MARKETING MANAGEMENT I

CHAPTER 07
Pranay Sindhu
IMT Hyderabad
 WHAT HAVE WE LEARNT TILL NOW?

• What is marketing? What is marketing management? What gets marketed? New

marketing realities? (Chapter 01)
• Developing a marketing plan. What are strategies, tactics, G-STIC? (Chapter 2)
• Marketing research process. Key concepts in demand measurement. (Chapter 5)
• Customer acquisition funnel. Customer satisfaction. Customer relationship management.
Customer lifetime value. (Chapter 19)
• Customer Behaviour Model. C-S-P. M-P-E-M. PR-IS-EoA-PD-PPB (Chapter 3)
• Targeting and segmenting customers (Chapter 06)
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NOW WE HAVE SEGMENTED OUR CUSTOMERS AND
ARE READY TO TARGET THE VIABLE SEGMENTS

WE TARGET OUR ‘CHOSEN’ CUSTOMERS WITH OUR

CAREFULLY DESIGNED ‘VALUE PROPOSITION’

AND ‘POSITION’ OURSELVES IN FRONT OF THE

CUSTOMERS TO WOO THEM.
BUT HOW?
WELCOME TO CHAPTER 7
CRAFTING A CUSTOMER VALUE PROPOSITION AND
POSITIONING
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 VALUE PROPOSITION

• A value proposition is,

“a concise statement that outlines the unique benefits and advantages a product or
service offers to customers, addressing their needs and differentiating it from
competitors.”

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 HOW DO CUSTOMERS MAKE CHOICES?

• Customers choose the OFFER they believe, will DELIVER the highest VALUE.
• An OFFERING can create value across THREE domains: FUNCTIONAL,
PSYCHOLOGICAL, and MONETARY
• Functional value: The tangible benefits and features of an offering that address specific
customer needs and provide practical solutions.
• Psychological value: The emotional and experiential aspects of an offering that resonate
with customers' feelings, aspirations, and self-image.
• Monetary value: The economic benefits and cost-effectiveness of an offering that
contribute to financial savings or advantages for customers. 5
VALUE/OFFERING SMARTPHONE
FUNCTIONAL Advanced camera, fast processor, large
storage - address the PRACTICAL
NEEDS of customers
PSYCHOLOGICAL Sleek design, premium materials, and
exclusive brand image - EMOTIONAL
CONNECTION with customers who
VALUE LUXURY
MONETARY While the smartphone has a higher
upfront cost, its durability and longevity well-being over time - LONG-TERM
translate to LONG-TERM SAVINGS.
GYM
Access to state-of-the-art exercise
equipment, experienced trainers, and a
variety of fitness classes - PRACTICAL
NEEDS of customers
The upscale environment, motivational
atmosphere, and sense of belonging to
an exclusive community -
EMOTIONAL CONNECTION with
customers who value their well-being
and self-improvement.
Improved physical health and mental
SAVINGS on medical expenses.
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VALUE/OFFERING
FUNCTIONAL Basic Kellogg’s
breakfast cereal
PSYCHOLOGICAL Yves Saint Laurent
Perfume
MONETARY Over-the-counter
medications

Customer value proposition = Total customer benefit (F+P+M) – Total customer

cost (F+P+M)

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 POSITIONING

• Positioning is,
“act of designing a company’s offering and image to occupy a distinctive place in the
minds of the target market.”
• Unlike VP (which articulates all benefits and costs of the offering), positioning zeroes in
on the KEY BENEFITS that will provide consumers with a REASON TO CHOOSE the
company’s offerings.
• It is believed that a great positioning requires – RATIONAL and EMOTIONAL
components in it.
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• A useful measure of the effectiveness of an organization’s positioning is the BRAND
SUBSTITUTION TEST
• If in some marketing activity – an ad, a social media campaign, a new product info –
your brand were replaced by a competitive brand, then that marketing activity
should not work as well in the marketplace.
• Basically, “YEH BHI CHAL JAYEGA” situation
• Positioning requires that marketers define and communicate similarities and differences
between their brand and its competitors.
• Deciding on a positioning involves:
• Choosing a frame of reference by identifying the target market and relevant
competition.
• Identifying the optimal points-of-parity and points-of-difference given that frame of
reference. 9
 FRAME OF REFERENCE

• Choosing a frame of reference (FoR) involves selecting the category or context

in which a brand's positioning will be understood by customers.
• A good starting point in defining a competitive FoR for brand positioning is
CATEGORY MEMBERSHIP - the products or sets of products with which a
brand competes and that function as close substitutes.

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COMPANIES FRAME OF REFERENCE

APPLE’S iPOD FoR: “Portable music player” – this helped customers understand that the iPod was
a revolutionary device for listening to music on the go

TESLA’s electric FoR: “Luxury cars” rather than just electric vehicles. This allowed TESLA to
cars communicate that electric cars can be high-performance, stylish, and desirable,
distinguishing Tesla from traditional electric car manufacturers.

RED BULL FoR: “Energy drinks as lifestyle boosters” - positioned itself as a lifestyle brand
rather than just an energy drink. By associating with extreme sports, adventure, and
high energy, Red Bull differentiated itself from traditional soft drinks

GOOGLE’S search FoR: “Search engines for instant answers” – Google positioned itself as a search
engine engine that provided quick and accurate answers to users' queries. This frame of
reference allowed Google to stand out by focusing on speed and relevance
compared to other search engines.
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COMPANIES FAILED FoR
New COKE FoR: "Cola Flavor Improvement“ – strong
association with original flavour, led to
backlash.
Crystal PEPSI FoR: “Clear cola for healthier choice” -
Customers were confused by the clear
appearance, and the "healthier" positioning
didn't resonate, resulting in limited success
and eventual discontinuation.
Microsoft ZUNE FoR: “Portable Media Player Competing with
iPod” – MS positioned itself in direct
competition with the iPod but lacked the
same level of user experience and ecosystem.
The focus on competing rather than
innovating led to its failure in the market.
POTENTIALLY SUCCESSFUL For
FoR: "Classic Taste with Modern Appeal“
- classic taste that people loved, combined
with modern elements that catered to
changing preferences.
FoR: “Refreshment in a New Light“ - as a
refreshing twist on traditional cola,
emphasizing its clear appearance as a
symbol of purity and simplicity. This
frame of reference would have
differentiated it from regular cola without
making "healthiness" the primary focus.
FoR: "Digital Entertainment Hub“
a comprehensive digital entertainment
platform that goes beyond music. By
focusing on a broader array of features like
video playback, gaming, and seamless
device integration, Zune could have
provided a unique value proposition. 12
ONCE MARKETERS FIX THE FRAME OF REFERENCE FOR
POSITIONING, THEY CAN DEFINE THE APPROPRIATE
POINTS OF PARITY AND POINTS OF DIFFERENCE

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 POINTS OF DIFFERENCE

“Attributes or benefits that DIFFERENTIATE the company’s offering from the

competition.”
• An increasingly demanded POD for brands is “Brand Authenticity”.
“the extent to which consumers perceive a brand to be faithful to its essence and its reason
for being”
• Strong brands have MULTIPLE PODs.

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 Perceived as considered
authentic due to its consistent
offering of traditional Indian
flavors and recipes, maintaining
Perceived as authentic for its the essence of homemade taste.
focus on traditional
craftsmanship, promoting
handloom and artisanal
products.
Perceived as considered
authentic due to its reputation
for precision, durability, and
mastery in watchmaking

Perceived as authentic due to its platform that

allows travelers to experience local cultures
authentically by staying in homes, immersing
themselves in neighborhoods, and interacting
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with hosts, fostering genuine connections and
experiences.
 Brand associations are “mental connections and attributes that customers link to a brand,
including characteristics, images, emotions, and experiences.”
• Three criteria determine whether a “brand association” can truly function as a POD
• DESIRABLE TO CONSUMER

• DELIVERABLE BY THE COMPANY

• DIFFERENTIATING FROM COMPETITORS

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 POINTS OF PARITY

“Attributes or benefits associations that are not necessarily unique to the brand but may in
fact be shared with other brands.”
• POPs come in 3 basic forms:
• CATEGORY: associations that are essential for a brand to be considered a legitimate and
credible offering within a particular product or service category.
• CORRELATIONAL: associations that customers expect to find together because of a
logical relationship or connection between them.
• COMPETITIVE: associations a brand shares with competing brands to negate possible
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negative perceptions about the brand's offerings.
EXAMPLES

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 ALIGNING FRAME OF REFERENCE, POP,
AND POD
• A brand can identify more than one COMPETITIVE FRAME OF REFERENCE
if the competition widens, or the firm plans to expand into new categories –
STRADDLE POSITIONING
• (Straddle meaning: to be in a position that covers two or more different things or
ideas)
• Then for each FoR, it would have separate PODs and POPs.
Example: HASSURU – Low alcohol beer brand in India
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 HASSURU
(MEANING ‘HUSTLE’ IN JAPANESE)
BEER BRAND WITH LOW ALCOHOL CONTENT
Category/FoRs "Low-Alcohol "Health-Conscious "Flavored and Light Beer"
Refreshment" Option"

Competitors Kingfisher Ultra, Bira Heineken 0.0, Kingfisher Radler, Bira 91 Breezer,
Light Hoegaarden 0.0, Johnnie Simba Fruity
Walker
PODs Emphasis on lower alcohol Promotes itself as Infused AUTHENTIC flavors into
content THAN OTHERS, BETTER TASTING with light beer – TODDY (KL, TN),
reduced calorie count a 0 ALCOHOL OPTION FENI (GA), MAHUA (BR),
THAN OTHERS. i.e., reduced calories, APONG (AP, NL), KESAR
aligns with wellness KASTURI (RJ), CHAANG
trends (LADAKH) etc.

POPs Adheres to alcohol content Offers different bottle Abides by alcohol regulations,
regulations, available in sizes, ensures product provides variety in terms of flavors
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various packaging sizes quality and taste
 CREATING A SUSTAINABLE COMPETITIVE
ADVANTAGE

• Competitive advantage is “a company’s ability to perform in one or more ways that

competitors cannot or will not match.”
• Three core tactics are integral to designing a VALUE PROPOSITION that makes an
offering stand out from the competition:
• DIFFERENTIATE ON AN EXISTING ATTRIBUTE
• INTRODUCE A NEW ATTRIBUTE
• BUILD A STRONG BRAND

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Both Coca-Cola and Pepsi are
cola beverages with similar
ingredients, but they
differentiate based on taste
perception.
Coca-Cola emphasizes its
classic and authentic taste,
while Pepsi positions itself as a
younger, more refreshing
option.
AMAZON MUSIC introduced
ALEXA, as an attribute to
their app. This feature set the
app apart by providing users
with a hands-free, interactive
experience that is not available
in other music streaming apps.
Their value proposition goes
beyond just selling shoes and
sportswear; it's about
empowering individuals to
achieve their goals and excel
in their pursuits, fostering a
strong emotional connection.
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 COMMUNICATING THE OFFERING’S
POSITIONING

• The key aspect of crafting an effective positioning statement:

• Communicating an offering’s category membership with POPs and PODs and
developing a narrative to convey the offering’s positioning
• CRAFTING A POSITIONING STATEMENT
• Clearly articulate two things – TARGET CUSTOMER + VALUE PROPOSITION
• EXAMPLE

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 "For individuals with a taste for
timeless luxury and style (target
customer), Louis Vuitton offers a range
of meticulously crafted fashion,
accessories, and leather goods that
embody the essence of elegance,
heritage, and exclusivity (value
proposition)."

"For budget-conscious
travelers (target customer),
OYO Rooms provides
affordable and comfortable "For fashion-forward
accommodations with individuals seeking
standardized amenities across convenience (target customer),
India (value proposition)." Myntra offers a curated online
shopping experience with a
vast selection of trendy
clothing and accessories, 24

delivered to your doorstep

(value proposition)."
COMMUNICATING CATEGORY MEMBERSHIP

• When a product is new, marketers must inform consumers of the brand’s category
membership.
• Three main ways to convey a brand’s category membership:
• Announcing category benefits
• Comparing to exemplars
• Relying on the product descriptor
• Example
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 3.
"Premium Bottled Spring
1. Water."
"Stay Hydrated with By directly stating "bottled
Refreshing Bottled Water." spring water," they're clearly
and succinctly communicating
The brand directly the category their product falls
announces that they offer into. The term "premium"
bottled water – a further suggests higher quality
recognized category for and emphasizes the product's
portable hydration. category membership.

The word "refreshing"

emphasizes the benefit of
choosing bottled water for 2.
quenching thirst and "Pure Hydration, Just like Mountain Spring Water!"
staying hydrated. By comparing their product to the renowned image of pristine
mountain spring water, they're positioning their bottled water as
having the same purity and quality.
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This comparison helps consumers associate their product with
well-known exemplars of clean and natural water sources.
----END OF CHAPTER 7---

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