Download - Edexcel AS Business 1.1.3 market positioning
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Edexcel AS Business
1.1.3. Market positioning
Revisionstation
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From Edexcel
a) Market mapping
b) Competitive advantage of a product or service
c) The purpose of product differentiation
d) Adding value to products/services
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Starter
• Mars Bar, in teams come up with as many new product ideas as you can in 3 minutes
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How did MARS identify gaps in the market?
How did MARS decide what new products to produce?
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Market mapping
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Definition of market mapping
• Market mapping is the process of finding the variables which differentiate brands in a market and then plotting them on a map – to identify a gap in the market
Examples of variables:
• Modern ------- traditional
• Mass ----------- niche
• Functional -----luxury
• High Quality ---low quality
• Luxury ---------- economy
• Premium --------budget
Premium
Budget
Functional Luxury
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Create a market map - activity
• Create a market map for these clothes shops (add others that you know)
George (at ASDA) Dorothy Perkins
Peacocks JD Sports
Sports Direct Marks & Spencer
Next Sports Direct
Topshop Matalan
Primark Debenhams
Dior
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High
Quality
High
Price
Low
Quality
Low Price
Dior
Top Shop
Primark
George
Sports Direct
Peacocks
Next
Matalan
Dorothy Perkins
Debenhams
Marks and Spencer's
Possible gap in the market
here
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Uses of market mapping
• Market mapping could be used to identify a gap in the market
• It could also be used by a start-up to identify which products to produce or which services to provide – so they are market orientated (not product orientated)
• It could also be used by a traditional brand to reposition itself in the market
North Face has moved away from the traditional mountaineer image to a younger market
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Competitive advantage of a product or service
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Definition of Competitive advantage
• An advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry, either in low cost leadership or on price leadership
• The concept of competitive advantage was first said by Michael Porter in his book called “Competitive Advantage” which was published in the 1980’s
• The main idea is that a business can win by being cheaper or by being different
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Ways that a business can achieve competitive advantage: Price
Poundland’s retailing concept is extremely simple: a range of more than 3,000 items – representing AMAZING VALUE for money.
Our pilot store opened in the Octagon Centre, Burton-upon-Trent in December of 1990, followed by new stores in High Street, Meadowhall and other quality trading locations.
Shoppers loved the concept, and so did fellow retailers and landlords. The stores proved to be a huge success.
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Ways that a business can achieve competitive advantage: Added Value
Birds Eye takes Cod and Pollock and adds value to the fish and produces a range of fish products
Enjoy that ‘just caught’ taste combined with mouth-watering flavours across the range, whether you’re a fan of the classics such as fish fingers, or love the taste sensations brought to you in the Inspirations products. What processes and ingredients do you
think they add to the fish to add value?
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Ways that a business can achieve competitive advantage: Innovation
“Like everyone we get frustrated by products that don’t work properly. As design engineers we do something about it. We’re all about invention and improvement.”
This is a quote from James Dyson
What is the difference between invention
and innovation?
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Ways that a business can achieve competitive advantage: Reliability
Lexus RX voted UK’s most reliable car by Autocars
Reliability is very important in the car market – customers like to know that when they turn the key the car will start
What do you think was the least reliable car?
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Ways that a business can achieve competitive advantage: Quality
Vileda makes cleaning products and over the last 60 years the family-run business has put together a broad product portfolio and established itself as a market leader in the mechanical cleaning products sector.
Their focus has consistently remained on the highest quality standards as well as consumer and customer satisfaction.
Alongside the consumer benefit, particular importance is placed on stability and durability of the products, all of which are designed and manufactured using the latest technologies. Have you ever owned a Vileda product?
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Ways that a business can achieve competitive advantage: Reputation
The LEGO Group is a privately held, family-owned company with headquarters in Denmark
Founded in 1932 by Ole Kirk Kristiansen, and based on the iconic LEGO® brick, it is one of the world's leading manufacturers of play materials
Guided by the company spirit: "Only the best is good enough”, the company is committed to the development of children and aims to inspire and develop the builders of tomorrow through creative play and learning
Can you guess which of these companies is British?
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Ways that a business can achieve competitive advantage: Advertising
Try the interactive site snuggler HERE
McVitie's is a British snack food brand owned by United Biscuits. The name derives from the original Scottish biscuit maker, McVitie & Price, Ltd., established in 1830 in Scotland
Their latest ad campaign is called SWEEET
Why do you think this was voted the best advert of
2016?
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Ways that a business can achieve competitive advantage: Branding
Superdry is an exciting contemporary brand which focuses on high-quality products
They are characterised by quality fabrics, authentic vintage washes, unique detailing, world leading hand-drawn graphics and tailored fits with diverse styling
Such distinctiveness has gained the brand exclusive appeal as well as an international celebrity following
Is Superdry; Japanese, Chinese, Taiwanese, British?
Answer here
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Ways that a business can achieve competitive advantage: Convenience
Tesco is the fourth largest retailer in the world measured by revenues and the second largest measured by profits.
The chain was founded by Jack Cohen in 1919. The brand first appeared after Cohen bought a shipment of tea from T.E. Stockwell and he used those initials and added the first two letters of his own surname. The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex.
Originally a UK-focused retailer specialising in food and drink, it has diversified both geographically and by product, into areas such as clothing, electronics, financial services, telecoms, home, health, car and dental insurance, retailing and renting DVDs, CDs, music downloads, Internet services and software.
Why do small communities protest at Tesco
Express businesses moving in?
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Ways that a business can achieve competitive advantage: Customer Service
• The top 50 companies for customer service*
• 1 Amazon.co.uk – 86.6• 2 Utility Warehouse – 86.4• 3 First Direct – 85.7• 4 Specsavers – 85.4• 5 Waitrose – 85.0• 6 John Lewis – 84.9• 7 New Look – 84.3• 8 SAGA Insurance – 84.1• 9 Nationwide – 83.7• 10 M&S Food – 83.5
Customer service can provide a business with competitive advantage
Consumers want a business to get things right first time and dealing with their complaints faster and more efficiently.
Amazon for example their vision/mission statement states: “to be earth’s most customer-centric company.”
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The purpose of product differentiation
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Product differentiation
• Where a product is different from the competition in some way
• Consumers must be able to perceive this difference and may be willing to pay a premium price for the product
• Look at the headphones, why are customers prepared to pay £299 for one type of headphones?
Beats by Dr Dre – RRP £299HERE
Soundlab headphones RRP £4.99 HERE
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Methods of differentiation
• Through reputation (hair salon, restaurant)
• Through customer service or after sales service (Marks and Spencer)
• Through value for money (ASDA, Lidl, Aldi, Primark)
• Through product features (Cars, mobile phones)
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Adding value to products/services
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Adding value definition
• Added value is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service
• This can be achieved through the product itself or the way that consumers perceive the product
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How can a business add value?
• Design – develop new technology/design features to make their product unique (differentiation advantage)
• Production – achieving quality and efficiency adds value. – Quality will ensure a higher price can
be charged (differentiation advantage)– Efficiency helps cut costs of the input
(cost advantage)
• Marketing – creating an image that makes the product more desirable, a brand differentiation advantage)
Aspirational product – name a
prestige watch brand – did you
say Rolex? Is that customer
perception?
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Adding value
• How many ways can you add value to a potato?
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Potato products
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Adding value - video
• Production processes add cost at each area but also add value to the raw material. Watch the video here:
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Process e.g. cooking, slicing, canning
Additional ingredients e.g. cake mix
Convenience e.g. In supermarket
Packaging e.g. Handy cake slice in plastic
Finished
goods
How value can be added
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Benefits of adding value
1. The more value that is added, the higher the price that can be charged, which means higher profit margins
2. Protection against competitors offering lower prices which means competitive advantage
3. Customer loyalty which means repeat business
Radley have added
value to leather, these
bags cost £300
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Sample AS questions
AS exam questions on Paper 1 Marketing and People have the following tariffs:2 marks4 marks8 marks10 marks20 marks
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Case Study for sample question 1
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Sample question 1
Knowledge 1 Application 2 Analysis 1
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Answer question 1
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Sample question 2
Knowledge 2
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Answer question 2
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Glossary
• Market mapping; the process of finding the variables which differentiate brands in a market and then plotting them on a map – to identify a gap in the market
• Competitive advantage; An advantage a business has over its competitors, allowing it to generate larger than average turnover for the industry
• Differentiation; This is the extent to which consumers perceive one product as being different from the others in the market, highly differentiated products have no substitutes
• Adding value; The process by which a business adds to the price that a consumer is willing to pay for a product e.g. frying potatoes to make chips
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