PRODUCT POSITIONING

15.823 Internet Marketing

Prof. Glen L. Urban

Spring 2001

Understanding Customers

Consumer Behavior

B2C vs B2B

Strategy Formulation

Trust vs. Push

Product Design

Segmentation

Positioning

Customer Acquisition

Advertising / PR/Selling

Pricing & Promotion

Distribution

Channel

Logistics

Relationship Building

Fulfillment

Service

OUTLINE

• Positioning Versus Segmentation

• Positioning Example

• Analytic support for Mapping

• Does it Pay to be First? -- Order of Entry Theory

• Implications for Internet

B

C

A

D

BA •••

•

• • •

•

E

POSITIONING

GIVEN SEGMENTATION

CBP

DIMENSIONS

COORDINATES

FULFILLMENT

UNIQUE POSITION

SHARE/PROFIT

MAPPING STEPS

Define category/segment

Identify products that compete

Attributes and features that differentiate

Group attributes - perceptual dimensions

Draw map

Implications

CLASS EXAMPLE

• On Line Trading

• evoke -- dimensions --triad comparisions

• judgement for position

• preference vectors

• implications

POSITIONING ANALYSIS

LEVEL I

focus group

customer contact

inspect competition

perceptual map -- judgment

LEVEL II

factor analysis

preference vectors

conjoint analysis

LEVEL III

simulation models

MAPPING INPUTS

BILL -- M.B. 500

BILL -- HONDA

BILL -- BUICK

ELECTRA

Lu x

u ry

s ty l

e

rel i

a bl e

MP

G

p er f

o rm

anc e

Du r

a bil

ity /

resa

le

q ua l

ity

ma i

n ta i

n

s af e

6

5

5

6

6

5

3

5

3

4

7

5

3

6

4

5

6

4

4

4

4

5

7

5

5

7

6

DATA COLLECTION

• Email lists– Zoomerang

• On Line Panels– NFO– Burke– Greenfield

FACTOR LOADINGS

Dimensions

Attribute

Luxury 0.88 0.10

Style 0.72 0.08

Reliable 0.45 0.63

M.P.G. 0.24 0.64

Safe 0.52 0.31

Maintain 0.10 0.67

Quality 0.48 0.64

Durability & Resale 0.38 0.60

Performance 0.67 0.35

Emotional

•Honda

•Lincoln Town Car

•Chrysler New Yorker

•Buick Riviera

•Cadillac Eldorado

Rational

•Olds

•Honda

•Lincoln Town Car

•Chrysler New Yorker

•Buick Riviera

•Cadillac Eldorado

Rational

•Olds

•BMW

•Jaguar

•MB

Emotional

•Honda

•Lincoln Town Car

•Chrysler New Yorker

•Buick Riviera

•Cadillac Eldorado

Rational

•Olds

•BMW

•Jaguar

•MB

Emotional

ENGINEERING

FEATURES

PERCEPTION

PREFERENCE

SURUGA EXAMPLE

Aim of eBusiness@Suruga

• Buyer Centric

• Idea Base

• Trust for Customer

• Construct business model of eCRM.

• Construct new services and products of eBusiness.

• Construct secure business with internet customers.

Keyword for Success What shall Suruga do?

INTERNET STUDY?

• Talk to Customers -- Listen

• Study Competitors -- judgmental Map

• Focus Groups

• Budget study if VC -- Crowded Out There

• Active Role in Study

Internet StudySTEPSBUDGET

DEFINE TARGET MARKET

DESIGN SURVEY

ATTRIBUTE GENERATION

STATISTICAL MAPPING

Name Dimensions

Number of Dimensions

Coordinates of Brands

Importance Vectors

MANAGER’S ROLE$50k to $250K

Be Sure Correct Segment Definition is Used

Specify Decision Requirements

Assure Completeness

Input Judgment

Examine Additional

Dimension for Relevance

Review for Reasonableness

Decide on Number of Sub-group

Internet Study - Cont’d

STEPSFEATURES

SIMULATE IMPROVED POSITIONING

MANAGER’S ROLESelect Features and Levels,

Link to preference and/or Perception

Be Sure Shift Can Be Achieved, Confirm with Concept/Product Tests

DOES IT PAY TO BE FIRST?

THEORY• Determinants -- +/-

– Memory -- Accessibility

– Switching costs - risk and satisfaction

– Learning about Market

– Market Power - Share & Channel

– Scale -- Production and Funds

– Continuing Innovation

– Standard Setting

– Broader Product Line

– Technology/Market window

– Best Positioning?

• Empirical

ORDER OF ENTRY AND MARKET SHARE IN CONSUMER GOODS BUSINESS

Average

Market Share

Pioneer 29

Early Follower 17

Late Entrant 12

(371 SBU’s)

Pioneer 16% 20% 23% 41% 100%

Early Follower 41% 24% 19% 16% 100%

Late Entrant 56% 25% 12% 7% 100%

Frequency Distribution

for Market Share

Less than 10 10-19 20-29 30 & up Total

DATA

131 Brands

36 Categories

Share - Last Purchases

Order

Advertising

Preference

ORDER OF ENTRY

1ST 2ND 3RD 4TH 5TH 6TH 7TH

100

57 43

42 32 26

34 26 22 18

29 22 18 16 15

25 19 16 15 13 12

23 17 15 13 12 11 9

Market Share

Strategic Implications

Market Share Reward for Innovation

If First:

Position Well-Preempt

Support - Advertising & Promotion

If Second or Third:

Premium Position

Support - Advertising & Promotion

Faster But Lower

Innovate for Market

Leadership -- But Risk

IMPLICATIONS FOR INTERNET

• Mapping -- Do It!

– Listen /Focus Groups

– Budget for Study in VC

• Segmentation and Positioning Strategy vs. Potential Competition -- Preempt

• Core Benefit Proposition -- Not Technology

• Establish with Features and Keep Innovating

• First In has Value

– But Catch window

– Have Best Position

– Spend behind It