Positioning and Brand Awareness

A Positioning Statement summarizes the positioning of a company in a market. The statement is usually one or two sentences, and begins by defining who the target market is, and what their need is for the product or brand. The product is then stated along with what category of the market it belong to. Finally the statement shows the key differences between the product and its competitors, and why consumers should purchase this particular product.
Having a strong positioning statement is very important. It not only serves to define your product and the benefits it carries over its competitors, but can also increase customer awareness of your product so much to the point where your product becomes synonymous with the market it belongs to.

To describe this, I think it's best to use a very classic example. Picture this scenario: It's a Sunday night and your family has made one of those last minute decisions to eat out. By the time you arrive at the restaurant and everyone sits down to order, it's 8:00 already, and everyone is famished. The menus get passed around and all orders are in. Except for yours. Your mother tells you that you have 10 seconds to order, or you don't get anything. Feeling rushed, you order your favorite dish, whatever that may be, and while your Mom is saying "3, 2, 1", you shout "and a Coke". The waiter heads back to the kitchen, and all of the sudden something hits you: Why did you just say a Coke? You're not in the mood for a Coke. Whether you catch the waiter and change your beverage to a Pepsi will have to be discussed another time. However what matters is, is that you just said Coke not because it's what you wanted, but because it was just what you said. That is one of the powers of brand awareness, and is one of the results of having strong positioning in the company.

This applies to just about every market there is. If you were to play a game with someone, where one of you says a market category and you have to say the first brand or product that comes to your mind, you'll be able to tell which company has made the strongest impression on you one way or another. If I say "car insurance", Geico may very well be the one to pop into your head. "Soft Drinks"- Coke. "Technology"- Apple. "Phone services"- Verizon, etc.
Whether you choose these companies because you own one of their products, just saw their commercial on TV, or just because that's what you thought of, you can assume that the company has been pretty successful in marketing their products.

Buyer Behavior and Decision Process

      There are many factors that affect our buying behavior, all of which marketers have to take into account before making decisions. These factors are primarily cultural, social, personal, and psychological. Culture strongly influences the decisions we make as consumers, and changes from place to place. Within each culture, there are subcultures which group people based on shared value systems, as well as social classes which group people based on common interests and beliefs. Social groups also influence a person's behavior. These groups include membership groups, aspirational groups, reference groups, and even social networks. Even within a family there are various buying behaviors. For example, in the United States, statistics show that women influence 91% of home purchases, and 92% of vacation purchases. Personal factors are factors such as age, occupation, economic situation, and lifestyle which all directly affect a person's decisions. Psychological factors are motivations, perceptions, and beliefs and attitudes which inspire and influence people's buying behaviors.

       A consumer's buying behavior also changes between products. For example, a person buying a new car or refrigerator will do extensive research before selecting and purchasing it. But when that same person realizes that he needs a more basic item such as salt, it is unlikely for him to start researching the different brands of salt, and will instead just go to the nearest store and buy whatever brand he sees first. The difference in these are dependent on how much consumer involvement is required in the purchase and how significant of a difference exists between brands. There are essentially four types of these behaviors: complex, dissonance-reducing, habitual, and variety-seeking. The marketing strategy that the leading brand uses won't necessarily be the same as a weaker brand's, as weaker brands will have to use things like promotions, lower prices, and advertising to lure customers away from their competitors and to their brand.

 
  Finally, it is important to understand the decision process that every buyer goes through before making a purchase. This process usually begins with a need recognition, which can be triggered by internal stimuli such as thirst, or by external stimuli such as an ad on TV. This recognition is then followed by a search for information in which you make use of sources, whether it be personal, commercial, public, or experiential, to gather information about the product you need. Once enough information is gathered, the buyer will evaluate the alternatives, eventually leading to a purchase of the most preferred one. Once the product is bought, the buyer's satisfaction (or lack of it) will ultimately affect his post-purchase buying decisions. These are all critical components of understanding the decisions buyers make when purchasing a product, as well as their behaviors throughout the entire buying process.

Marketing Research

     In order to achieve profitable customer relationships, marketers have to learn what their customers need and want. There are multiple ways of finding out this information using market research.

Exploratory Research is used to gather preliminary information that will help define a certain problem and offer suggestions to fixing it.

Descriptive Research is done to describe things such as how customers feel or what the opportunities are in a certain market 

Causal Research is used to figure out things like cause-and-effect relationships. 

For example, if I needed a way to lower expenses in my company, I would probably begin by doing some exploratory research to help define what the problem is and find what options I have to eliminate the problem. After doing this research, I may realize that the problem is that I pay my employees too much, and cutting their salaries might be an effective way of cutting expenses and saving the company money. Before just cutting salaries though, I would want to know how my employees will respond so I'm not left being the only person in the company. I will therefore do causal research to find out how people usually react to salary cutbacks in similar situations as mine, and then make a decision based on the results of this research.

What I am doing can essentially be divided into four different steps, which can best be seen by this chart:

While doing this research, I can gather different types of information. Primary data is information that is gathered specifically for the purpose of what I doing the research for. This includes things like surveys which are done now specifically for getting new information. Secondary data on the other hand, is information that already exists because it was collected for some other purpose. This includes information which can be found anywhere such as books and the web. In fact, there are commercial online databases which contain loads of information always available for use.

When doing primary research, the researcher has to make sure that the data he is collecting is relevant and accurate. There are a few different approaches for gathering primary data:
Observational Research- Attaining information by watching people and how they act in specific situations. An example of how this is used is when the Cleret, the famous, smartly designed squeegee was created. In 1989, an entrepreneur hired ZIBA, a major product design consultancy in the U.S., to design this tool used to scrub bathtubs, into a  tool which will be easy to use. ZIBA sent out a team of designers to literally shadow and watch how people cleaned bathtubs, studying the movements and gestures of the scrubbers. The observed to gather information, making use of observational research. They designed this squeegee based on this research, which not only ended up in the Smithsonian's permanent design collection, but also received an award for being the best-designed new consumer product.
Ethnographic Research- A type of observational research which sends observers to watch how people act in their natural environments. Nokia used this type of research to study the behaviors of consumers in foreign countries in how they use their cell phones. What's great about this type of research is that it produces true, honest information, as those being observed don't always realize they are providing the company with information.
Survey Research- Getting information by asking people questions about how they feel or what they know about something. This research approach is the most widely used method for gathering primary data. Many car rentals ask customers how their experience was with the car they rented and if they would rent again. This information is very valuable to the company, because it provides direct feedback from their customers. However, people can potentially lie or make up answers, or just ignore the survey altogether. That is a key difference between the value of surveys and ethnographic research.
Experimental Research- Gathering information by selecting groups and giving them different things, controlling the factors and checking for different results. This last main type of primary research is mostly used for gathering causal information. A restaurant might do this by charging different prices for the same sandwich in two different cities, and then seeing how the sales compare at the end of a month.

These are all ways of gathering primary data and using it to help create and maintain more profitable customer relationships. Companies use the information received to improve their products or services so that they are liked and desired more by customers.
The various ways of contacting the people you wish to interview are pretty straightforward: mail, telephone, personal interviewing, group interviewing (focus groups), online research, online focus groups, sampling,  questionnaires, and mechanical instruments.
Just to clarify: A focus group is pretty much when a small group of people (6-12) is selected to get together to talk about and express their feelings about a certain product or service. The interviewer's job is to focus the topics and questions, making sure to cover the important issues at hand. Sampling is when part of a population is selected for market research, which will represent the entire population or even the whole world.  (Probability sampling is a percentage or a calculable chance of something occurring, whereas non-probability sampling is just a random chance of something occurring). Questionnaires are the most common instrument used. They are very flexible in terms of the scope of questions that can be asked. Mechanical instruments include things like people meters, which are used for things like seeing how many people watch a certain channel on TV, all the way down to checkout scanners used by retailers to record purchases by consumers. 

The Marketing Environment

     As the environment is always changing, companies have to constantly be watching and adapting to it. If they fail to do this, they will fall behind and be left behind. A great example of a company that had this problem is Xerox. Xerox dominated the photocopy industry which it created, so much to the point that "xerox" actually became the term used for copying ("Could you xerox that for me?"). However, within an 18 month period, Xerox lost $38 billion in market value. Why? Because Xerox failed to adapt to the changing environment. Technology was transforming everything into digital, but Xerox wasn't keeping up.
    Eventually Xerox made its way back up and is once again growing and profitable, after making many changes in the company. But the point is that no matter how profitable and successful your company may be currently, if you fail to adapt to the environment, your company will be lost.
      The marketing environment consists of everything that affects a company's ability to maintain profitable relationships with consumers. It is comprised of the microenvironment and macroenvironment.
Microenvironment- The company itself, suppliers, marketing intermediaries, competitors, publics, and customers. All of these groups of people directly affects a company's relationship with its customers one way or another.

Macroenvironment- The macroenvironment is comprised of many factors:

1. Demographic- These are factors of human population such as age, gender, density, location, race, and occupation. Knowing the details and demographic factors of your customers is more than beneficial to your company; it is crucial. 
2. Economic- The financial situation around your company.
3. Natural- The natural resources or natural environment.
4. Technological- The forces that create new technologies, also creating new products and markets.
5. Political- Laws that prevent or only allow certain things.
6. Cultural- The values, behaviors, and perceptions of a certain society.

Each of these forces impacts the way a company performs. Take technology for example: The United States is clearly a lot more technologically advanced than so many other countries, as the U.S spends an enormous amount of money on researching the latest technologies. In 2009, the total spent on Research and Development (R&D) by the U.S. reached $367 billion. This not only impacts business in America, but has an effect on any business doing business in America. They have to know that there are major technological differences than from what they may be used to, and have to understand how to adapt to them. 

Marketing Strategies

It is often very difficult for companies to serve everyone, everywhere. Therefore, companies locate themselves in areas where they will most likely get the most profitable customers. Instead of just trying to take over an entire market, companies instead divide up the market (market segmentation), choose the best segments for them (market targeting), and then create strategies for how to best serve those particular market segments (differentiation and positioning).

Market Segmentation: There are numerous ways for companies to categorize their customers. They can be grouped based on geographic, demographic, and behavioral factors (Geographic = location; Demographic = gender, age, etc.; Behavioral = behaviors, attitudes). The process of dividing customers into these categories is called Market Segmentation.
Market Targeting: Once the company divides up the market, it can then pick which segment(s) it will go after. Again, companies have to do research to really see which segment will be the most profitable. For some companies this is easier to do than others, as in the Build-A-Bear case. Build-A-Bear realizes that their company can only be successful where there are children close by, and will therefore target them and open stores only where a large child demographic exists.
Market Differentiation and Positioning: Once the company chooses which market segment(s) to enter, it has to now decide if and how it will differentiate between each segment. Positioning is the process of arranging for the product to be where you want it in terms of the competitors, or why a customer would pay the extra money to have your product as opposed to another brand's. Differentiation is making your market offering different and hopefully better than your competitor's, so you have as much customer value as possible. Your goal here is to have your product be the one that's associated with the actual item. For example, if my mother asks me to buy a bottle of ketchup, I will assume she means Heinz because that's just what ketchup means. It's the same with all companies. If your product is the automatic name that comes to mind when the item is mentioned, it basically means that you have created superior customer value than your competition.

When analyzing a company's situation, marketers conduct what is called the SWOT analysis, which evaluates the company's Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are within the company itself, while opportunities and threats are external, or not controlled by the company.
Once the basic SWOT analysis is done, the company can start forming its detailed marketing plan. This plan begins with an executive summary that briefly goes the company's goals and recommendations. Then, a more detailed SWOT analysis is presented, followed by the major objectives of the company, along with strategies of how to achieve them. The budget section and controls sections which are last, projects profit and loss, and outlines the controls that will monitor the progress of meeting these goals.

Just as every company has a CEO and CFO, many companies have now created a new position, CMO, or Chief Marketing Officer, to carry out the marketing plans and manage the Marketing Department in the company. Marketing control is the process of evaluating the results of the marketing plans and ensuring that the listed objectives are being achieved.

Build-A-Bear Case Analysis

I am giving you two options: 1) You have to build your own garage, costing you $5000 and a week's worth of time. 2) A professional builder will build it costing you the same $5000 but no time at all.

Which would you choose? I would choose the professional builder without even thinking twice about it. Why? Because I get the same product, done professionally, for the same amount of money, and not costing me any of my time (even though I then would not get the same satisfaction as I would if I did it myself).

Now go over to a three-year old and ask him/her the following question: Would you rather order a stuffed-animal online, or go to the store and make your own stuffed animal, making it look however you want? The answer of course will be the second choice, make it myself. Why? Ask the CEO of Build-A-Bear, Maxine Clark.

When children enter a Build-A-Bear store, they step into an imagination dreamland. They begin their "bear-making" process at a "Choose Me" station, where they can select any unstuffed animal that they find. Then, they fluff, stitch, dress, accessorize, and name their animals. Each child is creating a product that is unique and personalized to him/her. In fact, getting the stuffed animal at the end is not what the company is really selling. Build-A-Bear is selling an experience to each and every customer; the experience of personalized entertainment. So which child or parent would want to miss out on this opportunity, and instead buy a stuffed animal from Vermont Teddy Bear Co., for at least twice the amount?! 

Build-A-Bear will remain successful because of the way they build customer relationships. Build-A-Bear changes its huge assortment of accessories for the stuffed animals 11 times a year. They adapt to their customer audience, no matter what it takes. For example, when the Spiderman movie came out, Build-A-Bear added bear-size Spiderman costumes to the clothing line. Therefore, Build-A-Bear will not just be a fad like many other toys and dolls that go in and out. It will keep expanding and being successful because it adapts to its customers. Build-A-Bear understands its customers' needs, wants, and demands

The Mission Statement and Portfolio

Every company and organization should have a goal of what it wants to be, and a plan or strategy as to how to reach that goal: a mission statement. The way a company defines its mission, can make a difference as to how they are perceived by the public. A company's mission statement should not merely define what it does, but rather tell its customers what it does for them. The mission statement should be market-oriented. For example, Microsoft's goal is what the company tells its customers: "Your potential, our passion." Target's statement is "Expect more. Pay less." Mission statements can't be vague.
     Once the company has its mission statement, it has to then plan its business portfolio, which is the collection of businesses that make up the company. There are two steps in making this portfolio: 1) Analyzing the company's current portfolio and decide which businesses to invest in. 2) Shaping the future portfolio by making strategies for improving and resizing the company.

In analyzing the current business portfolio, the Boston Consulting Group (BCG) approach is pretty well-known in the business world. This approach uses the growth-share matrix, which evaluates a company based on its market growth rate and relative market share, (its piece of the pie). This matrix shows four types of SBU's (strategic business units) which can refer to either a whole division within the company or even just to a specific product. These categories are:

1) Stars, which are products that are high-growth and high-share, or products which are currently hard to maintain but ultimately become cash cows (the next category).
2) Cash cows, which are low-growth and high-share products. In other words, the market isn't that large, and the company has the largest piece of the pie within that market. These are the company's most profitable products and many times are used to support other SBU's that need investments.
3) Question marks, which are low-share and high-growth products. These require a lot of cash to maintain, some end up as stars while others are just not worth it for the company to keep and are therefore discontinued.
4) Dogs, which are low-growth and low-share products. These many times result when the company doesn't do sufficient research beforehand, They sometimes generate enough cash to survive, but obviously not as much as cash cows.
However, this approach doesn't always make sense for a company to take, as it is many times difficult to categorize every product or SBU into one of these four categories. Furthermore, these categories all define where the product is now, but says nothing about the future. Therefore, many companies instead customize their own approaches to evaluating their SBU's, and decentralize the strategic planning to division managers.

Growth and Downsizing


There are four main ways for a company to grow. Although they may sound complicated, they are really very simple to understand:

1) Market penetration- increasing the sales of an existing product without changing the product at all. This is usually done when the market is not yet saturated.
Example: Starbucks building stores on every corner.             
2) Market development- finding new markets for the company's current products.
Example: Starbucks opening stores in cities without them.
3) Product development- creating new products.
Example: Starbucks selling other products such as CD's in their stores.
4) Diversification- starting completely new businesses that have nothing to do with the existing ones.
Example: Starbucks opening up a car wash.


Many times companies find that they have too many products which are unprofitable, and therefore want to downsize. Downsizing is not necessarily a bad thing. It just means that the company is reducing its portfolio by getting rid of products that are not adding to the company's value. It's all part of strategy. Having more players on your basketball team doesn't do you any good if those players are bad at basketball. It's the same idea here: If a grocery store makes a product that doesn't drive in any profit, and even causes the store to lose money making it, it's not a bad thing for the company to discontinue making it.