MARKETING MANAGEMENT BY KOTLER AND KELLER (12TH ED.)
LECTURE NOTES
Chapter10. CRAFTING THE BRAND POSITIONING
 Contents of the chapter; it explores specific ways of positioning and differentiation
 Importance of Positioning;
 No company can win if its products and offerings resemble every other product and offering,
 Companies must pursue relevant positioning and differentiation
 23% of Public TV’s has declined during 1993-2002, while the cable networks (Discovery, History
channels, Fox news,..) experienced 122% growth for the same period
 Developing and Communicating a Positioning Strategy;
 All marketing strategy is built on STP (Segmentation, Targeting and Positioning)
 Definition of Positioning; is the act of designing the company’s offering and image to occupy a
distinctive place in the mind of the target market, Table 10.1 shows how three companies defined their
value position given their target costumers, benefit and prices
 Competitive Frame of Reference; Deciding to target a certain type of consumer can define the nature
of competition, for example; in UK the automobile Association has positioned itself as the Fourth
“emergency service”- along with Police, Fire and Ambulance.
 This Framework that called “ Value Disciplines Positioning” is based on that in every market
there is a mix of three types of customers; -Product leadership –Operational excellence –
Costumer intimacy
 According to this framework a business should follow four rules to success
 Points-of- Parity and Points-of-Difference;
 Points-Of-Difference (POD); Strong, favorable and unique brand associations that based on
attributes or benefits consumers. Examples are FedEx (guaranteed overnight delivery), Nike
(performance), and Lexus (quality.
 Points-Of- Parity (POP); associations that are not necessarily unique to the brand, but may be
shared with other brands, consumers must feel that the brand does well enough on the
particular attribute or benefit. These types of associations come in two forms (Category and
competitive)
 POP versus POD
 Establishing Category Membership; marketers must inform costumers of a brand’s category
membership (cosmetics as Maybelline, consulting firm as Accenture, digital cameras as Sony, Olympic
and Kodak…).
 Three main ways to convey a brand’s category membership;
1- Announcing category benefit; fundamental reason for using a category
2- Comparing to exemplars; well-known, noteworthy brands in a category can also be used
to specify category membership
3- Relaying on the product descriptor;
 Choosing POPs and PODs;
 There are three key consumer desirability criteria for PODs
1- Relevance; target consumers must find the POD personally relevant and important
2- Distinctiveness; target consumers must find the POD distinctive and superior
3- 3-Believability; target consumers must find the POD believable and credible
 There are three key deliverability criteria;
1- Feasibility; The firm must be able to create the BOD
2- Communicability; Consumer must be given understandable rationale and reason as to why the
brand can deliver the desired benefit.
3- Sustainability; It depends on internal commitment and use of resources as well as external
market forces.
 Creating POPs and PODs;
 The common difficulty in creating a strong competitive brand positioning is that the attribute
and benefits that make up the POP/POD are negatively correlated (see table 10.2)
 Writing a positioning statement;
The statement should follow the form; To (target group and need), Our (Brand), is (concept)
that (point-of-difference)
1
 Present Separately; to launch two different marketing campaigns to addressing negatively correlated
attributes and benefits. Example Head & Shoulders shampoo and its dual campaign in dandruff removal
and the appearance and beauty of hair.
 Leverage Equity of another entity; brands can link themselves to any kind of entity that possesses the
right kind of equity as a means to establish an attribute or benefit as POP or POD, “Borrowing equity”
Example, such as IBM and Compaq found that the Intel Inside co-op advertising program, resulted in
consumers seeking Intel-based computers.
 Redefine the relationship; is to address the negative relationship between attributes and benefits to
convince consumers that in fact the relationship is positive. Example, when Apple computers launched
by Macintosh its key POD was “user friendly” , then ran another clever campaign “the power to be
your best” in order to convince both personal and business users.
 Differentiation Strategies;
Marketers must start with the belief that anything can be differentiated and brands can be differentiated on
the basis of many variables. Example, the Dallas-based airlines that distinguished itself as a “fun” airlines,
another popular feature is the first come, first- served open seating.
 Product differentiation: Brands can be differentiated on the basis of different :
 Product and service dimensions
 Best quality that depends on product performance and choosing physical signs. Example, cars
manufacturers make sure that cars doors make a solid sound when they shut, as buyers usually
slam doors in showroom to test how the car built
 Personal differentiation: companies can gain a strong competitive advantage through:
 Having better trained staff (Example Singapore Airlines enjoys an excellent reputation)
 Characteristics of better trained people: (Competence, Courtesy, Credibility, Reliability,
Responsiveness, Communication)
 Channel differentiation: companies can achieve competitive advantage through the way they design
their distribution channels:
 Coverage
 Experience
 Performance
 Image differentiation: Identity and image need to be distinguished,
 Identity: is the way a company aims to identify or position itself or its product
 An effective identity does three things:
1- Establishes the product’s character
2- Conveys this character in a distinctive way
3- Delivers emotional power beyond a mental image
 Image: is the way the public perceives the company or its product
 Product Life-Cycle (PLC) Marketing Strategies;
 To say that a product has a life cycle should assert four things;
1- Has a limited life
2- Sales pass through distinct stages
3- Profits rise and fail at different stages of PLC
4- Products require different marketing, financial, purchasing and human resources strategies
in each life cycle stage
 Exceeding customer expectations (Consumer-Centered organization); three steps to do so;
1- Defining the customer value model
2- Building the customer value hierarchy; (Basic, Expected, Desired, Unanticipated)
3- Deciding on the customer value package
 Product Life Cycle (PLC);
 Most PLC curves are as bell-shaped (figure 10.1), this curve is divided into four stages;
1- Introduction; a period of slow sales growth as the product is introduced in the market.
2- Growth; a period of rapid market acceptance and profit improvement.
3- Maturity; a slowdown in sales growth, profits stabilize or decline because of increased
competition
4- Decline; sales show a downward drift and profit erode
 Style, Fashion, and Fad Life Cycle (figure 10.3);
 Style; is a basic and distinctive mode of expression appearing in a field of human endeavor,
style can last for generations and go in and out of vague.
2

Fashion; is a currently accepted or popular style, and pass through four stages (distinctiveness,
emulation, mass fashion and decline), the length of a fashion cycle is hard to predict
 Fads; are fashions that come quickly into public view and adopted with great zeal, peak early
and decline very fast, attract only those who are searching for excitement or want to
distinguish themselves from others
 Marketing Strategies; Introduction stage and the Pioneer Advantage
 Introduction stage; sales growth low, profit negative or low, promotional expenditures at
highest ratio.
 Pioneer Advantage; Most studies indicate that the market pioneer gains the most advantage,
to be first can be rewarding , but risky and expensive, to become late makes sense if the firm
can bring superior technology, quality or brand strength. 19 of 25 companies who were market
leaders in 1923 were still the market leaders in 1983.
 Distinguishing between Inventor;(first to develop patents in a new product category), Product
pioneer (first to develop a working model),and Market pioneer (first to sell in the new
product category)
 Pioneers should know when and how to initiate products and enter markets, (figure 10.4)
 Marketing Strategies; Growth stage
 The growth stage is marked by; a rapid climb in sales, early adopters like the product, new
consumers start buying it, new competitors enter.
 During this stage, firms use several strategies to sustain rapid market growth; (improve product
quality- add new models- enter new market segments- increase distribution coverage- shift
from product-awareness advertising to product-preference advertising- lower prices
 Firms in the growth stage face a trade-off between high market share and high current profit.
 Marketing Strategy; Maturity Stage
 At some point the rate of sales growth will slow
 This stage normally lasts longer than the previous one and poses big challenges to marketing
management.
 This stage divides into three phases; growth, stable and decaying maturing
 The sales slowdown creates overcapacity in the industry which leads to; competitors try to find
niches, increase advertising and consumer promotions, develop product improvements,
shakeout begins and weaker competitors withdraw
 Dominating the industry are few giant firms; a quality leader, a service leader, and a cost leader
 The issue facing a firm in a mature market is whether to struggle to become one of the “Big
three” and achieve profits through high volume and low cost, or to pursue a niching strategy
and achieve profits through low volume and a high margin.
 Market Modification;
 A company might try to expand the market for its mature brand
 Two factors that make up sales volume;
Volume= number of brand users x usage rate per user
 Number of brand users could be expanded by; converting nonusers, interring new market
segments, winning competitors’ customers
 Usage rate could be increased by convincing users to increase their brand usage through; using
the product in more occasions, using more of the product on each occasion, using the product
in new ways
 See the case study of AARP, the American Association for Retired Persons (50-59, 60-79, 70
and older ages)
 Product Modification;
Managers also trying to stimulate sales by modifying product’s characteristics through;
 Quality improvement; (new, plus, stronger, bigger, better, freshness..)
 Feature improvement; (size, weight, materials, additives, accessories)
 Style improvement; aims to increase the product’s esthetic appeal
 Marketing Program Modification;
 Product Managers might also try to stimulate sales by modifying other marketing program
elements; (Prices, Distribution, Advertising, Sales promotion, Personal selling, Services)
 Marketing Strategies; Decline Stage
3






Sales decline for number of reasons; ( Technological advances, Shifting in consumer tastes,
increased domestic and foreign competition
The decline might be slow as in the case of sewing machines, or rapid as in 5.25 floppy disks
Some firms withdraw from the market and those remaining may; reduce product, withdraw
from smaller segments, cut their promotion budget, and reduce prices
Five strategies in declining industries;
1- Increase the firm’s investment to dominate the market or strengthen its competitive
position.
2- Maintaining the firm’s investment level until the uncertainties are solved
3- Decreasing the firm’s investment level selectively by dropping unprofitable customer
groups, while strengthening the firm’s investment in niches
4- Harvesting (milking) the firm’s investment to recover cash quickly
5- Divesting the business quickly by disposing of its assets
The appropriate strategy depends on;
1- The industry’s relative attractiveness
2- The company’s competitive strength in that industry
Case study PITNEY BOWES, in 1996 and how it predicted that faxes would kill regular mail,
and e-mail would kill faxes and that all these technological advances combined would kill
Pitney’s profit. Its slogan became “Engineering the flow of communication”
 The Product Life-Cycle “PLC” Concept; Critique
 PLC concept helps marketers; interpret product and market dynamics, planning and control,
although useful as a forecasting tool
 Critics charge that marketers can seldom tell what stage the product is in
 It also focuses on what is happening to a particular product or brand rather than on what is
happening to the overall market (a Product oriented rather than a Market oriented)
Prepared by; Mohammad Hamad
Sarajevo March 2010
4