07

Crafting a Customer Value

Proposition and
Positioning

Marketing Management, 16th ed

 JAZZ

• Jazz differentiates itself in Pakistan’s Jazz transcends traditional

telecom sector with a focus on digital mobile operations in Pakistan
innovation and customer-centric by serving as a digital
solutions, offering an integrated facilitator with JazzCash and
experience from mobile services to Jazz World, thus standing out
financial solutions. in a commoditized telecom
market.

10-2
 Chapter Questions
• Explain how a company should develop a value
proposition and a positioning strategy.
• Describe how a company chooses a frame of
reference.
• Discuss how a company identifies points of parity
and points of difference.
• Define the key strategies for creating a sustainable
competitive advantage.
• Identify alternative strategies to communicate the
positioning of a company’s offerings.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-3

 Developing a Value Proposition
and Positioning
Marketing Strategy: Value
Proposition & Positioning
Objective: Develop a value
proposition and position offerings
for target customers.
Process: Identify consumer
needs, target effectively, and
articulate distinctive benefits.
Outcome: Deliver high customer
value and satisfaction, leading to
repeat purchases and increased
profitability.
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-4
 DEVELOPING A VALUE
PROPOSITION: Key Elements
Impact on Satisfaction: Offer
alignment with expectations
influences repeat purchases.
Functional Value: Primary for
utilitarian products (office
equipment).
Psychological Value: Crucial for
luxury items (emotional, self-
expressive benefits).
Monetary Value: Dominant in
commoditized markets (price,
discounts, financial incentives).
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-5
 Customer Value, Value
Proposition & CVA:
Customer Value: Perceived benefits vs. costs;
includes product, service, and image.
Value Proposition: More than core offering; includes
additional benefits like performance and design.
Customer Value Analysis:
1. Identify what customers value in attributes and
benefits.
2. Determine the importance of these attributes and
benefits.
3. Compare the company’s and competitors’
performance on these points.
4. Continuously monitor and adjust the value
proposition.
Strategies for Competitiveness:
a) Increase total customer benefit through improved
products, services, and brand image.
b) Decrease total customer cost by reducing price or
ownership costs.
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-6
 DEVELOPING A POSITIONING
STRATEGY:
Positioning is the act of designing a company’s
offering and image to occupy a distinctive place
in the minds of the target market.
• The goal is to instill the brand in the minds of
consumers to maximize the potential benefits to
the firm.
• the positioning zeroes in on the key benefits
that will provide consumers with a reason
to choose the company’s offering.
• Many marketing experts believe positioning
should have both rational and emotional
components.
• Appeal both heart and mind

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-7

 Brand Substitution
Test:
A brand substitution test is a market • Price: Changing the price of a brand
research method used to analyze relative to its competitors to observe
consumer behavior and preferences how price sensitivity affects brand
related to brands within a specific product substitution.
category. • Availability: Manipulating the availability
or distribution of a brand to see how
The goal of a brand substitution test is to changes in accessibility impact
understand how easily and willingly consumer choices.
consumers switch from one brand to • Promotion: Adjusting promotional
another when certain factors are activities (e.g., advertising, discounts,
manipulated or changed. promotions) for a brand to measure their
effect on brand loyalty and substitution.
• Product Features: Testing how
changes in product attributes or features
influence consumer preferences and

brand loyalty .

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-8

 To effectively define and communicate similarities
and differences between their brand and its
competitors.
• Choosing a frame • Identifying the
of reference by optimal points of
identifying the parity and points
target market and of difference
relevant
given that frame
competition.
of reference.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-9

 Choosing a Frame of Reference

• a frame of reference can serve

as a benchmark against which
customers can evaluate the
benefits of a company’s offering.
• Category membership—the
products or sets of products with
which a brand competes and that
function as close substitutes.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-10

 Identifying Potential Points of Difference POD’s
and Points of Parity POP’s
• Once marketers have fixed the frame of reference for
positioning by defining the customer market and the
nature of the competition, they can define the
appropriate points of difference (attributes or benefits
that are unique to the company’s offering) and points
of parity (attributes or benefits that the company’s
offering has in common with the competition).

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-11

 IDENTIFYING POINTS OF DIFFERENCE

• PODs are attributes or benefits that

differentiate the company’s offering
from the competition. These are
attributes or benefits that consumers
strongly associate with a brand, that
they positively evaluate, and that they
believe could not be found to the same
extent with a competitive brand.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-12

 Three criteria in brand association function as a
point of difference:
• Desirable to consumers: Consumers must
see the brand association as personally relevant to them. i.e.
Chanel and haute couture

• Deliverable by the company: The

product design and the way the product is marketed must support
the desired association. The ideal brand association is preemptive,
defensible, and difficult to attack. i.e., Cadillac.

• Differentiating from competitors:

consumers must see the brand association as distinctive
and superior to relevant competitors. Weatable

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-13

 IDENTIFYING POINTS OF PARITY

• POPs are attribute or benefit

associations that are not
necessarily unique to the brand but
may be shared with other brands.
• These types of associations come
in three basic forms: category,
correlational, and competitive.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-14

 IDENTIFYING POINTS OF PARITY
• Category points of parity: are attributes or benefits that
consumers view as essential to a legitimate and credible offering within a certain
product or service category. In other words, they represent necessary but not
sufficient conditions for brand choice. i.e., the courier industry includes reliable
tracking systems, timely delivery, and a wide coverage area. TCS and Leopards.

• Correlational points of parity: are potentially negative

associations that arise from the existence of positive associations for the brand.
One challenge for marketers is that many attributes or benefits that make up their
POPs or PODs are inversely related. i.e, Uniformity in Fast Food: Especially in the
month of Ramzan Iftar Buffet.

• Competitive points of parity: are attributes or features

that a brand has in common with its competitors, which are necessary to be
considered a viable player in the market. i.e., drive-thru service by fast food chains.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-15

 Creating a Sustainable Competitive Advantage: AS
A MARKETING CONCEPT
• Competitive advantage: a company’s ability to
perform in one or more ways that competitors
cannot or will not match. Pharmaceutical
companies are developing biologics medicines
produced by using the body’s cells rather than
through chemical reactions in a lab.
• leverageable advantage: is one that a company
can use as a springboard to new advantages,
much as Microsoft has leveraged its operating
system with Microsoft Office and networking
applications.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-16

 STRATEGIES FOR CREATING A SUSTAINABLE
COMPETITIVE ADVANTAGE
• Differentiate on an Existing Attribute: This is the
quintessential strategy for creating an advantage over
competitors. Gillette, BMW
• Introduce a New Attribute: Instead of enhancing an
offering’s performance on an existing attribute, a company
can distinguish its offering by introducing a new attribute—
one that competitors don’t have. Uber introduced cash-free
payments between riders and drivers. Method Products
• Build a Strong Brand: A valuable source of sustainable
competitive advantage is a powerful brand that gives
customers a reason to choose the company’s offering. An
example of brand power is Harley-Davidson,

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-17

 Communicating the Offering’s Positioning

• CRAFTING A POSITIONING
STATEMENT

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-18

 COMMUNICATING CATEGORY MEMBERSHIP

• It refers to the process of

informing consumers about the
category to which a brand or
product belongs. This is crucial,
especially for new products, as it
helps consumers understand what
the product is and what needs it
fulfills. For instance, knowing
that a product is part of the
“wine” category implies that it’s
a beverage enjoyed with meals
and in social settings.
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-19
 three main ways to convey a brand’s category
membership:
• Announcing category benefits: highlighting the fundamental reasons
consumers would use a product category. It reassures them that the brand will
deliver on the basic expectations they have for products in that category. i.e.,
Smartphones: Highlighting features like long battery life and high-resolution
cameras.
• Comparing to exemplars: evaluating a new product, brand, or concept
against established and well-regarded examples within a category. i.e., A new
fashion label could be compared to Gucci or Chanel, brands that are
exemplars of luxury and style.
• Relying on the product descriptor: using the detailed information provided
about a product to understand its features, benefits, and uses. This
information helps consumers make informed purchasing decisions. Like
laptops overall description about memory and other specifications.

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-20

 COMMUNICATING CONFLICTING
BENEFITS
• Low Price vs. High Quality: Generally, • Nutritious vs. Good Tasting: Nutritious
consumers perceive that higher quality foods are sometimes thought to be less
comes with a higher price. Therefore, a palatable compared to less healthy
low-priced product may be seen as having options that are high in sugar, fat, or salt.
lower quality1.
• Ubiquitous vs. Exclusive: Ubiquitous
• Powerful vs. Safe: Products that are very Products are available everywhere and to
powerful, like high-performance cars, may everyone, which can make them seem
be perceived as less safe due to the less exclusive or luxurious1.
increased risks associated with their
• Efficacious vs. Mild: A very effective
power1.
product (efficacious) might be seen as too
• Taste vs. Low Calories: Tasty foods are
strong or harsh, whereas a mild product
often associated with higher calories. Low-
may be viewed as not as effective1.
calorie foods are perceived to compromise
on taste to reduce calorie content1. • Varied vs. Simple: A product with varied
features may be seen as complex, while a
• Strong vs. Refined: A strong product, like
simple product is easy to use but may
a heavy-duty cleaner, might be seen as too
lack advanced features
harsh or not refined, potentially causing
damage to delicate surfaces

Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-21

 POSITIONING AS STORYTELLING

• Positioning as storytelling refers For Example, a tech

to the strategic approach of using company might use
narrative techniques to define storytelling to position itself
how a product, brand, or as an innovator by sharing
company is perceived in the its founder’s journey from a
minds of the target audience. It’s garage startup to a leading
industry player,
about crafting a compelling story
emphasizing the challenges
that communicates the unique
overcome and the
value and differentiators of the groundbreaking
offering, creating a memorable technologies developed
image that resonates with along the way
consumers
Copyright © 2022 Pearson Education, Inc. Publishing as Prentice Hall 10-22