C

H 7
A
P
T
E
R

SEVEN
Differentiation
and
Positioning

McGraw-Hill/Irwin
©2008 The McGraw-Hill Companies,
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All Rights Reserved
What is Positioning?

 The place a product or brand occupies in

customers’ minds relative to their needs
 Refers to competing products or brands
 Comprises both competitive and
customer need considerations

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Differentiation

 Differences in scope–Broad or narrow

competitive scope
 Different ways in which companies can
compete for target markets
 Differentiation in Business Strategies
 Differentiation among Goods and Services

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 Exhibit 7.1

Generic Competitive Strategies

Competitive Advantage

Lower Cost Differentiation

Cost
Differentiation
Broad Target Leadership
Strategy
Competitive Strategy
Scope Focus Strategy
Focus
Narrow Target (Differentiation
Strategy
Based)

Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.

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Physical and Perceptual Positioning

 Physical positioning
 Assessing product offering based on a set
of objective physical characteristics
 Perceptual positioning
 Includes product presentation, past
experiences and opinion of others

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Exhibit 7.3

Comparison of Physical and

Perceptual Positioning Analysis
Physical Positioning Perceptual Positioning
Technical orientation Consumer orientation

Physical characteristics Perceptual attributes

Objective measures Perceptual measures

Data readily available Need for marketing research

Physical brand properties Perceptual brand positions and

positioning intensities
Large number of dimensions Limited number of dimensions
Represents impact of product Represents impact of product
specs specs and communication
Direct R&D implications R&D implications need to be
interpreted
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Kinds of Attributes

 Simple physically based attributes

 Directly related to a single physical
dimension
 Complex physically based attributes
 Used by consumers to evaluate competitive
offerings
 Essentially abstract attributes
 Are influenced by physical characteristics,
but not related in any direct way
 Price
 Implies high or low quality
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Exhibit 7.4 (1 of 2)

Steps in the Positioning Process

1. Identify relevant set of competitive

products serving a target market.

2. Identify the set of determinant attributes that define

the “product space” in which positions of current
offerings are located.

3. Collect information from a sample of

customers and potential customers about
perceptions of each product on the
determinant attributes.

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Exhibit 7.4 (2 of 2)

Steps in the Positioning Process

4. Determine product’s current location

(positioning) in the product space and intensity
thereof.

5. Determine customers’ most preferred

combination of determinant attributes.

6. Examine the fit between preferences of

market segments and current position of
product (market positioning).

7. Write positioning statement or value

proposition to guide development and
implementation of marketing strategy.
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Tools used to understand the
positioning of products
 Positioning grid
 Also called perceptual maps
 Value curve

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 Perceptual Map of Women’s Clothing Retailers
in Washington, D.C.
Washington 1990 Women’s fashion market

The Limited
Conservative versus current versus very latest

Neiman
Marcus Macy’s
Saks Bloomingdale’s
Nordstro
Women’s-wear fashionability

Hit or Miss
Dress Barn
T.J. Maxx

Casual corner Sassafras

The Gap
Garfinkels
L&T Marshall’s
Hecht’ Loehmann’s
Britches s
Kmart
Sears Woodwar
JC Penny d
&
Lothrop

Talbots
Women’s-wear value for the money
Worst value Best value
Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports,
September 1990. as shown in Michael Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin, 1992) p. 205. 1-117-11
Guiding Development of Marketing
Strategy
 Two common approaches:
 Positioning statement
 Identifies the target market
 States unique benefits of the product
 Value proposition
 Similar to positioning statement
 Includes information about pricing relative
to competitors
 Both approaches reflect the unique
selling proposition (USP) of the
product
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Positioning Statement for Volvo in
North America

 For upscale American families, Volvo is the

family automobile that offers maximum
safety
 Generic format for positioning statements:
For (target market), (brand) is the (product
category) that (benefit offered)

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Value Proposition for Volvo in
North America
 Target market: Upscale American families
 Benefits offered: Safety
 Relative price: 20% premium to domestic
family cars
 Generic format for value propositions:
 Target market
 Benefits offered (and sometimes not
offered)
 Relative price

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Some Key Questions
Concerning Positioning Decisions
 For whom are they written?
 In what sort of language?
 Should they focus on features or
benefits?
 How many differentiating attributes
should anchor them?

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A Useful Tool for Positioning
Decision Making: Perceptual Maps

Not Sweet

Sweet

Nutritious Not Nutritious

Where would you plot your favorite cereals?

Your kids’ favorites? Your grandma’s?
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