PRODUCT POSITIONING Internet Marketing Prof. Glen L. Urban Spring 2001

Understanding Customers Consumer Behavior B2C vs B2B Strategy Formulation Trust vs. Push Product Design Segmentation Positioning Customer Acquisition Advertising / PR/Selling Pricing & Promotion Distribution Channel Logistics Relationship Building Fulfillment Service

OUTLINE Positioning Versus Segmentation Positioning Example Analytic support for Mapping Does it Pay to be First? -- Order of Entry Theory Implications for Internet

B C A D B A E

POSITIONING GIVEN SEGMENTATION CBP DIMENSIONS COORDINATES FULFILLMENT UNIQUE POSITION SHARE/PROFIT

MAPPING STEPS Define category/segment Identify products that compete Attributes and features that differentiate Group attributes - perceptual dimensions Draw map Implications

CLASS EXAMPLE On Line Trading evoke -- dimensions --triad comparisions judgement for position preference vectors implications

POSITIONING ANALYSIS LEVEL I focus group customer contact inspect competition perceptual map -- judgment LEVEL II factor analysis preference vectors conjoint analysis LEVEL III simulation models

MAPPING INPUTS BILL -- M.B. 500 BILL -- HONDA BILL -- BUICK ELECTRA Luxurystyle reliable MPGperformanceDurability/resale qualitymaintainsafe

DATA COLLECTION lists –Zoomerang On Line Panels –NFO –Burke –Greenfield

FACTOR LOADINGS Dimensions Attribute Luxury Style Reliable M.P.G Safe Maintain Quality Durability & Resale Performance

Emotional Honda Lincoln Town Car Chrysler New Yorker Buick Riviera Cadillac Eldorado Rational Olds

Honda Lincoln Town Car Chrysler New Yorker Buick Riviera Cadillac Eldorado Rational Olds BMW Jaguar MB Emotional

Honda Lincoln Town Car Chrysler New Yorker Buick Riviera Cadillac Eldorado Rational Olds BMW Jaguar MB Emotional

ENGINEERING FEATURES PERCEPTION PREFERENCE

SURUGA EXAMPLE

Aim of Buyer Centric Idea Base Trust for Customer Construct business model of eCRM. Construct new services and products of eBusiness. Construct secure business with internet customers. Keyword for Success What shall Suruga do?

INTERNET STUDY? Talk to Customers -- Listen Study Competitors -- judgmental Map Focus Groups Budget study if VC -- Crowded Out There Active Role in Study

Internet Study STEPS BUDGET DEFINE TARGET MARKET DESIGN SURVEY ATTRIBUTE GENERATION STATISTICAL MAPPING Name Dimensions Number of Dimensions Coordinates of Brands Importance Vectors MANAGER’S ROLE $50k to $250K Be Sure Correct Segment Definition is Used Specify Decision Requirements Assure Completeness Input Judgment Examine Additional Dimension for Relevance Review for Reasonableness Decide on Number of Sub-group

Internet Study - Cont’d STEPS FEATURES SIMULATE IMPROVED POSITIONING MANAGER’S ROLE Select Features and Levels, Link to preference and/or Perception Be Sure Shift Can Be Achieved, Confirm with Concept/Product Tests

DOES IT PAY TO BE FIRST?

THEORY Determinants -- +/- –Memory -- Accessibility –Switching costs - risk and satisfaction –Learning about Market –Market Power - Share & Channel –Scale -- Production and Funds –Continuing Innovation –Standard Setting –Broader Product Line –Technology/Market window –Best Positioning? Empirical

ORDER OF ENTRY AND MARKET SHARE IN CONSUMER GOODS BUSINESS Average Market Share Pioneer29 Early Follower17 Late Entrant12 (371 SBU’s) Pioneer16%20%23%41%100% Early Follower41%24%19%16%100% Late Entrant56%25%12%7%100% Frequency Distribution for Market Share Less than & up Total

DATA 131 Brands 36 Categories Share - Last Purchases Order Advertising Preference

ORDER OF ENTRY 1ST2ND3RD4TH5TH6TH7TH Market Share

Strategic Implications Market Share Reward for Innovation If First: Position Well-Preempt Support - Advertising & Promotion If Second or Third: Premium Position Support - Advertising & Promotion Faster But Lower Innovate for Market Leadership -- But Risk

IMPLICATIONS FOR INTERNET Mapping -- Do It! –Listen /Focus Groups –Budget for Study in VC Segmentation and Positioning Strategy vs. Potential Competition -- Preempt Core Benefit Proposition -- Not Technology Establish with Features and Keep Innovating First In has Value –But Catch window –Have Best Position –Spend behind It