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E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 9: Differentiation and E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 9: Differentiation and Positioning Strategies © 2006 Prentice Hall 9 -1

Differentiation is what you do to the product. Positioning is what you do to Differentiation is what you do to the product. Positioning is what you do to the customer’s mind. It is the art of getting in and out of the mind -Jack Trout © 2006 Prentice Hall

Chapter 9 Objectives • After reading Chapter 9 you will be able to: • Chapter 9 Objectives • After reading Chapter 9 you will be able to: • Define differentiation and positioning and explain why they are important elements of marketing strategy. • Identify dimensions of differentiation and Internetspecific differentiation strategies. • Discuss how companies can position or reposition themselves on the basis of attributes, technology, benefits, user category, relation to competitors, or integrator capabilities. © 2006 Prentice Hall 9 -2

The J. Peterman Story • The J. Peterman Company is a classic example of The J. Peterman Story • The J. Peterman Company is a classic example of successfully combining clever differentiation with powerful positioning. • The founder established his company as a breed apart from ordinary competitors. • Visit jpeterman. com and discuss what makes their products “unique. ” © 2006 Prentice Hall 9 -3

Differentiation • Kotler defines differentiation as the process of adding meaningful and valued differences Differentiation • Kotler defines differentiation as the process of adding meaningful and valued differences to distinguish the product from the competition. • There a number of differentiation dimensions and strategies for their accomplishment. © 2006 Prentice Hall 9 -4

Differentiation Dimensions • A firm can differentiate along 5 dimensions: 1. 2. 3. 4. Differentiation Dimensions • A firm can differentiate along 5 dimensions: 1. 2. 3. 4. 5. © 2006 Prentice Hall Product Services Personnel Channel Image 9 -5

Product Differentiation • Product differentiation: • Includes customization and bundling • Offers a combination Product Differentiation • Product differentiation: • Includes customization and bundling • Offers a combination of products/services that the individual consumer needs + at attractive prices • Supports one-to-one relationship building with each customer, critical for a company’s longterm success. © 2006 Prentice Hall

© 2006 Prentice Hall © 2006 Prentice Hall

 • Product packaging: • Offline: • packaging are design to appeal to consumers, • Product packaging: • Offline: • packaging are design to appeal to consumers, be eyecatching, compete with other products on store shelves, and sell the product. • http: //www 2. dupont. com/Packaging/en_US/news_events/ 19 th_dupont_packaging_award_winners. html • Online: • products with more utilitarian packaging (that is designed to be more practical and useful) • products will be shipped from the distributor directly to the consumer and thus never appear on retailers’ shelves. © 2006 Prentice Hall

Product Differentiation Þ Results: ÞProducts don’t need the expensive, colorful packaging for store display. Product Differentiation Þ Results: ÞProducts don’t need the expensive, colorful packaging for store display. ÞProducts only need a size and shape that is functional and useful for the consumer. ÞPackaging minimization will reduce waste and reduce packaging costs. ÞLower prices, or more reinvestment in higher-quality, single-layer packaging enhancements. Þ Question? ? For online what replaces packaging to “attract the customer’s eye”? © 2006 Prentice Hall

Service Differentiation • Customer service: • Ability to receive customer feedback through e-mail 24 Service Differentiation • Customer service: • Ability to receive customer feedback through e-mail 24 hours a day, • Ability to respond more rapidly to customer concerns. • The distribution of products ordered online: • A way to differentiate services from traditional companies. • Shop at home groceries • Online services, such as online banking and securities trading: • Are becoming increasingly popular, • Are differentiated both by the features they offer and the service consumption experiences. • One day replace the traditional offline services. © 2006 Prentice Hall

Channel Differentiation • The Internet: • = a transaction & distribution channel + a Channel Differentiation • The Internet: • = a transaction & distribution channel + a communication channel + a relationship channel, • Used to forge one-to-one relationships with individual customers. • The Internet expands: • Companies’ geographic range + business hours + assortment of products available • The channel through which it can reach customers + display a diversified assortment of offerings + differentiate itself. © 2006 Prentice Hall

Channel Differentiation • There are multiple levels of online channel differentiation: • Product or Channel Differentiation • There are multiple levels of online channel differentiation: • Product or service information online = advantage over companies with no Web presence, ÞExploits the Internet as a communication channel. • Commercial transactions online, ÞExploits the Internets as a transaction and distribution channel. • The differentiation of competitors’ Internet-related service offerings: bank services, pay bills online © 2006 Prentice Hall

Image Differentiation • A company can differentiate itself by creating a unique experience online, Image Differentiation • A company can differentiate itself by creating a unique experience online, called “experience branding. ” • The Internet’s interactivity allows companies to respond more quickly to customer requests. • Faster communication. • Retain current customers and attract new ones. • Be Careful not to create bad experiences © 2006 Prentice Hall 9 -9

Differentiation Strategies • Differentiation strategies are particularly important on the Internet. • • Internet Differentiation Strategies • Differentiation strategies are particularly important on the Internet. • • Internet marketing strategy revolves around company image and product information available on the Web. Specific strategies may include: 1. Being the first to enter the market. 2. Owning a product attribute or quality in the mind of the consumer. © 2006 Prentice Hall 9 -10

Differentiation Strategies, cont. 3. Demonstrating product leadership. 4. Utilizing an impressive company history or Differentiation Strategies, cont. 3. Demonstrating product leadership. 4. Utilizing an impressive company history or heritage. 5. Supporting and demonstrating the differentiating idea. 6. Communicating the difference. • Amazon. com and Monster. com have successfully differentiated themselves. • • • A strong brand image helps to attain “ownership” of a product. (Amazon. com), Customers are drawn to brands they trust, an attraction that is enhanced by a positive company history. Monster. com has essentially gained ownership of online job searches. Google. com owns the online search market, this becomes evident when the term “googled it” became part of the American media vocabulary © 2006 Prentice Hall 9 -11

Internet-Specific Differentiation Strategies • There are 6 differentiation strategies unique to online businesses. 1. Internet-Specific Differentiation Strategies • There are 6 differentiation strategies unique to online businesses. 1. Site Environment/Atmospherics • Easy downloads; easy navigation. 2. Making the Intangible Tangible • Virtual tours, 3 -D images, trial downloads. 3. Build Trust • • © 2006 Prentice Hall Strong brand recognition. Privacy policy. 9 -12

Internet-Specific Differentiation Strategies, cont. 4. Efficient and Timely Order Processing • Deliver timeliness as Internet-Specific Differentiation Strategies, cont. 4. Efficient and Timely Order Processing • Deliver timeliness as an important benefit. 5. Pricing • • In the early days of the Web, companies offered discounts as purchase incentives. Majority of firms today differentiate themselves in other ways besides pricing. 6. Customer Relationship Management • © 2006 Prentice Hall Managing long term relationships with customers. 9 -13

1. Site Environment/ Atmospherics (Watson et al. 2000) Look and feel of site User 1. Site Environment/ Atmospherics (Watson et al. 2000) Look and feel of site User friendly Accurate portrayal of company and product 2. Tangibilize the Intangible (Watson et al. 2000) Images Virtual tours Realistic descriptions 3. Trust 4. Efficiency and Timeliness Deliver what is promised to customers Deliver in a timely manner 5. Pricing Be aware of competitor pricing Potential customer savings Internet-Specific Differentiation Strategies © 2006 Prentice Hall Clearly state privacy policy Use encryption for secure transactions A live person can be contacted 6. CRM Customer tracking Seamless communication Greater relationship efficiency

Enhancing the Experience • The E-Marketing Opportunity Model (Feeny, 2001) helps companies differentiate using Enhancing the Experience • The E-Marketing Opportunity Model (Feeny, 2001) helps companies differentiate using emarketing opportunities for enhancing: • The selling process. • The customer buying process. • The customer usage process. • Online differentiation involves: • Creation of a distinctive customer experience. • Development of one-to-one relationships with customers. © 2006 Prentice Hall 9 -14

Positioning • Positioning is the process of creating a desired image among its competitors Positioning • Positioning is the process of creating a desired image among its competitors in the public’s mind. • Position is the resulting view of the firm or brand from the consumer perspective. • The e-marketer’s goals is to build a position on one or more bases that are relevant and important to the consumer. © 2006 Prentice Hall 9 -15

Bases and Strategies for Positioning 1. 2. 3. 4. 5. 6. Product or service Bases and Strategies for Positioning 1. 2. 3. 4. 5. 6. Product or service attribute. High-tech image. Benefits. User categories. Comparison with competitors. Integrator position. © 2006 Prentice Hall 9 -16

Product or Service Attribute • May include features such as size, color, speed, etc. Product or Service Attribute • May include features such as size, color, speed, etc. • Amazon’s one-click check-out process is an example of a positioning attribute. • Tylenol does not sell online, but provides useful one-to-one features for pain relief and health information. © 2006 Prentice Hall 9 -17

Technology Positioning • Shows that a firm is on the cutting edge of technology. Technology Positioning • Shows that a firm is on the cutting edge of technology. • At Brand Me, consumers can build virtual models of themselves and try on virtual outfits. • At American Airlines, customers can store seating preferences and frequent flier account information. • Question? How long this type of positioning last? © 2006 Prentice Hall 9 -18

Benefit Positioning • Benefit positioning is generally a stronger basis for positioning, because it Benefit Positioning • Benefit positioning is generally a stronger basis for positioning, because it answers the consumer question: What will this do for me (the customer)? • Miller Lite offers software that can be used as a social organizer. • On the Valvoline motor oil site, visitors can send greeting cards, download racing screensavers and sign up for newsletters. © 2006 Prentice Hall 9 -19

User Category • User category positioning relies on customer segments. • Kellogg’s has an User Category • User category positioning relies on customer segments. • Kellogg’s has an interactive site for children. • Yahoo! Geo Cities hosts pages organized by neighborhoods and specific interests. © 2006 Prentice Hall 9 -20

Competitor Positioning • Many firms position by benefits that provide advantages over their competitors. Competitor Positioning • Many firms position by benefits that provide advantages over their competitors. • Companies may position themselves against • An entire industry. • A particular firm. • Relative industry position. • “I Can’t Believe It’s Not Butter” margarine positions itself against other margarines. • Avis: “We try harder” • http: //www. avis. com/Avis. Web/html/wetryharder/inde x. html © 2006 Prentice Hall 9 -21

Integrator positioning • We can expect to see more integrator positioning in the lending, Integrator positioning • We can expect to see more integrator positioning in the lending, jewelry and hospitality industries. • Lending Tree helps brokers find clients more quickly and cheaply. • Blue Nile sells an estimated $129 million of jewelry that would require 116 retail stores. • Web travel agencies can move market share to hotels that give them discounts. © 2006 Prentice Hall 9 -22

Repositioning Strategies • Repositioning is the process of creating a new or modified brand, Repositioning Strategies • Repositioning is the process of creating a new or modified brand, company or product position. • A company may enhance or modify a position, based on market feedback, . • Yahoo! repositioned from online guide to Web portal. • Amazon repositioned from world’s largest bookstore to “Earth’s biggest selection. ” © 2006 Prentice Hall 9 -23