What is the process of selecting a positioning and differentiation strategy?

Each firm must differentiate its offer by building a unique bundle of benefits that appeals to a substantial group within the segment. What is more, a brand’s positioning must serve the needs and preferences of well-defined target markets. So, they succeed because they create the right value proposition for its unique customers.

This task has three steps: identifying possible value differences and competitive advantages, choosing the right competitive advantages and selecting an overall positioning strategy. The brand has to communicate and deliver the chosen position in an effectively way.

1. Identifying possible value differences and competitive advantages

A company has to deliver more customer value than competitors do. When each of them provide superior customer value, they gain competitive advantage. But, what can be a competitive advantage? In effect, a competitive advantage is a value difference between the offers of one company as opposed to competing offers on the market. More customer value can be provided by offering either lower prices or by providing more benefits which justify higher prices.

To find points of differentiation, marketers must think the customer’s entire experience with the company’s product or service, adopt customer´s perspective. In fact, a company can differentiate itself on basis of the product, services, channels, people or image. Through product differentiation, brands can differentiated on features, performance, or style and design. Why is a BMW costlier than other cars? Because it has superior performance. Thus performance increases price. Similarly, your competition can present a product which does not perform as well but it is available at half price.

Beyond differentiating its physical product, a firm can also differentiate the service that accompany the product. Some companies gain services differentiation through speedy, convenient, or careful delivery. The main factors which can be used for service differentiation are: ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. For instance, an airline could differentiate itself by means of extraordinary customer care and very attentive and graceful stewardesses. This type of differentiation then become experience differentiation.

Firms that practice channel differentiation gain competitive advantage through the way they design their channel´s coverage, expertise and performance. There are two types of marketing: direct and indirect. In the direct marketing, the business is to sell products or services directly to the public. In the indirect one, the selling of products is through a distribution channel that includes wholesalers and retailers, it means that is the distribution which includes one or more resellers

Companies can also gain a strong competitive advantage through people differentiation. It implies hiring and training better than the competitors do. People differentiation requires that a company select its customer-contract people carefully and train them well. Well-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness and communication. When anyone goes to Disneyland in Paris, he can join the different characters which appear in the different movies of Disney. Any visitor can take a photo with them or ask for an autograph. Thousand of people are in Disneyland everyday, and the characters have to be willing to attend them and, what is more, with a smile in their faces. They have to play with children, make jokes, take a hundred photos per minute…Has everybody the ability to bear it? Workers are upbeat, funny, patient, tolerant, nice, friendly, kind… In fact, not all of us could be working at that position, so workers have to be selected very carefully.

Even when competing offers look the same, buyers may perceive a difference based on company brand image differentiation. A company or brand image should convey a product’s distinctive benefits and positioning. Developing a strong and distinctive image calls for creativity and hard work. A company cannot develop an image in the public´s mind overnight by using only a few ads. So, image is the way customers perceive the company and its products. An effective image does 3 things: establishes the product´s character and value proposition, delivers emotional power beyond a mental image and conveys the product´s character in distinctive way so as not to confuse with that of competitors. An aid for image differentiation are symbols, such as the Nike swoosh or Apple´s logo. These provide a strong brand recognition and thereby contribute to image differentiation. Also, famous persons may be of help. For instance, H&M built a brand around a famous person, David Beckham, to develop the image differentiation.

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