Competitive Market Analysis

Competition-Based Pricing

-Pricing influenced primarily by competitors' prices -Competitors' price represents the company's pricing anchor -Importance increases when competing products are relatively homogeneous -May necessitate frequent price adjustments

Customer-Based Pricing

-Pricing to capture customers' perceived value; -The key is to deliver more value than your competitor -Customers pay a higher price when demand for a product is strong and and a lower price when demand is weak. -Effectiveness depends on marketer's ability to estimate demand accurately.

Importance of Positioning

-Represents the key strategic framework for a company's communication campaign on behalf of the brand. -Drives consumer choice by linking a brand name to certain desired benefits.

Important Observations

-When demand is elastic, a decrease in price will result is an increase in the revenue (sales). -When demand is inelastic, a decrease in price will result is a decrease in the revenue (sales). -When demand is unit-elastic, an increase (or a decrease) in price will not change the revenue (sales).

Factors limiting pricing flexibility

1. Company's cost structure 2. Price sensitivity (e.g., elasticity of demand) 3. Stage in the PLC 4. Competitive intensity 5. Power of buyers/suppliers

The Law of Contraction

A brand becomes stronger when you narrow its focus.

Purpose of a Brand

A brand embodies the organization's promise to consistently deliver a specific set of features, benefits and services to the buyer. If the brand cannot influence choice, it is not a brand; it is just a corporate identity." Functionally, a brand is a competitive differentiator that does three things: -Helps you gain market share at prevailing prices -Helps you maintain market share at a premium price -Helps you claim a premium price for your products and your stock

The Law of Consistency

A brand is not built overnight. Success is measured in decades, not years.

The Law of the Word

A brand should strive to own one word in the mind of the consumer. That nobody else owns.

The Law of Color

A brand should use a color that is the opposite of its major competitor.

The Law of Shape

A brand's logotype should be designed to fit the eyes. Both eyes (i.e., be horizontal and legible)

Value Position

A cogent reason why the target market should buy the product. A unique selling proposition

Positioning: from a Consumers' Perspective

A composite perception of the meaning of a brand...When considering the market as a whole

The Law of Category

A leading brand should promote the (very narrow) category, not the brand.

Brand

A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers.

Under-positioning

A positioning error referring to failure to position a company, its product or brand.

Over-positioning

A positioning error referring to too narrow a picture of the company, its products or a brand being communicated to target customers.

Product

A product represents the translation of benefits wanted into a tangible product, which is then augmented by a set of services to develop a total product package that better fits the needs of the target market.

MULTIDIMENSIONAL SCALING PROS AND CONS

ADVANTAGES Does not require that product attributes be specified. Allows flexibility for customers to reveal perceptual dimensions. DISADVANTAGE Judgment needed to interpret perceptual dimensions

Cost-Based Pricing

Adding a dollar amount or percentage to the cost of the product

Positioning: from a Firms Perspective

Attempting to associate your brand with marketplace characteristics...So as to create a perception of the brand that is considered by consumers to be attractively distinct.

The Law of the Company

Brands are brands. Companies are companies. There is a difference.

The Law of Change

Brands can be changed, but only infrequently and only very carefully.

Repositioning

Changing consumers' perceptions of a brand in relation to competing brands.

Elements of a Product

Core Benefit, Features, Packaging, Other services

Elasticity Levels

E > 1 = Elastic E < 1 = Inelastic E = 1 = Unitary elastic

The Law of Fellowship

In order to build the category, a brand should welcome other brands. But not too many.

The Law of the Name

In the long run, a brand is nothing more than a name. One of the most important branding decision you will ever make is what to name your product or service.

Reference Pricing

Individuals make judgments and choices based on a comparison of the observed price to reference prices. -Consumers rely heavily on past prices and competitors' prices when forming reference prices. -Consumers are more sensitive to prices above rather than below the reference price.

Confused Positioning

Leaves consumers with a confused image of the company, its product or brand.

Implausible Positioning

Making claims that stretch the perception of the buyers too far to be believed.

The Law of Mortality

No brand will live forever. Euthanasia is often the best solution. Brands are born, they grow up, they mature, and they eventually die.

The Law of Advertising

Once born, a brand needs advertising to stay healthy.

The Law of the Generic

One of the fastest routes to failure is giving a brand a generic name.

Identify the Relevant Set of Competitors

PP Step 1. Typically done at the product category level. Units of analysis are typically brands.

Identify Determinant Attributes

PP Step 2. Which attributes/benefits are important? Product feature Consumer benefit Price/quality Use/application Lifestyle Which attributes/benefits are most important?\

Determine Consumers' Perceptions

PP Step 3. Involves market research Typically oriented around perceptual maps An attempt to determine which attributes are "owned" by competitors

Evaluate Positioning Opportunities

PP Step 4. A strategic positioning should be: Succinct Clear Memorable Believable Synergistic with the target market Made prior to making marketing mix decisions

Select a Position

PP Step 5. Match preferences of the target market. Take into account the current positions of competing brands. Remember the goal is to create a perception of the brand that is considered by consumers to be attractively distinct.

Elasticity Measure

Percentage Change in Quantity Ep = __________________________________________ Percentage Change in Price

The Law of Quality

Quality is a perception; Resides in the mind of the buyer. Quality is important, Build quality by following the laws of branding

Positioning

The act of designing the company's offering and image to occupy a distinctive place in the mind of the target market.

Price

The amount of money for which something is offered for sale. Where strategy meets the Real World

The Law of Publicity

The birth of a brand is achieved with publicity, not advertising

The Law of Extensions

The easiest way to destroy a brand is to put its name on everything. When your customers are not exactly rushing out to buy your product, why would you need more brands to satisfy those customers? Logic suggests you would need fewer brands.

RSQ

The index of fit, (like an R-square) is a squared correlation index that indicates the proportion of variance that can be accounted for by the MDS procedure. (Values of 0.60 (60%) or better are considered acceptable).

Marketing Mix

The mix of controllable marketing variables that the firm uses to pursue the desired level of sales in the target market.

The Law of Singularity

The most important aspect of a brand is its singularity. What's a brand? A singular idea or concept that you own inside the mind of the prospect. It's as simple and as difficult as that.

The Law of Expansion

The power of a brand is inversely proportional to its scope. Expand the Market not the Brand.

The Brand Blueprint

The procedure for constructing and communicating a brand's identity

Branding

The process of systematically and strategically transforming your organization into a BRAND with all of the benefits that true BRANDS enjoy: -Higher revenues -Higher customer loyalty -Higher efficiency -Respect and recognition

Odd-End Pricing

The use of odd numbers (e.g., $1.99, $19.95, $5,995) are perceive to be significantly lower than the conveniently, yet slightly higher round numbers they approximate (e.g., $2, $20, $6,000)

The Law of Borders

There are no barriers to global branding. A brand should know no borders.

The Law of Siblings

There is a time and a place to launch a second brand. You want to make each brand as different and distinct as possible.

Break-even in Dollars

Total fixed costs -------------------------- Contribution Margin

Break-even in Units

Total fixed costs -------------------------- Contribution per unit

The Law of Sub-Brands

What branding builds, sub-branding can destroy (or at least dilute).

Multidimensional Scaling

a class of procedures for representing perceptions of respondents spatially by means of a visual display.

Perceptual Map

a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands and then take marketing actions.

Stress Values

are also indicative of the quality of MDS solutions. While R-square is a measure of goodness-of-fit, stress measures badness-of-fit, or the proportion of variance that is not accounted for by the MDS model. Stress values of less than .10 (10%) are considered acceptable.