•
3 Market Positioning
Product & Market orientation
Market Mapping,
Market segmentation
Differentiation
Competitive advantage
Adding value
From the specification
a) Product/Market orientation
b) Market mapping
c) Competitive advantage of a product or service
d) The purpose of product differentiation
e) Adding value to products/services
To market a product a business must
through market research find out what
customers want and how much they are
prepared to pay.
Do all businesses find out what
customers want?
Market Orientation
Market orientation
Businesses develop products according to
customers needs and wants.
LOTS OF
MARKET
RESEARCH
Respond to
changes in
consumer
tastes
Market Orientation
Market orientation
How can a pen be improved to suit customer
needs?
Product Orientation
Product orientation
Businesses develop products to persuade
customers to buy. Innovative companies are
product orientated.
Do you agree?
New products not always a
success
SPOTIFY
Music
streaming
service
Launched in
2008
Swedish music podcast &
video streaming
Phenomenal
growth
Digital
platform
1. Outline 2 ways Spotify
can be seen as a market
orientated business. (4)
Users listen
to 30million+
tracks few $$
per month
Market or Product?
•
•
•
•
•
•
Nature of product
Policy decisions
Nature & size of market
Competition
Views of owners/managers
Costs
Evaluation of product v
market
• Trend towards market – limitations
• $$$ (resources)
• R & D of innovative product = success
• Read pg 20-21 advantages & disadvantages
TASK/hmk
• Read hand-out (chapter 3 pg 20-21)
• Discuss Activity 1- questions 1,2,3
• Read about Market segmentation
• Learn all the different types & benefits/
drawbacks
• Answer Activity 3, pg 27
• One benefit of being product orientated is that Sun
Pharmaceutical Industries can concentrate solely on
the development of new, high-quality drugs and
medicines. It does not have to ‘waste’ resources on
expensive market research, promotion and advertising.
For example, once a new medicine has been
developed, perfected and tested, Sun Pharmaceutical
Industries knows that the market already exists. Also,
since the product will be new on to the market, sales
are almost guaranteed. Sun Pharmaceuticals can also
obtain patents on new products, which prevent other
companies from copying their new drugs. This means
they will have no competition for a period of time.
MARKET MAPPING
Starter
• Mars Bar
• In teams come up with as many new product
ideas for dairy milk as you can in 3 minutes:
MARS
• Who would have dreamt in the late 1980s that you could transform
chocolate bars into ice creams?
• The market for confectionery ice cream did not exist at the
beginning of 1988. Today it is the fastest growing sector of the ice
cream market.
• In 1994 the total market for ice cream was worth £908 million.
projected to be worth about $54.7 billion in 2016.
https://www.statista.com/statistics/326315/global-ice-cream-marketsize/
• It is in this market's fastest growing sectors that the confectionery
manufacturers Mars and Nestlé are having the biggest impact.
•
http://www.mars.com/uk/en/brands/chocolate.aspx
Market mapping
• In order to identify a gap in the market, it may
be useful for a business to construct a diagram
of where competitors are on two axis (for
example price and quality):
Premium
Price
•Jimmy Choo
•Ugg
•Nike
Functional
Luxury (a
treat)
•Clarks
Budget
Price
•Primark
What is market mapping?
• Read hand-out & pg in book
• Try the cadbury’s task at Market mapping
• A perception from customers point of view
(not business). The customers make the
decisions. (position map)
• So how do customers perceive value?
While you think….
Back to the Market Map…
Turkish Delight Milk Tray Cadbury Snaps Mars Dairy Milk
Smarties Crunchie Maltesers Twix Snickers Galaxy Kit Kat
Cadbury’s Caramel Cadbury’s Celebrations
Luxury Chocolate
12
13
11
1
Filling chocolate
2
14
10
Light chocolate
3
4
5
9
7
6
Everyday chocolate
8
Answers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Turkish Delight
Cadbury’s Caramel
Cadbury’s Dairy Milk
Snickers
Twix
Mars
Kit Kat
Smarties
Maltesers
Galaxy
Celebrations
Milk Tray
Cadbury Snaps
Crunchie
Answers – Perceptual map for cars
What does this map show?

Mars is good at filling, everyday
chocolate



Snickers
Twix
Mars
But people are worrying about
their weight, and so are
buying…
Did you get it?

They are buying
e.g.



Lighter chocolate
Crunchie
Maltesers
Cadbury Snaps
The idea of market mapping is to identify gaps, to show
where a sector is overcrowded, and to stop a producer
becoming over-reliant on one sector.
Mars is very strong in the filling everyday sector (Twix, Mars
and Snickers), but this is a declining sector as people worry
about their weight. So the 1990s launch by Mars of
Celebrations was a clever move.
Thinking time…Is there room for a new
chocolate product??
 Is
there room for something
new in the market?
 What could it be?
 Why would you launch it?
Using market mapping:
• For new businesses can help identify potential
gaps in the market.
• Or position new product in with the others
(SAFE?) – less risky but less profit
• Marketing manager can now focus on which
features of the product to market/ promote
more.
• If an existing brand, can help reposition itself –
maybe new advertising campaign/ restyle
packaging (rather than cost of new product)
Identifying Market Map Key Factors
 High
priced/low priced
 High quality/low quality
 High Reputation/ low
reputation
 For the young/for the old
 Modern/traditional
 For men/for women

Companies decide on the “right” factors after careful
TASK
• ACTIVITY 2 – PG 23
• Advantages & Disadvantages of market
mapping (add to hand-out)
• Present .
• Read hand-out – evaluation together
Can you?.....
• identify how market mapping might be used
by a business
• Advantages & disadvantages of using market
maps to a business
Lesson Objective 2
 To be able to identify how market mapping might be used
by a business
 To analyse the advantages & disadvantages to a business of
using market mapping
 To be able to describe how a business could gain
competitive advantage
 To be able to discuss the purpose of product differentiation
 To be able to identify ways that a business can add value to
products or services
 To be able to answer exam questions based on the topic
area
TASK
• IN GROUPS, YOU WILL BE GIVEN A BUSINESS
SITUATION.
1. HOW WILL YOU DIFFERENTATE YOURSELF
FROM YOUR COMPETITORS?
2. WHAT WILL YOU DO TO GAIN A COMPETITIVE
ADVANTAGE?
3. WHAT IMPLICATIONS WILL THIS HAVE ON
YOUR BUSINESS? (+ & -)
Business TASK
1.
2.
3.
4.
Hair salon
Italian restaurant
Bakery
Furniture store
1. HOW WILL YOU
DIFFERENTATE YOURSELF
FROM YOUR
COMPETITORS?
2. WHAT WILL YOU DO TO
GAIN A COMPETITIVE
ADVANTAGE?
3. EXPLAIN HOW YOU WILL
ADD VALUE.
Competitive advantage
• Competitive advantage is an advantage that
enables a business to perform better than its
rivals in the market
Competitive advantage
•
•
•
•
•
•
•
•
•
product design (a feature, look, function)
Product quality (high quality = high price)
Promotion (persuasive advertising, creative promo)
Customer service (high quality service)
Delivery times (speed)
Ethical stance (fairtrade, environmental)
Flexibility (change design, speedier production)
EOS (produce at low cost = lower price)
Focus on a particular market segment (different)
Product differentiation
• Where a product is different from the
competition in some way.
• Consumers must be able to perceive this
difference and may be willing to pay a
premium price for the product.
Bugatti veyron – website
here which outlines its
features, including 1200
bhp (average car is about
104)
Article of cost of a Veyron here
Methods of differentiation
• Flexible pricing (perception of price)
• Recognition (different – packaging)
• Extend product range (appeal to different
tastes)
• Brand development (strong brand)
• Overcome competition (increase market
share)
Adding value
• Offering extra features when selling a product,
such as high quality customer service, which
helps to exceed customer expectations
Adding value
•
•
•
•
•
•
Bundling
Customer service
Speed of response to customers
Packaging
Frequent buyer offers
Customisation
However….
• IN order to differentiate, if your business is
providing a better service because of xyz
• Then costs may rise, so prices to customers
rise, so customers who have low disposable
incomes may choose not to purchase your
product/service.
Benefits of adding value for a
business
1.
Can charge a higher price – increase profit
2.
Protection against competitors offering lower
prices
3.
Customer loyalty, repeat business
4.
Focus more on target market – meeting needs
of customers more effectively
5.
Differentiate a product and gain a competitive
advantage
Input for handbags
Radley have added
value to leather, these
bags cost £300
Evaluation - think about….
• Value-added might not be important to all
customers, particularly during a recession or in
areas where disposable incomes are low in which
case low value added is likely to be necessary as
this will enable low prices to be charged.
• For some customers - with higher income &
luxurious lifestyle a recession may not effect their
decision to continue purchasing a particular
product/service.
Adding value
• Design – develop new technology/design features to
make their product unique (differentiation advantage)
• Production – achieving quality and efficiency adds value.
– Quality will ensure a higher price can be charged (differentiation
advantage)
– Efficiency helps cut costs of the input (cost advantage)
• Marketing – creating an image that makes the product
more desirable, a brand differentiation advantage)
• Service: - eg. hairdresser: refreshments, top reputable
designer stylists, comfortable waiting area, massage
chairs.
Glossary
• Market mapping: Market mapping is about positioning
the products/service a business plans to provide
• Added value: value added is when a business chooses to
enhance the quality of a core product by providing extras to
improve a customer’s utility/experience
• Product differentiation: How a business differentiates
its products; through reputation, service, features or value
• Competitive advantage: An advantage a business has
over its competitors, allowing it to generate larger than
average turnover for the industry
Revision Video
Added value Revision
• http://www.tutor2u.net/business/reference/e
nterprise-adding-value
• http://www.tutor2u.net/business/reference/a
dding-value-and-the-transformation-process
Reading
• http://businesscasestudies.co.uk/masterfoods
/how-mars-transformed-the-ice-creammarket/#axzz4NW42lqUZ
• Information case study on Mars
Sample question 1
Market mapping:
Case study on next slide
This is a levelled question to get 5 or 6 marks
students will need to provide a two sided
argument and an evaluation
Case
study for
question
1
Answer question 1
Level
Marks
Suggested answer
4
5-6
Markets change because of changes in consumer tastes
and preference or incomes or because of new entrants, in
which case the variables which determine the product
positioning of cakes are no longer valid. EVALUATION PLUS TWO
SIDED ANALYSIS
3
3-4
Anna can make sure she prices her wedding cup-cakes
appropriately at the high-end of the market given the
endorsement by Vogue magazine. ANALYSIS (ONE SIDED)
2
2
Anna could use market mapping to compare her cup-cakes in
relation to rival bakeries APPLICATION (CONTEXT)
1
1
Market mapping is about positioning the products/service your
business plans to provide KNOWLEDGE (NO CONTEXT)
Sample question 2
Competitive advantage:
This is an 8 mark answer
Note it asks for two ways (4 marks per way)
Case study on next slide
Answer question 2
Level
Marks
per way
given
Suggested answer
4
4
However, if by providing a better quality experience through Shiatsu
massage chairs adds significantly to the price of the hair treatments,
then customers may be put off going to the salon when personal
budgets are tight/incomes fall because of
unemployment.
EVALUATION PLUS TWO SIDED ANALYSIS
3
3
Handmade sofas will make the client experience more
enjoyable which may therefore lead to customer loyalty
ANALYSIS (ONE SIDED)
2
2
Offering waiting clients Italian handmade sofas; wide range of hair
services available, David’s reputation
APPLICATION (CONTEXT)
1
1
How a business differentiates itself; by providing a better quality
service, value for money, customer after-sales care,
marketing, advertising (word of mouth)
KNOWLEDGE (NO CONTEXT)
Sample question 3
Added value
 Case study is on next slide
 8 marks, which means it’s a 4 level question and will need a
contextualised evaluation to get into 8 marks (Judgement
needs to be specific to this case study)
 Notice the question asks for ANY fold enterprise not just the
one discussed in the case study
Answer question 3
Level
Marks
per way
given
Suggested answer
3
5
For example because the customers at the Fold are quite
discerning or have higher disposable incomes and so more
likely to expect to buy a product which has been made with care
and attention
ANALYSIS (ONE SIDED)
2
3-4
For example when the chef at the ecoCafe prepares soups he/she
uses organically produced ingredients.
APPLICATION (CONTEXT)
1
1-2
For example value added is when a business chooses to enhance
the quality of a core product by providing extras to improve a
customer’s utility/experience OR changing inputs in a way that
consumers see as beneficial and attractive.
KNOWLEDGE (NO CONTEXT)
How to get level 4 –top marks
6-8 marks
Level 4
Marks
6-8
Such as that in order to ensure that customers continue to buy the
products it is important that they consider their purchases to
have been carefully crafted since it is not price competitiveness
which appears to be important but the nature of the product itself,
for example muffins at the ecoCafe are likely to be made with
fair trade bananas. However, value-added might not be
important to all customers, particularly during a recession or
in areas where disposable incomes are low in which case low value
added is likely to be necessary as this will enable low prices to be
charged.
EVALUATION PLUS TWO SIDED ANALYSIS
Q4
(a) When Sue Wragg opened up her hair salon in the Mailbox
shopping mall in Birmingham, she considered a number of ways
to add value.
Which one of the following is least likely to add value for Sue’s
clients?
A Creating a website for supporting clients’ on-line bookings
B Furnishing the waiting area with leather sofas
C Increasing prices
D Providing magazines and refreshments for clients
Answer __________ (1)
(b) Explain why this answer is correct.(3)
Answer q4
a. C
b.- Definition of adding value (1) –when a business
chooses to enhance quality of a product by proving
extras to improve a customer’s utility/ experience or
changing inputs in a way that consumers see as
beneficial and attractive.
- Prices increase of hair cuts may increase revenue for(
Sue 1 mark) but not customer value /experience at the
salon(1)
- Websites, sofas, magazines and refreshments are for
the direct benefit of the customer (1)
Q5
Analyse one reason why it might be important
for Fraser to differentiate his business. (6)
Answer q5
Knowledge: 1 mark for defining differentiation, e.g.
distinguishing your product or service (1 mark) OR identifying a
reason, e.g. similar products/businesses already exist; gives
competitive advantage; to sell more products/increase sales
volume (1 mark)
Application: 1 mark for applying in context, e.g. the jams are
made from super fruits such as cranberries/with fruit juice not
Sugar (1 mark)
Analysis: up to 2 marks are available for identifying cause and
consequence/expanding, e.g. in order to gain a competitive
advantage (1 mark) which should help increase sales of jam
because this is something that rivals may not do (1 mark)
NB allow 2 marks if 2 separate analytical comments are made.
See examiner comments for more detailed answers.
Revision resources
• https://www.tutor2u.net/business/reference/
marketing-segmentation-targetingpositioning-video