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School of Marketing

While we wait … can you see the man in the picture ?

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School of Marketing

Admin reminder

• If for some reason you want to withdraw from a course … any course ..

• Make sure you have officially withdrawn thru campus services -

• Some people just ‘stop’ and get a “withdraw fail’ on their academic record

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Lecture 5

• Chapter 10 p. 364-375Chapter 12 p. 457-463

• Positioning• The Product Life Cycle

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Chapter Objectives

• In this chapter, we focus on the following questions:– What is ‘positioning’ ?– How does ‘differentiation’ work ?– Why is the Product Life Cycle important ?

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Developing and Communicating a Positioning Strategy

• Positioning - designing the company’s offering and image to occupy a distinctive place in the mind of the buyer– Through a value proposition: reason for

purchase in the mind of the customer – “Positioning is not what you do to the product,

its what you do to the mind of the consumer”

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Examples: value propositions

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Identifying Possible Competitive Advantages

• Consumers choose products and services that give them the greatest value.

• Marketers need to understand customers’ needs and buying processes better than competitors and to deliver more value.

• This is gaining competitive advantage.• This is from the text and we don’t

necessarily agree (short presentation later)

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Developing and Communicating a Positioning Strategy: How to do it

Start with the competitive frame of reference• confirm what buyers you are interested in• understand consideration sets that buyers use• understand substitutes that they use

• This gives you the target market, and the competitors that your target market consider & buy

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Developing and Communicating a Positioning Strategy: How to do it cont’d

Then - define the ‘points of parity’ and ‘points of difference’ you want to communicate

• Cannot just focus on the differences between your brand and competitors, as in the text

– Need to convey points of difference

– and convey points of parity

– Points of parity: category - essential to be credible for the category

– Points of parity: competitive - negate the things the competitor tries to make their point of difference

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Developing and Communicating a Positioning Strategy: How to do it cont’d

• So ideally your brand is equal on most attributes and is stronger on something at least

• The points of difference you use might not be really points of difference because the competitors use them too !!!!! – but that’s okay ….. because people do not recall everything they have ever seen

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Differentiation• If there are perfect substitutes for your product,

competitive intensity is extreme• So you try to ‘differentiate’ – make other brands less

perfectly substitutable for yours• How ? It might not be possible to make it really

different to others. • But you must make it identifiable. Pushing on your

POD and POP’s through marketing communication will differentiate it –

• Because then people will know and recognise it. If they know it / recognise it, it is differentiated from brands they know about less, or don’t recognise.

• = greater probability of purchase.

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Example of a positioning issue: 018

• In the news this year - a company extracts water from fruit

• It has special qualities: 50x the level of water molecule 018

• It evaporates more slowly; stays in body longer

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Your ideas

• Should 018 change its positioning?

• Why?

• What is its parity

• What is its difference?

• What should be its new slogan?

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Comments on 018

• So positioning at present:

• “look good - feel better”

• Too vague (why?)

• Their real issue is, who is target market and how to position this product

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“I’m part of the category”• Talk about points of parity first; then points of

difference.

Become a credible member of the category:by…• Announcing category benefits

– What are the basic things people expect from this category ?• Comparing to exemplars

– Associate with things / people that are known to be (relevant and) good

• Product description– The way you describe it, e.g a “sports wagon” [for a product

that straddles 2 categories].

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Points of difference

• Are they desirable ? Do you have capabilities to deliver ?

• 3 key criteria for desirability:– Relevant– Distinctive [the text also says ‘superior’ but is this

always possible ??]

– Believable

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Points of difference

• Then three criteria for deliverability– Feasible: is what you are saying consistent

with what the product actually is, or does ? Or do you have to change the product too ?

– Communicable: how can you foster the belief ? [is there a proof point]

– Sustainable: defensible, difficult to attack , can you build on it over time ?

* Note also that brands can also be differentiated on “seemingly irrelevant attributes” (p. 316) - ‘mountain grown coffee’

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Examples of differing emphasis (POP vs POD)

• Hyundai Sonata:• ‘intelligent design’• ‘engineering’• 173 kw • World class environmental

standards• These are all POP – this is

the emphasis• (Hyundai is building overall

image)• POD is the ‘image’ –

“evolved driving”• http://

www.evolveddriving.com.au/landing.html

• Renault Megane• ‘big bold and beautiful’• emphasis on the

appearance of the car, its unusual look

• More emphasis on POD

• http://www.renault.com.au/renault/vehicles/megane/tv-ad.asp

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Don’t try to mix things that don’t mix

Some positioning points don’t go together

e.g. low price & high quality; “exclusive” but available everywhere

Don’t position the brand on attributes that don’t easily mix.

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Figure 10.4: Identifying a Positional Direction

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Figure 10.5: Identifying a Repositioning Direction

Where would you put Harris Scarfe?

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Product Life-Cycle Marketing Strategies The basis of the product life cycle concept :

1. Products have a limited life.2. Product sales pass through distance stages, each

posing different challenges, opportunities, and problems to the seller.

3. Profits rise and fall at different stages of the product life cycle.

4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

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Managing Products over Their Life Cycles

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Product Life Cycles: 4 stages

• Introduction: slow growth, low profits

• Growth: rapid acceptance, profit improvement

• Maturity: growth slows, profits stabilise

• Decline: downward drift in sales, profits erode

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Product Life Cycle

• The actual shape of the curve can differ

• Some products take years to get through ‘growth’ phase, some take much less

• Some product categories are in the mature phase for years… and years…

• Single product or product category?

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Managing Products over Their Life Cycles: typical scenarios (1)

Introduction Growth Maturity Decline

Sales Low Rapidly growing

Peak Decline

Costs per customer

High Average Low Low

Profits Negative Rising High Declining

Competitors Few Growing Stable Declining

Objectives Create awareness and trial

Maximise Share

Maximise profit but defend share

Reduce expenditure / ‘milk’ the brand

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Product Life-Cycle Marketing Strategies

• Why an important concept ?

• If your goal is growth … then you need to look at whether your mix of products contains enough that are in the “growth” phase to get some growth !

• What’s wrong with the concept?