Bases of Differentiation

• Features: characteristics that supplement a

product’s basic function
- ―bare bones‖ model
- optional features

Continuously introduce new features

- Japanese electronics manufacturers
- Contact recent buyers - Survey
- Value to customer vs. cost to firm tradeoff
 Quality
Strategic Planning Institute (SPI) found a positive
correlation between Quality and ROI. In a study of
525 units,
ROI
Low Quality 17%
Medium Quality 20%
High Quality 27%

Benefits of Quality - Premium price

- Repeat purchase
- Loyalty
- Positive word of mouth
 Types of Quality
• Performance quality
• Conformance quality
• Reliability – Maytag
• Durability – Volvo has highest mean life
• Repairability - Caterpillar
 Design and style
Style - How well the product looks and feels to the buyer.
- Packaging of cosmetics
- Jaguar
- GM hired Pinifarina, an Italian designer, to design the Allante’
- Herman Miller - office furniture
- Olivette - office machines
- Swatch - watches

Design - Integration
- Italian design - apparel and furniture
- Scandianvian design - functionality aesthetic
- German design - austerity and robustness
- Braun - design, engineering, and manufacturing
- Bang and Olufsen - stereo and television
 Services
• Delivery - speed, accuracy, care
- Deluxe Check Printers - shipped in one day after order

• Installation - IBM delivers all equipment to the site at same time.

- IBM moves competitors equipment as well.

• Customer training – General Electric

- McDonalds employees attend Hamburger University

• Consulting - McKesson Corporation - 12,000 independent

pharmacists.
Helps set up accounting and inventory systems
 Personnel
• Competence - skill and knowledge
• Courtesy - friendly, respectful, and considerate
• Reliability - consistency and accuracy
• Credibility - trustworthy
• Responsiveness - quick response
• Communication - make effort to understand and communicate

McDonald’s - courteous
Singapore - beauty and grace
IBM - professional
Disney - upbeat
 Brand and Image
e.g., Marlboro Man

Identity versus image.

Identity - how companies aim to identify itself to its
customers.
Image - how an individual perceives the company
 TIDE

• Is so powerful; it cleans down to the fiber

• All purpose family detergent for extra-tough

laundry jobs.

• ―Tide’s in, dirt’s out‖

• Great stain fighting qualities

 CHEER

• Color Guard gives ―outstanding cleaning

and color protection.

• Clothes look clean, bright, and more like

new.
 OXYDOL
• Contains bleach.

• Makes your white clothes really white and

your colored clothes really bright.

• ―So don’t reach for the bleach -- grab a box

of Ox!‖
 GAIN

• Originally P&G’s ―enzyme‖ detergent

• Repositioned as the detergent that gives you

clean, fresh smelling clothes

• ―Freshens like sunshine‖

 BOLD

• Detergent with fabric softener

• ―Cleans, softens, and controls static with

fabric softener scent‖
 IVORY SNOW

• Ninety-nine percent and forty-four one

hundredths percent pure

• ―Mild, gentle soap for diapers and baby

clothes‖
 DREFT

• Formulated for baby’s diapers and clothes.

• Contains borax - nature’s natural sweetener

• ―A clean you can trust.‖

 DASH

• P&G’s value entry

• Attacks tough dirt

• ―Dash does it for a great low price.‖

 ERA PLUS

• Built-in stain removers

• ―Gets tough stains out and does a great job

on your whole wash too.‖
 Positioning – Why?
1. Over-communicated society
- 30,000 books published
- 10 million tons of news, 94 pounds/year/person
NY Times (Sunday) - 4.5 lbs.; 5 million words
- Television - 13 hours/day
2. Product explosion
25,000 SKUs
UPC - 10 digits
3. Advertising explosion
Advertising spending in US is $376.62/year/person
versus $17 for the rest of world
 Developing a positioning
What are the points of differentiation?

Good points of differentiation should have the following

characteristics:
– Important
– Distinctive
– Superior
– Communicable
– Preemptive
– Affordable
– Profitable

Product needs a USP ( Unique Selling Proposition )

 Positioning
Al Ries and Jack Trout

1. Be the first - pioneering advantage

2. Strengthen current position
- give a reason
- Avis – We’re No. 2, we try harder
- 7-Up – The Uncola
3. Look for the hole: Milky Way candy - lasts longer
United Jersey Bank - fast moving bank
4. Deposition/reposition the competition
Lenox/Royal Doulton - both from England
Lenox made in New Jersey
 Perceptual Maps
• How similar are each of the following
brands?
A-B 1 2 3 4 5
B-C 1 2 3 4 5
C-A 1 2 3 4 5
C

B A
 Mapping Methods in Marketing

Perceptual Maps Preference Maps Joint Space Maps

Similarity-based Ideal-point model External analysis

methods (unfolding model) using PREFMAP-3

Attribute-based Vector model Simple ―joint space

methods maps‖ using
modified perceptual
mapping methods

Positioning–8
 Attributes of Laptops on a Perceptual Map

Common

 Toshiba 1960CT
Easy setup
Slow

Performance

Light
Value
 IBM 701 C
―Butterfly‖

Elegant

Looks
The six attributes were measured on semantic differential scales: 1) Slow–Fast operation, 2) Plain–Elegant,
3) Easy–Difficult setup, 4) Poor–Excellent value, 5) Light–Heavy, and 6) Common–Distinctive.
 Interpreting Perceptual Maps

• The arrow indicates the direction in which that

attribute is increasing (The attribute is decreasing
in the direction opposite to the arrow).

• The length of the line from the origin to the arrow

is an indicator of the variance of that attribute
explained by the 2D map. The longer this line, the
greater is the importance of that attribute.
 Attributes of Laptops on a Perceptual Map

(Plain)

Common

 Toshiba 1960CT
Easy setup
Slow

Performance

Light
Good
 IBM 701 C Value
―Butterfly‖

Elegant

Looks
 Interpreting Perceptual Maps

Attributes that are both relatively important and

close to the horizontal (vertical) axis help
interpret the meaning of the axis.

To position a laptop on each attribute, draw an

imaginary perpendicular line from the location of
the laptop onto that attribute. (These are shown
by dashed lines on the map).
 Perceptual Map of Beer Market
(only Brands)

Old Milwaukee
•
Budweiser
• Beck’s •
Meister Brau • Heineken
• Miller •
•
• Coors
Stroh’s

• Michelob
• Coors
Miller
Lite
• Light
•
Old
Milwaukee Light
 Perceptual Map of Beer Market
(Only attributes)

Heavy Popular
Full Bodied Heavy with Men

Special
Occasions
Blue Collar Dining Out Premium
Good Value

Budget Premium

Popular
Pale Color with
Women
On a
Budget Light Less Filling
Light
 Perceptual Map of Beer Market
(both products & attributes)

Heavy Popular
Heavy with Men
Old Milwaukee
Full Bodied
•
Budweiser
• Beck’s •
Meister Brau Special • Heineken
• Miller • Occasions
Good Value
Blue Collar
• Dining Out Premium
• Coors
Budget Stroh’s Premium
• Michelob
• Coors Popular
Pale Color
Miller
Lite
• Light with

On a
• Women
Old
Budget Milwaukee Light Light Less Filling
Light
 Two Preference Models
Ideal-Point Preference Model Vector Preference Model

Increasing
Preference

Preference Preference

Decreasing
Preference

Ideal Point
Attribute Attribute
(eg, sweetness) (eg, service speed)
 Limitations of Preference Mapping

• Provides a static model—ignores dynamics of

customer perceptions.

• Interpretation is sometimes difficult.

• Does not incorporate cost or likelihood of being able

to achieve a desired positioning.

• Does not incorporate a ―probability model‖ to

indicate goodness of a map.

• Generally, need about 6 to 8 products to make the

technique useful.