‘Market Positioning’ requires in-depth customer research to identify needs and prime buying criteria. Since positioning is also about beating rivals it requires research of competitor-offerings so as to know how to be superior. The company can then provide and promote a bundle of benefits more tightly suited to customer needs than rival offerings.
Positioning maps
Positioning analysis often incorporates the use of one or more positioning maps. A hypothetical and simple two-variable example is shown in Figure 3.8 here.
FIGURE 3.8: A HYPOTHETICAL POSITIONING MAP
• The horizontal and vertical axes show the prime customer supplier selection criteria as ‘price’ and ‘productivity’ respectively.
• The circled areas represent customer segments.
• A, B, C, D, E and F represent positions that are currently occupied by competitors.
Say that analysis reveals that the segment second up from the bottom (segment E) is not currently being served to the customer’s satisfaction.
Hence, there may be an opportunity here for a new company to enter this market by offering a product more closely positioned to customer needs than that being offered by rival E.
Analysis such as that in Figure 3.8 is useful. However, much greater clarity and completeness can be gained by using multi variant maps. These can illustrate the positions of several companies’ products on all the factors that customers use as buying criteria. The hypothetical example of a PC market positioning shown in Figure 3.9 is, for simplicity, confined to eight buying criteria and just two companies. This type of positioning map is called a ‘spidergram’.
High productivity
Low productivity Low
price
High price
f e
b
a
c d
FIGURE 3.9: HYPOTHETICAL SPIDERGRAM POSITIONING MAP
In Figure 3.9 the eight axis of the spidergram radiate like bicycle wheel spokes from the hub in the centre. They relate to the customer’s buying criteria and the number at the end of each spoke indicates the buying importance to the customers on, say, a ten-point scale for example.
The lines joining the axes show the positioning of the two companies.
They are defined by customers assessing each company’s offering on each ten-point scale to express how well each offering satisfies the buying criteria. These scores are marked on the axes and the marks are joined to form a continuous positioning line around the hub.
A further sophistication (not shown) is that additionally the target customer’s buying criteria is itself expressed by a third ‘web’ line. The use of different colours to indicate which web is which, assists clarity.
Functions
User fri endly
Data security
Price
Finance Crisis h
elp After sales
service
Available
Our company Strongest rival
10
7
10
8
5 9
8
7
In this figure, the unbroken positioning line refers to our company and the half tone line refers to our strongest rival. Thus, our company is superior on product functions, user friendliness, data security, crisis help and after sales service, whereas the rival is superior on price, financing and availability.
These spidergram ‘positionings’ indicate that our company has stronger appeal to benefits-orientated buyers, while the rival is more attractive to price conscientious buyers. On balance, our company seems to have overall differential advantage since it is markedly superior on the three buying criteria (functions, data security and crisis help) which the target customer tells us are the most important. Even so, both companies have scope to strengthen their positionings by improving their respective performance on the variables where they are inferior.
Positioning strategies
Various positioning options are available for companies entering a market:
• Position close to the leader as ‘acceptable alternative’.
• Position away from existing rivals in either – un-served niches; or
– innovative new positions.
• For an existing market brand leader, sensible positionings include:
– Heavy promotion of existing superiority.
– Augmenting present superiorities with extra layers of differential advantage (see The Levitt Construct, Chapter 4, Part 1).
• For those badly positioned the options include:
– Adapting the offering to fit more closely with needs.
– Finding new positionings.
– Trying to alter customer perceptions (but only if they are erroneous).
– Withdrawing from the market.
Guidelines for effective positioning
Positioning is more effective when the 4Cs shown below are applied:
• Clarity. Target markets should be clearly defined and offerings tightly tailored to buyer needs.
• Competitive. The positioning must be based on superior buyer value or lower buyer costs (you can’t be both – it is not credible).
• Credibility. The buyer benefit claimed by the company’s promo- tion should be genuine, If not:
a) no repeat sales, and
b) no customer recommendation.
• Consistency. A particular positioning will strengthen cumula- tively the longer it is maintained. Efforts should therefore be made to select a positioning that is durable. Once established it should not be tinkered with, except if absolutely necessary.
Activity No. 5
Positioning your product
Construct a perceptual positioning map or spidergram for two products you know well, one yours, the other your strongest rival (as per the exercise in Chapter 2).
FIRSTLY
• Decide on six factors used by your customers to evaluate your product.
SECONDLY
• Show them on the six axes form provided (see over).
• Grade each (out of ten) as to their importance to your customers (again – it is wise to do your research rather than guess).
• Join these grade points.
THIRDLY
• Grade each axis as to how well you think your product addresses these issues versus the chosen competitor’s product.
• Join the grade points for each product with a different coloured pen.
• Compare customers’ needs versus your comparative offering, versus that of the competitor.
• What does this reveal in terms of the key positioning issues your product faces?