Saturday, February 12, 2011

Thoughtful Advertising: Consider Preferences and Positioning

Though there is a plethora of advertising strategies, a few come to mind as especially effective. And one in particular is extremely important in the context of having your message in the consumer’s mind when they enter the market with the intent to buy. This strategy is called positioning.

Positioning strategy deals with the factors that influence customer choices. Why does the customer buy Coke instead of Pepsi? Are there reasons for that choice? Aren’t they both essentially the same product? In blind taste tests can people really tell the difference? Most can’t, but there are still decided preferences for one brand over another just as there are decided preferences for one store over another. And positioning theory addresses those preferences by looking at the factors that influence the decision.

Positions are the qualities that the consumer thinks about, or attaches, to each competitor in a category. They’re things like quality, service, price, selection, friendliness, convenience, etc. The consumer places each competitor in the category in rank order in each of the pertinent qualities, thus giving each advertiser a position in their mind. The relative importance of each position—is price more important than quality when buying a loaf of bread, for example—dictates the consumer’s choice of product.

A point to note is that whether one store actually has better selection and the other lower prices isn’t relevant. What’s important is what I perceive to be true. Once the consumer puts an advertiser in a position in their mind, it generally stays there.

The most important position
Some positions are more important than others, of course. The one that matters most is the position that the best consumer holds as most important. In other words, the prime consumer we talked about before, who represents the largest single share of sales in the category, may well consider one quality—service, let’s say—more important than any other. Even if other market segments think price is tops, or selection, or convenience, the advertiser should be almost exclusively concerned with just the first position. He’ll get more business from the best consumer—and therefore more business overall—if he can occupy the position as the best service provider in that consumer’s mind.

Many business owners believe that price is the most important position to every consumer, so they assume that by trying to gain and hold the position as the price leader in their category, they’ll garner the largest share of market. That’s why almost all advertising says we’re the lowest, we’re the cheapest, we won’t be undersold. But that’s the wrong position to try to hold most of the time. Consumers in almost every category very seldom make price the number on reason that choose one store or brand over another. That includes some categories that you would think are automatically price sensitive, like supermarkets or department stores. The number one reason consumers choose supermarket A over supermarket B is cleanliness! Followed by selection. Price comes in third or fourth!

Most people choose a particular bank not because they get a lower loan rate or a higher interest rate on their savings account, but because it is the most conveniently located in relation to where they get paid.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, hiring, firing, and motivating personnel, financial management, and business strategy.

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