Building quality into the core product is vital. The core product must achieve the basic functional requirements expected of it. Higher quality brands achieve greater market share and higher profitability than their inferior rivals. It is important to understand as to how the customers judge the quality of a product. Most customers do not do detailed evaluations of the performance of the product when they buy.

Positioning:

Creating a unique position in the marketplace involves the careful choice of target market and establishing a clear differential advantage in the minds of these customers. This can be achieved through brand name and image, service, design, guarantees, packaging and delivery. Unique positioning will require a combination of these factors. Viewing markets in novel ways can create unique positioning concepts. Positioning is an opportunity for the company to communicate to customers as to what it strives to achieve for them functional needs, and what it wants to mean to them emotional needs.

Repositioning:

As markets change and new opportunities arise, repositioning is needed to build brands from their initial base. A successful brand may be rendered irrelevant if needs and circumstances of customers in its target market change. If this change is gradual, then manage to keep itself acceptable to the target market.

Well Balanced Communication:

Brand positioning shapes customer perceptions. A brand needs to communicate its positioning to its target market. Awareness needs to be built, brand personality projected and favorable attitudes built and reinforced among customers. The brand themes need to be reinforced by advertising, salespeople, sponsorship, public relations and sales promotion campaigns. Companies have often relied on advertising in the mass media to communicate brand positioning.

Being First:

Pioneer brands are more likely to be successful than follower brands. Being first gives a brand the opportunity to create a clear position in the minds of target customers before competition enters the market. It gives the pioneer the opportunity to build customer and distributor loyalty. But it requires sustained marketing effort and the strength to withstand competitor attacks.

Commodity products are hard to differentiate. Reducing risks in such products can help suppliers in differentiating their products and charging a premium from the customer. Marketers have tough time selling products which do not lend themselves to being easily differentiated. Companies resort to price-cutting to be able to sell such commodity products. Smart buyers play one seller against the other to extract the largest concessions. Conventional marketing approaches like bundling products or appending value-enhancing services such as training and consulting can distinguish commodities. These strategies may be able to avoid price wars but they can be so expensive that companies may not be able to recover their costs.

There is another way to sell a commodity more profitable. Customers frequently will pay a premium to the supplier that understands and reduces their risk. Companies can segment their customers by their exposure to and tolerance for risk and offer customized risk-reduction packages for a price. Companies should understand that customers do not want more choices. They are more bothered about obtaining exactly what they want, which they often do not get even when they have many choices. Therefore, businesses can gain more if they deliver products that meet the exact specifications of the customer. Database technology permits companies to accumulate data about individual tastes and preferences of customers. This information can be used by companies to customize their offerings for customers at a low cost through flexible manufacturing systems.

In mass marketing or segmented marketing, the company designs an average product that a large number of customers would like to some extent. This is a product in which choice of large multitude of customers have been compromised. This product is not perfectly suited for even a single customer but is adequately suitable for a large number of customers. Customers have to find the most suitable product for themselves from the given array of options. A company will need to have a learning relationship with the customer. It means that the company should be aware of changing customer needs, and accordingly keep on tailoring its offering. In such a relationship, both the company and the customer will have to invest time.

Products are embedded with increasing amount of technology. Products like personal computers and mobile phones are supposed to make customers more efficient, entertain them, and connect them with others. But customers accuse the very same products of wasting their time, confusing them, and isolating them. Customers have an uneasy relationship with technology and this uneasiness affects the way they shop for, buy, and use technology products. There are eight paradoxes that govern the relationship between customers and technology.

Control-chaos and Freedom-Enslavement:

Many technology products are supposed to bring order to the lives of the customers. But they have the capability to disrupt everyday routines. A family dinner can be ruined by malfunction in an over’s automatic timer; a corporate presentation can be disrupted by the equipment’s malfunctioning. Products that promise freedom to the customer also put new restrictions on them. The availability of the voice mail lets customers be in a meeting without being disturbed, but makes them feel obligated to constantly check messages and respond to them.

New-Obsolete an and Intelligence-Stupidity:

Some products have cutting edge technologies embedded in them but owners of such products always have the fear that their products will be rendered obsolete by the introduction of a more advanced model. Customers feel smarter when they use sophisticated products to solve complex problems. But they also feel stupid because they find it difficult to master the new technology or because they lose old skills.

Efficiency-Inefficiency and fulfilling needs-Creating new needs:

Customers are able to do certain tasks faster but they are not saving time as they have to do time-consuming new chores that the new product imposes on them. Numerous kitchen appliances were supposed significantly less time in the kitchen than they were doing earlier. Many technology products create new needs even as they serve others. A customer may be able to make a beautiful report using color printer but he will have to spend hours to get the fonts and the colors just right.

Assimilation-Isolation and Engagements-Disengagements:

Many technologies connect customers among themselves either by creating direct communication links or by providing shared experiences. But these technologies also become a substitute for face-to-face meeting and other social activities. A technology may enable an activity to be done faster but the customer does not feel sufficiently engaged in the activity and the technology may suck the fun element from the activity.

Products can be defined as either business or consumer products depending on the buyer’s intentions. The main distinction between the two types of products is their intended use. Business products are used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other customers. Consumer products are bought to satisfy an individual’s personal wants. Sometimes same product can be classified as either business or consumer product depending on its intended use. Computers are bought by customers for their own use and they are also bought by organizations to facilitate their operations.

Types of Consumer Products:

Consumer products can be classified according to how much effort is normally expended to buy them. Products that are frequently purchased, and have a low unit price involve lesser effort by the consumer. For infrequently purchased products, particularly those with high unit price, the consumer has to expend more effort while buying the product.

Convenience Product:

Conveniences goods are inexpensive products require little shopping effort. Customers do not shop extensively for such a product. Customers buy convenience products regularly without much planning. Customers are aware of brand names of the popular convenience products. These products are very intensively distributed. Soft drinks, chocolates, deodorants are common convenience products. These products are also called fast moving consumer goods.

Shopping Product:

Shopping goods are more expensive than convenience products and are found in fewer retail stores. Customers buy these products only after comparing several brands or stores on style, features, price, and benefits. Customers expend time and effort to select the right product for themselves. Some shopping products like televisions and refrigerators are basically similar and customers buy the lowest priced brand that has the desired features and benefits.

Specialty Product:

Specialty products are those for which customers have strong brand preference and are very fussy about them. They will travel long distances to locate their favorite brand or outlet. They rarely accept substitutes. Designer watches, Rolls Royce cars, restaurants are typical specialty products. Companies marketing specialty products use selective, status-conscious advertising to maintain the product’s exclusive image.

The positioning idea must be clear in terms of both target market and differential advantage. The target market should be clearly demarcated and identifiable in terms of demographic or geographic parameters, or a combination of both. Each target market of the company should be different from the other. The target market should be clearly defined in terms of being served by a distinct value proposition. The value proposition should be clearly communicated. The value proposition is communicated mostly through advertising. Advertising agencies are responsible for communicating the value proposition.

Consistency:

Confusion will arise if changes in positioning planks occur frequently. For instance, if a company positions on quality of service in one year, and then next year it changes its positioning to superior product performance, the consumer would not know what to expect from the offering of the company. A company which changes its positioning planks frequently will leave customers confused about its real identity. Customers will not know what the company stands for. A company has to stick to a positioning plank for a reasonable length of time so that the new image sinks in customers.

Credibility:

The differential advantage must be credible to customers. Credibility means believability and trustworthiness. Positioning is a promise made to the customer. The customer must believe that the company will deliver what is promises, and is capable of delivering the promise. Through advertisements and its public relation efforts the company should be able to demonstrate its capability to deliver the promised utility. Every time a customer buys the company’s product he should have got what the company promised on its positioning strategy. Through word of mouth the company develops a reputation for delivering its promised value.

Competitiveness:

The differential advantage should offer something of value to the customer which the competition is failing to supply. The company should be able to develop or acquire distinct set of resources and processes. This unique set of resources and processes are used to ser of resources and processes used to create it. Therefore the key to be able to provide differential value to customers is to possess a distinctive set of resources and processes which competition does not possess.

A company has to select the target market in which it will offer its products. It will have to determine the differential value that it will provide to customers to make the product attractive to them, and communicate to customers the differential value it intends to provide to them.

Target Market:

Where does the company want to compete? The company has to select the segments to which it will offer its products. It is very tempting to select the largest segment or the most profitable segment. The company should possess special competencies and resources to serve its target market, which means that before a company can zero on to its target markets it, should have done a comprehensive research of requirements of customers of various segments, and an honest audit of its own resources and competencies. But it is never easy. A company should have a clear road map of how it will acquire or develop the required competencies and resources.

Undifferentiated Targeting:

A company using an undifferentiated targeting strategy essentially adopts a mass-market philosophy. It views the market as a single unified big market with no segments. The company uses one marketing mix for the entire market. The company assumes that individual customers have similar needs that can be met with a common marketing mix. The first company in an industry normally uses an undifferentiated targeting strategy. There is no competition at this stage and the company does not feel the need to tailor marketing mixes to the needs of market segments.

Multi-segment Targeting:

A company following multi-segment targeting strategy serves two or more well-defined segments and develops a distinct marketing mix for each one of them. Separate brands are developed to serve each of the segments by most companies following this strategy. It is the most sought after target market strategy because the strategy has the potential to generate sales volume, higher profits, larger market share, and economies of scale in manufacturing and marketing. The car market is most clearly segmented. There are segments for small cars, luxury cars, sports utility vehicles, etc.

The purpose of evaluating market segments is to choose one or more segments to enter. Target market selection is the choice of which and how many market segments the company will compete in. There are four generic target marketing strategies.

Undifferentiated Marketing:

There may be no strong differences in customer characteristics. Alternatively, the cost of developing a separate marketing mix for separate segments may outweigh the potential gains of meeting customer needs more exactly. Under these circumstances a company will decide to develop a single marketing mix for the whole market. There is absence of segmentation. This strategy can occur by default. Companies which lack a marketing orientation may practice this strategy because of lack of customer knowledge. It is convenient since a single product has to be developed.

Differentiated Marketing:

When market segmentation reveals several potential target segments that the company can serve profitably, specific marketing mixes can be developed to appeal to all or some of the segments. A differentiated marketing strategy exploits the differences between marketing segments by designing a specific marketing mix for each segment. Several segments may be identified but a company may not serve all of them. Some may be unattractive or be out of line with the company’s business strengths. A company may target just one segment with a single marketing mix.

The strategy is suited for companies with limited resources as these resources may be too stretched if it competes in many segments. Focused marketing allows R&D expenditure to be concentrated on meeting needs of one set of customers and managerial activities are devoted to understanding and catering to their needs. In some markets, the requirements of individual customers are unique and their purchasing power is sufficient to make designing a separate marketing mix for each customer a viable option. Many service providers such as advertising, marketing research firms, architects and solicitors vary their offerings on a customer to customer basis. They will discuss face to face with each customer their requirements and tailor their services accordingly.

One-to-one marketing involves gearing the organization to deal with valuable customers on an individual basis. This is not unattainable, but the effort should be worth the benefits that accrue. One-to-one or relationship marketing means being able and willing to change one’s behavior towards individual customer based on what the customer tells the company and what else the company knows about that customer. The mechanics of one-to-one marketing are complex. There are four important steps for implementing one-to-one marketing.

Identifying the customers:

The Company must be able to locate and contact a fair number of its customers directly, or at least a substantial portion of its most valuable customers. It is critical to know customers in as much detail as possible. The information should contain not only names and addressable characteristics but their habits, preferences etc.

Differentiating the Customers:

Customers are different in two ways. They represent different levels of value to the company and they have different needs. Once each customer’s needs and values are found out, it is possible to tailor the company’s behavior to each customer in order to reflect the customer’s value and needs.

Interacting with Customers:

It is important to be both cost-efficient and effective when the company is interacting with its customers. Cost-efficiency improves by directing customer interaction towards more automated channels. Providing information on its website would be more economical than supporting a call center.

Customizing the Company’s Behavior:

Ultimately, to lock a customer into a learning relationship, a company must be able to adapt some aspect of its behavior to meet that customer’s individually expressed needs. This might mean mass-customizing a manufactured product, or it could involve tailoring some aspect of the service surrounding a product-perhaps the way the invoice is made or how the product is packaged. Managers are tempted to dismiss one-to-one marketing as unattainable. Maintaining a customer database, having one system communicate seamlessly with another, tracking each customer’s contact with the company, making the operations responsive and flexible, and assigning responsibility for maintaining customer relationships across divisions can be daunting tasks.

A company should be able to connect emotionally with its customers. Showing care and concern for one’s customer involves treating customers with dignity, trust and respect. This will be a source of competitive advantage. Most customers actually want to be loyal to the companies they buy their products and services from. Most customers prefer not to shop around for the best deals. They want to stick to their tried and tested companies. It is companies which alienate customers by making them faceless targets of their marketing machines. Standard reward programs exclusively offer monetary rewards for buying the company’s products and services repeatedly. An airline would offer a free ticket for flying a certain number of miles. Following three practices will help companies in making their customers more loyal.

Many customers are persuaded to buy a company’s for a trial period by offering concessions. A customer would be lured to sigh for a credit card by being offered a lower rate of interest than what is being changed to current card holders. But the long-term customer gets nothing for his loyalty to the company. Companies should change their emphasis from acquiring customers to retaining customers. A simple gesture like sending an anniversary card each time the customer completes one year of doing business with the company, with some monetary reward tucked into it, will make customers feel good about being associated with the company.

It is important to treat customers with dignity especially when they are faltering on some of their commitments. When a customer falls behind on payments, the rational thing to do is to send a tough letter telling him to pay up and gradually pressurizing him more and more. The company eventually may lose the customer but it is not too worried losing a problematic customer. But this practice may turn out to be short-sighted. Many otherwise good customers, who have had histories of making timely payments do falter for reasons outside their control. They may feel embarrassed and may be unsure about how to approach the company.

Culture refers to the traditions, taboos, values and basic attitudes of the whole society within which an individual lives. Culture is essentially associated with a certain nationally or religious identity of an individual. Culture teaches an individual the acceptable norms of behavior, and tells him the rights and wrongs. When an individual deviates from acceptable norms, certain sanctions are imposed on him.

Social Class:

Social class refers to the hierarchical arrangement of the society into various divisions, each of which signifies social status or standing. Though there are various methods of ascertaining social class, most often it has been equated with income differences. However, this may not be true. Income differences do contribute to differences in social status though they may not be the sole cause of differences in consumption patterns or lifestyles. Social class may fail to distinguish between contrasting consumption patterns though it remains an important discrimination of consumption patterns. Social class should be used with other measures such as life stage and life cycle.

Reference Groups:

Reference groups are groups of people that influence an individual’s attitude or behavior. Individuals use these groups as reference points for learning attitudes, beliefs and behaviors, and adapt these in their life. Family and close friends are considered to be primary reference groups in an individual’s life due to their frequency of interaction with the individual and primacy of these significant others in an individual’s life. Schoolmates, neighborhood, colleagues, other acquaintances are a part of the secondary reference groups of an individual. Reference groups influence product and brand purchases, particularly when the consumption is conspicuous in nature. Where a product is conspicuously consumed, the brand chosen may be influenced by what buyers perceive as acceptable to their reference groups. In case of conspicuous luxuries, even product consumption is influenced by reference groups.