Course: Marketing Management- I (MKT 101) Session 14

Crafting a Customer Value Proposition and

Positioning

IN ST R U C TOR: D R . SH A ON SEN
EMAIL : s h a o n s e n .8 8@imth yd e r a b ad .e d u.in
Developing a Value Proposition

Create value across three domains:

◦ Functional value
◦ Psychological value
◦ Monetary value
 Developing a Value Proposition
How do customers ultimately make choices?

Customers tend to be value-maximizers, within the bounds of search costs and limited
knowledge, mobility, and income
Customers choose – for whatever reason – the offer they believe will deliver the highest
value and act on it

Develop value across three domains: functional, psychological, and monetary

 Functional value – reflects the benefits and costs that are directly related to an offering’s
performance

 Psychological value – encompasses the psychological benefits and costs associated with
the offering. Psychological value extends beyond the functional benefits to create emotional
benefits for target customers

 Monetary value – includes the financial benefits and costs associated with the offering
Developing a Value Proposition
Total customer benefit

The perceived value of the bundle of functional,

psychological, and monetary benefits customers expect
from a given market offering because of the product, service,
and image
Developing a Value Proposition
Total customer cost

The perceived bundle of functional, psychological,

and monetary costs customers incurs in evaluating,
obtaining, using, and disposing the given market
offering
Developing a Value Proposition
Customer value
 customer value is the difference between the prospective
customer’s evaluation of all the benefits and costs of an
offering

 and his/her evaluation of the costs and benefits of the perceived

alternatives
Developing a Value Proposition
Customer value proposition

Based on the difference between benefits the

customer gets and the costs he or she assumes for
different choices
Developing a Value Proposition
Customer value analysis

◦Reveals the company’s strengths and weaknesses

relative to those of various competitors
Customer Value Analysis
 Identify the relevant attributes and benefits that customers value
 Assess the relative importance of these attributes and benefits
 Assess the company’s and competitors’ performance on the key
attributes/benefits
 Monitor customer value over time
 Developing a Positioning Strategy

Positioning

◦ The act of designing a company’s offering and

image to occupy a distinctive place in the
minds of the target market
 Developing a Positioning Strategy

Positioning
 The goal is to instil the brand in the minds of
consumers to maximize the potential benefit
to the firm

 Effective positioning helps guide marketing

strategy by clarifying the brand’s essence
(identifying the goals it helps the consumer
achieve) and showing what it offers in a
unique way
 Everyone in the organization should
understand the brand positioning and use it as
the context for making decisions
Choosing a Frame of Reference
Frame of reference

Serves as a benchmark against which customers can evaluate the

benefits of a company’s offering

Deciding to target a certain type of consumer can define the nature

of competition because certain firms have decided to target that
segment in the past (or plan to do so in the future) or because
consumers in that segment may already look to certain products or
brands in their purchase decisions
Choosing a Frame of Reference
 A good starting point in defining a competitive frame of reference for
brand positioning is category membership – the products or sets of
products with which a brand competes and that function as close
substitutes

 Marketers sort product attributes or benefits into two points – point of

parity and point of difference, in order to form the frame of reference
of the product
 Points of Difference and Points of Parity

Points of difference (PODs)

◦ Attributes/benefits that consumers strongly associate with a brand,

positively evaluate, and believe they could not find to the same
extent with a competitive brand
 Points of Difference and Points of Parity
P O D criteria

 Desirable – consumers must see the brand association as

personally relevant to them

 Deliverable – The company must have the internal resources

and commitment to feasibly and profitably create and
maintain the brand association in the minds of consumers

 Differentiating – consumers must see the brand association as

distinctive and superior to relevant competitors
 Points of Difference and Points of Parity

Points of parity (P O P s)

Attribute/benefit associations that are not necessarily unique to the

brand – can in fact be shared with other brands

Regardless of the source of perceived weaknesses, if, in the eyes of

consumers, a brand can “break even” in those areas where it appears to
be at a disadvantage and achieve advantages in other areas, it should be
in a strong – and perhaps unbeatable – competitive position
 Points of Difference and Points of Parity
P O P forms
 Category POP – are attributes or benefits that consumers view as essential to a legitimate
and credible offering within a certain product or service category – necessary
conditions; not necessarily sufficient conditions
Example: ATMs for Banks, Online Banking Facilities

 Correlational POP – are potentially negative associations as a trade-off for a set of

positive associations for the brand
Example: IKEA and MUJI low price, less ornamentation – good quality

 Competitive POP – are associations designed to overcome perceived weaknesses of the

brand in light of competitors’ points-of-difference’
Remember: competitive parity is a method of budgeting funds to achieve industry–
average results
Example: If my competitor is spending certain funds in Social Media Marketing then I
must shall do the same in order to gain similar reach and success
 POP And POD

Potential POPs And PODs are shared across competitors

Quick-serve restaurants and convenience shops

PODs POPs
Quality, Image, Experience Convenience, Value
Source: google image
Searched on 20th August 2022
 POP And POD
Potential POPs And PODs are shared across competitors

https://www.amazon.com/vdp/0
58bbc34ce874528a693323fcc6ac
7bf?ref=dp_vse_rvc_0

Home and office consumption

PODs POPs
Quality Image Experience, Variety Convenience Value
Source: google image
Searched on 20th August 2022
POP And POD
 Multiple Frames of Reference –

First – develop the best possible positioning for each type or class of
competitors
Then – see if there is a possibility to develop a combined and robust
positioning to effectively address all the competitors

Remember:
 If competition is too diverse, then prioritize the competitors
 If there are many competitors across categories or subcategories then devise
effective positioning at the category level for all categories
POP And POD

Remember:

DO NOT try to be all things to all people

This leads to ‘lowest common denominator’ positioning –

ineffective
Straddle Positioning

Straddle two frames of reference into one set of

POPs and PODs

Example: BMW
In U.S. markets –
 Luxury cars were NOT perceived to be high on
performance
 High performance cars were NOT perceived to be
luxurious

 BMW positioned their cars as – high performing

luxurious cars – straddling both performance and
luxury
 Points of Difference and Points of Parity

Perceptual maps

◦ Visual representations of consumer perceptions and preferences

◦ Perceptual maps, also called positioning maps, may be useful for
choosing specific benefits as POPs and PODs to position a brand.
 Creating a Sustainable Advantage

Competitive advantage
The ability to perform in one or more ways that competitors cannot
or will not match

Holding competitive advantage with being replicated by competitors

for ever is not possible – so devise Leverageable advantage to
sustain

Example: Microsoft has leveraged its operating system with

Microsoft Office and networking applications
 Creating a Sustainable Advantage

Three core strategies:

 Differentiate on an existing attribute

 Introduce a new attribute

 Build a strong brand

 Communicating the Positioning
 Positioning statement
 Communicating an offering’s category membership along with points of
parity and points of difference, and developing a narrative to convey the
offering’s positioning
 Crafting a positioning statement

 Attributes that describe the offering versus benefits delivered by the

attributes
“For serious athletes, Nike gives confidence that
provides the perfect shoe for every sport”

Source: google image

Searched on 20th August 2022
 Communicating the Positioning

Communicating category membership

 Announce category benefits
 Compare to exemplars
 Rely on the product descriptor

Presumably, consumers need to know what a product is and what

function it serves before deciding whether it is superior to the brands
against which it competes

For new products, initial advertising often concentrates on creating brand

awareness, and subsequent advertising attempts to create the brand image
 Communicating the Positioning
Importance – customers are probably
aware that HP produces digital cameras – but
they may not be certain whether HP cameras are
in the same class as those made by Canon,
Nikon, and Sony

In this instance, HP might find it useful to

reinforce category membership

Source: google image

Searched on 20th August 2022
Communicating the Positioning
Communicating the Positioning
Communicating conflicting benefits – many of the benefits
offered can make up the POPs and many forms the PODs

Challenge: consumers want to maximize both of the negatively

correlated attributes or benefits

 Develop a product or service that performs well on both

dimensions – POPs and PODs
 Launch two different marketing campaigns
 Communicating the Positioning

Positioning as storytelling – Narrative brandling

 Setting – time, place, context

 Cast – the brand as a character, including its role in the life of
the audience its relationships and responsibilities, and its
history or creation myth
 Narrative arc – the way the narrative logic unfolds over time,
including actions, desired experiences, defining events, and
the moment of epiphany
 Language – authenticating voice, metaphors, symbols,
themes, and leitmotifs
 Positioning Through Storytelling

 Stories matter:

Even before human beings learned how to read and write, humans have
communicated through stories

• When humans are invested in a good, engaging story, the brain

responds physically to the same

• Humans buy stories because stories make them believe in things

or ideas that are communicated
 Positioning Through Storytelling

 Stories matter:

 Nike – ‘Until we all win’ story – https://www.youtube.com/watch?v=MT1Fy7OuAyY

 Maruti Alto – ‘Rishta’ story – https://www.youtube.com/watch?v=FpX71-E-F0s

 Communicating the Positioning

 Primal branding – Consumers often view a brand as

complex belief systems or a set of primal codes – icons,
story, creed, rituals, sacred words, good leader etc.
CHAMPION
Relentless determination
The Championships – Wimbledon
It doesn’t just tell time, it tells
history

Source: google image

Searched on 20th August 2022
 References &
Acknowledgements

• Kotler Keller, Marketing Management, 16th ed. Text Book And

Slides
• Prof. S. Ramachandran