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Key Concepts

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Title: Key Concepts


1
Key Concepts
  • Differentiation (What you do to an offering)
    Creating tangible or intangible differences on
    one or more attributes between a focal offering
    and its main competitors.
  • Positioning (What you do to the minds of
    customers) A set of strategies a firm develops
    to differentiate its offering in the minds of its
    target customers. Successful positioning will
    result in the offering occupying a distinct,
    important, and sustainable position in the minds
    of the target customers.
  • Mapping Techniques that enable managers to
    develop differentiation and positioning
    strategies by helping them to visualize the
    competitive structure of their markets as
    perceived by their customers. The maps are
    derived from data of customer perceptions of
    existing products (and new concepts) along
    various attributes, perceptions of similarities
    between brands, preferences for the products, or
    measures of behavioral response of customers
    toward the products.

2
Crowded Markets
  • Consumers face increasing number of choices
  • Over 8,200 mutual funds
  • Over 150 models of cars
  • Over 30,000 products in a grocery store
  • Over 100,000 prescription drugs
  • If we can figure out in the crowd, we will have a
    better
  • handle on our future profitability.

3
Some Positioning Bases
  • Life style (self-concept) positioning
  • Attribute positioning
  • Benefit positioning
  • Competitive positioning
  • Time-based (e.g., usage occasion) positioning

4
Generic Positioning Strategies
  • Our product is unique (eg, Perdue chicken).
  • Our product is different (eg, Listerine).
  • Our product is similar (eg, Meister Brau).

5
Some SuccessfulPositioning Themes
  • Apple iPod
  • BMW
  • Burger King
  • Charmin Tissue
  • Coke
  • Chevy Trucks
  • Colgate Total Toothpaste
  • Disney
  • GE
  • Mobil Service Stations
  • Universals Orlando
  • Visa
  • Volvo
  • Viagra
  • Lipitor

1000 songs Exceptional performance Have it your
way Softness Authentic, real, original Tough,
strong, durable Total dental protection Wholesome
family entertainment Improves the quality of
life Fast, friendly service Thrills, excitement,
escape Accepted everywhere Safety Quality of
life More potent at lower price
6
Marketing Opportunities Associated with
Positioning
  • Find unmet (or inadequately met) customer needs
    and wants.
  • Identify product strengths that are unique and
    important.
  • Determine how best to overcome product
    weaknesses.
  • Identify market segments for which a particular
    product or new concept would be appealing.

7
Initiating Positioning Studies in Companies
  • Four questions that could trigger positioning
    analyses
  • Who do we need to target?
  • What do they think now?
  • What do we want them to think, now and from now
    on?
  • How do we do that?

8
Why Mapping?
An organic chemist reads diagrams such as the one
here
An Electrical Engineer reads diagrams such as the
one here
Positioning 8
9
Can You See Patterns in These Customer Data?
Ratings of nine brands of notebook computers on
several attributes B1 B2 B3 B3 B4 B5 B6 B7 B8 New
Attractive 5.1 3.6 3.5 5.4 3.9 4.8 5.2 4.0 5.2 4.
0Light 6.0 3.5 5.0 3.9 3.3 5.3 5.0 2.5 5.5 2.5Un
reliable 3.4 4.1 4.5 2.1 4.5 2.7 4.5 3.7 2.5 3.8P
lain 1.5 4.1 2.9 2.3 4.5 2.7 3.5 4.3 2.2 5.2Batte
ry life 3.3 4.9 4.3 4.1 3.9 3.0 3.5 6.2 3.5 4.0Sc
reen 3.5 5.3 3.4 6.4 5.4 5.2 3.3 6.0 3.3 4.8Keybo
ard 2.6 3.5 2.5 3.4 3.8 3.3 2.8 5.0 4.3 4.7Roomy
5.5 4.3 5.4 3.1 3.4 3.3 4.7 3.5 4.3 4.2Easy
service 4.5 4.9 3.3 5.0 4.4 4.5 3.3 4.7 3.8 4.5Ex
pandability 5.5 4.3 5.4 3.1 3.4 3.3 4.7 3.5 4.3 4.
2Setup 5.6 3.5 5.6 5.4 2.5 4.2 5.2 3.3 5.8 2.5Co
mmon 4.1 3.5 3.3 2.9 4.0 4.3 2.2 4.2 3.3 4.2Value
3.5 4.8 4.4 3.6 3.6 2.7 3.2 4.7 3.5 4.0Preferenc
e 7.4 3.4 4.8 6.6 4.4 7.4 7.1 3.8 6.9 3.3
10
Marketers Need to Learn to Read Perceptual Maps!
11
Conventional Mapping UsingSnake Charts
Does notDescribes it describecompletely
it at all 0 1 2 3 4 5
  • 1. Company provides adequate insurance coverage
    for my car.
  • 2. Company will not cancel policy because of
    age, accident experience, or health problems.
  • 3. Friendly and considerate.
  • 4. Settles claims fairly.
  • 5. Inefficient, hard to deal with.
  • 6. Provides good advice about types and amounts
    of coverage to buy.
  • 7. Too big to care about individual customers.
  • 8. Explains things clearly.
  • 9. Premium rates are lower than most companies.
  • 10. Has personnel available for questions all
    over the country.
  • 11. Will raise premiums because of age.
  • 12. Takes a long time to settle a claim.
  • 13. Very professional/modern.
  • 14. Specialists in serving my local area.
  • 15. Quick, reliable service, easily accessible.
  • 16. A good citizen in community.
  • 17. Has complete line of insurance products
    available.
  • 18. Is widely known name company.
  • 19. Is very aggressive, rapidly growing company.

12
Uses of Mapping Techniques
  • Check how customer perceptions of your products
    compare to those of your competitors.
  • Identify product strengths and weaknesses.
  • Select competitors to compete against.
  • Determine exactly how much change is need on key
    product attributes to move your products to more
    favorable positions.
  • Visually determine whether your communications
    programs are having the desired impact on market
    perceptions (Before-After study).
  • Compare perceptions from different demographic,
    geographic, or psychographic subgroups in your
    market.

13
Mapping Techniques
  • Mapping perceptions
  • Attribute-ratings methods (particularly useful
    for functional products)
  • Overall-similarity methods (particularly useful
    for image-oriented products)
  • Mapping preferences
  • Include an overall preference vector in a
    perceptual map
  • External analysis to fit preferences of
    individuals on a common perceptual map

14
Mapping Methods in Marketing
Joint Space Maps(includes both perception
preference)
  • Perceptual Maps

Preference Maps
Similarity-based methods Attribute-based methods
Ideal-point model(unfolding model) Vector model
External analysisusing PREFMAP-3 Simple joint
space maps using modified perceptual mapping
methods
Included in Marketing Engineering. Coming soon
Ideal-point model

Positioning 14
15
Perceptual Maps Using Attribute Ratings
Example Positioning of Beers
  • Select a set of Beers e of interest to the target
    group of customers.
  • Identify a set of key attributes on which these
    Beers evaluated by the target group (e.g.,
    through focus groups).
  • Ensure that customers are familiar with the
    products of interest.
  • Have customers evaluate the products on the
    chosen set of attributes (e.g., Light-Heavy
    Cheap-Expensive Drink alone-Share with friends).
  • If desired, include Preference for the Beers as
    one of the attributes.

16
Perceptual Map of Beer Market (This slide shows
only the products)

Old Milwaukee
Budweiser

Becks

Meister Brau
Heineken

Miller

Coors
Strohs

Michelob

Coors Light

Miller Lite

OldMilwaukee Light
17
Perceptual Map of Beer Market (This slide shows
only the attributes)
Heavy
Popular with Men
Heavy
Full Bodied
Special Occasions
Blue Collar
Dining Out
Premium
Good Value
Premium
Budget
Popular with Women
Pale Color
On a Budget
Light
Less Filling
Light
18
Perceptual Map of Beer Market (This slide
includes both products and attributes)
Heavy
Popular with Men
Heavy

Full Bodied
Old Milwaukee
Budweiser

Becks

Meister Brau
Heineken
Special Occasions

Miller
Blue Collar

Dining Out
Premium
Good Value

Coors
Premium
Budget
Strohs

Michelob

Popular with Women
Coors Light

Miller Lite
Pale Color

On a Budget
OldMilwaukee Light
Light
Less Filling
Light
Interesting web site to visit www.ratebeer.com
19
Guidelines for Interpreting Perceptual Maps
  • The arrow indicates the direction in which that
    attribute is increasing (The attribute is
    decreasing in the direction opposite to the
    arrow). Thus, a beer positioned farther and
    farther in the North East direction are popular
    with men, whereas a beer positioned in the South
    West direction is less popular with men.
  • The length of the line from the origin to the
    arrow is an indicator of the variance of that
    attribute explained by the 2D map. The longer
    this line, the greater is the importance of that
    attribute in helping you to interpret the map.
    Thus, Good value and Less filling are
    relatively more important than Pale color and
    Blue collar in explaining how this group of
    customers discriminates between the different
    beers.

20
Guidelines for Interpreting Perceptual Maps
(contd.)
  • Attributes that are both relatively important and
    close to the horizontal (vertical) axis help you
    in articulating the meaning of the axis. Here,
    the two dimensions along which these customers
    seem to discriminate between the beers appear to
    be Budget-Premium for the horizontal axis and
    Light-Heavy for the vertical axis. This
    interpretation can be based on attributes most
    correlated with the axes (Premium, Special
    occasions, Blue collar, Budget, etc. for the
    horizontal axis, and Heavy, Light, Pale color for
    the vertical axis).
  • To position a particular beer on an attribute,
    draw an imaginary perpendicular line from the
    location of that beer onto that attribute.
    (These are shown by dashed lines on the map).
    Thus, Budweiser is perceived to more popular with
    men than Coors.

21
Interpreting Perceptual MapsAnother Example
22
Mapping Preferences
  • ObjectiveIntroduce customer preferences into
    perceptual maps
  • A simple ideal point method Introduce an ideal
    brand as an additional stimulus evaluated by
    customers.
  • 1. Combine attribute ratings of ideal brand with
    the other brands.
  • 2. Compare how similar the ideal brand is to the
    other brands included in the study.
  • A simple vector method Introduce preferences
    as an additional variable in the attribute
    ratings data
  • 1. Analyze the preference variable simultaneously
    with evaluations of the cars on each attribute.
  • Identify which attributes influence consumer
    preferences the most
  • Identify which brands are most preferred in the
    aggregate.
  • 2. Analyze preferences separately for each
    customer.
  • Identify target segments that prefer the brand of
    interest the most.

23
Mapping Preferences contd
  • PREFMAP-3 External Analysis
  • First, develop a perceptual map of competing
    alternatives.
  • Given the fixed positions of the alternatives on
    the perceptual map, add the preferences of each
    customer on the perceptual map (this approach is
    called external analysis).
  • Marketing Engineering includes an option to do
    External Analysis.

24
Two Preference Models
Ideal-Point Preference Model
Vector Preference Model
IncreasingPreference
Preference
Preference
DecreasingPreference
Ideal Point
Attribute
Attribute
(eg, sweetness)
(eg, service speed)
25
Interpreting Preference Maps
Vector Map
Preference Vector
A
dAC
dAB
C
B
(b)A is preferred to B and B is preferred to
C.With reference to A, C is preferred half as
much as B.(dAC 2dAB)
26
Vector Method for Representing Aggregate
Preferences
  • Matrix of inputs
  • A1 A2 A3 A4 ............... A15, PREF
  • Dell 320N 4 3 4 1 2 2
  • C1 TI Travelmate 6 3 7 2 8 8
  • Toshiba concept 3 6 2 7 6 6
  • Dell 320N
  • C2 TI Travelmate
  • Toshiba concept
  • Note A higher number on PREF indicates higher
    preference for that brand.
  • Compute average ratings of each brand on each
    attribute and the average preferences for each
    brand.
  • Obtain a joint space map from Marketing
    Engineering software showing relationships
    between brands and their evaluations on each
    attribute.
  • Interpret the map. The relative locations of the
    brands are directly provided by the map. The
    orientation of the attributes (including
    preference) are determined by drawing vectors
    from the origin to each attribute. The position
    of a brand on an attribute is determined by
    drawing a perpendiclar line from the brand
    location to the attribute orientation.

27
Preference Map Using Vector Model
Low battery life
Keyboard
Expandability
  • Toshiba

Elegant
Distinct
Unsuccessful
Avant-Garde
Heavy
Fast operation
  • IBM
  • Compaq

Reliable
  • Sanyo
  • Good design
  • TI
  • AST Exec

Difficult to use
  • Dell
  • NEC

Value Graphics
  • New Concept

Poor setup
  • Samsung

Screen quality
  • Preference

28
Data for PREFMAP-3 for External Analysis
  • Matrix of inputs
  • C1 C2 C3 C4 ...............
  • Newton 2 3 9 3
  • HP200LX 7 7 2 5
  • Canon 3 8 3 5
  • An element of this matrix is the stated
    preference of each consumer (C1, C2, . . .) for
    each brand. A higher number indicates higher
    preference for that brand.
  • Use the Preference Map option in Marketing
    Engineering to obtain a joint space map showing
    relationships between brands and preferences
    between brands for each consumer.
  • Interpret the map. The relative locations of the
    brands are directly provided by the map. The
    direction in which an individual consumers
    preferences are increasing is determined by
    drawing a vector from the origin to each
    consumers ID displayed on the map. The relative
    preference for a brand for an individual consumer
    is determined by drawing a perpendicular from the
    brand location to the preference orientation.
    Identify target segments by examining consumer
    groupings on the map.

29
A Joint-Space Map (This Example Only Shows
Preferences and Brands)
30
Evaluating Perceptual and Preference Maps
  • Technical adequacy
  • What percentage of the total information
    (variance) in the raw data is captured in the
    map?
  • What percentage of the information of each
    attribute (variance) is captured in the map?
  • Managerial interpretation (example questions)
  • What underlying dimensions seem to characterize
    how customers view the products?
  • What is the competitive set associated with the
    target product or new concept?
  • How well is a target product positioned with
    respect to the existing products?
  • Which attributes are related to each other?
  • Which attributes influence customer preferences
    positively? negatively?
  • What improvements will enhance the value of a
    product or new concept?
  • Which customer segments have positive perceptions
    and high preference for the product?

31
Example Positioning Statements
  • For target segment, the product/concept is
    most important claim because single most
    important support.
  • Iomega
  • For PC Users, the IOMEGA Zip drive is the
    best portable storage device because it is
    most cost-effective system.
  • JC Penney
  • For Modern Spenders and Starting-outs in
    mid-income levels who shop for apparel,
    accessories, and home furnishings we offer
    private-label, supplier exclusive, and national
    brands that deliver greater value than that of
    our competitors because of our unique
    combination of quality, selection, fashion,
    service, price, and shopping experience. (From
    jcpenney.com)

32
Example Positioning Statements
  • Pantene
  • For females 18-49 who possess dry damaged hair
    and believe they cannot achieve truly
    healthy/shiny hair Pantene is a hair care
    system (shampoo/conditioner/ styling aids) that
    offers hair so healthy it shines because it
    penetrates from root to tip through its
    patented Pro-Vitamin B5 formula.
  • Microsoft .NET
  • For companies whose employees and partners need
    timely information, Microsoft.NET is a new
    protocol and software system that enables
    unprecedented levels of software integration
    through XML Web services, because unlike Java,
    .NET is infused into the Microsoft platform,
    providing the ability to quickly and reliably
    build, host, deploy, and utilize connected
    applications.

33
Implementing Positioning
  • Leverage strategically advantaged resources
  • Product characteristics
  • features, performance, durability, conformance,
    reliability, style, etc.
  • Service attributes
  • delivery, installation, consultation, customer
    training, repair, etc.
  • Personnel
  • competency, credibility, courtesy,
    responsiveness, etc.
  • Brand image
  • symbols, emotion, personality, etc.

34
Positioning is not ...
  • just clever slogans or gloss
  • what we push on our customers -- it is what
    customers will realistically grant us
  • a one-time activity
  • an appeal to everyone
  • a way to make our product superior -- it is about
    finding a superior position in the minds of
    customers.

35
Limitations
  • Provides a static model - ignores dynamics of
    customer perceptions.
  • Interpretation is sometimes difficult.
  • Does not incorporate cost or likelihood of being
    able to achieve a desired positioning.
  • Does not incorporate a probability model to
    indicate goodness of a map.
  • Generally, need about 6 to 8 products in a
    category to make the technique useful.
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