Chapter 9 - Crafting the Brand Positioning and Competing Effectively

Summary

Companies must study competitors as well as customers if it wants to have effective positioning.  Developing a position in the market requires determining a frame of reference by identifying the target market and the resulting nature of the competition, and the optimal points-of-parity and points-of difference brand associations.  Firms seek competitive advantage by relevant brand differentiation.  Emotional branding seeks to touch customers’ minds and hearts.  Market leaders want to stay number one by expanding market demand and challenging competitors.  Some firms choose not to be leaders, but follow instead, which can still be profitable.

A.     Developing and Establishing a Brand Position

1.      Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market.

2.      An example is the Volvo station wagon.  Volvo has positioned the automobile in the minds of consumers to be a safe, family friendly car with durability.

3.      Once a company has established its place in the minds of consumers by positioning, it hopes the successful result is a customer-focused value proposition, a reason why the target market should buy the product. Deciding on a position requires: 1) determining a frame of reference, 2) identifying the optimal points-of-parity and points-of-difference brand associations, and 3) creating a brand mantra to summarize the positioning.  A company also needs to determine its competition and where to focus the competitive analysis.  This can be done by the competitive frame of reference and category membership. Marketers must determine what other products in the market could act as substitutes to their products. After the competitive frame of reference is fixed, the marketers can define the Points-of-difference (PODs) and Points-of-parity (POPs) associations.  PODs are the strong, favorable attributes that consumers believe they couldn’t find in another product. POPs are attribute associations that are not unique to a brand but may be shared with other brands. POPs and PODs help marketers prove their claims that their products offer certain benefits.  A brand mantra is an articulation of the brand essence and promise and should communicate category and clarify the brand’s uniqueness.  Establishing the brand positioning requires that consumers understand what the brand offers and what makes it a superior competitive choice. Some marketers will place their products in a category membership.  Three ways to convey category membership are announcing category benefits, comparing to exemplars, and relying on product descriptor.

B.     Differentiation Strategies

1.      Differentiation strategy is the approach a firm takes to make unique products for different customer segments.

2.      Microsoft Office is a product that derived from the Microsoft operating system.

3.      A successful company must have competitive advantage over its main competitors. Customers ultimately choose a product because of the customer advantage they get from having that product.  It’s only valuable to them if they value that attribute of the product.  There are other dimensions to differentiation such as employee differentiation – better customer service, channel differentiation – coverage, expertise, performance, image differentiation – images that appeal to social and psychological needs, and services differentiation – delivering more effective and efficient solutions.  Many marketing experts believe a brand position should appeal to the mind and the heart of the consumer. A brand seen as authentic to consumers can evoke trust, loyalty and affection.

C.     Competitive Strategies for Market Leaders

1.         Companies cannot expect to lead the market share without being diligent about keeping up with what the competing markets are doing.  To stay number one the market leader must find ways to expand the total market demand.

2.         McDonald’s is a market leader that must pay close attention to what their competitors are offering that could easily take away the market share.

3.         To maintain market lead, firms should look for new customers or increase use of their product among current customers.  The most constructive response to protecting market share is continuous innovation.  They must lead the industry in developing new products and getting those products into the hands of the consumers. There are six defense strategies a leading firm can use: position defense – occupying the most desirable market space in consumer’s minds, flank defense – erect outposts to protect a weak front, preemptive defense – attack first to keep competitors off balance, counteroffensive defense – attack frontally so the rival will have to defend itself, mobile defense – leader moves into new territories, and contraction defense – give up weaker markets and reassign resources to stronger ones.  When striving to increase market share the cost can sometimes outweigh the value.  Four factors should be considered: 1) the possibility of provoking anti-trust action, 2) economic cost, 3) pursuing the wrong marketing activities and 4) the effect of increased market share on actual and perceived quality.

D.    Other Competitive Strategies

1.      Some marketers try to increase market share by challenging the current market leader or by challenging comparable firms that are under performing or attacking local and regional firms.

2.      Ford is a company that is quite large and has a very profitable market share, even though it is normally outdone by another firm.

3.      Many firms have been able to overtake the market leader by various forms of attack, given clear opponents and objectives.  Challengers may use one of these five attack strategies: 1) frontal attack – matches the opponents product, advertising, price and distribution, 2) flank attack – identifying shifts that are causing gaps then filling the gaps, 3) encirclement attack – launching a grand offensive on several fronts, 4) bypass attack – bypassing the enemy to attack easier targets, and 5) guerrilla attack – small, intermittent attacks, both conventional and unconventional.  Any aspect can serve as an aspect of attack – lower prices, discounts, new or improved products, larger variety and distribution.  Many firms prefer not to be the market leader, but to follow the market leader instead.   This way, the leader bears the cost of researching and developing new products and putting them out on the market through advertising and distribution.  The follower can still make huge profits by offering similar products. Some even copy the leader’s products and offer them illegally on the black market. Some followers adapt or improve the leader’s products and sell them in different markets.  A final strategy is to be a leader in a much smaller, niche market. Niche markets can dry up or be attacked so niche market leaders must create new niches and expand.