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Chapter-by-Chapter Instructional Material

CHAPTER

CRAFTING THE BRAND

POSITIONING

CHAPTER SUMMARY
Deciding on positioning requires determining a frame of reference by identifying the
target market and the nature of the competition and the ideal points-of-parity, and
points-of-difference brand associations. Determining the proper competitive frame of
reference depends on understanding consumer behavior and the considerations
consumers use in making brand choices.
Points-of-difference are those associations unique to the brand that are also strongly
held and favorably evaluated by consumers. Points-of-parity are those associations
not necessarily unique to the brand but perhaps shared with other brands. Category
point-of-parity associations are associations consumers view as being necessary to a
legitimate and credible product offering within a certain category. Competitive pointof-parity associations are those associations designed to negate competitors pointof-difference.
The key to competitive advantage is product differentiation. A market offering can be
differentiated along five dimensions: product (form, features, performance quality,
conformance quality, durability, reliability, reparability, style, design); services
(order ease, delivery, installations, customer training, customer consulting,
maintenance and repair, miscellaneous services); personnel, channel, or image
(symbols, media, atmosphere, and events).
Because economic conditions change and competitive activity varies, companies
normally find it necessary to reformulate their marketing strategy several times
during a products life cycle. Technologies, product forms, and brands also exhibit
life cycles with distinct stages. The general sequence of stages in any life cycle is
introduction, growth, maturity, and decline. The majority of products today are in the
maturity stage.
Each stage of the product life cycle calls for different marketing strategies. The
introduction stage is marked by slow growth and minimal profits. If successful, the
product enters a growth stage marketed by rapid sales growth and increasing profits.
Then it follows a maturity stage in which sales growth slows and profits stabilize.
Finally, the product enters a decline stage. The companys task is to identify the truly
weak products; develop a strategy for each one: and phase out weak products in a
way that minimizes the hardship to company profits, employees, and customers.
Like products, markets evolve through four stages: emergence, growth, maturity, and
decline.

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OPENING THOUGHT
A barrier to effective learning that can be experienced by students in this chapter comes
from the concept of positioning. Students will be familiar with different products or
services, but having them realize what the products and services positions are within
their frame of references is challenging to verbalize. The instructor is encouraged to use a
number of examples of products or services familiar to the students to get this concept
fully
across.
Secondly, the understanding of the terms point-ofdifferences (PODs) and points-of-parity
(POPs) can easily be confused. The instructor is encouraged to use a number of similar
products (computers, cell phones, pens, PDAs for example) and ask the students to
differentiate these products in terms of the products POPs and PODs; and why these concepts
are so important to the marketing of products.
The third challenge presented in this chapter is an understanding that products and markets
have a life cycle and undergo changes throughout that process. Again, the use of product or
service examples familiar to the students is encouraged to communicate the different stages of
a products life cycle.

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS
1. At this point in the semester, student projects should be completed to include their
fictional product or services brand positioning. In relationship to the material
contained in the chapter, students should have delineated and designed a
differentiated brand positioning for their project.
2. Relevant to the opening vignette of the chapter concerning The Public Broadcasting
Services positioning and differentiation, students are to devise a positioning and
differentiation strategy for their own local PBS system (radio or television). Students
should arrange to meet with local PBS management to elicit information on what
challenges their local station(s) is/are having in increasing their viewership/listeners.
What stage in the products life cycle (PBS is the product) does your local station
fall? What level of competitive advantage, if any, commensurate with the position in
the life cycle, does your local PBS station(s) command? What can be done to reverse
or continue these trends?
3. Sonic PDA Marketing Plan The third part of STP is to select and communicate an
effective positioning to differentiate your offering from competitors offerings. The
marketer must also plan for appropriate marketing strategies for each stage of the
product life cycle. As you continue your work to develop Sonics marketing plan for
launching Sonic 1000, consider these questions about positioning and life-cycle
strategies:

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Which of the differentiation variables related to product, services, personnel,

channels, and image are best suited for Sonics situation, strategy, and marketing
objectives? Why?
Write the positioning statement for Sonic 1000.
Knowing the stage of the product life cycle for Sonic 1000, what are the
implications for the marketing mix, product management strategy, service
strategy, and R&D strategy?

Record your answers in a written marketing plan or type them in the Positioning
section of Marketing Plan Pro. Note any additional research you may need in the
Marketing Research section of Marketing Plan Pro.

ASSIGNMENTS
Small Group Assignments
1. Most campus communities have their own radio and/or television broadcasting
stations. If one is present on your campus, students are to define the college or
universitys station(s) in terms of positioning and differentiation strategy. What stage
in the products life cycle are the station(s)? What can be done to reposition the
station(s) to attract more viewership? What is the competitive advantage present in
their operations?
2. Determining the proper competitive frame of reference requires understanding
consumer behavior and the consideration sets consumers use in making brand
choices. For a set of three products or services (selected by the students) students
should research these companies and provide the companies (and its products) value
proposition in a matrix similar to Table 10.1.
Individual Assignments
1. Consultants Michael Treacy and Fred Wiersema, in their book, The Disciplines of
Market Leaders (Reading, MA: Addison-Wesley, 1994) proposed a positioning
framework called value disciplines. Within its industry, a firm could aspire to be the
product leader, operationally excellent firm, or customer intimate firm. Choosing an
industry, each student is to identify one or more firms operating within that industry
that fits each of these three value disciplines. Students should define their reasoning
for selecting each firm and in its placement as either the product leader, operationally
excellent or customer intimate.
2. Points-of-differences and points-of-parity are two important concepts of brand
development and are driven by two differing strategiesinclusion and differentiation.
Students should devise a list of at least five other products/services that they believe
demonstrate points-of-differences and points-of-parity in their brand positioning.
Student must include their reasoning behind the inclusion of these products/services
into a category. Good students will present proof of their correct selection by
including advertising copy supporting the product or services POD or POP.

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Think-Pair-Share
1. Styles, fashions, and fads fall into special categories when talking about product life
cycles. Some may have a product life cycle measured in weeks, others in months, and
yet others in years. Ask the students to list the current fads, fashions, and styles
prevalent around campus today. Do any of these fashions, styles, or fads meet or
satisfy a strong need? If so, can they predict the length of the life cycle of the ones
that satisfy a strong need? Which of the fashions, styles, or fads do the students
predict will have longevity? Why or why not?
2. In the Marketing Memo entitled, Exceeding Customer Expectations, the authors list a
three-step process for creating customer value that exceeds customer expectations in
service organizations. Students, who have experience working in an eating
establishment, can comment on the applicability and feasibility of this three-step
process to creating customer value in their work environment. In other words, does
their place of employment follow the practices outlined in the Marketing Memo? Or
is there still much more work to be done to create customer value where they work?
Other students who have related experiences in service industries can also comment
on the value of this model in their work environment.

MARKETING TODAYCLASS DISCUSSION TOPICS

Southwest Airlines has differentiated itself by emphasizing low prices, reliable service,
and a healthy sense of humor. Recently a number of other low fare airlines have started
with their objectives being to capitalize upon the niche created by Southwest. If you were
in the position to create a new differentiation and positioning strategy for Southwest,
what aspects of the company would you emphasize? How would your differentiation
strategy position Southwest from these other airlinesby product, personnel, channel, or
some combination of all of the above?

END-OF-CHAPTER SUPPORT
MARKETING DEBATEDo Brands Have Finite Lives?
Often, after a brand begins to slip in the marketplace or disappears altogether, commentators
observe, all brands have their day. Their rationale is that all brands, in some sense, have a
finite life and cannot be expected to be leaders forever. Other experts contend, however, that
brands can live forever, and long-term success depends as much on the skill and insight of the
marketers involved.
Take a position: Brands cannot be expected to last forever versus there is no reason for a
brand to ever become obsolete.
Pro: Brands can last forever as evidenced by a number of brands that are entering their one
hundredth year of existence. For a brand to have immortality, it must continue to have a
competitive advantage in its product differentiation dimensions (product, services, personnel,
channel, and symbols). The management of the brand, how well brand management monitors
changes in the environment, customer preferences, strategies, and technology to continue to

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equip the brand with point-of-differences and/or points-of-parity is the key to the brands
ongoing success in the marketplace.
Con: Brands meet specific consumer needs and wants and provide specifics for these needs
and wants. As consumer needs and wants change, evolve, or disappear, brands must also
change, evolve, and finally expire. The loss of the brands point-of-difference in the
marketplace or its lack of point-of-parity with other brands will cause its demise. Firms can be
best served to understand and accept the inevitability of brand declines and plan for the
creation of and marketing of newer brands to replace declining brands quickly. If a brand is
designed to perform a specific function, the change in technologies may render that brand
obsolete and see its market decline. Consider the case of the IBM Selectric typewriter as an
example where the new technology of computers rendered this brand obsolete. Every
manufacturer or service provider must be on the lookout for threats to their brands ongoing
effectiveness and applicability and develop appropriate replacement strategies.
MARKETING DISCUSSION
Identify other negatively correlated attributes and benefits not included in Table 10.2. What
strategies do firms use to position themselves on the basis of pairs of attributes and benefits?
Suggested Response:
Some additional negatively correlated attributes and benefits include:

Functionality and price: products and/or services with many features but at a low
pricecomputers, automobiles, home appliances.

Easy and completeness: products that are easy to use and contain everything the
consumer wants in the productscomputers, home entertainment products.

Fun to drive and good gas mileage: for cars, this is an ongoing challenge along
with safe and good gas mileage and large and good gas mileage.

Safe and scaryamusement rides, movies, television shows, books.

Choices and convenience: variety in our shopping but sized for convenience (has
the right mix of products but is not too bigconvenience stores.

Close but not too closeshopping centers and large mega-stores close enough but
not in my backyard.

Simply to use yet not complicated-computer and game programs.

A firm may use dual strategies to communicate these negatively correlated attributes and
benefits. Although more expensive to use dual marketing strategies, for a product or service
consisting of negatively correlated attributes, such strategies will appeal to both sets of
consumers for the product.
Additionally, the marketer may anchor the PODs and POPs, with other brands or other
associations that emulate the desired characteristics or communicate the desired emotional
appeals.

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MARKETING SPOTLIGHTKrispy Kreme

Discussion Questions:
1) What have been the key success factors for Krispy Kreme?
a. Careful brand positioning.
b. Local marketing.
c. Careful brand image (fresh, hot donuts).
2) Where is Krispy Kreme vulnerable?
a. Change in diet preferences (low carb).
b. Replication of their corporate image and brand positioning by their
competitors.
3) What should it watch out for?
a. Change in diet preferences.
b. Change in consumer tastes and emotional appeals that donuts have (reward or
indulgent).
4) What recommendations would you make to senior marketing executives going
forward?
a. Watch for changes in diet (fads, fashions, trends) and respond accordingly.
5) What should they be sure to do with their marketing?
a. Continue to craft their image and positioning carefully.
b. Care in expansion of their products through third parties such as convenience
stores.
c. Over exposure prevalence of the brand.

Competitive Frame of Reference

A) A starting point in defining a competitive frame of reference for a brand position
is to determine category membershipthe problems or sets of products with
which a brand competes and which function as close substitutes.
B) Target market decisions are often a key determinant of the competitive frame of
reference.

Points-of-Parity and Points-of-Difference

A) Once the competitive frame of reference for positioning has been fixed by
defining the customer target market and nature of competition, marketers can
define the appropriate points-of-difference and points-of-associations.

Points-of-Difference
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A) Points-of-difference (PODs) are attributes or benefits consumers strongly associate

with a brand, positively evaluate, and believe that they could not find the same extent
with a competitive brand.
B) Creating strong, favorable, and unique associations as point-of-differences is a real
challenge, but essential in terms of competitive brand positioning.

Points-of-Parity
A) Points-of-parity (POPs) are associations that are not necessarily unique to the brand
but may in fact be shared with other brands. These types of associations come in two
basic forms: category and competitive.
1) Category points-of-parity are associations consumers view as essential to be a
legitimate and credible offering within a certain product or service category. They
represent necessary conditions but not necessarily sufficient for brand choice.
2) Category points-of-parity may change over time due to technological, legal, or
consumer trends.
B) Competitive points-of-parity are associations designed to negate competitors pointsof-difference.
1) If a brand can break-even where the competitors are trying to find an advantage
and can achieve advantages in other areas, the brand should be in a strong
competitive position.

Points-of-Parity Versus Points-of-Difference

A) To achieve a point-of-parity on a particular attribute or benefit, a sufficient number of
consumers must believe that the brand is good enough on that dimension.
B) There is a zone or range of tolerance or acceptance with points-of-parity.
C) The brand does not literally have to be seen as equal to competitors, but consumers
must feel that the brand does well enough on that particular attribute or benefit.
D) With points-of-differences, the brand must demonstrate clear superiority.
E) Often the key to positioning is not so much as achieving a point-of-difference as in
achieving points-of-parity.

Establishing Category Membership

Often marketers must inform consumers of a brands category membership.
A) Perhaps, the most obvious is with the introduction of new products, especially when
the category membership is not apparent.
B) Brands are sometimes affiliated with categories in which they do not hold
membership.

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C) The preferred approach to positioning is to inform consumers of a brands

membership before stating its point-of-difference.
D) There are three ways to convey a brands category membership:
1) Announcing category benefits.
2) Comparing to exemplars.
3) Relying on the product descriptor.

Choosing POPs and PODs

A) Points-of-parity are driven by the needs of category membership (to create category
POPs) and the necessity of negating competitors PODs (to create competitive POPs).
B) In choosing points-of-difference, two important considerations are that consumers find
the POD desirable and that the firm has the capabilities to deliver on the POD.
C) There are three consumer desirability criteria for PODs:
1) Relevance.
2) Distinctiveness.
3) Believability.
D) There are three deliverability criteria:
1) Feasibility.
2) Communicability.
3) Sustainability.
E) Marketers must decide at which level(s) to anchor the brands points-of-differences.
F) At the lowest level are the brand attributes.
G) At the next level are the brands benefits.
H) At the top level are the brands values.
I) Research has shown that brands can sometimes be successfully differentiated on
seemingly irrelevant attributes if consumers infer the proper benefit.

Creating POPs and PODs

One common difficulty in creating a strong competitive brand positioning is that
many of the attributes or benefits that make up the points-of-parity and points-ofdifference are negatively correlated.
A) If consumers rate the brand highly on one particular attribute or benefit, they also
rate it poorly on another important attribute.
.
B) Unfortunately, consumers typically want to maximize both attributes and benefits.

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C) The best approach is to develop a product and service that performs well on both
dimensions.

Present Separately
A) An expensive but sometimes effective approach to address negatively correlated
attributes and benefits is to launch two different marketing campaigns, each
devoted to a different brand attribute or benefit.

Leverage Equity or Another Entity

A) Brands can potentially link themselves to any kind of entity that possesses the
right kind of equity as means to establish an attribute or benefit as a POP or POD.

Redefine the Relationship

A) Convince the consumer that in fact the relationship is positive.
B) This redefinition can be accomplished by providing consumers with a different
perspective and suggesting that they may be overlooking or ignoring certain
considerations.

DIFFERENTIATION STRATEGIES
To avoid the commodity trap, marketers must start with the belief that you can
differentiate anything.
A) The obvious means of differentiation, and often most compelling ones to
consumers, relate to aspects of the product or service.

Product Differentiation
A) Brands can be differentiated on the basis of a number of different product or service
dimensions.
B) One more general positioning for brands is as best quality.
C) The Strategic Planning Institute studied the impact of higher relative product quality
and found a significantly positive correlation between relative product quality and
return on investment.
D) Quality is also communicated through other marketing elementsa high price signals
premium quality.
E) Quality image is additionally affected by packaging, distribution, advertising, and
promotion.
F) A manufacturers reputation also contributes to the perception of quality.

Personnel Differentiation
Companies can gain a strong competitive advantage through having better-trained
people.
A) Better-trained personnel exhibit six characteristics:
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1) Competence.
2) Courtesy.
3) Credibility.
4) Reliability.

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5) Responsiveness.
6) Communication.

Channel Differentiation
Companies can achieve competitive advantage through the design of its distribution
channels coverage, expertise, and performance.

Image Differentiation
Buyers respond differently to company and brand images.
A) Identity and image need to be distinguished.
B) Identity is the way a company aims to identify or position itself or its product.
C) Image is the way the public perceives the company or its products.
D) An effective identity achieves certain things:
1) It establishes the products character and value proposition.
2) It conveys this character in a distinctive way.
3) It delivers emotional power beyond a mental image.
4) For identity to work, it must be conveyed through every available communication
vehicle and brand contact.
5) Even a sellers physical space can be a powerful image generator.
Review Key Definitions here: identity and image

PRODUCT LIFE-CYCLE MARKETING STRATEGIES

A companys positioning and differentiation strategy must change as the product,
market, and competitors change over the product life cycle (PLC).
A) Products have a limited life.
B) Product sales pass through distinct stages, each posing different challenges,
opportunities, and problems to the seller.
C) Profits rise and fall at different stages of the product life cycle.
D) Products require different marketing, financial, manufacturing, purchasing, and human
resource strategies in each life-cycle stage.

Product Life Cycles

Figure 10.1 portrays the bell-shaped life-cycle curve.
A) The product life-cycle is divided into four stages:
1) Introduction.
2) Growth.

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3) Maturity.
4) Decline.
B) The PLC concept can be used to analyze a product category, a product form, a
product, or a brand.
Figure 10.2 shows three common alternative patterns
C) Figure 10.2 (a) shows a growth-slump-maturity pattern.
D) Figure 10.2 (b) shows a cycle-recycle pattern.
E) Figure 10.2 (c) shows a common pattern called scalloped.

Style, Fashion, and Fad Life Cycles

Figure 10.3 distinguishes three special categories of product life cyclesstyles,
fashions, and fads.
A) A style is a basic and distinctive mode of expression appearing in a field of human
endeavor.
B) A fashion is a currently accepted or popular style in a given field.
C) Fashions pass through four stages:
1) Distinctiveness.
2) Emulation.
3) Mass-fashion.
4) Decline.
D) The length of a fashion cycle is hard to predict.
E) Fads are fashions that come quickly into public view, are adopted with great zeal,
peak early, and decline very fast.
F) Fads do not survive because they do not normally satisfy a strong need.

Marketing Strategies: Introduction Stage and Pioneer Advantage

A) Profits are negative or low in the introduction stage.
B) Promotional expenditures are at their highest ration to sales because of the need to:
1) Inform potential consumers.
2) Induce product trial.
3) Secure distribution in retail outlets.
C) Companies that plan to introduce a new product must decide when to enter the market.
D) To be first can be rewarding, but risky and expensive.
E) To come in later makes sense if the firm can bring superior technology, quality, or
brand strength.

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F) Speeding up innovation time is essential in an age of shortening product life cycles.

G) Most studies indicate that the market pioneer gains the most advantage.
H) What are the sources of the pioneers advantage?
1) Early users will recall the pioneers brand name if the product satisfies them.
2) The pioneers brand also establishes the attributes the product class should
possess.
3) The pioneers brand normally aims at the middle of the market and so captures
more users.
4) There are producer advantages:
a. Economies of scale.
b. Technological leadership.
c. Patents.
d. Ownership of scarce assets.
e. Other barriers to entry.
I) The pioneers advantage is not inevitable.
J) Steven Schnaars studied industries where imitators surpassed the innovators. He found
several weaknesses among the failing pioneers:
1) New products were too crude.
2) Were improperly positioned.
3) Appeared before there was a strong demand.
4) Product-development costs were high.
5) Lack of resources to compete.
6) Managerial incompetence or unhealthy complacency.
K) Golder and Tellis raise further doubts about the pioneer advantage. They distinguish
between an:
1) Inventor.
2) A product pioneer.
3) A market pioneer.
L) The pioneer should visualize the various product markets it could initially enter,
knowing that it cannot enter all of them at once.
Figure 10.4 shows the product market segments.

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Marketing Strategies: Growth Stage

The growth stage is marked by rapid climb in sales. Early adopters like the product,
and additional consumers start buying it. New competitors enter, attracted by the
opportunities.
A) Prices remain where they are or fall slightly.
B) Companies maintain their promotional expenditures at the same or at a slightly
increased level to meet competition and to continue to educate the market.
C) Sales rise much faster than promotional expenditures.
D) Profits increase.
E) Manufacturing costs fall faster than price declines owing to the producer learning
effect.
F) During this stage, the firm uses several strategies to sustain rapid market growth:
1) It improves product quality and adds new product features and improved styling.
2) It adds new models and flanker products.
3) It enters new market segments.
4) It increases its distribution coverage and enters new distribution channels.
5) It shifts from product-awareness advertising to product-preference advertising.
6) It lowers prices to attract the next layer of price-sensitive buyers.
G) A firm in the growth stage faces a trade-off between high market share and high
current profits. By spending money on product improvement, promotion, and
distribution, it can capture a dominant position.

Marketing Strategies: Maturity Stage

At some point, the rate of sales growth will slow, and the product will enter a stage
of relative maturity. This stage normally lasts longer than the previous stages and
poses big challenges to marketing management. Most products are in the maturity
stage of the life cycle, and most marketing managers cope with the problem of
marketing the mature product.
A) The maturity stage divides into three phases:
1) Growth, where the sales growth rate starts to decline.
2) Stable, where sales flatten on a per capita basis because of market saturation.
3) Decaying maturity, where the absolute level of sales starts to decline, and
customers begin switching to other products.
B) The sales slowdown creates overcapacity in the industry that leads to intensified
competition.

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C) The industry eventually consists of well-entrenched competitors whose basic drive is

to gain or maintain market share.
D) Dominating the industry are a few giant firms that serve the whole market and make
their profits mainly through high volume.
E) Surrounding these dominant firms is a multitude of market nichers.
F) The issue facing a firm in a mature market is whether to become one of the big three
or pursue a niching strategy.
G) Some companies at this stage abandon weaker products and concentrate on products
that are more profitable and on new products.

Market Modification
The company might try to expand the market for its mature brand by working with
the two factors that make up sales volume: Volume = number of brand users x
usage rate per user.
A) It can try to expand the number of brands users by converting nonusers.
B) It can also try to expand the number of brand users by entering new market segments.
C) A third way to expand the number of brand users is winning competitors customers.
D) Volume can also be increased by convincing current users to increase their brand
usage:
1) Use the product on more occasions.
2) Use more of the product on each occasion.
3) Use the product in new ways.

Product Modification
Managers also try to stimulate sales by modifying the products characteristics
through quality improvement, feature improvement, or style improvement.
A) Quality improvement aims at increasing the products functional performance.
B) Feature improvement aims at adding new features that expand the products
performance, versatility, safety, or convenience.
1) This strategy has several advantages:
a. New features build the companys image as an innovator.
b. Wins the loyalty of market segments that value these features.
c. Provide an opportunity for free publicity.
d. Generate sales force and distributor enthusiasm.
2) The chief disadvantage is that feature improvements might not pay off in the long
run.
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C) Style improvement aims at increasing the products esthetic appeal.

Marketing Program Modification

A) Product managers might also try to stimulate sales by modifying other marketing
program elements.
1) Prices.
2) Distribution.
3) Advertising.
4) Sales promotion.
5) Personal selling.
6) Services.
B) Marketers often debate which tools are most effective in the mature stage.

Marketing Strategies: Decline Stage

Sales decline for a number of reasons, including technological advances, shifts in
consumer tastes, and increased domestic and foreign competition. All lead to
overcapacity, increased price-cutting, and profit erosion.
A) As sales and profits decline, some firms withdraw from the market. Those remaining
may reduce the number of products they offer.
B) In handling aging products, a company faces a number of tasks and decisions.
C) In a study of company strategies in declining industries, five strategies are available to
the firm:
1) Increase the firms investment.
2) Maintain the firms investment level until uncertainties about the industry are
resolved.
3) Decrease the firms investment level selectively, by dropping unprofitable
customer groups, while simultaneously strengthening the firms investment in
lucrative niches.
4) Harvesting the firms investment to recover cash quickly.
5) Divesting the business quickly by disposing of its assets as advantageously as
possible.
D) The appropriate strategy depends on the industrys relative attractiveness and the
companys competitive strength in that industry.
E) Companies that successfully restage or rejuvenate a mature product often do so by
adding value to the original product.

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The Product Life-Cycle Concept: Critique

The PLC concept helps marketers interpret product and market dynamics. It can be
used for planning and control, although it is useful as a forecasting tool. The PLC
has its share of critics.
Table 10.3 summarizes the characteristics, marketing objectives, and marketing
strategies for the four stages of the PLC.
decline stage

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