Market mapping – what does this mean? Key topic Market mapping – what does this mean?

Market Positioning links closely with: Marketing Strategy Niche & Mass Markets Competitiveness Market Research Marketing Mix Adding Value

How Businesses Use Marketing to Create Value for Customers 1. Choose which customers to serve Market segmentation (parts of a market) Targeting (segments to enter) 2. Decide how to serve those customers Product differentiation (what makes it different from the competition) Marketing positioning (how customers perceive the product)

The Marketing (Positioning) Map A market (or positioning) map illustrates the range of “positions” that a product can take in a market based on two dimensions that are important to customers

Some possible “dimensions” of a market map Low price High price Basic quality High quality Low volume High volume Necessity Luxury Light Heavy Simple Complex Unhealthy Healthy Low-tech Hi-tech

Example of a Market (Positioning) Map High Quality Low Quality High Price Low Price

Draw your own for a market of your choice

Market Mapping Helps to spot a gap in the market Pros Cons Helps to spot a gap in the market Useful for analysing what competing companies are doing Encourages companies to carry out more market research Very subjective – consumers have different perceptions Just because there is a gap in the market it doesn’t guarantee success Also just because there is a gap in the market there may be no demand.

Positioning & Competitive Advantage Customers choose products based on the value proposition Providing superior value than the competition is a source of competitive advantage (if it can be sustained) There are various possible value differences which can deliver competitive advantage

Product Differentiation Product differentiation arises when customers perceive a distinct difference between your product and the alternatives provided by competitors

Purpose of Product Differentiation Positioning v Competition Source of competitive advantage Ideally hard to copy Protect and Build a Brand Build intangible value Strengthen customer loyalty Add More Value Strong differentiation should allow a higher price Higher profit margins

Product Differentiation by Offering a Unique Selling Point (“USP”) A source of competitive advantage Helps make demand more price inelastic Should lead to higher profits USP = something that sets a product apart from its competitors in the eyes of customers, both new and existing

Requirements for Effective Product Differentiation What do we think?

Examples of Highly Differentiated Products (1) Fairy Liquid 60% Market Share in the UK Trusted household brand for 120 years Key point of differentiation: “It lasts longer…” Premier Inn UK’s largest hotels business Targets 75,000 rooms by 2018 Key point of differentiation: “A great night’s sleep - guaranteed”

Examples of Highly Differentiated Products (2) John Lewis / Waitrose Both in top 10 for UK customer satisfaction Key point of differentiation: “The partnership difference” – i.e. people First Direct The UK’s first – and most recommended online & telephone bank Key point of differentiation: Banking satisfaction guaranteed

Why is differentiation important?