Chapter 7

Differentiation and
Brand Positioning
Marketing Strategy Course Contents
SECTION ONE
Introduction to Strategy
1. Market-Oriented Perspectives Underlie
Successful Corporate, Business, and
Marketing Strategies
2. Corporate Strategy Decisions and Their
Marketing Implications
3. Business Strategies and Their Marketing
Implications
SECTION TWO
Opportunity Analysis
4. Understanding Market Opportunities
5. Measuring Market Opportunities:
Forecasting and Market Knowledge
6. Targeting Attractive Market Segments
7. Differentiation and Brand Positioning
SECTION THREE
Formulating Marketing Strategies
8. Marketing Strategies for New Market
Entries
9. Strategies for Growth Markets
10. Strategies for Mature and Declining
Markets
11. Marketing Strategies for a Digitally
Networked World
SECTION FOUR
Implementation and Control
12. Organizing and Planning for Effective
Implementation
13. Measuring and Delivering Marketing
Performance
 The Topic
• The success of a brand offered to a given target market often depends
on how well it is positioned within that market segment—that is, how
well it performs relative to competitive offerings and to the needs of the
target audience.
• Brand positioning refers to both the place a brand occupies in
customers’ minds relative to their needs and competing brands and to
the marketer’s decision making intended to create such a position.
• Positioning comprises both competitive and customer considerations.
Brand positioning is basically concerned with differentiation.
• Ries and Trout, who popularized the concept of positioning, view it as a
creative undertaking whereby an existing brand in an overcrowded
marketplace of similar brands can be given a distinctive position in the
minds of targeted prospects. While their concept was concerned with an
existing brand, it is equally applicable for new brands.
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Lecture Preview
• In this lecture I am taking the final step in preparing the foundation on
which effective marketing strategies are based.
• Drawing on decisions made about target markets, as discussed in the last
lecture, I have addressed the critical question: “How should a business
position its product offering—whether goods or services—so customers in
the target market perceive the offering as providing the benefits they seek,
thereby giving the product an advantage over current and potential future
competitors?”
• As you shall see in this lecture, the brand positioning decision is a strategic
one, with implications not only for how the firm’s goods or services should
be designed, but also for developing the other elements of the marketing
mix.
• Pricing decisions, promotion decisions, and decisions about how products
are to be distributed all follow from and contribute to the effectiveness of
the positioning of the product in its competitive space.
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Brand Positioning

• Customer's perception of a brand or a

product relative to their needs
• Comprises both competitive and customer
need considerations

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Differentiation

• Preference of one product, good or service,

over another
• Reasons why consumers choose what they
buy
• What they choose is better or cheaper
• Important in business strategies and
marketing

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Physical Positioning

• Assessing product offering based on a set of

objective physical characteristics
• Limitations
• Does not provide a complete picture of relative
positions
• Customers may perceive some of the brand
characteristics differently from how the
marketers intended

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Perceptual Positioning
• Includes product presentation, past experiences and
opinion of others

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Exhibit 7.2 - Comparison of Physical
and Perceptual Positioning Analysis

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Kinds of Brand Attributes

o Physical - Directly related to a single physical

dimension
o Complex physical - Used by consumers to
evaluate competitive offerings
o Abstract - Influenced by physical
characteristics
o Not related in any direct way
o Price - Implies high or low quality
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Exhibit 7.4 - Steps in the Positioning Process

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Exhibit 7.4 - Steps in the Positioning Process

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Determinant Attributes

• Features
• Benefits
• Parentage
• Manufacturing process
• Ingredients
• Endorsements
• Comparison
• Proenvironment
• Price/quality
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Tools Used to Understand the Positioning of Products

• Positioning grid: Visual representation of the

positions of various products or brands in the
competitive set in terms of two determinant
attributes
• Also called perceptual maps
• Value curve: Comprises more than just two
dimensions that can be generated

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Exhibit 7.6 - Perceptual Map of Women’s
Clothing Retailers in Washington, D.C.

Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They? ” Babson College Retailing Research Reports, September 1990, as shown in
Micheal Levy and Barton A. Weitz, Retailing Management (Burr Ridge, IL: Richard D. Irwin. 1992), p. 205.

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Constraints Imposed by an Intense
Position
• Shift in the market environment cause
customers to reduce the importance they
attach to an attribute
• Difficulty in repositioning a brand with an
intensely perceived position on that attribute

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Exhibit 7.8 - Value Curves for Neiman Marcus, J.C.Penney, and Sears

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Market Positioning Analysis

• Measuring customers’ preferences and

locating them in the product space along
with their perceptions of the positions of
existing brands

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 Exhibit 7.9 - Perceptual Map of Women’s Clothing
Retailers in Washington, D.C., Showing the Ideal Points
of a Segment of Consumers

Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September 1990.

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Exhibit 7.10 - Perceptual Map of Women’s Clothing
Retailers in Washington, D.C., Showing Five Segments
Based on Ideal Points

Source: Adapted from Douglas Tigert and Stephen Arnold, “Nordstrom: How Good Are They?” Babson College Retailing Research Reports, September 1990.

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Guiding Development of Marketing Strategy

• Common approaches
• Positioning statement
• Identifies the target market
• States unique benefits of the product
• Value proposition
• Similar to positioning statement
• Includes information about pricing relative to
competitors
• Both approaches reflect the unique selling
proposition (USP) of the product
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Exhibit 7.11 - Positioning Statement and Value Propositions for Volvo Automobiles in the United States

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Brand Equity

• Value created by establishing customer

preference for one’s brand
• Maintaining brand value requires
• Brand reinforcement
• Brand Revitalization

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Positioning Decisions in Global Markets

• Globalization makes consumers understand:

• What’s available elsewhere and see how it is
positioned
• Marketers will have to be careful that:
• Marketing messages in one part of the world don’t
conflict with established positioning in another

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Caveats in Positioning Decision Making

• Focus should be on delivering the benefits

that matter most to the target customer
• Tangible attributes of the good or service itself

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