Chapters 8 & 9

Differentiation,
Positioning & Product
Market Analysis
 Exhibit 8.1

Generic Competitive Strategies

Note similarity to the

Competitive Advantage
Competitive Strategy
Grid in Exhibit 3.2
Lower Cost Differentiation

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

Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.
 Product Market Grid
Markets (Customer Groups)
Products M1 M2 M3

P1

P2

P3
 Product Market Analysis:
Quick Service Dining
n
tio Home
ca
Lo
Away

Breakfast
Meal

Lunch

Dinner

Family Social Business

Occasion
What do we mean by positioning?
• The act of designing the firm’s market
offering so that it occupies a distinct and
valued place as perceived by the target
customer.
• Key Components:
– distinct and valued
– physical and perceptual
– differences between one’s product and its
competitors.
 Exhibit 8.3

Comparison of Physical and Perceptual

Positioning Analysis

Physical positioning Perceptual positioning

• Technical orientation
• Physical characteristics
• Objective measures
• Data readily available
• Physical brand properties
• Large number of dimensions
• Represents impact of product
specs and price
• Direct R&D implications
• Consumer orientation
• Perceptual attributes
• Perceptual measures
• Need for marketing research
• Perceptual brand positions
and positioning intensities
• Limited number of dimensions
• Represents impact of product
specs and communication
• R&D implications need to be
interpreted
 Exhibit 8.5

Product Positioning Map

(Women’s Clothing Retailers in Washington, D.C.)
Washington 1990 Women’s fashion market
Latest Style
Women’s-wear fashionability

The Limited

Neiman-Marcus
Saks
Bloomingdale’s Macy’s
Nordstrom

Hit or Miss
Current Dress
Garfinkels Barn TJ Maxx
The Gap Sassafras
Casual Corner
Britches L&T Marshalls Loehmann’s
Hecht’s
Kmart Woodward & Lothrop
Sears
JC Penney

Talbots
Conservative
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.
 Exhibit 8.7

Perceptual Positioning Map

(Women’s Clothing Retailers and
Segments Based on Ideal Points)
Washington 1990 Women’s fashion market
Latest Style
Women’s-wear fashionability

The Limited
Neiman-Marcus 3
2
Saks
Bloomingdale’s Macy’s 4
Nordstrom

Hit or Miss
Current Dress
Garfinkels Barn TJ Maxx
The Gap Sassafras
Casual Corner Loehmann’s
1 Britches L&T Marshalls
Hecht’s
Kmart Woodward & Lothrop
Sears
5
JC Penney

Talbots
Conservative
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.
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).
 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
 Exhibit 9.1

Categories of New Products Defined According to

Their Degree of Newness to the Company and
Customers in the Target Market

High
Newness to the company

20% 10%
New product New-to-the
lines world products

Additions to
26% 26% existing product
Revisions/ lines
improvements to
existing products

11% 7% Repositionings
Cost
Low reductions
Low High
Newness to the market
Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).
 Exhibit 9.4

Potential Advantages of Pioneer and

Follower Strategies
Pioneer
• Economies of scale and
experience
• High switching costs for early
adopters
• Pioneer defines the rules of
the game
• Possibility of positive network
effects
• Distribution advantage
• Influence on consumer choice
criteria and attitudes
• Possibility of preempting
scarce resources
Follower
• Ability to take advantage of
pioneer’s positioning mistakes
• Ability to take advantage of
pioneer’s product mistakes
• Ability to take advantage of
pioneer’s marketing mistakes
• Ability to take advantage of
pioneer’s limited resources
 Exhibit 9.5

Marketing Strategy Elements Pursued by

Successful Pioneers, Fast Followers,
and Late Entrants
These marketers... are characterized by one or more of
these strategy elements:
Successful pioneers • Large entry scale
• Broad product line
• High product quality
• Heavy promotional expenditures

Successful fast followers • Larger entry scale than the pioneer

• Leapfrogging the pioneer with superior:
product technology
product quality
customer service

Successful late entrants • Focus on peripheral target markets or

niches
Advice for Would-Be Pioneers
• First mover advantage is often trumped
by followers who are better.
– Best beats first. Concentrate on being best.
– Best and first is the ideal.
• Being a pioneer without the basis for
sustainable competitive advantage is a
trap!
New Product Development
Key success criteria include:
– Product fit with market need
– Product fit with capabilities
– Product or cost superiority
– Cross-functional team approach
– Clear vision of future market based on
customer feedback
– Continuous, quality-based process