Brand Differentiation & Positioning For Maximum Competitive Advantage

Project and Seminar Material for Marketing

Brand Differentiation & Positioning For Maximum Competitive Advantage


Abstract


In the market place, no company can win if its market offering resembles every other company’s product. Companies must pursue relevant positioning and differentiation. As part of branding strategy, a company and its offering must represent a distinctive big idea in the mind of the target market. Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy, a company can differentiate its offering between segments and within each segment it can differentiate its offering from the comp+0-etition. By a creating a differential advantage over the competition, a company is giving the customer a reason to buy from them rather than from the competition because a company with a differentiated marketing strategy can produce more sales. The differentiation concept must be understood for effective positioning of a company’s offering. The differentiation and positioning task consist of three steps; identifying a set of possible differentiations that create competitive advantage, choosing the right competitive advantages, and selecting an overall positioning strategy. A company may choose to differentiate its product in terms of durability, price, quality, or in relation to a competitor. Success in positioning requires a well researched plan.This research is aimed at identifying the various strategies which firms can use in other to gain maximum competitive advantages while differentiating and positioning its product in the market place.The objective of the study is as follows; to determine the effect of brand differentiation on a company and on its product, to identify how a company differentiates and positions its product against that of competitors, identify the best differentiation and positioning strategy for greater competitive advantage and to identify whether there is an increase in sales volume of a well differentiated and positioned product.The research questions to be adopted in this research work are as follows; to what extent does brand differentiation and positioning affect a company and its product? How does a company differentiate its product from that of competitors? What differentiation and positioning strategy will give a company maximum competitive advantage? Does differentiation and positioning increase the sales of a company? The significance of this research work will be to benefit the company in identifying the most effective differentiation and positioning strategy for increasing sales performance.This research is focused on brand differentiation and positioning for maximum competitive advantage in the market place using as a case study, Dangote Noodles limited. In conducting this research, the survey method, use of questionnaire to gather data from respondents in some of the departments in Dangote Noodles Limited Ebute Ikorodu town of Lagos, while the secondary sources of data will include instruments such as review of past projects, relevant journals, textbooks and materials from the internet.


Chapter One


Introduction

1.1 Background to the Study

Branding has been around for centuries as a means to distinguish the goods of one producer from those of another producer. To firms, brands represent enormously valuable pieces of legal property that can influence consumer behaviour, be bought and sold as well as provide the security of sustained future revenues of their owner. Well- recognized brands make shopping easier. Brand promotion has advantages for branders as well as customers. A good brand reduces the marketer’s selling time and effort and sometimes a firm’s brand name is the only element in its marketing mix that a competitor cannot copy. Also good brands can improve the company’s image- speeding acceptance of new products marketed under the same name. Thus branding can be seen as a powerful means to secure a competitive advantage.

Beyond deciding which segments of the market it will target, the company must decide on a value proposition, that is, how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments. Companies must pursue relevant differentiation and positioning, each company and its product must represent a distinctive big idea in the mind of the target market. Given the many brands available in the market place, a company must carefully consider both the strengths and the weaknesses of competitors when developing marketing strategy; this is to aid the product positioning task.

The differentiation and positioning task consists of three steps: Identifying a set of possible differentiations that create competitive advantage, choosing the right competitive advantages and selecting an overall positioning strategy. In essence, product positioning extends market segmentation by defining the market target that management intends the firm to penetrate. It establishes the segments at which the firm intends to focus its marketing efforts; this is the segments where the firm is most likely to have a competitive advantage.

Consumers are overloaded with information about products and services, to simplify the buying process, consumers organize products, services and companies into categories and “position” them in their minds. But marketers do not want to leave their product’s position to chance, therefore, they must plan positions that will give their products the greatest advantage in selected target markets and they must design marketing strategies to create these planned positions.

The key to superior performance is to gain and hold a competitive advantage. Firms can gain a competitive advantage through differentiation of their product offering which provides superior customer value or by managing for lowest delivered cost. These two means of competitive advantage when combined with the competitive scope of activities (broad or narrow), result in four generic strategies: differentiation cost leadership, differentiation and cost focus.

Differentiation strategy involves the selection of one or more choice criteria that are used by many buyers in an industry. The firm then uniquely positions itself to meet these criteria. Differentiation gives customers a reason to prefer one product over another. In order to create a differentiated position, a firm needs to understand the nature and location of the potential sources of competitive advantage. The nature of these sources are the superior skills- distinctive capabilities of key personnel that set them apart from the personnel of competing firms and the superior resources of a firm- tangible requirements for advantages that enable a firm to exercise its skills, it includes the number of sales people in the market, expenditure on advertising and sales promotion, distribution coverage, expenditure on research and development, financial resources, brand equity and knowledge. These skills and resources are translated into a differential advantage when the customer perceives that the firm is providing value above that of the competition.

The objective of positioning is to create and maintain a distinctive place in the market for a company and its products, but to compete successfully in a target market involves providing the customer with a differential advantage. This differential advantage can be created using the marketing mix;

Product: brands were differentiated based on product performance in areas of speed, comfort and safety levels, capacity and ease of use or improving taste or smell. Product development was a cornerstone of corporate activity, and continual product improvement was an acknowledged objective for any brand marketer. However, while companies still invest heavily in research and development and still seek a product performance edge wherever it can be found, it is a marketing maxim that differences in performance now are often minimal at best.

Distribution: Lacking meaningful product performance differences, marketers have traditionally emphasized another marketing resources; wide distribution coverage and or careful selection of distributor location to provide convenient purchasing for customers. In other words, products that are conveniently available will all other things being equal be chosen most often.

Promotion: The most commonly pursued marketing solution lies in the area of brand communications, advertising and promotions.

At a time when products perform in similar ways when availability differences are often minimal and when price differentiation may be only temporary, powerful advertising messages, creatively carving a sustainable and unique position in the minds of a receptive audience.

Price: Pricing has been another marketing tool often used to establish differentiation. The challenge, however, is how to “own” a real (or perceived) long-term price advantage. Short-term offers, deals, and price promotions can provide a brand an apparent price advantage and the appearance of differentiation. However, as the acknowledged goal of brand marketing is to build customer loyalty (i.e. not just trial, but repeat business), a short-term advantages or a temporary point of differentiation is simply not sufficient. Sustainable differentiation is required. If the sustainable differentiation is to be based on price, and is to be owned over time, the marketer must occupy the “low-cost provide” position. Thus, price as wellas product performance is not what differentiates these brands. So, price is what keeps customers coming back or keeps them from leaving. The end result of differentiation and positioning is however, the successful creation of a market focused valued position.


1.2 Statement of the Problem

A wide variety of brands that are similar in performance can make a company to find its brand in a difficult position in the market place. For companies, differentiation and positioning are seen as major methods of gaining competitive advantage over competitors.

The purpose of this research is to identify the various strategies employed by a company in the differentiation and positioning of its product that gives it a competitive advantage over competitors.


1.3 Objective of the Study

The study will address the following;

  1. To identify the effect of brand differentiation on a company and its product.
  2. To identify the effect of positioning on a company’s product.
  3. To identify how a company differentiates and positions its brand against competition.
  4. To identify the differentiation and positioning strategies that gives the greatest competitive advantage.
  5. To identify how differentiation and positioning affect sales of a firm.

1.4 Research Questions

  1. Does differentiation and positioning increases a company’s sales revenue?
  2. Does competition affect brand preference of consumers of noodles?
  3. Which of the differentiation strategy gives a company the greatest competitive advantage?
  4. How does a firm differentiate it product from that of competitors?
  5. Does brand differentiation affect a company’s image?

1.5 Research Hypothesis

  1. H01: A company’s sales revenue is not affected by its differentiation and positioning strategies.
    H11: A company’s sales revenue is affected by its differentiation and positioning strategies.
  2. H02: Competition does not affect consumer’s brand preference.
    H12: Competition affects consumer’s brand preference.
  3. H03: Brand differentiation has no impact on a company’s image
    H13: Brand differentiation has an impact on a company’s image.

1.6 Significance of the Study

A number of significant changes have occurred over the past several years to identify the impact of brand differentiation and positioning in the market place. Brand differentiation and positioning today, has aided companies effectively enjoying maximum competitive advantage against its competitors in the market place.

The significance of this study is to benefit both the consumers and companies in identifying effective differentiation and positioning strategies that will lead to increase in sales revenue.


1.7 Scope and Limitation of the Study

This research is focused on brand differentiation and positioning for maximum competitive advantage in the market place.

This research is limited to Dangote Noodles Limited, Ebute Ikorodu a subsidiary of Dangote Group.


1.8 Definition of Terms

Brand:

This is a name, term, sign, symbol or design or a combination of these that identifies the goods or services of one seller or group of sellers and differentiates them from those of competitors.

Differentiation:

This is defined as the act of designing a sort of meaningful differences to distinguish the company’s product from products of competitors.

It involves actually differentiating the product to create superior customer value.

Positioning:

Is defined as the act of designing the company’s product and image so that it occupies a meaningful and distinct competitive position in the target customers mind.

A product’s position is the way the product is defined by consumers on important attributes; the place the product occupies in consumers mind relative to competing products.

Competitive Advantage:

This refers to a company’s ability to perform in one or more ways that competitors cannot or will not match.

It can also be defined as an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.


Chapter Five


Summary of Findings, Recommendation and Conclusion

5.1 Summary of Findings

The study of brand differentiation and positioning for maximum competitive advantage in the market place is seen to be of relevance to an organization as a determining factor for differentiating the product of a producer from that of other producers.

The most distinctive skill of professional marketers is their ability to build and manage brands. Consumers view a brand as an important part of a product and branding can add value to a product. Differentiating a product helps a consumer to identify products that can benefit them, it also says something about product quality and consistency, branding also gives sellers several advantages. The brand name becomes the basis on which a whole story can be built around a product’s special qualities. The seller’s brand name and trademark provide legal protection for unique product features that otherwise might be copied by competitors. It also helps the seller to segment markets.

But marketers were formerly into mass marketing, undifferentiating marketing, differentiating marketing and target marketing. Target marketing requires four major steps; market segmentation, market targeting, positioning and differentiation. A company can differentiates products, personnel, image and channel and having done this, a company must decide how many differences to promote and which ones to promote. The positioning are more for more, more for same, the same for less, less for much less and more for less.

The basis for segmentation is geographic segmentation, demographic segmentation, psychographic segmentation, behavioural segmentation. Target marketing consists of five (5) patterns; single segment concentration, selective specialization, product specialization, market specialization and full market coverage.

The first, second and third null hypotheses that was tested in the study was rejected because it has been established that there is significance between a company’s sales revenue, competition, image and its differentiation and positioning strategies. Brand differentiation and positioning was considered as a variable that would have an effect on a company’s sales revenue.

We can conclude (at 0.05 significant level) that a company’s sales revenue is affected by its differentiation and positioning strategies, also that competition affects consumers brand preference and lastly that brand differentiation has an impact on a company’s image.


5.2 Recommendations

Generally, in developing marketing strategy for Noodles products, the relative elements of brand differentiation and positioning should be blended to reflect the importance attached to having maximum competitive advantage in the market place that is; product differentiation, personnel differentiation, channel and image differentiation, for positioning we have; more-for-more, more for the same, more for less, the same for more and less for much less.

This means that for a brand to be successful it must out performs other brands quality wise in the market, its price must be competitive and it must be reasonably available in important distribution outlets. Since there is a high level of brand preference in the market, effective branding is critical to the success of a brand in the market.

Thus effective competitive advantage will be achieved through distinctiveness in its differentiation and positioning and to achieve such distinctiveness, significant marketing resources will have to be employed so as to create distinct brand personalities, awareness and loyalty for the product.


5.3 Conclusion

The influx into the Nigerian market of different brands of Noodles was followed by an awareness of the need for greater economic consideration by the consuming population in their demand pattern. This phenomenon has brand as a non-easy job for the marketers to sell the product in question especially as they are substitutes.

Different market differentiation and positioning strategies are being adopted by the firms and their marketers to make their various brands acceptable to the consumers, but more aggressive marketing devices need to be adopted by those concerned with manufacturing and marketing of this product so as to meet the ever-changing buying motives and pattern of the consumer. Neglect of this by any firm and its marketers may lead to loss of patronage for the particular brand and eventually to complete extinction from the market.

In a nutshell, if all the recommendations are implemented by producers of Noodles products, their goals and objectives will be achieved. That is to say, the relative element of differentiation and positioning should be blended.


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Frequently Asked Questions


What is the difference between positioning and differentiation?

Before we move on to the different types of differentiation strategies, let’s recap: Positioning is the place you hold in the mind’s eye of your target audience. Differentiation is how your firm is different or stands out from your competitors on a non-price basis.

What does differentiation mean to professional service organizations?

For professional service organizations, differentiation can mean the difference between swimming in a sea of sameness or becoming the go-to leader in your field. Some brands are more comfortable doing things the way they’ve always been done; others say they’re trying to appeal to the largest possible audience.

What are the three steps in a differentiation strategy?

A differentiation strategy is multi-pronged but can generally be condensed into three steps: 1 Identifying differentiating competitive advantages. 2 Choosing the competitive advantages that will build the best position. 3 Selecting a global positioning strategy. 

What is positioning and why is it important?

Positioning is the place in the market you want your business to hold, especially in the mind’s eye of your target audience. It can be subtle and difficult to detect but can be easier to spot if you look at it from your own position as a consumer. Take cars, for example, where the idea of perception as reality excels.

What is the difference between positioning and differentiation in marketing?

Key Difference – Positioning vs Differentiation The key difference between positioning and differentiation is that positioning refers to acquiring a space in the mind of the customer whereas differentiation is a marketing strategy companies use to make their product unique to stand out from competitors.

What is the difference between branding and positioning?

The key difference between branding and positioning is that branding is the process of creating a unique image of the company’s product mainly through brand logos, taglines and advertising strategies whereas positioning is referred to as acquiring a space in the mind of the customer among competitor brands.

What is product differentiation in marketing?

Product differentiation is a positioning strategy that allows marketers to create distinction of their product offerings in the minds of their target market. Positioning of a product is the process that influences consumers’ perception of the product and will lead to consideration for purchase in the competitive set.

How does Kia use product differentiation in their positioning strategy?

This use of carving a niche for a product (in this instance a car for young drivers) requires the use of product differentiation. This is a type of positioning strategy that Kia is using to distinguish their cars from the competitor’s in the market place.

What is differentiation in an organization?

What is Differentiation in Organization? Differentiation refers to how a business separates itself into key components. This is common among larger companies; the larger a company grows, the more differentiated it tends to become. Businesses with a large amount of differentiation give these separate components a great deal of autonomy.

How many differentiators do professional services firms have?

There are many successful differentiators. Here are 21 that work for many professional services firms. And remember, you can have multiple differentiators. They can be combined to create a powerful competitive advantage. 1. Specialize in an industry.

How do you differentiate your service?

It is demotivating. The best way to differentiate your service is to have lesser return rates, be it a product service or a restaurant. Overall, above are the 7 ways that you can differentiate your services and thereby achieve service differentiation.

What is brand differentiation?

Brand Differentiation Defined Throughout the life of your firm, you will experience significant changes in what you do. It’s simply the nature of professional services that the landscape is constantly changing under your feet. Your competitors will change. Your clients’ needs will change.

What are the two types of differentiation strategies?

There are two main types of differentiation strategies that a business may carry out: a broad differentiation strategy and a focused differentiation strategy. What is a broad differentiation strategy? A broad differentiation strategy consists of building a brand or business that is different in some way from its competition.

What are the advantages of a focused differentiation strategy?

Advantages of Focused differentiation Strategy First, there is the room to charge very high prices. Furthermore, a business can use low-cost structures to better their profit margins. Second, a business can develop great expertise on their products and services.

What is the best differentiation strategy for a shoe brand?

Furthermore, a brand may use cost advantages as a differentiation strategy. Certainly, this is a most common differentiation strategy. If your brand sells shoes at a lower price compared to another brand where both products are virtually identical, a lower price can create the cost advantage. Pitfalls of differentiation strategy

What is effective differentiation in teaching and learning?

Effective differentiation starts with knowing the students’ academic strengths, interests, and perspectives. Formative assessments, thinking styles inventories, and surveys help to construct lessons and scaffolds that strategically meet needs.

What is an example of positioning?

The threat of color revolutions is common for all. And in this respect, Belarus in this operation not just showed that it is ready to meet such threats once again, it demonstrated the extraordinary activity.

What is the definition of positioning?

Positioning – the act of putting something in a certain place. locating, location, emplacement, placement, position. activity – any specific behavior; “they avoided all recreational activity”. stratification – the placing of seeds in damp sand or sawdust or peat moss in order to preserve them or promote germination. 

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