Crafting a CVP and Positioning

(Ref: Text Book Chapter 7)

Dr. Anjani Srikanth Koka

Department of Management
 BITS Pilani
Pilani Campus

MBAHL ZC411 - MARKETING

Lecture No. 7
 Learning Objectives
7.1 Explain how a company should develop a value
proposition and a positioning strategy.
7.2 Describe how a company chooses a frame of reference.
7.3 Discuss how a company identifies points of parity and
points of difference.
7.4 Define the key strategies for creating a sustainable
competitive advantage.
7.5 Identify alternative strategies to communicate the
positioning of a company’s offerings.

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 Developing a Value Proposition
• Create value across three domains:
– Functional value
– Psychological value
– Monetary value
• Total customer benefit
• Total customer cost
• Customer Value Proposition
• Customer Value Analysis
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 Developing a Brand Positioning
• Positioning
– The act of designing a
company’s offering and
image to occupy a
distinctive place in the
minds of the target
market

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 Frame of Reference
– Serves as a benchmark against which customers
can evaluate the benefits of a company’s offering

– Category Membership

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 Points-of-Difference

• Points-of-difference
(PODs)
– Attributes/benefits that
consumers strongly
associate with a brand,
positively evaluate, and
believe they could not
find to the same extent
with a competitive
brand
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 Points-of-Difference
• POD criteria

Desirable

Deliverable

Differentiating

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 Points-of-Parity
• Points-of-parity (POPs)
– Attribute/benefit associations that are not
necessarily unique to the brand but may in
fact be shared with other brands

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 Points-of-Parity
• POP forms

Category

Correlational

Competitive

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 POP vs. POD
• Multiple Frames of
Reference

• Straddle Positioning

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 Creating a Sustainable Advantage
• Three core strategies:
– Differentiate on an existing attribute
– Introduce a new attribute
– Build a strong brand

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 Communicating the Positioning
• Crafting a Positioning Statement

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 Communicating the Positioning
• Communicating category membership

Announcing category benefits

Comparing to exemplars

Relying on product descriptor

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 Communicating the Positioning
• Communicating Conflicting Benefits

 Low price vs. high quality

 Taste vs. low calories
 Nutritious vs. good tasting

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 Communicating the Positioning
• Positioning as Story Telling

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 Nespresso

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 Nespresso

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 Sample Solution for Q1
• Nespresso was first launched in the professional market
(businesses and restaurants located in Switzerland, Italy, and
Japan) as a machine/capsule system that had a single-utility
function of serving coffee.
• The high cost of the product explains the failure of Nespresso on
the market initially. By repositioning itself as an asset of great
value, not only as an expensive, high-end product, exclusively
targeted to high-income groups, Nespresso has been able
recover its place in the market. Nespresso customers feel they
belong to a privileged community—the brand responds to the
consumers’ need for esteem and recognition.
• A strong customer service and a good communication strategy
also add to the brand’s value.
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 Sample Solution for Q2
• Nespresso has revolutionized the coffee market as a result of its
high-quality system of machines and coffee capsules. This
innovation resulted in drastic changes in the consumption of coffee
at home – a certain ease of preparation, espresso with good coffees,
and well-designed machines came to be associated with the brand.
Nespresso has the pioneer advantage in this market, and has
succeeded in building a strong relationship with consumers. A brand
inspired from this business model would be perceived as a “me-too”
brand. Only a brand bringing in new innovation in the market for
coffee could compete with Nespresso, which is currently not the
case. Douwe Egberts has significant financial resources but lacks
innovation, and, for the moment, Nespresso’s market shares remain
safe.

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