Suppose a company has researched and selected its target market. If it is the only company serving the target market, it will have no problem in selling the product at a price that will yield reasonable profit. However, if several firms pursue this target market and their products are undifferentiated, most buyers will buy from the lowest priced brand. Either, all the firms will have to lower their price or the only alternative is to differentiate its product or service from that of the competitors, thereby securing a competitive advantage and better price and profit. The company must carefully select the ways in which it will distinguish itself from competitors. Suppose a scooter manufacturer, say Bajaj, gets worried that scooter buyers see most scooter brands as similar and, therefore, choose their brand mainly on the basis of price. Realizing this, Bajaj may decide to differentiate their scooters physical characteristics. "Differentiation is the act of designing a set of meaningful differences to distinguish the company's offer from competitors' offers. May be Bajaj claims its scooter to be different from others because of its highest fuel efficiency and economy, LML claims-maximum durability and added physical features, whereas Vijay Super may have claimed highest mileage. Thus, all scooters appeal differently to different buyers. If it wishes, any scooter manufacturer can show this comparison chart to potential buyers. Not all buyers will notice or be interested in all the ways one brand differs from another. Such firm will want to promote those few differences that will appeal most strongly to its target market. Positioning is the act of designing the company's offer so that is occupies a distinct and valued place in the target customer's minds. Positioning calls for the company to decide how many differences and which differences to promote to the target customers.
How many differences to promote: Many marketers advocate aggressively promoting only one benefit to the target market. Rosser Reeves, e.g. said a company should develop a unique selling proposition (USP) for each brand and stick to it. Thus, Godrej refrigerators claim, automatic defrost, while Rin claims to have dirt-blasters. Each brand should pick an attribute and claim itself to be "number one" on it. What are some of the "number one" positions to promote? The major ones are "best quality", "best service", "best value", “most advanced technology” etc. If a company hammers at any one of these positioning points and delivers it properly, it will probably be best known and recalled for this strength. Besides single benefit positioning, the company can try for double benefit positioning- e.g. Forhans toothpaste claims that it cleans teeth and protects the enamel. There are even cases of successful triple benefit positioning e.g. Videocon Washing machines claims that the machine "washes, rinses and even dries the clothes". Many people want all three benefits, and the challenge is to convince them that the brand delivers all three.
What differences to promote: A company should promote its major strengths provided that the target market values these strengths. The company should also recognize that differentiation is a continuous process. It would seem that the company should go after cost or service to improve its market appeal relative to competitors. However, many other considerations arise.
1. How important are improvements in each of these attributes to the target customers?
2. Can the company afford to make the improvements, and how fast can it complete them?
3. Would the competitors also be able to improve service if the company started to do so, and in that case, how would the company react?
This type of reasoning can help the company choose or add genuine competitive advantages.
Communicating the Company's positioning: The Company must not only develop a clear positioning strategy, it must also communicate it effectively. Suppose a company chooses the "best in quality" positioning strategy. It must then make sure that it can communicate this claim convincingly. Quality is communicated by choosing those physical signs and cuts that people normally use to judge quality. Quality is often communicated through other marketing elements. A high price usually signals a premium-quality product to buyers. The product's quality image is also affected by the packaging, distribution, advertising and promotion. The manufacturer’s reputation also contributes to the perception of quality. To make a quality claim credible, the surest way is to offer "satisfaction or your money back". Smart companies try to communicate their quality to buyers and guarantee that this quality will be delivered or their money will be refunded.