Friday, February 23, 2007

Segmentation, Differentiation and Positioning (Part 4 of a Series)


To truly understand marketing, a little psychology is in order. In fact, there is a whole segment of marketing studied under the title "Consumer Behavior." But we digress...

Unless we are marketing a completely new product, unlike anything anyone has ever thought about or seen - a rare occurrence, indeed - consumers already have some preconceived notions about whatever it is you are trying to sell them. Every consumer already has a perceptual map of sorts in his mind. Think about any product, and you naturally think about some of its characteristics. Some examples:

+ a McDonalds hamburger - cheap, not very healthy, greasy, fast

+ BMW - expensive, fast, powerful, handles well

+ Southwest Airlines - fun, inexpensive, fast, efficient

And so forth. Every one of the characteristics cited above can be thought of as lying somewhere on a horizontal line, somewhere between two extremes - or somewhere along a "dimension." Let's look at this graphically, using the easiest of all examples: price.

+ ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ---- +
free | inexpensive | moderate | somewhat expensive | expensive

Consider a product that has yet to be branded... (really NOT many left...) - electricity. Further, suppose you can select your electricity provider (as you can in California, for example). There is no difference between the electricity provided by one vendor and that provided by another save one single characteristic - price (since everything comes in off the same network, there are no differences in reliability). If we were to present a consumer with several providers of electricity, then, there would be only one way in which he could rank them - from least to most expensive - and he would most likely select the least expensive provider (unless he was a shareholder in one of the other utilities or had some other vested interest).

If we could slice open this consumer's brain and extract the small and insignificant segment of his mind used to think about electricity, we would find a perceptual map with one single dimension, just as the one I had created above. This map symbolizes the way that the consumer thinks about electricity. Corresponding to some of the characteristics along the price dimension, we would find the names of electricity providers, as follows -

The consumer has positioned each one of the utilities providing electricity in the only way that he can - using the price dimension. This is the only way that the consumer can differentiate between the different providers of electricity. "Utility A," therefore, is positioned in his mind as being cheap, while "C" is inexpensive and "B" is moderately priced.

What could we do, then, as marketers of electricity, to entice this consumer to switch providers? Sadly, unless we could introduce some new dimension into the mix, the only tool at our disposal is price. It is not surprising, then, that all of the utilities are "bunched" together - this means that they are very similar on this dimension. They are all positioned as relatively inexpensive. On a perceptual map, whenever products are close together, they are positioned in the consumer's mind as being very similar. It is important to note that, in reality, the products could be quite different - but they are positioned similarly. This is what is important to us as marketers.

In an ideal world, we could position our product on a one-on-one basis, based on the perceptions of every single consumer in the world. In reality, however, we typically can't - therefore, we draw up perceptual maps based on the target market segment we are trying to sell to. In effect, we average out the positioning across all relevant consumers. This provides us with some sense of how the products on the market are positioned in these consumers' minds.

Obviously, with price as the only relevant dimension there is little we can do to position our product - electricity - except play with the product's price. So, let's make this more interesting and add a second dimension. The second dimension in a perceptual map is orthogonal to the first - just like an 'X' and 'Y' axis are in algebra. Suppose that each of the three utilities above can now run individual lines to the consumer's home - they can now differentiate based not only on price, but also on reliability, or "uptime" - a characteristic that defines the percentage of time that we have electricity flowing. In the perceptual map that follows, I have added the dimension of reliability along the 'Y' axis -

The first dimension we had considered, price, is on the horizontal, or 'X' axis. Note that the positioning of the three providers along the dimension of price has remained identical to the one-dimensional perceptual map I had drawn above. 'A' is less expensive than 'C,' while 'C' is less expensive than 'B.'

The new dimension is reliability. The provider can be unreliable, or he can be very reliable - or he can fall anywhere in between these two extremes. On the map above, 'B' turns out to be positioned as most reliable - while 'C' is least reliable. 'A' is middle-of-the-road.

It is important to note that positioning does not necessarily correspond with performance - for example, utility 'B' may be advertising massively, in an attempt to position itself as the most reliable provider - although in reality it may not be significantly more reliable than either 'A' or 'C.' The perceptual map provides a picture of how the consumer thinks about the products in a specific category, and this may very well be different than what a scientific analysis of the characteristics of the products would yield.

As a marketer considering entry into this market - or as a marketer of one of the three existing utilities - I could now use the perceptual map to identify potential strategies. For example, it is clear that if I could position a utility as more reliable than 'B' but less expensive than 'C' I'd have a clear winner on my hands (a further analysis should clarify whether such a strategy would actually be profitable).

A graphical representation of a perceptual map is limited by our ability to render dimensions on paper (or on the screen) - we could add a third dimension to the above map, but we couldn't add any more. Sometimes, a fourth dimension can be discerned off of a three dimensional map by virtue of the clustering of some of the products. But typically, if you can't boil your map down to two or three dimensions, it's probably because you have yet to identify the most critical ones.

Questions? Comments? Why don't you post them?


Tuesday, February 13, 2007

Segmentation, Differentiation and Positioning (Part 3 of a Series)

Recalling the old adage, “If a tree falls in a forest, and there’s no one there to hear it, does it make a sound?” – the differences we design into a product will remain there even if no one is there to observe them. But positioning is different. A product is positioned, but it is positioned in the mind of the customer – therefore, unlike differentiation, without a customer – a product cannot be positioned. Yet the positioning that we as marketers communicate is supported by the differentiation we have created.

Al Ries and Jack Trout, in their seminal work, Positioning, write, "Consumers are like chickens. They are much more comfortable with a pecking order that everybody knows about and accepts." Marketers create that pecking order through positioning. Positioning is simply the strategy marketers employ in order to rank a product in the consumer's "pecking order." For another perspective on this, Engel and Blackwell write that positioning is the sum of "marketing strategies designed to influence the location of a brand or store in the minds of potential customers."

At its core, Positioning is mostly a communications strategy – as marketers, we use communications tactics to position our product in the mind of the consumer in a way that will maximize our profits from that product. Such communications may include tactics such as advertising, public relations, and guerilla marketing (for example, seeding and propagating word-of-mouth - communication tactics will be addressed later in the course). By repeatedly exposing the consumer to strong messages that are congruent with our positioning strategy, our product will come to occupy the desired position in the consumer’s mind.

The real challenge in positioning is selecting the core attributes of a product that will be most effective in encouraging consumer trial and, later, motivating brand loyalty. Such attributes are developed from the variables identified in the differentiation phase. The number of attributes used to promote a product varies. While some marketing experts advocate the use of a single differentiating attribute to position a product (known as a unique selling proposition, or USP), there is no golden rule. Consider, though, that given the barrage of messages consumers are exposed to, there is a very tangible limit to what they are likely to remember - by some accounts, consumers in urban areas are subject to as many as 15,000 messages daily. If you can define your product as clearly superior in its category based on a single attribute, your positioning messages will be all the more powerful.

To achieve such clarity in positioning, the attributes you select to highlight should leverage your product's competitive advantages. This is why differentiation is essential to successful positioning. Picking up on the cake mix example discussed in a previous note in this series, imagine you are trying to market a new kind of cake mix. Your cake may be very moist, but it seems that all cake mixes claim to produce moist cakes. Moistness, therefore, is not a differentiating attribute, nor is it a competitive advantage. Positioning your cake mix as "very moist" will not get you that unique space in the consumer's mind which you are trying to capture. Also, remember that some aspects of your product are simply not important to your customer - for example, the type of cardboard you use for packaging; however, that same cardboard may ensure that your product stays fresh longer, and freshness is probably something that is very important to your customer. Your positioning must leverage your product's competitive advantages while honing in on what is important to your customers.

Another important guideline to remember when developing a communications strategy to promote your product’s positioning is that the consumer is not stupid – if your car is not the fastest to accelerate from zero to sixty, don’t say it is. Your work should always be honest and ethical – your company’s most valuable asset is its reputation, and if consumers feel you are broadcasting deceiving messages, they will quickly migrate to competing brands as your reputation falters. While many marketing campaigns are short-term, you must maintain a long-term focus and not sacrifice the future for the present.


Feel like getting into the nitty gritty of positioning?

Try the following books:

Ries, Al, and Jack Trout. Positioning: The Battle For Your Mind. New York: McGraw Hill, 1981.

Porter, Michael E. “Chapter 4 - Differentiation.” Competitive Advantage. New York: The Free Press, 1985.


Engell, James F., and Roger D. Blackwell. Consumer Behavior. Chicago: The Dryden Press, 1982.

Kotler, Philip. Marketing Management - The Millennium Edition. Upper Saddle River, New Jersey: Prentice Hall, 2000.

Ries, Al, and Jack Trout. Positioning: The Battle For Your Mind. New York: McGraw Hill, 1981.

Sunday, February 11, 2007

The Genius of Superbowl Marketing

For several years now I've been tracking the genius of Superbowl marketing with my students. Here are some of the interesting sites and notes I've collected over time...

Tracking and voting on Superbowl commercials has become more fun than watching the game itself...

For the best coverage of Superbowl ads head over to

If you're looking for a reliable archive, iFilm has Superbowl Ads from 2002 to 2007; lots of other great features here such as Superbowl Classics as well as Banned Ads.

Most of us have fun with those ads, but some of us are downright critical...the New York Times thought this year (2007's) batch was too violent...

Experts never shy away from expressing their opinions on anything and everything, and Superbowl ads are no different. Here are some expert opinions on Superbowl ads then -

For the 2007 batch -

Businessweek's take on what the blogosphere has to say about the ads...

For 2006 ads:

Slate's take. (also links to commentary on 2004/2005 ads)

For 2003 ads:

Some more dribble from Businessweek.

And let's take a look at some of those top 10 lists -

Raw Prawn


(actually, those are the only two worthwhile listing here for you all)

btw, it's no longer just the Superbowl that's big business, hosting the superbowl has become a big business in and of itself.

Found some good Superbowl ad material? leave a comment.

Saturday, February 10, 2007

Segmentation, Differentiation and Positioning (Part 2 of a Series)


Differences between product offerings can be quite subtle. Some products grow to become so similar over time that the only differences between them remain differences that can be attributed to the marketing process – as an example, consider cake mixes. In fact, imagine that you are shopping for a specific cake mix, such as Devil’s Food Cake.

In a typical supermarket, you will find between two and four types of this cake mix: Duncan Hines, Betty Crocker, possibly Pillsbury and maybe a store brand or some other generic type of cake mix. How different can these cake mixes be? The consumer in this case will consider differentiation mainly among only two variables – brand and price. A cost-conscious consumer will opt for the cheapest alternative, while a more brand-loyal customer will select his favorite brand. But in every other way, such products are virtually identical.

Such a scenario is typical of mature products. Over the lifecycle of a product, competitors will continuously borrow the best features from competing products, so that after many years it becomes difficult to differentiate between products marketed by different companies. Brand and pricing become paramount to the continued success of such products.

Additional examples of such mature products that are difficult to differentiate include personal computers (how is a Dell laptop different from one marketed by HP?), ibuprofen (Is Advil more effective than Motrin?), and light bulbs (Is a 100 watt Sylvania any brighter than a 100 watt GE??) But when one considers introducing a new product to market, one seeks to develop a product in such a way that it will be superior to existing products – this superiority, resulting from differences in the new product, is what will create the motivation among consumers to try the new product (in combination with pricing, promotions and distribution, of course!).

While brand in and of itself can become a differentiator over time, trying to introduce a product to market based on brand-differentiation alone can be a risky proposition, as so many companies discovered during the boom and subsequent bust from 1998 through 2002. Branding is NOT a communications exercise...

What, then, is differentiation? Differentiation is simply the degree to which one product is different from other products in its category. For such differences to stand out, they must be meaningful. Differentiation can be achieved along five different dimensions – product, services, personnel, change or image. Within each of these dimensions, there are many variables one can use to differentiate their product. For example, along the product dimension, a product may be differentiated based on features, performance, durability, quality, reliability or style. Along the image dimension, products may be differentiated based on packaging, ambiance, graphics and symbols. A properly differentiated product clearly stands apart from its competitors.

The next segment of this series will explore the art and science of positioning.

Sunday, February 4, 2007

Superbowl Sunday - Some Pointers

It's Superbowl Sunday - but I'll bet there's quite a bit about the Superbowl you have not run across...

Start with the basics - the Official Superbowl Site at

Oh, and who's playing who? Why, it's the Colts up against Da Bears...

But, looks like...The Party's Over

Did you know that the NFL has been throwing its weight around to discourage big screen parties?? Apparently, mass viewings of the game violate copyright law...

Well, how about turning off those lights??

Officials in Nashville, Indiana, told fans to turn off the blue lights; yup, looks like these fans were in violation of some silly city ordinance...

Superbowl Myths and Truths

For some SUPERbowl myths, check out Snopes

And if you feel like busting some Superbowl legends, try this on for size.

Sick of the Superbowl?

Did you know there's a Superbowl flu making the rounds?

Worse yet, some academics who have WAY too much time on their hands have proven that watching the Superbowl increases your chance of becoming involved in an accident...

Superbowl Strategy? Fat that...

Finally, looks like the NFL has finally figured out that, no, bigger isn't always better - especially when big comes along with bloated, slow, and, well, downright dumb... The average weight of 20 teams has declined over the past year! And the weight of the average player has dropped by a full pound. More interesting still - the two teams playing in the Superbowl are the lightest teams in the league!!

Hey, told you some of this is going to be random.
Up next - Superbowl marketing (we do have to get back to biz... :-)