What is the competitive advantage that a product or a service has over the competitors? What makes it distinguishable from competitor’s products or services? One way to identify competitors is through a perceptual mapping. In a perceptual map, products are compared based on how customers view a set of comparable products on quality and cost. The perceptual map is derived from customer data measuring similarities among brands. Customers are asked to rate each pair of brands on a scale from similar to very dissimilar, which help find out how a product stands in comparison to competitors and decide whether to confront, compete, coexist or cooperate with them.
To be able to sustain in competitive advantage your products must be valuable for customers, not easy to imitate and profitable to sell. Successful products fulfill a high emotional value state, for instance OXO who evolved a single product called GoodGrips to a full line of products penetrating a significant market share. Motorola developed a major presence in the consumer product category with one new product, called the Talkabout.
In evaluating the value impact of these products, it is found that they were successful in communicating ‘values’ in key categories that connected them to their customers. Product positioning has an important role to play in product development. The product positioning refers to the set of features and value that is valued by the target customer audience, relative to competing products. It is about how you differentiate your product or service in the mind of your prospect.
When you position your product, especially in the established markets instead of creating products and services with distinctive advantage, the company can fall into trap of creating something, which is merely a duplication of the same product with identical characteristics. This is called a majority fallacy, which at the end often results in price wars.
Due to the changes of situation (in the market or internal organization) you may need to reposition your product or service and decide what direction going to move. It is not easy to do, especially when the company has something to lose, such as existing customers or other products.
Positioning is therefore an organized approach for finding a window in the mind of one’s prospect in order to position effectively over there a product against its main competitors. This system is based on the concept that communication can only take place at the right time and under the right circumstances. The mind accepts only that new information which matches its current state. It filters out everything else. In other words, positioning is a process by which a psychological “anchor” has been placed into the minds of prospects so that they come to choose one specific person or company over another. The task is however a complex one which explains why so many products attempts fail.
Cagan and Vogel argues that there are three key factors that must be present to guarantee the highest potential of success.
Ability to identify product opportunities. – As cultures continue to change, opportunities emerge for new products, which do not just solve existing problems but create possibilities for new experiences. Heightened understanding of the customer needs translated into actionable insights that define attributes. – These attributes serve as guides in developing products form and features that consumers quickly recognize as useful, usable and desirable. True integration of engineering, industrial design and marketing which respects and appreciates perspective of each discipline.
The identification of product opportunities should be the core force that drives companies that manufacture products, provide services or process information. A product opportunity exists when there is gap between what is currently in the market and the possibility for new or significantly improved products that result form emerging trends. A product that successfully fills a Product Opportunity Gap (POG) is perceived as useful, usable and desirable. Identifying a POG requires a constant sweep of a number of factors in three major areas; social trends (S), economic forces (E) and technological advances (T).
The social factors include family and work patterns, consumption patterns, health issues, politics, sports and recreation etc. The economic factors focus on income that people perceive they have, or that they expect to have, to give them purchasing power. The technology factors focus on direct and imagined results from new scientific discoveries in corporate, military and university environments.
The process therefore starts with a scan of what Cagan and Vogel call SET factors: Social trends, Economic forces, and Technical advances, which open opportunities for new products. For example, the retro trend (social), ample disposable income (economic), and new materials and processes (technology) opened an opportunity that Mazda capitalized on with its Miata sports car. SET factors change constantly, so they can lead to new insights that were not apparent before. Similarly, changing SET factors explain how products go out of fashion and even how a product can appear before its time.
The next step is to detect in the SET factors some Product Opportunity Gaps. These POGs are a discrepancy between what is currently available on the market and what the SET factors suggest. Discovering POGs is part science and part art. When found, they lead to product opportunities.
These SET factors generate opportunities for procuring new products that can have effect on the way people live their lives at any given moment. This goal is to create products and services by identifying emerging trends and to match that trend with the right technology and understanding of the purchasing dynamics.
Successful new products become necessary once they ‘hit’ the market, which when will become instantly desirable. Coca cola has been able to maintain its position as the leading soft drink for the entire century. Baby dolls hitting the children’s mind lasted decades. Hit factory in the field of music is another classic example. Once POGs are identified, the challenge become translating the POGs into the development of a new product or the significant modification of an existing product. Positioning maps shows how breakthrough products are differentiated from the competition.
The upper right quadrant of the map integrates the attributes of style and technology and adds a third dimension; Value. Style refers to the sensory and ergonomic elements of a product. It determines how well the product connects with the lifestyle of those in the target market. Technology refers to the functionality that enables the product to operate. It can include mechanical, electrical, chemical, or software and it includes materials and manufacturing choices as well. Finally, value is “the level of effect that people personally expect from products and services, represented through lifestyle impact, enabling features, and ergonomics, which together result in a useful, usable, and desirable product.” Useful means that the product satisfies a human need and is cost-effective, usable relates to ease of use, and desirable means that its attributes combine to make people want to own it.
Upper right products, services and companies merge style and technology in a way that creates strong customer value and promotes positive user experience. Strong brand, corporate values and connection to customer values lead to both short term and long term customer satisfaction. Many breakthrough products stay in the upper right through the constant injection of useful, usable and desirable features of the customer.
Each remaining quadrant contains products that emphasize only style, technology or low cost. Through the integration of the attributes represented in the upper right, breakthrough products meet the needs, wants and desires of customers resulting in increased sales, profit and brand equity. This integration results in the creation of breakthrough products that are perceived as having high value.
The positioning maps show how different products in the same category can be located in a matrix with style and technology as the two axes. The third dimension, value, primarily exists in the upper right quadrant where companies make a concerted effort to integrate style and technology by responding to the needs of the customers. While this approach can lead to increased cost in production, the cost can often be easily returned with interest by establishing a higher price for the product, increased sales, increased interest in the company’s product lines, or establishing or reaffirming a company’s brand recognition. People pay more for quality and value of they feel they connect to their goals and aspirations.
The Motorola Talkabout is an example of product that converted a core technology into a useful upper right product. Prior to Talkabout, there were generic short-range consumer walky-talkies with minimal features, lifestyle impact, and less attention to ergonomics in the lower left. Motorola’s core wireless communication technology, which was used for professional applications, was in the lower right. Motorola had to change the performance standards from its professional line to meet projected price points in the consumer market. When consumer’s felt the resulting quality is still much higher than the competitors, Motorola had to increase the amount charge for the product over what they had originally targeted. However through careful cost reduction, they still maintained a high profit margin on this highly successful product, which still meets the needs of the market.
Some products possess ideal characteristics which is the characteristics that the target market most desires ‘ideal’. The logic here is that whenever a group of consumers has a distinctive “ideal” for a product category, they represent a potential target market segment. A firm does well if its attributes (of the product) are perceived by consumers as being close to their ideal. The objective is to be “more ideal” than the competitors. Each product must provide some unique combination of new features desired by the target market. Instead of allowing the customer to position products independently, marketers try to influence and shape consumers concepts and perceptions.
Very Safe
| Lexus/infiniti
| Mercedes
| BMW
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Cheap————————————————–Expensive
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Very Unsafe
BMW repositions up to the left and due to the exchange rate, Lexus moves to the right. They reposition because of safety, affordability and the competitors include Infiniti, Lexus, Mercedes Benz and Aurora. Having said that, some of the conclusions related to the issues of Product Positioning can be summarily laid down as follows;
a. Product positioning refers to the decisions and activities intended to create and maintain a certain concept of a product in the customers’ minds. b. Marketers try to position a product so that it seems to possess the characteristics most desired by the target market. c. Product position is the result of customers’ perceptions of a product’s attributes relative to those of competing brands. d. Marketers sometimes analyze product positions by developing “perceptual maps.” These are created by questioning a sample of consumers about their perceptions of products, brands, and organizations with respect to two or more dimensions. e. Using a perceptual map, marketers can compare how consumers perceive their brands compared to ideal points representing customer desires. f. Positioning can be designed to compete head to head or to avoid it. Head-to-head positioning may be appropriate if the product’s performance characteristics are at least equal to those of competitive brands, if the product is priced lower, or even when the price is higher if the product’s performance characteristics are superior. Positioning to avoid competition may be best when the product’s performance characteristics do not differ significantly from competing brands, when the brand has unique characteristics, or when marketers want to keep a new brand from cannibalizing sales of their existing brands. If a product has been planned properly, its features and brand image will give it the distinct appeal needed. If buyers can easily identify the benefits, they are more likely to purchase the product. h. Evaluating the positions of existing products is important because a brand’s market share and profitability may be strengthened by product repositioning. i. Repositioning can be accomplished by physically changing the product, its price, its distribution, or its promotion.
A one concluding remark; In his book ‘Crossing the Chasm’, Moore says that there is a chasm between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). He argues that this is because visionaries and pragmatists have very different expectations. Moore attempts to explore those differences and builds from there to suggest techniques to successfully cross the “chasm”, by choosing a target market, understanding the whole product concept including positioning the product.
Reference
Cagan, Jonathan, and Vogel, Craig (2002) Creating Breakthrough Products, Innovation from product planning to product Approval. Upper Saddle River, NJ:Prentice Hall.
Cooper, Robert G. (2001) Winning at New Products – Accelerating the Process from Idea to Launch, Third Edition, Product Development Institute.
Kahn, Kenneth B. (2004) PDMA Handbook of New Product Development, Second Edition, John Wiley, New York.
McGrath, Michael E., Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times, McGraw-Hill, New York.
Ulrich, Kari (2000) Product Design and Development, McGraw Hill
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