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Chapter 9 Objectives

After reading Chapter 9, you will be able to:

Define differentiation and positioning and explainwhy they are important elements of marketing

strategy. Identify dimensions of differentiation and internet-

specific differentiation strategies.

Discuss how companies can position or reposition

themselves on the basis of attributes, technology,benefits, user category, relation to competitors,integrator capabilities, or reverse positioning.

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2009 Pearson Education, Inc.Publishing as Prentice Hall

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The J. Peterman Story

The J. Peterman Company is a classicexample of successfully combining cleverdifferentiation with powerful positioning.

The founder established his company as a breedapart from ordinary competitors.

Every item has a description that communicatesnostalgia and romance.

Visit www.jpeterman.com and discuss whatmakes their products unique.

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Kotler defines differentiation as the process ofadding meaningful and valued differences todistinguish the companys offering from the

competition. There are a number of differentiation

dimensions and strategies for their

accomplishment.

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Differentiation Dimensions

A firm can differentiate along 5 dimensions:

Product

Service

Personnel

Channel

Image

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Product line differentiation is an important e-marketing strategy.

Differentiation may include customization,

bundling, and attractive pricing of products. Internet sales may not rely as heavily on product

packaging and displays as do traditionalretailers.

Packages shipped to households may requireadditional packing materials not required in bulkcase shipments to wholesalers and retailers.

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Service Differentiation

Customer service can be enhanced by 24-hour customer feedback through e-mail andthe ability to respond more rapidly to customer

concerns. Home delivery of groceries, online banking,

and securities trading are becomingincreasingly popular.

Today such services supplement traditionalservices, but may someday replace them.

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Personnel Differentiation


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The internet allows companies to deliverproducts more efficiently.

Low-cost channels

Automated processesReduced dependence on personnel

Lower transaction cost

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The internet:

Is a location-free, time-free distribution andcommunication channel.

Functions as a communication channel forcompanies that provide product or serviceinformation online.

Serves as a transaction and distribution channel

for companies that conduct online commercialtransactions.

Becomes the entire distribution channel for digitalproducts.

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Image Differentiation

A company can differentiate itself by creating aunique experience online, called experience

branding.

Through experience branding firms can betterretain customers, target key segments, andenhance profitability.

Build-a-Bear extends its offline experience online. Some Web sites invite users to upload content

and comments, which gives them a competitiveedge.

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Differentiation Strategies

Trout and Rivkin proposed specificdifferentiation strategies common to offline andonline businesses:

Being the first to enter the market. Owning a product attribute in the mind of the

consumer.

Demonstrating product leadership.

Utilizing an impressive company history or heritage.

Supporting and demonstrating the differentiatingidea.

Communicating the difference.

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There are 6 differentiation strategies unique toonline businesses.

Site Environment/Atmospherics

Easy downloads, accurate and clearinformation, easy navigation.

Build Trust

Strong brand recognition.

Privacy policy.

Safe and encrypted payment process fortransactions.

Internet-Specific DifferentiationStrategies

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Efficient and Timely Order Processing

Pricing In the early days of the Web, companies

offered discounts as purchase incentives. Majority of firms today differentiate

themselves in other ways besides pricing.

Customer Relationship Management

Managing long-term relationships withcustomers.

Invite User-generated Content The key is to trust customers, listen, respond,

and learn.

Internet-Specific DifferentiationStrategies, cont.

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Positioning is the process of creating a desiredimage for a company and its products in theminds of a chosen user segment.

The e-marketers goal is to build a position onone or more bases that are relevant andimportant to the consumer.

Firms can position brands, the company, theCEO, or individual products.

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Product or service attribute

Technology positioning

Benefit positioning

User category

Competitor positioning

Integrator positioning

Bases and Strategies forPositioning

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Product or Service Attribute

May include features such as size, color,ingredients, speed, etc.

Amazons 1-click checkout process is an example

of a positioning attribute. iVillage allows users to build personalized mean

menus.

Tylenol does not sell online, but provides useful

one-to-one features for pain relief and healthinformation and Tylenol greeting cards.

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Technology Positioning

Positioning on the basis of technology showsthat a firm is on the cutting edge.

At Lands End, consumers can build virtual

models of themselves and try on virtual outfits.At American Airlines, customers can store seating

preferences and frequent flier accountinformation.

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Benefit Positioning

Benefit positioning is generally a strongerbasis for positioning because it answers theconsumer question: What will this

product/service do for me?Miller Lite offers software that can be used as a

social organizer.

On the Valvoline motor oil site, visitors can send

greeting cards, download racing screensavers,and sign up for newsletters.

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User Category

User category positioning relies on customersegments.

Kelloggs has an interactive site for children.

Yahoo! Groups hosts forums organized byspecific interests.

Eons is a social network for baby boomers.

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Competitor Positioning

Many firms position by benefits that provideadvantages over their competitors.

Companies may position themselves against:

An entire industry.

A particular firm.

Relative industry position.

I Cant Believe Its Not Butter margarinepositions itself against other margarines.

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Integrator positioning

Integrators provide everything a consumer needsin a particular product category, industry, or evenin general.

Consumers want convenience and one-stopshopping:

Martha Stewarts Web site brings together business

units in one place.

TheKnot.com offers everything to do with weddings.

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Integrator positioning, cont.


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We can expect to see more integratorpositioning in the real estate, lending, jewelry,and hospitality industries.

zipRealty uses software that reduces the agents'work.

LendingTree and HomeGain.com help brokersfind clients more cheaply and quickly.

Blue Nile sells an estimated $129 million ofjewelry that would require 116 retail stores.

Web travel agencies can move market share tohotels that give them discounts.

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Repositioning is the process of creating a newor modified brand, company, or productposition.

A company may enhance or modify a position,based on market feedback.

Yahoo! repositioned from online guide to Webportal.

Amazon repositioned from worlds largest bookstore

to Earths biggest selection.

Facebook now hosts many business page profilesand third-party applications.

RepositioningStrategies9-22

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