BRAND DIFFERENTIATION & POSITIONING FOR MAXIMUM COMPETITIVE ADVANTAGE

BRAND DIFFERENTIATION & POSITIONING FOR MAXIMUM COMPETITIVE ADVANTAGE

CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND TO THE STUDY

Since ancient times, brands have been used to set one producer’s products apart from those of another. Brands are extremely valuable pieces of property that may be bought, sold, and used to influence consumer behavior as well as guarantee their owner’s continued future financial success. Brands with a solid reputation make shopping simpler. Promotion of a brand benefits both brand owners and consumers. A strong brand saves the marketer’s time and effort when it comes to selling, and occasionally a company’s brand name is the only component of its marketing mix that a rival cannot imitate. Also, strong brands can enhance the company’s reputation and hasten consumer acceptance of new products sold under the same name. Hence, branding can be viewed as a potent tool to secure a competitive advantage.

The company must decide on a value proposition, or how it will create differentiated value for targeted segments, as well as what positions it wants to occupy in those categories, in addition to selecting which market segments it will target. Businesses must pursue pertinent positioning and differentiation; each business and its product must convey a unique big idea to the target market. Given the variety of brands on the market, a business must carefully analyze the advantages and disadvantages of rivals while creating a marketing strategy in order to better position its products.

There are three steps in the differentiation and positioning task: Selecting the best competitive advantages, identifying a collection of potential differentiations that provide competitive advantage, and selecting an overall positioning strategy. In essence, by identifying the market target that management wants the company to enter, product positioning broadens market segmentation. It identifies the market segments the company plans to target with its marketing initiatives; these are the categories where the company is most likely to enjoy a competitive advantage.

Because there is an abundance of information available to consumers regarding goods and services, they categorize and “position” goods, services, and businesses in their thoughts in order to make the purchasing process easier. Yet, as marketers do not want to rely on chance, they must prepare positions that will provide their products the biggest advantage in particular target markets, as well as marketing techniques to establish these planned positions.

The key to superior performance is to gain and hold a competitive advantage. Firms can gain a competitive advantage through differentiation of their product offering which provides superior customer value or by managing for lowest delivered cost. These two means of competitive advantage when combined with the competitive scope of activities (broad or narrow), result in four generic strategies: differentiation cost leadership, differentiation and cost focus.

Differentiation strategy involves the selection of one or more choice criteria that are used by many buyers in an industry. The firm then uniquely positions itself to meet these criteria. Differentiation gives customers a reason to prefer one product over another. In order to create a differentiated position, a firm needs to understand the nature and location of the potential sources of competitive advantage. The nature of these sources are the superior skills- distinctive capabilities of key personnel that set them apart from the personnel of competing firms and the superior resources of a firm- tangible requirements for advantages that enable a firm to exercise its skills, it includes the number of sales people in the market, expenditure on advertising and sales promotion, distribution coverage, expenditure on research and development, financial resources, brand equity and knowledge. These skills and resources are translated into a differential advantage when the customer perceives that the firm is providing value above that of the competition.

The objective of positioning is to create and maintain a distinctive place in the market for a company and its products, but to compete successfully in a target market involves providing the customer with a differential advantage. This differential advantage can be created using the marketing mix;

Product: brands were differentiated based on product performance in areas of speed, comfort and safety levels, capacity and ease of use or improving taste or smell. Product development was a cornerstone of corporate activity, and continual product improvement was an acknowledged objective for any brand marketer. However, while companies still invest heavily in research and development and still seek a product performance edge wherever it can be found, it is a marketing maxim that differences in performance now are often minimal at best.

Distribution: Lacking meaningful product performance differences, marketers have traditionally emphasized another marketing resources; wide distribution coverage and or careful selection of distributor location to provide convenient purchasing for customers. In other words, products that are conveniently available will all other things being equal be chosen most often.

Promotion: The most commonly pursued marketing solution lies in the area of brand communications, advertising and promotions.

At a time when products perform in similar ways when availability differences are often minimal and when price differentiation may be only temporary, powerful advertising messages, creatively carving a sustainable and unique position in the minds of a receptive audience.

Price: Pricing has been another marketing tool often used to establish differentiation.   How to “own” a genuine (or perceived) long-term price advantage, though, is the difficult part. Temporary discounts, special offers, and price promotions can provide a brand the illusion of distinctiveness and an apparent pricing advantage. Yet, given that brand marketing’s stated objective is to develop client loyalty (i.e., not only one-time sales but recurrent business), ephemeral advantages or points of uniqueness are insufficient. It’s necessary to differentiate sustainably. The marketer must hold the “low-cost provide” position if the price-based sustainable differentiation is to be owned over time. As a result, neither the price nor the quality of the product distinguishes these brands. Hence, price determines whether a customer stays or leaves. The outcome of differentiation Conversely, positioning is the effective development of a market-focused valuable position.