Chapter 3 Market Positioning
Product orientation:
● De nition -> an approach to business with places the emphasis upon the product
process and the product itself
● Focus on production process and product itself
● Develop products that rms think consumer want to buy
● Advantage -> focus on high-quality products -> innovation and strong product
performance
● Disadvantage -> higher costs -> heavy focus on product development can increase
research and development costs
Market orientation:
● De nition -> an approach to business which places the needs of consumers at the
centre of the decision-making process
● Focus on meeting customer needs and preferences
● Prioritize research on what customers want, design products or services that meet those
demands
● Advantages:
● Helps ensure the business stays competitive by adapting to market trends and changes
● Can respond more quickly to changes because of use of market information
● Stronger position to meet the challenge of a new competitor in the market
● Able to anticipate market changes more easily
● More con dent of a successful market launch
Market mapping:
● De nition -> typically a two dimensional diagram that shows two of the qualities or
characteristics of a brand and those of rival brands in the market
● A tool for identifying the position of a product within a market
● Refers to a two-dimensional diagram that shows the attributes or characteristics of a
product in comparison to a rivals product
● Only two criteria can be chosen, e.g: price & quality, age & income etc.
fi
fi
fi
fi
fi
● Carry out market research -> help to understand how customers see the brand in relation
to others in the market
-> PERCEPTUAL MAPS
● No spaces left on the market map -> the market is saturated
● No opportunities to exploit a market niche in the market
● Competition is likely to be high & low pro ts
● Market gap -> existence of space in the market
● Research in areas that do not exist yet -> e.g in graph above: sporty style, lower price
● Advantages:
● 1. Market Gaps can be identi ed -> new ideas
● 2. Comparisons -> businesses products & rivals
● 3. Simple to construct, visual illustration of the position in the market
● Disadvantages:
● 1. Gap may exist because it’s not able/ pro table to ll
● 2. May require primary research -> expensive
● 3. Only 2 criteria can be chosen -> may be too simplistic, vague
● 4. Markets are often dynamic and market map only provides insight at a speci c point in
time
fi
fi
fi
fi
Market Segmentation
Parts of a whole market where a particular customer group has similar characteristics
● Made up of consumers that have similar needs
● Some businesses concentrate on producing one product for one particular segment e.g:
luxury cars -> wealthy market segment in car market
● Some businesses produce a range of different products & target them at different
segments
● Aim product at almost all consumers -> large food manufacturers
● Advantage -> by dividing markets into segments -> businesses can more easily supply
products that meet customers needs
Behavioral segmentation
Segment markets according to how consumers relate/ interact with a product
1. Usage rate: how often consumers buy
2. Loyalty: Brand loyalty
3. Time and Date of consumption-> e.g breakfast cereals marketed for both morning and
evenings
Geographical and Demographic segmentation
Geographic segmentation divides markets based on location -> as needs vary by
climate and region. People in hot climates like Australia have different needs than
those in colder regions like Denmark.
1. Age -> Different age groups have different needs (e.g., children vs. adults).
2. Gender -> Men and women are often targeted with different products (e.g., clothing,
cars).
3. Income -> Products are tailored to different income levels (e.g., luxury watches vs. low-
cost groceries).
4. Social class -> Businesses target based on occupational groups.
5. Ethnicity -> Different ethnic groups may have speci c preferences.
6. Religion -> Religious practices affect consumption, such as dietary restrictions for
Muslims
fi
Psychographic Segmentation
Psychographic segmentation groups customers based on their attitudes, opinions,
and lifestyles. Unlike geographic or demographic segmentation, it looks beyond basic
traits
● For example:
1. Sports products may target those into extreme sports.
2. Chocolate brands may classify consumers as "depressive" (eating to unwind) or
"energetic" (eating for quick energy).
3. Pension funds may focus on ethical investors.
4. Clothing brands may appeal to those interested in retro fashion.
5. Travel companies often target families with young children.
6. Newspapers may cater to readers with speci c political views.
● Disadvantage -> Psychographic segmentation is that gathering data on attitudes and
lifestyles can be dif cult and may require specialized help.
Competitive advantage of a product or service
Refers to the features of a business and its products that are perceived as superior to
its rivals by customers
● How a rm’s product is made both distinctive and defensible
● Distinctive -> different from competitors
● Defensible -> business can prevent competitiors from copying it
fi
fi
fi
Ways a rm can gain competitive advantage:
1. Innovation
2. Reputation (branding)
3. Building strong relationships with stakeholders
4. Adding value to
5. Differentiation
6. Market segmentation
Examples of the source of business competitive advantage:
1. Quality e.g- > Audi
2. Delivery Times e.g-> Amazon prime, delivers products within 24h of ordering
3. Low price e.g-> Primark
4. Reliability e.g-> Apple
5. Ethnical stance
6. Design -> Dyson, original design
Product Differentiation
Attempt by a business to distinguish its products from competitors
● Creating functions or features of the product, to stand out from its competitors ->
competitive advantage
● Helps a rm to create a unique selling point for its product
● May be tangible, clearly visible or a perception that is created about the product in the
consumer’s mind
● Helps the business to increase demand for its products, increase brand loyalty and allow
business to charge higher prices
Adding value
Difference between the price and the cost of inputs required to create the product or
service
● E.g -> customers pay more for potatoes when they are packaged as oven chips than they
would be willing to pay for a bag of potatoes
fi
fi
Methods:
1. Marketing and branding
● Building brand identi cation and customer loyalty to the brand -> allows the rm to
change a higher price for its products, increasing the added value
2. Functions and features
● Unique features allows the rm to charge a higher price for its products -> increasing
added value
3. Customer service
● good reputation for customer service -> charge higher prices -> increasing added value
4. Customization
● allowing customers to design/create their products -> charge higher prices -> increasing
added value
5. Packaging
● Apple products well known for their superior packaging -> exciting opening experience ->
charge higher prices-> increasing added value
fi
fi
