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.
