Tag: Positioning

Positioning Services

In the Brexit debate, much attention has been paid to UK having some form of custom’s union with the European Union.  Conservative politicians who support Brexit, fear such a union will remove the UK’s ability to make trade deals with other nations.  Jeremy Corbyn speaks of a unique ‘custom’s union for goods’; different from the existing EU custom’s union which includes Turkey but which does not include Norway and the other EFTA nations.

What these statements from UK politicians shows is that very few of them understand the details of international trade.  They talk of WTO rules as if they are some sort of magic bullet; not the least worst option in trade; the fall-back position; the last resort of world trade; trading terms so ‘favourable’ not a single nation in the world uses them.

Corbyn’s comment about a ‘custom’s union for goods’ is a clear indication that our politicians don’t know what they are talking about.  Custom’s unions are almost universally focused on goods.  They do not deal in services.  Service markets face different restrictions such as compliance with professional standards and government legislation.  The EU, in recent years has worked hard in recent years to remove such barriers from its single market.  The EU Services Directive, is one piece of legislation that looked to ensure that service providers could operate across the bloc.  This included attempts to provide a level playing field in terms of professional qualifications and standards.  The Consumer Credit Directive, which was largely based on the UK Consumer Credit Act 1974, looks to create a single legislative framework for the sale of unsecured loans across the whole of the EU.

In debating a ‘custom’s union for goods’, UK politicians appear to ignore the fact that since the 1980s Britain has developed as a services-based economy.  Politicians seem focused on manufacturing; they are ignoring the needs and necessary environment for service providers: Which are now the majority part of the UK economy.

Marketing services is different from marketing goods.

Services have immediacy.  They are time dependent.  Once an aircraft has taken off, you can’t put any more passengers on it.  You can’t put any more diners in a restaurant once the sitting has finished. Once a play has started, you can’t put any more patrons in the audience.  This leads to a need to balance supply and demand.  Airlines and holiday firms do this by operating fluid pricing strategies.

Increasingly services are dependent on technology.  They are often delivered remotely and by distance communication tools such as the telephone and the internet.

Increasingly, customers are involved in the delivery of services.  For example, the business who works closely with the developer to design a website.

Increasingly, customers want a customised service to meet their individual needs.  Again, a business may want a bespoke database and will employ a service provider to build it.

Positioning is about creating a distinctive place in the market for both your company and the services you provide.

This requires two decisions to be made:

  1. The choice of a target market: Where you want to compete.
  2. The creation of differential advantage:  How you want to compete.

So in positioning services, you need to be aware of the particular needs of your target customer.  These needs will determine the target segment of the market.  You then will need to create a services marketing mix which creates differential advantage based on those customer needs.

For services, the extended marketing mix was created.  This extends the 4P mix developed by Philip Kotler (Product, Promotion, Price, Place) and adds three additional ‘P’s; People, Process and Physical Evidence.

Target marketing is based on market segmentation and using positioning tools based on the needs of defined customer groups and their price sensitivity.

Using targeting tools and designing your mix for defined customer segments does not preclude sales to customers outside those groups but by targeting your marketing activity, you make best use of scarce resources such as financial budgets.  targeting marketing is targeting resources on your core customers.  Sales to those outside that core are a bonus.

As stated above, there are three additional elements to the services marketing mix:

  1. People:  People are critical to the provision of services.  Often the creation of a service and its delivery are simultaneous.  People occupy a key position in a customers perception of service quality.  Bad staff often equates to bad service so it is critical to get the right people. Training, monitoring and the REWARDING of staff is critical to good service quality.  People aren’t machines so body language, tone of voice and attitude matter. Airlines spend significant time and money training cabin crew to ensure these attributes send the right message.  If people enjoy their work, this often comes across in their body language.  Systems such as SERVQUAL aim to eliminate harmful interactions by reducing opportunities for cognitive dissonance.
  2. Physical Evidence:  This is the environment in which a service is delivered.  It is tangible evidence of service quality.  When you travel on an airline is your drink served in a plastic tumbler or a glass?  When Gordon Ramsay does a ‘Restaurant nightmare’, a big element of his revamp is to change the restaurant décor. physical evidence can be changing the ergonomics of a service e.g. the layout of equipment in a gym.  There was an outcry when Ryanair proposed ‘standing room only’ on its aircraft (although that was a likely attempt at PR spin).
  3. Process:  is the mechanisms, procedures and flow of activities by which a service is delivered.  Process changes such as the elimination of queuing can radically affect service delivery to target consumers and therefore differential advantage.  So theme parks sell priority tickets which allow patrons to dodge queues.  Airlines offer first class and business lounges. Cruise firms will pick up customers from their homes.  Others such as Amazon Prime offer reduced delivery times.

In Big Ideas in Services Marketing (Berry, 1987), seven guidelines for services marketing were declared:

  1. Marketing happens at all levels of an organisation.
  2. there must be flexibility in service provision (the ability to customise services).
  3. You need to recruit high quality staff.  You need to treat them well and communicate withthem clearly.
  4. You need to increase the usage of services by marketing to existing customers; customer retention is key.  to keep customers you will likely need to offer service extensions.
  5. You need a quick response facilities for customer service and complaint resolution.
  6. You need to engage with new technology to deliver better service at lower cost.
  7.  You need to differentiate your service through branding.  Branding works the minds of target customers.

 

 

Finding and Communicating a Market Position

To develop a strategic marketing plan, there are a number of stages.

  • You need to analyse the environment in which you will operate.  This is the wider macro-environment of politics, economics, societal trends, technology, environmental concerns and legal concerns.  It is also the micro-environment represented by Porter’s five forces model of organisational stakeholders – competitors, suppliers, staff, stakeholders and new entrants.
  • You need to analyse the internal operations of an organisation, its skills, resources and capabilities.
  • Once you have analysed the environment, you need to analyse the market.  You need to examine where market gaps exist and you need to confirm that those market gaps can offer sustainable competitive advantage.
  • You then need to analyse the consumer base of the market.  Who buys the products in the market?  What is their spending power?  What are their expectations and perceptions of the market?  How will their needs be satisfied?
  • Only once you have carried out all this analysis can you develop you’re preferred market position.
  • Once you have decided on a market position and you design a marketing mix aimed at meeting the consumer need whilst fitting the competitively advantageous market gap.  And remember, the mix is two-pronged; it has to be able to compete against other market players; but it must also defend your place in the market.

Crucial to the development of a marketing mix and its associated communications strategy is the development of a positioning statement which fits your chosen integrated marketing objectives.

A positioning statement must be clear and concise.  It should clearly state what your brand stands for and differentiate your offer from that of competitors.

There are two approaches to a positioning statement:

  1. A functional statement which clearly shows brand benefits, e.g. Gorilla Glue is the strongest adhesive on the market
  2. An expressive statement – which shows the ego, social and hedonistic satisfactions of a brand, e.g. Smirnoff vodka being the spirit of choice for party people.

In managing positions, you need to:

  • Determine the positions of your competitors: using tools such as perceptual mapping
  • Examine the position of a focus brand in a market (the market leader or the brand with the greatest share of voice; the brand which consumers will use to evaluate your offer).
  • Confirm that your desired market position is feasible.  Can you defend it, do you have the resources to achieve it and will it offer sufficient returns in the long-term?
  • Develop your positioning strategy
  • Implement your marketing mix and communications programme to achieve the desired market position
  • Continue to monitor consumer perceptions so as to evolve with the market.

There are three broad approaches to developing a position based on the market, the customer profile and the appeal of the brand.

From these three basic approaches a range of strategies can be developed.  Often there is a need to develop a hybrid approach using one or more of these strategies.  Examples are:

  1. Product Features:  This is a commonly adopted approach.  Examples include Dyson promoting vacuum cleaners on the basis of improved suction or the Halifax promoting the ease of making small payments with their debit card.
  2. Price/Quality:  Again a commonly used approach.  Examples include Aldi advertising how much you can buy in their stores compared to buying branded goods at other supermarket chains (for no apparent loss of quality).  Price itself can be a good indicator of quality.  Sainsbury’s used to advertise using the slogan ‘Good Food Costs Less’; Stella Artois Lager is ‘Reassuringly Expensive’.  An Audi car costs more than the equivalent Volkswagen despite both brands sharing hundreds of components.
  3. Use: Informing consumers as to how a product should be used. For example, Readybrek was ‘Central Heating For Kids’, a nutritious hot breakfast for winter mornings.  Kellogg’s are currently trying to reposition Corn flakes as not a breakfast cereal but a snack food which can be eaten at any time of day.  Belvita is doing the opposite and trying to make biscuits a breakfast food.  After Eight chocolates are the wafer thin mint to finish off a dinner party. Wash and Go is the shampoo that is quick and easy to use and suitable for people with busy lifestyles.
  4. Product Class Dissociation:  This position is often taken in markets which appear humdrum or boring.  It is often used where competitors have taken all available positions.  You disassociate yourself from your competitors.  So if you produce margarine, you compare your product to butter, not other margarines, e.g. I Can’t Believe it’s Not Butter.  You compare your brand to a higher quality offer.
  5. User:  You position yourself by clearly defining target users.  So Sheila’s Wheels was car insurance specifically for women drivers.  Often celebrity endorsements are used as a shortcut to defining the user.  Hence the proliferation of fragrances which use the names of pop stars.  Sports endorsements often try to link brands to users.  Nick Faldo used Mizuno golf clubs, Tiger Woods links to Nike, Justin Rose uses TaylorMade, etc.
  6. Competitor:  You position yourself against your main competitor.  Pepsi uses its ‘taste challenge’ to directly place itself against Coca Cola (and does so without naming Coke).  Avis Car Rental ‘Tries Harder’ i.e. is better than Enterprise.  Qualcast advertised their lawn mowers as ‘A lot less bovver than a hover”; a direct comparison to Flymo.
  7. Benefit: You position your brand by proclaiming a benefit.  So Sensodyne toothpaste reduces or eliminates sensitivity from hot and cold foods. Voltarol gel relieves pain and allows you to be active.
  8. Heritage or Cultural Symbol:  Some brands use coats of arms to indicate heritage (although this can be a risky tactic as UK heraldry bodies regularly prosecute for the misuse of heraldic symbols).  Bass beer’s red triangle is the oldest registered trademark in the world.  Lyle’s Golden Syrup and ‘From Great Strength Comes Forth Sweetness’ is a similarly long-lived brand.  Many businesses state ‘Established since’ in advertising.  Kronenberg 1664  lager uses the date in the brand name to indicate longevity. These dates and symbols infer permanence and depth of experience.

Whatever position you choose, it must be supported and expressed across your communications and across your marketing mix.  You must be consistent.

If you promote a high quality position, your product and service quality must be better than your competitors.  Land Rover markets a position as a tough off-road access all areas vehicle, yet they also have a reputation for mechanical faults. Land Rover’s position has often differed from the experience of consumers. A troubling situation.

If you are promoting a position of exclusivity, that will directly affect your communications mix.  You will be less likely to use sales promotion and advertising will be in carefully chosen publications.  Your messages will infer affluence, particularly visually.  A family car will be shown being driven down a local high street; A luxury car will be shown motoring in the Cote D’Azur and arriving at an exclusive restaurant or nightclub overlooking a marina of luxury yachts.

Dimensions of your position must be relevant and important to the target audience of your communications.  Image cues must be believable and considered credible.

Market Positions must developed over the long-term if they are to prove effective; but they must also be flexible enough so as to cope with changes in the market environment and consumer expectations.

Often it is necessary to reposition a brand within a market.  Technology means that consumer tastes are changing rapidly as is their behaviour.  Market positions therefore must evolve at an equivalent pace.  technology also allows new substitute offers to proliferate.

Market positions are frequently being challenged in the minds of consumers.  If your position has strong foundations and it is continually reinforced; if your position can be communicated by clear, simple messages, there may be little need to change your original market position.  otherwise, situations will arise where you will need to reposition.  This may be as a result of market opportunities and developments such as takeovers and mergers.  Buyer preferences change.  This may make an existing position untenable.  Repositioning will therefore be necessary.

Repositioning is difficult, and risky, but it can be successful.  often consumers have entrenched positions as to brands.

To reposition successfully, the old market position needs to be suppressed so that consumers no longer relate to it.  Consumers also need to learn the new position.

These two processes can be complimentary as by weakening the old position you can reinforce the new position.

 

Position, Position, Position

Philip Kotler describes four stages in the development of a value proposition:

  1.  Choose the market position for the brand
  2. Choose a specific position for the individual product
  3. Develop a value proposition for the product (e.g. More for More, More for Less, The Same For Less, etc)
  4. Develop a total value proposition for the brand (Answer the question; Why should I buy from you?)

When building a brand, you have to do more than simply choose a brand name.  You have to develop rich associations and promises for the brand.  You have to manage all contacts the consumer has with your organisation and your brand.  These contacts must match; or better; exceed customer expectations.

Managing a brand at a strategic level than managing it at a tactical level.  Managing at a tactical level does not have the requirement of coordinating all areas of your organisation and integrating organisational behaviour to reflect the meaning and values desired of the brand.

Many senior managers only start to take a brand seriously when it appears as an asset on the company’s balance sheet.  Only then do they consider its true potential.  They start to see brand management as a strategic goal which requires long-term investment, commitment and innovation.

Positioning a brand in the marketplace take place at both strategic and tactical levels.  At the strategic, organisational level, it must determine a unique position in the market which differentiates the brand from those of competitors.  this has significant implications for marketing and communications strategies; they must reflect the competitive position and be designed to create, build maintain and improve that position.

This strategic position will direct the tactical position through a positioning statement which defines communications which reflect the actual and/or desired market position.

Once a strategic position is established, every area of the organisation and everything it does should be coordinated to deliver products and services based on that position.  It will determine your marketing choices.  In particular it will inform your marketing mix, the specific benefits and values associated with products and services.

Consumers attach both emotional and rational values to brands.  These can be displayed graphically on positioning maps.  Usually these take two attributes e.g. customer service versus reliability or innovativeness versus modernity.  On these maps, the basis of perceptual mapping, you place consumers views of your products and the products and brands of your competitors.

Treacy and Wiersema stated that there were three basic value disciplines:

  1.  The operationally excellent firm (management efficiency),
  2. Product leadership,
  3. Customer intimacy.

They also stated that customers only notice excellence or below adequate performance.  Adequate or average performance did not catch the eye of consumers.

Treacy and Wiersema suggest that to achieve a strong market position you should:

  1.  Become the best at one of the three value disciplines;
  2. Achieve adequate sector performance of the other two disciplines
  3. Keep improving your superior position so not to lose out to competitors
  4. Retain adequate position in the other two disciplines as consumer’s impression of what is adequate is constantly evolving.

This strategy can be equated with Michael Porter’s generic marketing strategies in that to try to develop excellence in all three value propositions will spread your resources too thinly.  You will end up with, at best, average performance in each discipline and fail to develop a noticeable differentiated market position.  You will enter a value discipline no man’s land.

There are a vast range of options when it comes to developing a specific market position for  product or a brand e.g. Best quality, best performance, most reliable, most durable, safest, fastest, best value for money, least expensive, most prestigious, best designed or styled, easiest to use, most convenient, etc.

Some firms compete on more than one product position.  For example, Volvo lead their marketing on being the safest car on the market; but in some markets they also position themselves as the most durable car brand.  Fairy market their washing up liquid as the best for cleaning crockery but they also state they are the best value for money as you need to use less and a bottle will last longer than other brands.

Philip Kotler advocates that when designing a specific market position for a product of brand you should consider:

  • Attribute positioning – e.g. first established firm in the market or the tallest skyscraper in the city.  However Kotler warns that such positioning strategies are weak as they often do not involve easily explained benefits to consumers.
  • Benefit Positioning – e.g. Cillit Bang is marketed as being a strong cleaning fluid that cuts through grime.  Most marketing communications are based on benefits positioning.
  • Use/Application Positioning – For example Apple Computers are advertised as the best machines for graphic designers.  Sun Microsystems advertised their computers as the best for engineers.
  • Competitor Positioning – Position your products in the context of your competitor’s products.  Suggest superiority or difference.  Avis described itself as the car hire company which ‘tries hardest’, implying they had better customer service than Hertz.
  • Category Positioning – Kodak means photographic film, Xerox means photocopiers, Hoover means vacuum cleaners, Jacuzzi means jet baths.
  • Quality/Price Positioning – Chanel No. 5 positions itself as high quality/high price. Fairy liquid is best value for the money and better quality cleaning.

Kotler also advises that you avoid:

  1.  Under-positioning- Failing to present a strong central benefit or reason to buy the brand.
  2. Over-positioning – Adopting such a narrow position that some potential customers will overlook the brand.
  3. Confused Positioning – Offering two or more benefits that are contradictory.
  4. Irrelevant Positioning – Offer a benefit few consumers will care about.
  5. Doubtful Positioning – Claiming things consumers doubt you can deliver.

Positioning your product or brand is a critical stage in the development of your marketing strategy.  Your position should reflect your organisational goals and values but it should also differentiate your business from your competitors and attract your target customers.  Doubtful positioning will often mean that your product or brand will fail to meet its potential.

Defining your position

A critical element in the planning of marketing mix strategies, including promotional communications, is the management of your market position.

Market positions operate in relation to two dynamics:

  1. who is the target audience – i.e. your chosen market segments; and,
  2. how that audience views your offering – either through their understanding of how the product works or through their understanding of your communications. i.e. how their minds interpret your message.

One of the roles of marketing professionals in a business is to research these two dynamics and to develop a position which maximises the offering in relationship to them.

Most marketers use the following process to develop distinct market positions:

  1. Examine the positions of a business’s competitors.  This usually involves the development of perceptual maps taken from customer market research.  Perceptual mapping helps determine consumer attitudes and perceptions.
  2. They then determine the position of the focus brand.  This is the process of finding gaps in the market which are commercially viable or where competitors are seen as vulnerable.
  3. You then determine the positioning strategy for your brand.  Where in the market do you want to be.
  4. The next stage is critical.  You must determine whether that market position is viable in terms of the competition and your budgetary constraints.  I do a presentation on strategic marketing planning which includes a section on positioning.  I use the example of a private jet catering company.  Despite being in existence for a number of years, the company has never made a profit.  The owner of the firm believed he had identified a clear position in the market which was not being catered for (sorry bad pun) by his competitors.  However, it was clear why his competitors had not filled that market gap – there wasn’t enough income to be generated to cover the high costs of the segment.  In choosing a market position, it must be viable in the long-term.
  5. Once an appropriate market position has been chosen, you should develop an appropriate marketing mix which will maximise opportunities.
  6. You then need to continually monitor the market position; to defend against entrants to the segment and to adjust your offering to account for changing consumer tastes.

You need to develop a position which your intended customers can relate to and understand.   This means developing distinct brand attributes and values.

There are numerous approaches to developing marketing positions based upon factors in the market, customer profiles at through brand redefinition e.g.

  • Product features:  For example, mobile phones are sold on features such as software apps, storage capacity and the quality of the built-in camera.
  • The price/quality ratio:  Price is often a strong signifier of quality.  You don’t get cheap designer watches or clothes.  For many years Stella Artois lager was sold using the strapline “reassuringly expensive’.
  • The product class association: Dove is not a soap, it is a ‘beauty bar’.  Head and Shoulders began its life as an anti-dandruff shampoo, not it is sold as the UK’s favourite shampoo.  Listerine began life as a multi-purpose household detergent, now it is sold as a mouth wash to prevent bad breath.
  • The product use: A few years ago, Kellogg’s ran a highly successful advertising campaign where their cereals were redefined not simply as breakfast food but as snack foods to be eaten at any time of the day.  They also ran a campaign advertising their cereals to people dieting to lose weight where they replaced either lunch or dinner with a bowl of cereal.  Kellogg’s Corn Flakes were originally sold as a health food.  The original formulation of Coca Cola was sold as a medicinal tonic, not a soft drink.  Lucozade was a drink for invalids but its use was successfully re-interpreted as a drink for sportsmen and sportswomen.
  • The User:  Products which are designed for carefully chosen consumer groups.  This is common in the market for fragrances.  Firms such as Unilever and Estee Lauder develop perfumes with pop stars such as Britney Spears and One Direction to specifically target their fan base.
  • The Competitor:  For many years Tesco and Sainsbury’s battled to be the UK’s top supermarket chain.  They would watch each others activities closely and develop very similar offerings in terms of own brand products and specialist ranges.  Before their demise, Saab competed with Volvo as to who produced vehicles with the highest level of safety features.
  • Benefit: Sensodyne toothpaste is marketed as the toothpaste for people who suffer from porous tooth enamel.   Daewoo for many years marketed the fact that you could buy their cars directly without a dealer as a middle man.  Eliminating the dealer was seen as a benefit as it reduced vehicle costs and increased the consumer’s power in the deal.
  • Heritage or cultural symbol:  A unique aspect of heritage in the UK is the display of Royal warrants, the fact that your firm supplies goods and services to the Queen and Royal family.  It is no accident that Universities are marketed using their coat of arms.  Firms proudly display that they were ‘established in 1803’ and there are brands such as Kronenbourg 1663 lager which use a date as an indication of longevity and quality.

Whatever the position chosen for a brand or product, it must be relevant to the target customer group and have a consistent marketing mix.  It must be believable and credible to consumers and supply chain partners.  It must be developed for the long-term.  It must be adaptable to account for changing market conditions and customer tastes.

If you are looking to reposition an existing brand or product (such as Listerine) you should do so not from your own perceptions but from the viewpoint of consumers.  You need promotional and marketing activities which suppress the old market position so that the consumer dissociates the product with its existing position.  You also need to promote the new position so that consumers are educated about the change.  It is important that these two activities are complimentary i.e.  the activities which weaken the old market position should strengthen the new market position.