Positioning, Differentiation and Marketing Mix
A company’s offer has to be distinct from those of its competitors and should fulfill the requirements of the customers of its target markets. A company’s positioning is the result of whatever the company does. Marketing mix is the most tangible and the most flexible tool to create the desired positioning. Companies use their marketing mix to create something specific and special for the customer.
Product differentiation results from added features which give customers benefits that rivals cannot match. Before adding features, a company should thoroughly research the need for the particular feature among customers in the intended target market. Companies keep on adding new features just because their competitors are offering them. Sometimes deletion of features and benefits from a product may be a very effective differentiation because customers never really wanted these benefits.
Adding the same features as competitors may make the products of a company more acceptable among customers, though it may end up introducing similar products that does not result in any differential advantage. Such a strategy of matching features and benefits will result in product parity, with no company providing any compelling reasons to the customer for buying its product. In such industries customers will buy on the basis of price, and competitors will be forced to cut prices to grab customers from each other.
The profit of every company will go down. Companies will not have the ability to differentiate their product as they will not have enough resources due to their dwindling profit margins. The only way out of this mess is that companies should pick up courage, arrange resources and start differentiating their products from each other. Price based competition should be avoided.
Most of the time, in most categories of goods, consumers get products with features that they could do without and are needlessly paying for them. Most products can be made more suitable for their target markets by deletion of certain features. Nokia has introduced a stripped down version of the cellular phone for the entry level customer in Japan.
The phone is a contrast to the ones that offer internet usage, m-commerce, camera etc. It serves the basic purpose of mobile connectivity. Many customers are realizing that they do not need what they have bought and are switching over to these simpler phones. This phenomenon is likely to be repeated in many categories of goods once simpler options ore available at lesser prices.
Promotional Differentiation or Image Differentiation
Promotional differentiation arises from unique, valued images created by advertising or superior services provided by salespeople. People in different target markets are likely to react differently to certain stimuli like emotions, images, storylines, celebrities etc.
It is important to identify the stimuli which will evoke the desired response in members of the target market. It may be an extremely intricate task but it is imperative to find out whether the members prefer emotional or rational messages, whether they like humor or sedate messages, whether they like narratives or musicals etc.
Unless the company has determined the choice of the consumers on all the variables that affect an advertisement it cannot create an advertisement which is suitable for members of the target market but is unsuitable for any other target market. Sadly most advertisements look and sound similar and are not suitable for any particular target market and do not elicit the desired response.
Similarly, different target markets will require different types of sales presentations, persuasions and relationships with the seller.
Distribution differentiation arises by making the buy situation more convenient for customers. Different target markets will require different activities to make the buying situation more convenient for them. Customers hard pressed for time have welcomed introduction of automated teller machines.
But some customers would still prefer to visit the bank to conduct transactions which can easily be carried out through the ATMs. Cans of carbonated soft drinks from vending machines are finding favor with youngsters from the upper strata in India who believe that this is the original Coke or Pepsi.
Different distribution channels like telemarketing, direct mails, internet marketing, personal selling are being used to lure customers of the same target market resulting in irritability among customers, duplication of efforts and high costs. This is particularly true of credit card markets, internet service providers etc. The adequate strategy would be to identify the most suitable distribution channel for each target market and pursue it.
Price differentiation involves estimating the price sensitivity of the target market, and offering relevant values on the basis of such an estimation. A target market can be totally price insensitive and desire value of the highest order. These values can be exclusivity/ sheer luxury/ symbol of status or royalty. They essentially signify belongingness to an exclusive club and are often accompanied with the owner’s passionate attachment to the product.
A target market can be highly price sensitive and will go for mere functionality of the product if it finds the price of available products high. Customers of this target market yearn for better products/ but will not be willing to pay a price for it. If a company offers a better product at the existing price level such customers would buy it.
A third type of target market is emerging. This market’s price sensitivity is moderate and is willing to pay higher price for more features and benefits. This would be a big market in the future because income and aspiration levels of customers are rising throughout the world.