Positioning (marketing)

From Wikipedia, the free encyclopedia

Marketing

Key concepts

Product • Pricing

Distribution • Service • Retail

Brand management

Account-based marketing

Marketing ethics

Marketing effectiveness

Market research

Market segmentation

Marketing strategy

Marketing management

Market dominance

Promotional content

Advertising • Branding • Underwriting

Direct marketing • Personal Sales

Product placement • Publicity

Sales promotion • Sex in advertising

Loyalty marketing • Premiums • Prizes

Promotional media

Printing • Publication

Broadcasting • Out-of-home

Internet marketing • Point of sale

Promotional merchandise

Digital marketing • In-game

In-store demonstration

Word-of-mouth marketing

Brand Ambassador • Drip Marketing

 This box: view · talk · edit

In marketing, positioning has come to mean the process by which marketers try to create an image or identity
in the minds of their target market for its product, brand, or organization.

Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the
collective minds of the target market.

De-positioning involves attempting to change the identity of competing products, relative to the identity of your
own product, in the collective minds of the target market.

The original work on Positioning was consumer marketing oriented, and was not as much focused on the
question relative to competitive products as much as it was focused on cutting through the ambient "noise" and
establishing a moment of real contact with the intended recipient. In the classic example ofAvis claiming "No.2,
We Try Harder", the point was to say something so shocking (it was by the standards of the day) that it cleared
space in your brain and made you forget all about who was #1, and not to make some philosophical point about
being "hungry" for business.

The growth of high-tech marketing may have had much to do with the shift in definition towards competitive
positioning. An important component of hi-tech marketing in the age of the world wide webis positioning in
major search engines such as Google, Yahoo and Bing, which can be accomplished through Search Engine
Optimization , also known as SEO. This is an especially important component when attempting to improve
competitive positioning among a younger demographic, which tends to be web oriented in their shopping and
purchasing habits as a result of being highly connected and involved in social media in general.

Contents
 [hide]

1 Definitions

2 Product positioning

process

3 Positioning concepts

4 Measuring the

positioning

5 Repositioning a

company

6 See also

7 References

8 External links
[edit]Definitions

Although there are different definitions of Positioning, probably the most common is: identifying a market niche
for a brand, product or service utilizing traditional marketing placement strategies (i.e. price, promotion,
distribution, packaging, and competition).

Also positioning is defined as the way by which the marketers creates impression in the customers mind.

Positioning is a concept in marketing which was first introduced by Jack Trout ( "Industrial Marketing"
Magazine- June/1969) and then popularized by Al Ries and Jack Trout in their bestseller book "Positioning -
The Battle for Your Mind." (McGraw-Hill 1981)

This differs slightly from the context in which the term was first published in 1969 by Jack Trout in the
paper "Positioning" is a game people play in today’s me-too market place" in the publication Industrial
Marketing, in which the case is made that the typical consumer is overwhelmed with unwanted advertising, and
has a natural tendency to discard all information that does not immediately find a comfortable (and empty) slot
in the consumers mind. It was then expanded into their ground-breaking first book, "Positioning: The Battle for
Your Mind," in which they define Positioning as "an organized system for finding a window in the mind. It is
based on the concept that communication can only take place at the right time and under the right
circumstances" (p. 19 of 2001 paperback edition).

What most will agree on is that Positioning is something (perception) that happens in the minds of the target
market. It is the aggregate perception the market has of a particular company, product or service in relation to
their perceptions of the competitors in the same category. It will happen whether or not a company's
management is proactive, reactive or passive about the on-going process of evolving a position. But a
company can positively influence the perceptions through enlightened strategic actions.

[edit]Product positioning process

Generally, the product positioning process involves:

1. Defining the market in which the product or brand will compete (who the
relevant buyers are)

2. Identifying the attributes (also called dimensions) that define the product
'space'

3. Collecting information from a sample of customers about their

perceptions of each product on the relevant attributes
4. Determine each product's share of mind
5. Determine each product's current location in the product space
 6. Determine the target market's preferred combination of attributes
(referred to as an ideal vector)

7. Examine the fit between:

 The position of your product

 The position of the ideal vector

8. interest and started a conversation, you'll know you're on the right track.
[edit]Positioning concepts

More generally, there are three types of positioning concepts:

1. Functional positions

 Solve problems

 Provide benefits to customers

 Get favorable perception by investors (stock profile) and lenders

2. Symbolic positions

 Self-image enhancement

 Ego identification

 Belongingness and social meaningfulness

 Affective fulfillment

3. Experiential positions

 Provide sensory stimulation

 Provide cognitive stimulation

[edit]Measuring the positioning
Positioning is facilitated by a graphical technique called perceptual mapping, various survey techniques, and
statistical techniques like multi dimensional scaling, factor analysis, conjoint analysis, and logit analysis.

[edit]Repositioning a company

In volatile markets, it can be necessary - even urgent - to reposition an entire company, rather than just a
product line or brand. When Goldman Sachs and Morgan Stanley suddenly shifted from investment to
commercial banks, for example, the expectations of investors, employees, clients and regulators all needed to
shift, and each company needed to influence how these perceptions changed. Doing so involves repositioning
the entire firm.

This is especially true of small and medium-sized firms, many of which often lack strong brands for individual
product lines. In a prolonged recession, business approaches that were effective during healthy economies
often become ineffective and it becomes necessary to change a firm's positioning. Upscale restaurants, for
example, which previously flourished on expense account dinners and corporate events, may for the first time
need to stress value as a sale tool.

Repositioning a company involves more than a marketing challenge. It involves making hard decisions about
how a market is shifting and how a firm's competitors will react. Often these decisions must be made without
the benefit of sufficient information, simply because the definition of "volatility" is that change becomes difficult
or impossible to predict

Product differentiation
From Wikipedia, the free encyclopedia

A concept in Economics and Marketing proposed by Edward Chamberlin in his 1933 Theory of Monopolistic

Competition.

In marketing, product differentiation (also known simply as "differentiation") is the process of distinguishing

a product or offering from others, to make it more attractive to a particular target market. This involves
differentiating it from competitors' products as well as a firm's own product offerings.

Differentiation can be a source of competitive advantage. Although research in a niche market may result in
changing a product in order to improve differentiation, the changes themselves are not differentiation.
Marketing or product differentiation is the process of describing the differences between products or services,
or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product
and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued
by buyers (e.g.[1]). The term unique selling propositionrefers to advertising to communicate a product's
differentiation.[2]

In economics, successful product differentiation leads to monopolistic competition and is inconsistent with the
conditions for perfect competition, which include the requirement that the products of competing firms should
be perfect substitutes. There are three types of product differentiation: 1. Simple: based on a variety of
characteristics 2. Horizontal : based on a single characteristic but consumers are not clear on quality 3.
Vertical : based on a single characteristic and consumers are clear on its quality [3]

The brand differences are usually minor; they can be merely a difference in packaging or an advertising theme.
The physical product need not change, but it could. Differentiation is due to buyers perceiving a difference,
hence causes of differentiation may be functional aspects of the product or service, how it is distributed and
marketed, or who buys it. The major sources of product differentiation are as follows.
  Differences in quality which are usually accompanied by differences in price

 Differences in functional features or design

 Ignorance of buyers regarding the essential characteristics and qualities of

goods they are purchasing

 Sales promotion activities of sellers and, in particular, advertising

 Differences in availability (e.g. timing and location).

The objective of differentiation is to develop a position that potential customers see as unique. The term is used
frequently when dealing with freemium business models, in which businesses market a free and paid version of
a given product. Given they target a same group of customers, it is imperative that free and paid versions be
effectively differentiated.

Differentiation primarily impacts performance through reducing directness of competition: As the product
becomes more different, categorization becomes more difficult and hence draws fewer comparisons with its
competition. A successful product differentiation strategy will move your product from competing based
primarily on price to competing on non-price factors (such as product characteristics, distribution strategy,
or promotional variables).

Most people would say that the implication of differentiation is the possibility of charging a price premium;
however, this is a gross simplification. If customers value the firm's offer, they will be less sensitive to aspects
of competing offers; price may not be one of these aspects. Differentiation makes customers in a given
segment have a lower sensitivity to other features (non-price) of the produc

Market segmentation is a concept in economics and marketing.

A market segment is a sub-set of a market made up of people or
organizations with one or more characteristics that cause them to
demand similar product and/or services based on qualities of those
products such as price or function. A true market segment meets all of
the following criteria: it is distinct from other segments (different
segments have different needs), it is homogeneous within the segment
(exhibits common needs); it responds similarly to a market stimulus, and
it can be reached by a market intervention. The term is also used when
consumers with identical product and/or service needs are divided up
into groups so they can be charged different amounts.The people in a
given segment are supposed to be similar in terms of criteria by which
they are segmented and different from other segments in terms of these
criteria. These can broadly be viewed as 'positive' and 'negative'
applications of the same idea, splitting up the market into smaller
groups.
Examples:

 Gender

 Price

 Interests
While there may be theoretically 'ideal' market segments, in reality every
organization engaged in a market will develop different ways of
imagining market segments, and create Product differentiation strategies
to exploit these segments. The market segmentation and corresponding
product differentiation strategy can give a firm a temporary commercial
advantage.
Contents
 [hide]

1 "Positive" market segmentation

2 Positioning

3 Using Segmentation in Customer

Retention

o 3.1 Process for tagging

customers

4 Price Discrimination

5 References

[edit]"Positive" market segmentation

Market segmenting is dividing the market into groups of individual
markets with similar wants or needs that a company divides into distinct
groups which have distinct needs, wants, behavior or which might want
different products & services. Broadly, markets can be divided according
to a number of general criteria, such as by industry or public versus
private. Although industrial market segmentation is quite different from
consumer market segmentation, both have similar objectives. All of
these methods of segmentation are merely proxies for true segments,
which don't always fit into convenient demographic boundaries.
Consumer-based market segmentation can be performed on a product
specific basis, to provide a close match between specific products and
individuals. However, a number of generic market segment systems also
exist, e.g. the system provides a broad segmentation of the population of
the United States based on the statistical analysis of household and
geodemographic data.
The process of segmentation is distinct from positioning (designing an
appropriate marketing mix for each segment). The overall intent is to
identify groups of similar customers and potential customers; to prioritize
the groups to address; to understand their behavior; and to respond with
appropriate marketing strategies that satisfy the different preferences of
each chosen segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing
effectiveness. Distinct segments can have different industry structures
and thus have higher or lower attractiveness
[edit]Positioning

Once a market segment has been identified (via segmentation), and

targeted (in which the viability of servicing the market intended), the
segment is then subject to positioning. Positioning involves ascertaining
how a product or a company is perceived in the minds of consumers.
This part of the segmentation process consists of drawing up a
perceptual map, which highlights rival goods within one's industry
according to perceived quality and price. After the perceptual map has
been devised, a firm would consider the marketing communications mix
best suited to the product in question.
[edit]Using Segmentation in Customer Retention
The basic approach to retention-based segmentation is that a company
tags each of its active customers with 3 values:
Tag #1: Is this customer at high risk of canceling the company's
service? One of the most common indicators of high-risk customers is a
drop off in usage of the company's service. For example, in the credit
card industry this could be signaled through a customer's decline in
spending on his or her card.
Tag #2: Is this customer worth retaining? This determination boils
down to whether the post-retention profit generated from the customer is
predicted to be greater than the cost incurred to retain the customer.
Managing Customers as Investments. [1] [2]
Tag #3: What retention tactics should be used to retain this
customer? For customers who are deemed “save-worthy”, it’s essential
for the company to know which save tactics are most likely to be
successful. Tactics commonly used range from providing “special”
customer discounts to sending customers communications that reinforce
the value proposition of the given service.
[edit]Process for tagging customers
The basic approach to tagging customers is to utilize historical retention
data to make predictions about active customers regarding:

 Whether they are at high risk of canceling their service

 Whether they are profitable to retain

 What retention tactics are likely to be most effective

The idea is to match up active customers with customers from historic
retention data who share similar attributes. Using the theory that “birds of
a feather flock together”, the approach is based on the assumption that
active customers will have similar retention outcomes as those of their
comparable predecessor.
[edit]Price Discrimination
Where a monopoly exists, the price of a product is likely to be higher
than in a competitive market and the quantity sold less,
generating monopoly profits for the seller. These profits can be
increased further if the market can be segmented with different prices
charged to different segments charging higher prices to those segments
willing and able to pay more and charging less to those whose demand
is price elastic. The price discriminator might need to create rate
fences that will prevent members of a higher price segment from
purchasing at the prices available to members of a lower price segment.
This behavior is rational on the part of the monopolist, but is often seen
by competition authorities as an abuse of a monopoly position, whether
or not the monopoly itself is sanctioned. Examples of this exist in the
transport industry (a plane or train journey to a particular destination at a
particular time is a practical monopoly) where business class customers
who can afford to pay may be charged prices many times higher than
economy class customers for essentially the same service.
[edit]

Dominance (economics)
From Wikipedia, the free encyclopedia
For other uses, see Dominance.

For the game theory, see Strategic dominance.

This article needs additional citations for verification.

Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (May 2008)

Marketing

Key concepts

Product • Pricing

Distribution • Service • Retail

Brand management

Account-based marketing

Marketing ethics

Marketing effectiveness

Market research
 Market segmentation

Marketing strategy

Marketing management

Market dominance

Promotional content

Advertising • Branding • Underwriting

Direct marketing • Personal Sales

Product placement • Publicity

Sales promotion • Sex in advertising

Loyalty marketing • Premiums • Prizes

Promotional media

Printing • Publication

Broadcasting • Out-of-home

Internet marketing • Point of sale

Promotional merchandise

Digital marketing • In-game

In-store demonstration

Word-of-mouth marketing

Brand Ambassador • Drip Marketing

This box: view · talk · edit

Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive

offerings. There is often a geographic element to the competitive landscape. In defining market dominance, you
must see to what extent a product, brand, or firm controls a product category in a given geographic area.

Contents
 [hide]

1 Calcula

ting

2 Exampl

es

3 See
 also

4 Refere

nces

[edit]Calculating

There are several ways of calculating market dominance. The most direct is market share. This is the
percentage of the total market serviced by a firm or brand. A declining scale of market shares is common in
most industries: that is, if the industry leader has say 50% share, the next largest might have 25% share, the
next 12% share, the next 6% share, and all remaining firms combined might have 7% share.

Market share is not a perfect proxy of market dominance. The influences of customers, suppliers, competitors
in related industries, and government regulations must be taken into account. Although there are no hard and
fast rules governing the relationship between market share and market dominance, the following are general
criteria:

 A company, brand, product, or service that has a combined market share

exceeding 60% most probably has market power and market dominance.

 A market share of over 35% but less than 60%, held by one brand, product or
service, is an indicator of market strength but not necessarily dominance.

 A market share of less than 35%, held by one brand, product or service, is not
an indicator of strength or dominance and will not raise anti-competitive
concerns by government regulators.

Market shares within an industry might not exhibit a declining scale. There could be only two firms in
a duopolistic market, each with 50% share; or there could be three firms in the industry each with 33% share;
or 100 firms each with 1% share. The concentration ratio of an industry is used as an indicator of the relative
size of leading firms in relation to the industry as a whole. One commonly used concentration ratio is the four-
firm concentration ratio, which consists of the combined market share of the four largest firms, as a percentage,
in the total industry. The higher the concentration ratio, the greater the market power of the leading firms.

Alternatively, there is the Herfindahl index. It is a measure of the size of firms in relation to the industry and an
indicator of the amount of competition among them. It is defined as the sum of the squares of the market
shares of each individual firm. As such, it can range from 0 to 10,000, moving from a very large amount of very
small firms to a single monopolistic producer. Decreases in the Herfindahl index generally indicate a loss
of pricing power and an increase in competition, whereas increases imply the opposite.

Kwoka's dominance index (D) is defined as the sum of the squared differences between each firm's share and
the next largest share in a market:
where

 for all i = 1, ..., n - 1.[1]

As part of its merger review process, Mexican Competition

Commission uses dominance index (ID), described as the Herfindahl
index of a Herfindahl index (HHI). Formally, ID is the sum of squared

firm contributions to the market HHI:   

where 

European Commission's Tenth Report on Competition implies that a

significant disparity between the largest and the second-largest firm
shares can indicate that the largest firm has a dominant position in the
market. Specifically, under a section entitled "Scrutiny of mergers for
compatibility with Article 86 EEC," the Report states:

A dominant position can generally be said to exist once a market share to

the order of 40% to 45% is reached. [footnote: A dominant position cannot
even be ruled out in respect of market shares between 20% and 40%;
Ninth Report on Competition Policy, point 22.] Although this share does
not in itself automatically give control of the market, if there are large gaps
between the position of the firm concerned and those of its closest
competitors and also other factors likely to place it at an advantage as
regards competition, a dominant position may well exist. (European
Commission's Tenth Report on Competition, page 103, paragraph 150.)

Asymmetry Index (AI) is defined as the statistical variance of

market shares:   [2][3]