1.1.4 Market Positioning

• Market Positioning

  • refers to the process a business goes through when launching a new product or service
  • The business decides where they want to position the product in the market with regard to price, quality, branding and customer perception
• Market Mapping

  • a tool for identifying the position of a product within a market
  • A market map refers to a two-dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals’ products
  • Only two criteria can be chosen e.g. price and quality, age and income, etc.
• No spaces on the market map

  If there were no spaces left on the market map, it indicates that the market is saturated

  This means that there are no opportunities to exploit a market niche in the market

  Competition is likely to be high and profits low
• Existence of space on map

  • ay indicate the existence of a market niche
  • This needs to be researched carefully before the business commits, e.g. it looks like there is a gap in the market in high price / low quality area in the map above
  • This gap does not represent a worthwhile market as the business would find it impossible to build and maintain a loyal customer base
• Usefulness of market mapping

  • Market gaps can be identified which may enable a business to come up with ideas for new products
  • Comparisons can be made between a business’ products and those of its rivals - where are the business’ products positioned about its rivals?
  • Market maps are simple to construct and offer a visual illustration of the position of a product in the market
• Limitations of market mapping

  • A gap in the market may exist because it is not profitable to fill
  • Mapping a market may require primary research, which can be expensive
  • Only two criteria can be chosen, which may prove too simplistic
  • Markets are often dynamic and a market map only provides insight at a specific point in time
• Competitive advantage

  • refers to the features of a business and its products that are perceived as superior to its rivals by customers.
  • t is how a firm’s product is made both distinctive and defensible
  • Distinctive means that it is different from the competitors
  • Defensible means that the business can prevent competitors from copying it
• Methods of adding value

  • innovation, reputation (branding)
  • building strong relationships with stakeholders
  • adding value
  • differentiation
  • market segmentation
  • price leadership
• Purpose of product differentiation

  • involves creating functions or features of the product (or firm) which help it to stand out from competitors
  • Strong product differentiation helps firm develop competitive advantage.
  • often helps firm to create unique selling point for product, which can be used in marketing.
  • may be tangible (clearly visible) or it may be a perception that is created about the product in the consumer's mind.
  • helps the business to increase demand for its products, increase brand loyalty and allow the business to charge higher prices
• Adding 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
• Methods of adding value

  • Marketing and branding
  • Building brand identification and customer loyalty to the brand allows the firm to charge a higher price for its products, thus increasing the added value
  • Functions and features
  • Adding unique features allows the firm to charge a higher price for its products, thus increasing the added value
• Methods of adding value

  • Customer serviceBusinesses that ensure they have a good reputation for customer service can charge a higher price for their products, thus increasing the added value
  • CustomisationAllowing customers to design or create their products allows the firm to charge a higher price, thus increasing the added value
  • PackagingApple products are well known for their superior packaging, which creates an exciting opening experience for the customer. This allows the firm to charge a higher price for its products, thus increasing the added value