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Differentiation Across the Consumption Chain - Market Segmentation, Targeting and Positioning
MARKETING MANAGEMENT - Market Segmentation, Targeting and Positioning
Differentiation Across the Consumption Chain - Market Segmentation, Targeting and Positioning
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A research finding suggests that there are one million branded products in the world today.
Differentiation Across the Consumption Chain
A research finding suggests that there are one million branded products in the world today. As a result, the market is increasingly competitive and confusingly crowded. For the customers, it means more choices than they know how to handle and less time than they need to decide. For the marketers, it is hyper-competition and continuous struggle to win the attention and interest of choice-rich, price-prone customers. The tyranny of choice for the buyers are represented by the following facts:
1. An average hypermarket stocks 40,000 brand items (SKUs)
2. An average family gets 80% of its needs met from only 150 SKUs
3. That means there’s a good chance that the other 39,850 items in the store will be ignored
The implication is that those that don’t stand out will get lost in the pack! The average customer makes decisions in more than 100 product/ service categories in a given month. He/she is exposed to more than 1600 commercials a day. Of this, 80 are consciously noticed and about 12 provoke some reaction. The challenge for marketers is: how to get noticed (i.e. differentiation) and be preferred (i.e. positioning)?
Most profitable strategies are built on differentiation (i.e.) offering customers something they value that competitors don’t have. A close look at consumer behaviour reveals that people buy on the differences. An ability to create compelling differences remains at the heart of a firm’s competitive advantage. The battle has always been (and still is) about differentiation - create winning differences in customers’ minds.
People pay attention to differences (though at different levels) and tend to ignore undifferentiated products. Here is an example of how Nike (the top-dog sports shoe brand) creates winning differences at cognitive, normative and wired-in levels in the buyer.
1. Cognitive (conscious decisions) Level
§ ‘I buy Nike because it’s made of engineered materials which enable higher athletic performance’
2. Normative
(semiconscious feelings) level
§ ‘I buy Nike because it’s “in” with my crowd’
3. Wired-in (subconscious determinants) level
§ (‘Nike appeals to my desire to be cool, fashionable, strong, aggressive …’)
Organizations use several differentiation dimensions. The most popular are product differentiation, service differentiation, personnel differentiation, channel differentiation and image differentiation.
Activity 1.6.5
Match the following brands with their chosen differentiation dimensions.
1. Apple’s iMac (with an innovative product design)
2. Honda’s bikes (In the US market, they did an image make-over for bike riders to differentiate from the image created by Harley-Davidson bike riders)
3. Singapore airlines (highlighting the ‘Singapore airlines girl’ is its campaign)
4. Dell computers (Dell becoming synonymous with Direct (channels) selling)
5. Cemex cement (using GPS to deliver ready-mix concrete just-in-time)
Most firms while seeking to differentiate themselves from the competition focus their energy only on their products and services. In a Harvard Business Review article, MacMillan and McGrath, advocate that a company has the opportunity to differentiate itself at every point where it comes in contact with its customers – from the moment the customers realize that they need a product or service to the time when they no longer want it and decide to dispose of it – that is, anywhere along the spectrum of the Consumption chain – from need recognition to product disposition. Based on this idea, some avenues for differentiation are listed below:
w How do
people become aware of their need for your product/service?
– If you can make consumers aware of a need in a way that is unique and subtle, that’s a powerful source of differentiation!
w How do customers find your offering?
– Opportunities for differentiating on the basis of the search process that is made less complicated, more convenient, less expensive and more habitual.
w How do customers order and purchase your product/service?
– Differentiating by making the process of ordering and purchasing more convenient
w How is your product/service delivered?
– Delivery affords many hard-to-duplicate opportunities for differentiation
w What happens when your product/service is delivered?
– An often overlooked opportunity between product/service delivery and usage; opening, inspecting, assembling are real issues for customers
w How is your product installed?
– Differentiation that is particularly relevant for companies with complex products
w What help do customers need when they use your product?
– Most helpful and fastest response gives a cut above the rest
w How is your product moved around?
– Addressing the difficulties experienced in transporting a product from one location to another
w How is your product repaired or serviced or exchanged?
– Differentiating by being proactive and practicing acceptance
w What happens when your product is disposed of or no longer used?
- Differentiation opportunities through Responsible marketing and Green Marketing
Activity 1.6.6
Think of how the petrol bunks have evolved over the years – starting from selling a commodity to marketing a branded product in landscaped locations! Is there a way to differentiate selling petrol?
A research finding suggests that there are one million branded products in the world today. As a result, the market is increasingly competitive and confusingly crowded. For the customers, it means more choices than they know how to handle and less time than they need to decide. For the marketers, it is hyper-competition and continuous struggle to win the attention and interest of choice-rich, price-prone customers. The tyranny of choice for the buyers are represented by the following facts:
1. An average hypermarket stocks 40,000 brand items (SKUs)
2. An average family gets 80% of its needs met from only 150 SKUs
3. That means there’s a good chance that the other 39,850 items in the store will be ignored
The implication is that those that don’t stand out will get lost in the pack! The average customer makes decisions in more than 100 product/ service categories in a given month. He/she is exposed to more than 1600 commercials a day. Of this, 80 are consciously noticed and about 12 provoke some reaction. The challenge for marketers is: how to get noticed (i.e. differentiation) and be preferred (i.e. positioning)?
Most profitable strategies are built on differentiation (i.e.) offering customers something they value that competitors don’t have. A close look at consumer behaviour reveals that people buy on the differences. An ability to create compelling differences remains at the heart of a firm’s competitive advantage. The battle has always been (and still is) about differentiation - create winning differences in customers’ minds.
People pay attention to differences (though at different levels) and tend to ignore undifferentiated products. Here is an example of how Nike (the top-dog sports shoe brand) creates winning differences at cognitive, normative and wired-in levels in the buyer.
1. Cognitive (conscious decisions) Level
§ ‘I buy Nike because it’s made of engineered materials which enable higher athletic performance’
§ ‘I buy Nike because it’s “in” with my crowd’
3. Wired-in (subconscious determinants) level
§ (‘Nike appeals to my desire to be cool, fashionable, strong, aggressive …’)
Organizations use several differentiation dimensions. The most popular are product differentiation, service differentiation, personnel differentiation, channel differentiation and image differentiation.
Activity 1.6.5
Match the following brands with their chosen differentiation dimensions.
1. Apple’s iMac (with an innovative product design)
2. Honda’s bikes (In the US market, they did an image make-over for bike riders to differentiate from the image created by Harley-Davidson bike riders)
3. Singapore airlines (highlighting the ‘Singapore airlines girl’ is its campaign)
4. Dell computers (Dell becoming synonymous with Direct (channels) selling)
5. Cemex cement (using GPS to deliver ready-mix concrete just-in-time)
Most firms while seeking to differentiate themselves from the competition focus their energy only on their products and services. In a Harvard Business Review article, MacMillan and McGrath, advocate that a company has the opportunity to differentiate itself at every point where it comes in contact with its customers – from the moment the customers realize that they need a product or service to the time when they no longer want it and decide to dispose of it – that is, anywhere along the spectrum of the Consumption chain – from need recognition to product disposition. Based on this idea, some avenues for differentiation are listed below:
– If you can make consumers aware of a need in a way that is unique and subtle, that’s a powerful source of differentiation!
w How do customers find your offering?
– Opportunities for differentiating on the basis of the search process that is made less complicated, more convenient, less expensive and more habitual.
w How do customers order and purchase your product/service?
– Differentiating by making the process of ordering and purchasing more convenient
w How is your product/service delivered?
– Delivery affords many hard-to-duplicate opportunities for differentiation
w What happens when your product/service is delivered?
– An often overlooked opportunity between product/service delivery and usage; opening, inspecting, assembling are real issues for customers
w How is your product installed?
– Differentiation that is particularly relevant for companies with complex products
w What help do customers need when they use your product?
– Most helpful and fastest response gives a cut above the rest
w How is your product moved around?
– Addressing the difficulties experienced in transporting a product from one location to another
w How is your product repaired or serviced or exchanged?
– Differentiating by being proactive and practicing acceptance
w What happens when your product is disposed of or no longer used?
- Differentiation opportunities through Responsible marketing and Green Marketing
Activity 1.6.6
Think of how the petrol bunks have evolved over the years – starting from selling a commodity to marketing a branded product in landscaped locations! Is there a way to differentiate selling petrol?
Tags : MARKETING MANAGEMENT - Market Segmentation, Targeting and Positioning
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