Competitive Positioning and Competitive Advantage

1. Competitive PositioningandCompetitive Advantage Professor Chip Besio Cox School of Business Southern Methodist University

2. Review of STP • Segmentation • Identify basis(bases) for segmenting the market • Develop profiles of segments • Targeting • Determine segment attractiveness • Select segment(s) to target • Positioning • Develop product positioning for each target segment • Develop marketing mix for each target segment

3. Positioning • The place that the product or service occupies in the customer’s mind relative to competing products • Positioning should be superlative • Most • Best • Strongest • Fastest Is the positioning believable?

4. PositioningHOW DO YOU DO IT? • Differentiate the product Step 1 - Identify a set of possible advantages relative to competitors Step 2 - Select the competitive advantage(s) most important to the target market • Communicate the selected positioning Step 3 - Effectively communicate and deliver the chosen positioning in the market

5. Differentiation is Based onCompetitive Advantage • Competitive Advantage - An advantage enjoyed by a single product relative to other products in the market • General sources of competitive advantage: • Overall cost leadership - can offer best value; lowest prices • Product differentiation - unique product characteristics or associations • Narrow customer focus (niching) - addresses wants and needs of particular customer segment(s) Adapted from: Michael Porter

6. Sustainable Competitive Advantage • Is the competitive advantage difficult for competitors to emulate? • Can competitors copy you? • How quickly? • How much investment is required? • Can the company continue to improve on its advantage?

7. Positioning StrategyDevelopment Process • Identify the competitors. • Assess perceptions of them. • Determine their positions. • Analyze consumer preferences. • Make the positioning decision.

8. PositioningPERCEPTUAL MAP Definition: A spatial representation of how target customers perceive competing brands • Brands that are perceived to be similar are located close to each other • Brands that are perceived to dissimilar are further apart Use the perceptual map to: • Determine how target customers perceive the product • Identify competitors • Select a positioning

9. Select a Positioning Selection of a positioning depends on: • Ideal point for target customers • Current perceptions of the product • Product’s competitive advantage(s)

10. Select a Positioning There are four general positioning strategies: • Head-on • With an Idea • For Social Accountability • U.S.P. - Unique Selling Proposition

11. G H C A D E B F Select a Positioning Value Product Attribute(s) Away from Competitors Benefit(s) Offered Product Usage Against a Competitor Cultural Symbols Product User Adapted from: Prentice Hall

12. Communicate a PositioningUSP Establishing the product’s positioning in the mind of the target customer requires the communication of a: Unique Selling Proposition (USP) • Why should the customer choose your product?

13. USP ExampleCAR RENTAL Match the USP on the left to the car rental company on the right The standard for reliability and convenience in car rental We work harder to provide the best possible service We get the car to you, whenever, wherever you need it • Enterprise • Hertz • Avis

14. Use the Marketing Mix to Support the Positioning • Based on the positioning and unique selling proposition, develop a marketing mix plan for each targeted segment Marketing Mix 1 Segment 1 Marketing Mix 2 Segment 2 Segment 3 Marketing Mix 3

15. STP Review • Divide market into segments, each of which behaves differently vis-à-vis your product • Select certain segment(s) and focus on them • Tailor a marketing mix for each segment 4. Think small!