Bases of Differentiation

1
Bases of Differentiation

• Features characteristics that supplement a
  products basic function
• - bare bones model
• - optional features
• Continuously introduce new features
• - Japanese electronics manufacturers
• - Contact recent buyers - Survey
• - Value to customer vs. cost to firm tradeoff

2
Quality

• Strategic Planning Institute (SPI) found a
  positive correlation between Quality and ROI. In
  a study of 525 units,
• ROI
• Low Quality 17
• Medium Quality 20
• High Quality 27
• Benefits of Quality - Premium price
• - Repeat purchase
• - Loyalty
• - Positive word of mouth

3
Types of Quality

• Performance quality
• Conformance quality
• Reliability Maytag
• Durability Volvo has highest mean life
• Repairability - Caterpillar

4
Design and style

• Style - How well the product looks and feels to
  the buyer.
• - Packaging of cosmetics
• - Jaguar
• - GM hired Pinifarina, an Italian designer, to
  design the Allante
• - Herman Miller - office furniture
• - Olivette - office machines
• - Swatch - watches
• Design - Integration
• - Italian design - apparel and furniture
• - Scandianvian design - functionality aesthetic
• - German design - austerity and robustness
• - Braun - design, engineering, and
  manufacturing
• - Bang and Olufsen - stereo and television

5
Services

• Delivery - speed, accuracy, care
• - Deluxe Check Printers - shipped in one day
  after order
• Installation - IBM delivers all equipment to the
  site at same time.
• - IBM moves competitors equipment as
  well.
• Customer training General Electric
• - McDonalds employees attend Hamburger
  University
• Consulting - McKesson Corporation - 12,000
  independent pharmacists.
• Helps set up accounting and inventory systems

6
Personnel

• Competence - skill and knowledge
• Courtesy - friendly, respectful, and considerate
• Reliability - consistency and accuracy
• Credibility - trustworthy
• Responsiveness - quick response
• Communication - make effort to understand and
  communicate
• McDonalds - courteous
• Singapore - beauty and grace
• IBM - professional
• Disney - upbeat

7
Brand and Image

• e.g., Marlboro Man
• Identity versus image.
• Identity - how companies aim to identify itself
  to its customers.
• Image - how an individual perceives the company

8
TIDE

• Is so powerful it cleans down to the fiber
• All purpose family detergent for extra-tough
  laundry jobs.
• Tides in, dirts out
• Great stain fighting qualities

9
CHEER

• Color Guard gives outstanding cleaning and color
  protection.
• Clothes look clean, bright, and more like new.

10
OXYDOL

• Contains bleach.
• Makes your white clothes really white and your
  colored clothes really bright.
• So dont reach for the bleach -- grab a box of
  Ox!

11
GAIN

• Originally PGs enzyme detergent
• Repositioned as the detergent that gives you
  clean, fresh smelling clothes
• Freshens like sunshine

12
BOLD

• Detergent with fabric softener
• Cleans, softens, and controls static with fabric
  softener scent

13
IVORY SNOW

• Ninety-nine percent and forty-four one hundredths
  percent pure
• Mild, gentle soap for diapers and baby clothes

14
DREFT

• Formulated for babys diapers and clothes.
• Contains borax - natures natural sweetener
• A clean you can trust.

15
DASH

• PGs value entry
• Attacks tough dirt
• Dash does it for a great low price.

16
ERA PLUS

• Built-in stain removers
• Gets tough stains out and does a great job on
  your whole wash too.

17
Positioning Why?

• 1. Over-communicated society
• - 30,000 books published
• - 10 million tons of news, 94 pounds/year/person
• NY Times (Sunday) - 4.5 lbs. 5 million words
• - Television - 13 hours/day
• 2. Product explosion
• 25,000 SKUs
• UPC - 10 digits
• 3. Advertising explosion
• Advertising spending in US is 376.62/year/person
  versus 17 for the rest of world

18
Developing a positioning

• What are the points of differentiation?
• Good points of differentiation should have the
  following characteristics
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
• Product needs a USP ( Unique Selling Proposition
  )

19
PositioningAl Ries and Jack Trout

• 1. Be the first - pioneering advantage
• 2. Strengthen current position
• - give a reason
• - Avis Were No. 2, we try harder
• - 7-Up The Uncola
• 3. Look for the hole Milky Way candy - lasts
  longer
• United Jersey Bank - fast moving bank
• 4. Deposition/reposition the competition
• Lenox/Royal Doulton - both from England
• Lenox made in New Jersey

20
Perceptual Maps

• How similar are each of the following brands?
• A-B 1 2 3 4 5
• B-C 1 2 3 4 5
• C-A 1 2 3 4 5

21
Mapping Methods in Marketing
Joint Space Maps

• Perceptual Maps

Preference Maps
Similarity-based methods Attribute-based methods
Ideal-point model(unfolding model) Vector model
External analysisusing PREFMAP-3 Simple joint
space maps using modified perceptual mapping
methods
Positioning8
22
Attributes of Laptops on a Perceptual Map
Common
Toshiba 1960CT
Easy setup
Slow
Performance
Light
Value
IBM 701 CButterfly
Elegant
Looks
The six attributes were measured on semantic
differential scales 1) SlowFast operation, 2)
PlainElegant, 3) EasyDifficult setup, 4)
PoorExcellent value, 5) LightHeavy, and 6)
CommonDistinctive.
23
Interpreting Perceptual Maps

• The arrow indicates the direction in which that
  attribute is increasing (The attribute is
  decreasing in the direction opposite to the
  arrow).
• The length of the line from the origin to the
  arrow is an indicator of the variance of that
  attribute explained by the 2D map. The longer
  this line, the greater is the importance of that
  attribute.

24
Attributes of Laptops on a Perceptual Map
(Plain)
Common
Toshiba 1960CT
Easy setup
Slow
Performance
Light
GoodValue
IBM 701 CButterfly
Elegant
Looks
25
Interpreting Perceptual Maps
Attributes that are both relatively important and
close to the horizontal (vertical) axis help
interpret the meaning of the axis. To position a
laptop on each attribute, draw an imaginary
perpendicular line from the location of the
laptop onto that attribute. (These are shown by
dashed lines on the map).
26
Perceptual Map of Beer Market (only Brands)

Old Milwaukee
Budweiser

Becks

Meister Brau
Heineken

Miller

Coors
Strohs

Michelob

Coors Light

Miller Lite

OldMilwaukee Light
27
Perceptual Map of Beer Market (Only attributes)
Heavy
Popular with Men
Heavy
Full Bodied
Special Occasions
Blue Collar
Dining Out
Premium
Good Value
Premium
Budget
Popular with Women
Pale Color
On a Budget
Light
Less Filling
Light
28
Perceptual Map of Beer Market (both products
attributes)
Heavy
Popular with Men
Heavy

Full Bodied
Old Milwaukee
Budweiser

Becks

Meister Brau
Heineken
Special Occasions

Miller
Blue Collar

Dining Out
Premium
Good Value

Coors
Premium
Budget
Strohs

Michelob

Popular with Women
Coors Light

Miller Lite
Pale Color

On a Budget
OldMilwaukee Light
Light
Less Filling
Light
29
Two Preference Models
Ideal-Point Preference Model
Vector Preference Model
IncreasingPreference
Preference
Preference
DecreasingPreference
Ideal Point
Attribute
Attribute
(eg, sweetness)
(eg, service speed)
30
Limitations of Preference Mapping

• Provides a static modelignores dynamics of
  customer perceptions.
• Interpretation is sometimes difficult.
• Does not incorporate cost or likelihood of being
  able to achieve a desired positioning.
• Does not incorporate a probability model to
  indicate goodness of a map.
• Generally, need about 6 to 8 products to make the
  technique useful.