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Business studies: Market positioning
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Revision notes on market positioning
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A Level Business StudiesMarket positioning
Market positioning relates to the views which consumers have about the quality, value for money
and image of products and services in relation to those of competitors.
Some approaches which a business might use to position its products and services are
The benefits offered by the product e.g. extra safety features, quality of work, style and
design.
Unique selling points USP….. making the product or service unique by giving it unique
features or attributes.
Marketing Mapping
Businesses may carry out market research to determine what customer perceptions of their products
or services actually are.
Perceptions could relate to perceptions of quality, value for money, image etc.
The results of such research can be displayed on a perceptual map, commonly referred to as a
marketing map.
It will help a business to make a comparison of the perceptions which consumers have of their
products and services in relation to other goods and services sold by competitors in the same
market.
Businesses may then consider making adjustments to the products marketing mix in order to change
customer perceptions and change the position of their goods and services on the map.
Drawbacks of market mapping
It can be expensive to conduct market research to acquire information for the map.
The map is two dimensional and only allows two product attributes to be analysed on the same map.
Competitive advantage of a product or service.
Gaining a competitive of advantage in a market will make a business more successful.
A business can develop a competitive advantage in a number of ways:
Product design ….if a business can design products which are superior in comparison to those of
their main competitors. Product designs can be differentiated in terms of their functionality or
perhaps have more aesthetic appeal than those of their competitors.
Product quality…Premium prices can be charged for products and services which are perceived to be
of better quality in comparison to other products available in the market place….but producing
better quality products may lead to additional costs…which could reduce profit margins.
Promotion…For example, unique and imaginative promotional campaigns can set products apart
from the alternatives available in the market. They can also change customer perceptions of a
product or service and encourage them to make a purchase.
, Customer service….high levels of customer service, including after sales service can improve
customer perceptions of a product or service. High levels of customer service could be related to
faster delivery times, speed of dealing with customer complaints, returns policies and warranties.
The purpose of product differentiation
Product differentiation is used by businesses to gain a competitive edge over their rivals.
It involves businesses attempting to make their products or services remain unique in some way, so
that customers are able to distinguish them from those of their competitors.
Purposes of product differentiation may include:
Ability to charge higher prices….businesses may be able to justify charging higher prices if their
products or services are different to those offered to consumers by their competitors…..customers
may be willing to pay more for products which they perceive as having some unique qualities.
Brand development….businesses which are successful at differentiating products from their
competitors may be able to build a strong brand identity around these products…customers may
grow to trust the brand …..customer loyalty may result …..and the products may benefit from a low
price elasticity of demand, which means that any increase in price results in a less than proportionate
fall in demand.
Overcome competition…..differentiate may give a business a competitive edge…..by creating a real
or perceived difference businesses may be able to attract more customers and increase their market
share.
Adding Value
This process involves the business adding extra features to products or services which go beyond
their standard expectations.
A business can add value to their products and services in a number of ways, examples include:
Bundling…. A business may add extras to their standard products by providing customers with a
bundle of products or services which provide them with additional value for money. For example, a
holiday company may sell holiday packages which include free or reduced priced insurance.
Customer Service…. Excellent customer service can create the impression that a business is going
that ‘extra mile’ to ensure that the needs of their customers are met…helpful and knowledgeable
staff can provide customers with improved levels of customer service. This may also include speed of
response to customer enquiries or complaints.
Packaging…. Stylish packaging can create the impression of quality and help a business differentiate
its products from those of its competitors.
Customisation….changing designs or features of products or services to meet customer expectations
can also add value. E.g. a wedding planning service may be able to meet their clients special requests
concerning types of venues for weddings or locations where wedding photographs are taken.
AS WITH THE PREVIOUS HOMEWORK MAKE SURE YOU READ THROUGH AND UNDERSTAND THE
NOTES ABOVE.
THEN COPY THE KEY POINTS ONTO REVISION CARDS…THESE ARE HIGHLIGHTED IN RED BELOW.
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