Positioning and differentiating the market offering | Management Optional Notes for UPSC PDF Download

Introduction

• Considerations related to differentiation and positioning play a crucial role in marketing, aiming to make a company's products and services stand out in a competitive market. Differentiation pertains to individual product characteristics, while positioning focuses on branding. However, both concepts share the common goal of surpassing competitors by emphasizing distinctive features of a company's product or brand. Theorist Tan suggests that differentiating and positioning strategies in the market offering represent a subsequent stage in a marketing plan following the concept of consumer orientation-marketing plan (2000). Other researchers emphasize the close relationship between differentiation and positioning, highlighting their aligned utilization.
• Differentiation: In the realm of differentiation, the objective is to imbue the product offer with unique qualities that provide special value to customers. Companies strive to create distinctions in their products to deliver enhanced value to consumers. Marketers emphasize aspects of product differentiation to ensure that customers perceive their product as distinct from competitors' offerings. Various tools such as goods, services, delivery channels, and positioning strategies are employed to set products apart. Differentiation may stem from variations in quality, features, style, price, or even the product's image in the customer's mind. Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish a company's offering from those of competitors. Multiple dimensions and strategies exist for achieving differentiation.

Differential tools encompass

• Product: Differentiation within the product realm focuses on elements such as Form, Feature, Performance, Conformance, Durability, Reliability, Reparability, Style, and Design. Product differentiation aims to highlight aspects that set a product apart from competing brands. This distinction can be based on the physical form, features, quality, and other characteristics like price. The physical form includes size and shape, features encompass functionalities, and product quality refers to overall characteristics ensuring the product meets customer expectations.
• Services: Enhancements in customer service can be achieved through 24-hour feedback via email and faster response to customer concerns. Growing trends like home delivery of groceries, online banking, and securities trading are gaining popularity, potentially supplementing or even replacing traditional services.
• Personnel Differentiation: Utilizing the internet enables companies to streamline product delivery with low-cost channels, automated processes, reduced dependence on personnel, and lower transaction costs.
• Channel: Internet-based strategies leverage a location-free, time-free distribution, and communication channel. It serves as a communication channel for providing product or service information and facilitates transactions and distribution for online commerce. In some cases, the internet becomes the entire distribution channel for digital products.
• Image: Image differentiation involves symbols, events, and sponsorships. Companies can create a distinctive online experience, known as "experience branding," to improve customer retention, target key segments, and boost profitability. For instance, Build-a-Bear extends its offline experience online, and websites encouraging user content and comments gain a competitive edge.

Differential Variables

In various instances, marketers encounter challenges in establishing product differentiation based solely on the product itself. Consequently, marketers embark on differentiation strategies that emphasize the services accompanying the product. These services encompass aspects such as ease of ordering, delivery, installation, financial arrangements, customer training, warranties, repair services, maintenance, and product disposal. Companies allocate substantial annual investments in employee training, aiming to enhance customer service and thereby creating a distinctive customer experience.

Differentiation Strategies

Trout and Rivkin advocate specific differentiation strategies applicable to both offline and online businesses:

• Being the first to enter the market.
• Owning a product attribute in the consumer's mind.
• Demonstrating product leadership.
• Utilizing an impressive company history or heritage.
• Supporting and illustrating the differentiating idea.
• Communicating the difference.

Numerous differentiation strategies are distinctively tailored for online businesses:

• Site Environment/Atmospherics: Offering easy downloads, providing accurate and clear information, and ensuring easy navigation.
• Build Trust: Establishing strong brand recognition, implementing privacy policies, and ensuring a safe and encrypted payment process for transactions.
• Efficient and Timely Order Processing.
• Pricing: While early web-based companies offered discounts as purchase incentives, today's majority of firms differentiate themselves through means other than pricing.
• Customer Relationship Management: Focusing on managing long-term relationships with customers, encouraging user-generated content, and fostering trust through active listening, responding, and learning.

Companies can achieve distinctive product differentiation through effective distribution channels and by leveraging their recognition. Image represents how people perceive a company and its products. An effective image establishes the product's character and value positions. Companies utilize various tools such as symbols, events, print and mass media, and communication channels to convey the product's image to customers.

There are five market differential strategies: A new technology can provide sufficient grounds for market differentiation. In the current marketplace, differentiation based on fostering healthy relationships with customers holds significant power.

Positioning

• Positioning is the process of crafting a distinctive place for a company and its products within the target market. The objective is to establish the brand firmly in the minds of consumers to harness potential benefits for the firm (Kotler and Keller, 2009). Successful development of a customer-focused value proposition is the outcome of effective positioning, providing a compelling reason for consumers to purchase the product. 
• Positioning necessitates defining and communicating the similarities and differences between brands. Kerin et al. (2009) propose two approaches for positioning a product in the market: "Head-to-head positioning," involving direct competition with competitors based on similar product attributes in the same market, and "Differentiation positioning," aiming for a less competitive, smaller market niche to position a brand. The brand is the primary component communicating differences between products, complemented by product descriptors, customer support services, and image. 
• Products can be distinguished based on positioning, where a product's position is the customer's perception of its characteristics relative to competing brands. Product positioning involves marketers deciding the best way to communicate their product's qualities to target customers, considering customer requirements, competitive pressures, available communication channels, and carefully crafted key messages. 
• Successful product positioning ensures that marketing messages resonate with target consumers, compelling them to take action. Product positioning becomes a standard choice when a company engages in market segmentation, requiring the development of a unique selling proposition (USP) for each brand.

Several factors influence a firm's decision on which positioning base to use. The figure below outlines a four-step process for positioning a firm's product.

Positioning process Market Offering

• Positioning is the process of shaping a desired image for a company and its products in the minds of a chosen user segment. Various theoretical studies have been conducted by researchers. Ries and Trout (1986) distinguish positioning from marketing theories, asserting that positioning is not something done to a product; rather, it is what is done to the mind of the prospect. 
• Positioning begins with a product, and Kotler (2006) defines it as the act of designing the company's offer to occupy a distinct and valued place in the target customer's mind. Scholars Kotler and Armstrong (2006) confirm that market positioning involves arranging for a product to occupy a clear, distinctive, and desirable place in the minds of target consumers relative to competing products. Consequently, marketers devise positions that differentiate their products and provide the greatest strategic advantage in their target markets. The objective of positioning is to create a unique and positive image among target customers.

Product Positioning Steps

• In simpler terms, positioning involves developing a specific marketing mix to influence the consumer's overall perception of a brand, product line, or organization in general (Lamb, Hair, McDaniel 2004).
• The e-marketer aims to establish a position on one or more bases that are relevant and significant to the consumer. Companies can position brands, the company itself, the CEO, or individual products. In designing its positioning strategy, a company has three main options:
  • Positioning the product against competitors,
  • Emphasizing a distinctive unique benefit, and
  • Affiliating the product with something the customer knows and values.
• Positioning is a challenging task for marketers, and positioning mistakes can jeopardize a company's credibility and result in the loss of a product's image in the market. Therefore, marketers must exercise caution while positioning their products. Major positioning errors that can occur include under-positioning, over-positioning, doubtful positioning, and confused positioning. Once a company has established a position for the product or service in the customer's mind, it must effectively communicate it to consumers.

Positioning Strategies

• Product or service attributes
• Technology positioning
• Benefit positioning
• User category
• Competitor positioning
• Integrator positioning

In summary, differentiation and positioning are crucial for a company's productivity. If an organization fails to distinguish its offerings and clearly position them in the consumer's mind, it is left to compete solely on a price basis. The differentiation strategy involves a company choosing a specific characteristic of the product to focus on. Positioning plays a significant role in reaching the desired place in the mindsets of potential and active consumers. Academicians assert that a differentiated marketing strategy can foster brand loyalty, resulting in a high rate of repeat purchases by fulfilling the needs of each consumer segment. It can also aid a new brand in gaining traction in a saturated market. However, a differentiated marketing strategy may not be cost-effective for small manufacturers, as conducting suitable market research and developing several brands simultaneously can be costly. Positioning is the process by which a brand is marketed to own a meaningful and differentiated idea in the minds of the target audience. Essentially, positioning strategy describes the procedures, tools, and strategies used by a business to differentiate itself from competitors and gain market share. In an ultra-competitive market, positioning strategy is often the difference between failure and success. Product positioning involves creating an exceptional, reliable, and recognized customer perception of a firm's offering and image. A product or service may be positioned based on thoughts or benefits, use or application, user category, class, price, or level of quality. It targets specific market segments and caters to product requirements at accurate prices.