1.1.3 Market positioning

Market positioning

How a business aims to place its product or brand in the mind of consumers, relative to competitors, based on factors such as price, quality, and brand image

Market mapping

A diagrammatic technique that enables businesses to display the perceptions of customers.

Benefits of market mapping

• Market gaps can be identified

• Useful for analysing competitors

• Simple to construct and offer a visual illustration

Limitations of market mapping

• Just because there is a ‘gap’ doesn’t mean there is demand

• May require primary research to make, 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

An advantage that enables a business to perform better than its rivals in the market and this can be through a set of unique features of a business and its products

Distinctive

The product is different from those of competitors

Defensible

The business can prevent competitors from copying the product

Sources of competitive advantage

• Quality - higher quality leads to better customer satisfaction

• Design - stand out from competitors using packaging

• Delivery time - efficient, customer satisfaction, more sales, reliability

• Customer service - polite and helpful, customer loyalty

• Promotion - reach a wider demographic

• Economies of scale - lower cost means lower prices for customers

• Ethical stance

• Brand image & reputation

Product differentiation

An attempt by a business to distinguish its products from those of its competitors

USP

Something that sets a product apart from its competitor in the eyes if customers

Purposes of product differentiation

• Create a unique selling point - stand out from competitors

• Charge higher prices - unique, cant find it anywhere else

• Gain competitive advantage - hard for rivals to copy or replace, strengthens market position and increases market share

• Increase brand loyalty - leads to repeat purchases and stable customer base

Adding value

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 - creates awareness, builds strong reputation

• Product differentiation - makes a product stand out from competitors, reducing price competition

• Design - makes products more appealing

• Convenience - products that save time or effort are valued more by customers

• Customer service - excellent service increases satisfaction, encourages repeat purchases and strengthens reputation

• Customisation - tailoring to individual preferences makes customers willing to pay more

• Packaging - attractive, protection

• Functions and features - More useful or desirable, increasing its value

Added value

The extra features that may be offered by a business when selling a product, such as high quality customer service, which helps to exceed customer expectations