DIFFERENTIATING AND POSITIONING OF THE MARKET OFFERING

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DIFFERENTIATING AND POSITIONING OF THE MARKET
OFFERING

• Ch 10

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Industry intense competition

• Small co compete against industry leaders?
• Southwest airlines
• Expert at avoiding direct competition with larger
  airlines (like United American)

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Differentiation!Two decades key SWA profitability

• Small Dallas based carved niche in short haul
  flights
• Low prices
• No frills (tidak ada embel-embel)
• Start 1973 w/ 3 Boeing 737, 3 Texas cities, 1993
  w/ 157 planes, 37 cities, annual revenue 2 Bio.
• Avoiding major airport hubs (avoiding direct
  comp.). Oakland Burbank rather than SF LA
• Offering point to point short flights at
  affordable price substituting short distances
  motor driving
• Low fares by operating only 737 planes
• 6.8 cents/mile (American 8.8, United 9.6)

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• SWA offers cheaper flights (dlm arti
  seluas-luasnya). Cheaper is one of the broadest
  ways to differentiate
• Firm can create value by offering something
• Better Outperforming rivals offer
• Newer Developing solutions didnt exist before
  (higher risk than simple improvement, higher
  gain)
• Faster Reducing the performance or delivery
  time in usage and buying
• Mistakes by cutting cost solely
• Cheaper seen as inferior in quality
• Cutting services
• Competitors offer another cheaper price
• SWA doesnt compete on price alone
• Best on time flight records in industry
  (bypassing most connected hubs)
• Can offer more flights (for busy travellers)
• Positioning as fun airlines that break rules
  but not break promises

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Competition

• Companies are constantly trying to differentiate
  their market offering/value from competitors
• New guarantees
• Special rewards for loyals
• New conveniences and enjoyments
• Succeeded? Copied by Competitors
• Most competitive advantages last only a short
  time
• Co must constantly think up new features and
  benefits to win attention

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Virgin Air vs British Airways (Eng)

• Virgin owned by Richard Branson
• Flights London to Hongkong feature a tailor or
  beauty therapist
• Tailor fax measurements to HK, suits ready on
  arrival
• Beautician offers massages and manicures
• Other flights offer
• Ice cream during movies
• Special arrg. for birthday cakes
• Champagne for newly weds
• Midflight marriage announcements
• Offers motorcycle or limousine rides to Heathrow
  for upperclass passengers

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Virgin Air vs British AirBritish Air do the
same? No

• Branson is more creative. British Air feels more
  dignified and avoid cute style
• Differentiating by developing more fundamental
  benefits for its target market
• First class long flight passengers provided w/
  bedroom comfort (pajamas, seats lay flatter)
• Arrival lounge at Heathrow (shower, press,
  breakfast)
• Many biz travellers perceive this as substantial
  benefit than Virgin Air

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SONYConstantly comes up with new benefits for
its customers

• Assemble 3 teams, asked to view the new products,
  as if it were a competitors product
• 1st team thinks of minor improvements
• 2nd team thinks of major improvements
• 3rd team thinks of making products obsolete
• Sony thinks that the best thing co can do is to
  be the first to improve its own product

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Table 10 -1 Biz to biz value adding(Result of
brainstorming on a major chemical co)

• Help customer reduce process costs
• Improve yields
• Reduce waste (recycling, etc.)
• Reduce rework
• Reduce direct labor
• Reduce indirect labor (inspection, handling)
• Reduce energy costs
• Help customer reduce inventory
• Consignment (pengiriman)
• Just in time delivery
• Reduce cycle time
• Help customer reduce admin costs
• Simplify billing
• Improve traceability
• Use electronic data interchange
• Improve safety for customer and his employees
• Reduce price to the customer
• Substitue certain product components
• Improve co processes and supplier processes

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Crego Schiffrin Customer Centered Organizations

• Defining Customer value model
• List all the product and service that influence
  Cust perception of value
• Building Customer value hierarchy
• Basic food is edible and accurately delivered
• Expected
• Good china and tableware,
• Linen tablecloth and napkin,
• Flowers, etc.
• Desired pleasant, quiet, food good and
  interesting
• Unanticipated Complimentary boxes
• Deciding Customer value package,
• Combining tangible and intangible items,
  experiences etc. to outperform competitors

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Tools for Competitive Differentiation

• Differentiation
• is the act of designing a set of meaningful
  differences to distinguish the companys offering
  from competitors offerings
• BCG 4 types of industries
• Volume industry
• Co can gain a few but rather large comp adv.
• i.e const eqp ind. Co strives for low cost, high
  diff, win big or either basis
• Stalemated industry
• Few potential comp adv and each is small
• i.e steel ind. Hard to diff or to decrease manuf
  cost
• Hire better salespeople, entertain, but this is
  small
• Fragmented industry
• Many opportunities for diff, but each opp. for
  comp adv is small
• i.e restaurant. Many ways but end up at not large
  market share
• Specialized industry
• Many opp for diff, each diff can have high
  payoff.
• i.e specialized machinery for selected market
  segments.
• In this market small co can be as profitable as
  large companies

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Product Differentiation

• Product
• Services
• Personnel
• Channel
• Image

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Product

• Features
• Performance
• Conformance
• Durability
• Reliability
• Repairability
• Style
• Design

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Features Most products can be offered with
varying features

• Features are characteristics that supplement the
  products basic function
• Started with stripping down or bare bones
  version of the products create add versions w/
  extra features
• Automobile electric windows, air bags, automatic
  transmission, a/c
• Japanese continuous enhancement for watches,
  cameras, automobiles, motorcycles etc.

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Features

• How to identify and select appropriate new
  features?
• Contact recent buyers and ask them questions
• Like the products?
• Any bad features?
• Good features?
• Any to be added would improve satisfactions?
  What?
• How much would you pay for each features?
• Etc.

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Performance Q vs Conformance Q

• Performance
• Conformance

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Durability, Reliability, Repairability

• Durability
• Reliability
• Repairability

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Style vs Design

• Style
• Design

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SERVICES

• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and Repair
• Miscellaneous

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Personnel

• Competence
• Courtesy
• Credibility
• Reliability
• Responsiveness
• Communication

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Channel

• Coverage
• Expertise
• Performance

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Image

• Symbol
• Written and audiovisual media
• Atmosphere
• Events

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DEVELOPING POSITIONING STRATEGY

• Co must decide which product to be differentiated
  and which product not
• Not all differences are meaningful
• Criteria
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable

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Positioning

• Is the act of designing the companys offering
  and image so that they occupy a meaningful and
  distinct competitive position in the
  target-customers minds

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3 co Value propositions

• Perdue (chicken)
• Target cust Quality conscious cust of chicken
• Benefits Tenderness
• Price 10 premium
• Value more tender golden chicken at moderate
  premium price
• Volvo (station wagon)
• Target cust Safety-conscious upscale families
• Benefits Durability and safety
• Price 20 premium
• Value the safest, most durable wagon
• Dominos (pizza)
• Target cust convenience-minded pizza lovers
• Benefits Delivery speed and good quality
• Price 15 premium
• Value a good hot pizza, delivered to your door
  within 30 min at moderate price

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POSITIONING (word found by Al Ries Jack Trout)

• Perkara merebut hati/benak konsumen
• Akses bottlenecking (tekanan start pada
  produk!!!)
• Menggeser yang sudah ada
• Menancapkan bendera
• Menggeser peran promotor
• Dari co
• Kepada Brand (akhirnya bukan produk lagi!!!)
• Strategi
• Tema
• Pengulangan (iklan / lagu / gerak)
• Penggunaan kata (terutama best)

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4 things to be avoided

• Underpositioning
• Buyers dont really sense anything special
• Overpositioning
• Buyers may have too narrow an image of the brand
• Confused positioning
• Buyers might have a confused image of the brand
  too many claims and positionings
• How to fix?
• Doubtful positioning
• Buyers hard to believe brand claims for features,
  price, manufacturer

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Communicating Positioning

• Once co got clear positioning strategy
• If strategy is best quality
• Choose physical signs normally judged
• If not best
• Choose other marketing element segment
• Packaging, distribution, ads, etc.