Bus 50 Advertising for Small Business
Business & Product Identity, Positioning, and Differentiation  

When a customer enters your store, buys your product or consumes your service, that customer is measuring the perceive value gained against their cost, measured in money, time and effort expended.

The idea is that a sale is an exchange of "values," where both parties have to feel that they benefit and both parties "win" and are satisfied. The key idea is that value is perceived. That perception often hinges upon their perceptions going into the exchange as compared to the reality of consumption after the exchange. Simply put, did the product or service meet and exceed their expectations when compared to the cost?

It is the responsibility and burden of marketing and advertising to create and communicate the perception of value and then meet that created expectation with a product, a service and a store experience that satisfies the customer's wants & needs.

This lesson looks at some of the strategies for creating and communicating perceived value through advertising.

What is a Product and How Do Consumers Make Decisions?

All products are really “bundles” of benefits. Benefits are:

  • physical benefits
  • functional benefits
  • psychological benefits

When a customer makes a decision to buy a product or service they ususally go through a Decision Making process that involves either Lo or Hi involvement and rational versus emotional choices.

Decision Map Example


Product Positioning

Product (or business or service) positioning can be defined as follows:

    1. create a real or perceived difference between competing products in the mind of the consumer
    2. fitting a product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition

You are creating a personality, a unique identity and targeting a segment of the broader market by fitting your product to their wants and needs. This is often done by focusing on key benefits or attributes of a product, service or company to create the position.

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For example, Dannon Yogurt has changed its position successfully throughout the years:

diet food
light snack
added fruit
natural food
healthy, no additives - "Only one thing goes into Dannon that nature doesn't make...your spoon!"

A “positioning map” or “perceptual map”is useful in planning your position relative to competitors positions. Often this is done in two or more dimensions, where "Key" attributes are mapped for competitors and for your product, service or business.

The trick is to identify key attributes. This is often done through interviews, focus groups and surveys and confirmed with test marketing.

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Criteria for a good position map

  • The consumer must believe that the product attribute is a benefit.
    • or it is not a benefit
  • The benefit must be important to the user.
    • or it is not important
  • The consumer must perceive that the company and its products or services deliver the benefit
    • or it is not delivered

In other words, you must "create a real or perceived difference between competing products in the mind of the consumer."

Common positioning errors include:

  • Attacking the leader
  • Everybody trap - be all things to all people
  • Forgot what made you successful
  • Triviality - position by a trivial attribute
  • Equality - as good as competitors
Product Differentiation

Product differentiation is very similar to positioning. Here, however, you are using devices to communicate the position or identity, usually intended to allow the customer to find and pick out your offerings from the competitive clutter.

Common ways to do this include:

  • Brand Names
  • Logos
  • Packaging
  • Labeling
  • Timing
  • Location
  • Distribution
  • Price
  • Price/QUality relationships