Part 4: Building strong brands
Chapter 10: Crafting the brand positioning
Discussion questions:
- How can a firm develop and establish an effective positioning in the market?
- How do marketers identify and analyze competition?
- How are brands successfully differentiated?
- What are the differences in positioning and branding with a small business?
1. Marketing strategy
- Segmentation
- Targeting
- Positioning
1.1 Brand positioning
2. Positioning
- The act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target
market.
2.1 Value proposition
3. Developing and establishing a brand positioning
All marketing strategy is built on segmentation, targeting, and positioning (STP).
- A company discovers different needs and groups in the marketplace, targets those it can satisfy in a
superior way, and then positions its offerings so the target market recognizes the company’s distinctive
offerings and images.
- Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the
minds of the target market.
- The goal is to locate the brand in the minds of
consumers to maximize the potential benefit to the
firm.
- A good brand positioning helps guide marketing
strategy by clarifying the brand’s essence, identifying
the goals it helps the consumer achieve, and showing
how it does so in a unique way.
1
,4. Determining a competitive frame of reference
The competitive frame of reference defines which other brands a brand competes with and therefore which
brands should be the focus of competitive analysis. Decisions about the competitive frame of reference are
closely linked to target market decisions. Deciding to target a certain type of consumer can define the nature
of competition, because certain firms have decided to target that segment in the past (or plan to do so in the
future), or because consumers in that segment may already look to certain products or brands in their
purchase decisions.
4.1 Identifying competitors
A good starting point in defining a competitive frame of reference for brand positioning is to determine
category membership the products or sets of products with which a brand competes and which function as
close substitutes. It would seem a simple task for a company to identify its competitors.
The range of a company’s actual and potential competitors, however, can be much broader than the obvious.
For a brand with explicit growth intentions to enter new markets, a broader or maybe even more aspirational
competitive frame may be necessary to reflect possible future competitors. And a company is more likely to
be hurt by emerging competitors or new technologies than by current competitors. Firms should identify their
competitive frame in the most advantageous way possible. We can examine competition from both an
industry and a market point of view. An industry is a group of firms offering a product or class of products that
are close substitutes for one another.
Marketers classify industries according to number of sellers; degree of product differentiation; presence or
absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of
globalization. Using the market approach, we define competitors as companies that satisfy the same customer
need. For example, a customer who buys a word-processing package really wants “writing ability” a need that
can also be satisfied by pencils, pens, or, in the past, typewriters. Marketers must overcome “marketing
myopia” and stop defining competition in traditional category and industry terms. The market concept of
competition reveals a broader set of actual and potential competitors than competition defined in just product
category terms.
4.2 Analyzing competitors
Chapter 2 described how to conduct a SWOT
analysis that includes a competitive analysis.
A company needs to gather information
about each competitor’s real and perceived
strengths and weaknesses.
Table 10.2 shows the results of a company
survey that asked customers to rate its three
competitors, A, B, and C, on five attributes.
Competitor A turns out to be well known and respected for producing high-quality products sold by a good
sales force, but poor at providing product availability and technical assistance. Competitor B is good across the
board and excellent in product availability and sales force. Competitor C rates poor to fair on most attributes.
2
, This result suggests that in its positioning, the company could attack Competitor A on product availability and
technical assistance and Competitor C on almost anything, but it should not attack B, which has no glaring
weaknesses. As part of this competitive analysis for positioning, the firm should also ascertain the strategies
and objectives of its primary competitors.
Once a company has identified its main competitors and their strategies, it must ask: What is each competitor
seeking in the marketplace? What drives each competitor’s behavior? Many factors shape a competitor’s
objectives, including size, history, current management, and financial situation. If the competitor is a division
of a larger company, it’s important to know whether the parent company is running it for growth or for profits
or milking it.
Finally, based on all this analysis, marketers must formally define the competitive frame of reference to guide
positioning. In stable markets with little short-term change likely, it may be easy to define one, two, or
perhaps three key competitors. In dynamic categories where competition may exist or arise in a variety of
different forms, multiple frames of reference may arise, as we discuss next.
5. Identifying Optimal Points-of-Difference and Points-of-Parity
Once marketers have fixed the competitive frame of reference for positioning by defining the customer target
market and the nature of the competition, they can define the appropriate points-of difference and points-of-
parity associations.
5.1 Points-of-difference
Points-of-difference (PODs) are attributes or benefits that consumer strongly associate with a brand, positively
evaluate, and believe they could not find to the same extent with a competitive brand. Associations that make
up points-of-difference may be based on virtually any type of attribute or benefit. Strong brands may have
multiple points-of difference.
Three criteria determine whether a brand association can truly function as a point-of-difference desirability,
deliverability, and differentiability. Some key considerations follow.
- Desirable to consumer.
o Consumers must see the brand association as personally relevant to them. Consumers must
also be given a compelling reason to believe and an understandable rationale for why the brand
can deliver the desired benefit.
- Deliverable by the company.
o The company must have the internal resources and commitment to create and maintain the
brand association in the minds of consumers feasibly and profitably. The product design and
marketing offering must support the desired association. Does communicating the desired
association require real changes to the product itself, or just perceptual shifts in the way the
consumer thinks of the product or brand? Creating the latter is typically easier.
- Differentiating from competitors.
o Finally, consumers must see the brand association as distinctive and superior to relevant
competitors. Any attribute or benefit associated with a product or service can function as a
point-of-difference for a brand if it is sufficiently desirable, deliverable, and differentiating. The
brand must demonstrate clear superiority on an attribute or benefit, however, for it to function
as a true point-of-difference.
3
Chapter 10: Crafting the brand positioning
Discussion questions:
- How can a firm develop and establish an effective positioning in the market?
- How do marketers identify and analyze competition?
- How are brands successfully differentiated?
- What are the differences in positioning and branding with a small business?
1. Marketing strategy
- Segmentation
- Targeting
- Positioning
1.1 Brand positioning
2. Positioning
- The act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target
market.
2.1 Value proposition
3. Developing and establishing a brand positioning
All marketing strategy is built on segmentation, targeting, and positioning (STP).
- A company discovers different needs and groups in the marketplace, targets those it can satisfy in a
superior way, and then positions its offerings so the target market recognizes the company’s distinctive
offerings and images.
- Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the
minds of the target market.
- The goal is to locate the brand in the minds of
consumers to maximize the potential benefit to the
firm.
- A good brand positioning helps guide marketing
strategy by clarifying the brand’s essence, identifying
the goals it helps the consumer achieve, and showing
how it does so in a unique way.
1
,4. Determining a competitive frame of reference
The competitive frame of reference defines which other brands a brand competes with and therefore which
brands should be the focus of competitive analysis. Decisions about the competitive frame of reference are
closely linked to target market decisions. Deciding to target a certain type of consumer can define the nature
of competition, because certain firms have decided to target that segment in the past (or plan to do so in the
future), or because consumers in that segment may already look to certain products or brands in their
purchase decisions.
4.1 Identifying competitors
A good starting point in defining a competitive frame of reference for brand positioning is to determine
category membership the products or sets of products with which a brand competes and which function as
close substitutes. It would seem a simple task for a company to identify its competitors.
The range of a company’s actual and potential competitors, however, can be much broader than the obvious.
For a brand with explicit growth intentions to enter new markets, a broader or maybe even more aspirational
competitive frame may be necessary to reflect possible future competitors. And a company is more likely to
be hurt by emerging competitors or new technologies than by current competitors. Firms should identify their
competitive frame in the most advantageous way possible. We can examine competition from both an
industry and a market point of view. An industry is a group of firms offering a product or class of products that
are close substitutes for one another.
Marketers classify industries according to number of sellers; degree of product differentiation; presence or
absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of
globalization. Using the market approach, we define competitors as companies that satisfy the same customer
need. For example, a customer who buys a word-processing package really wants “writing ability” a need that
can also be satisfied by pencils, pens, or, in the past, typewriters. Marketers must overcome “marketing
myopia” and stop defining competition in traditional category and industry terms. The market concept of
competition reveals a broader set of actual and potential competitors than competition defined in just product
category terms.
4.2 Analyzing competitors
Chapter 2 described how to conduct a SWOT
analysis that includes a competitive analysis.
A company needs to gather information
about each competitor’s real and perceived
strengths and weaknesses.
Table 10.2 shows the results of a company
survey that asked customers to rate its three
competitors, A, B, and C, on five attributes.
Competitor A turns out to be well known and respected for producing high-quality products sold by a good
sales force, but poor at providing product availability and technical assistance. Competitor B is good across the
board and excellent in product availability and sales force. Competitor C rates poor to fair on most attributes.
2
, This result suggests that in its positioning, the company could attack Competitor A on product availability and
technical assistance and Competitor C on almost anything, but it should not attack B, which has no glaring
weaknesses. As part of this competitive analysis for positioning, the firm should also ascertain the strategies
and objectives of its primary competitors.
Once a company has identified its main competitors and their strategies, it must ask: What is each competitor
seeking in the marketplace? What drives each competitor’s behavior? Many factors shape a competitor’s
objectives, including size, history, current management, and financial situation. If the competitor is a division
of a larger company, it’s important to know whether the parent company is running it for growth or for profits
or milking it.
Finally, based on all this analysis, marketers must formally define the competitive frame of reference to guide
positioning. In stable markets with little short-term change likely, it may be easy to define one, two, or
perhaps three key competitors. In dynamic categories where competition may exist or arise in a variety of
different forms, multiple frames of reference may arise, as we discuss next.
5. Identifying Optimal Points-of-Difference and Points-of-Parity
Once marketers have fixed the competitive frame of reference for positioning by defining the customer target
market and the nature of the competition, they can define the appropriate points-of difference and points-of-
parity associations.
5.1 Points-of-difference
Points-of-difference (PODs) are attributes or benefits that consumer strongly associate with a brand, positively
evaluate, and believe they could not find to the same extent with a competitive brand. Associations that make
up points-of-difference may be based on virtually any type of attribute or benefit. Strong brands may have
multiple points-of difference.
Three criteria determine whether a brand association can truly function as a point-of-difference desirability,
deliverability, and differentiability. Some key considerations follow.
- Desirable to consumer.
o Consumers must see the brand association as personally relevant to them. Consumers must
also be given a compelling reason to believe and an understandable rationale for why the brand
can deliver the desired benefit.
- Deliverable by the company.
o The company must have the internal resources and commitment to create and maintain the
brand association in the minds of consumers feasibly and profitably. The product design and
marketing offering must support the desired association. Does communicating the desired
association require real changes to the product itself, or just perceptual shifts in the way the
consumer thinks of the product or brand? Creating the latter is typically easier.
- Differentiating from competitors.
o Finally, consumers must see the brand association as distinctive and superior to relevant
competitors. Any attribute or benefit associated with a product or service can function as a
point-of-difference for a brand if it is sufficiently desirable, deliverable, and differentiating. The
brand must demonstrate clear superiority on an attribute or benefit, however, for it to function
as a true point-of-difference.
3
