DB – Perceptual Maps:
One notable characteristic of the Markstrat perceptual maps is that not every segment wants the cheapest possible product. In some cases, segments actually seek quite expensive products. They would prefer a product that has ideal characteristics at an ideal price to a product that has ideal characteristics at a lower price. At first glance, this seems quite perverse. We are used to people preferring the same for less. The Markstrat markets are examples of markets where price acts as a quality indicator. The cheaper product is rejected because it is believed to be inferior based purely on price information.
Can you think of any other markets where price acts as a quality indicator?
Perceptual map shows how marketing firms can formulate their product positioning strategy within an individual market segment that is based on the perception of a particular brand. This is particular so in the luxury market segment where consumers tend to seek expensive product and often perceive price as a symbol of quality more than any other factors.
Markets in this segment include audiophile equipment industry, hospitality and healthcare business and infant products market among many other. Taking the case of the audiophile market, the equipments can range from a few hundred dollars to well over ten of thousands for an amplifier, cd player or speakers. For instance China made audiophile equipments have been receiving good reviews and reputation in several well-know audiophile magazines and have gained many royal fans around the world. Moreover the price of their audio products are price at less than half the price of those branded equipments traditionally manufactured in Europe or US although their quality and performance were equivalent or better in the certain aspect. However due to their brand and price, many buyers including the Chinese themselves tend to shun away from them knowing the fact that they are good value for money.
After you have thought of an example, briefly describe the market and your perceptions of the buying behaviour.
As mentioned earlier, audiophile tends to perceive established audio equipments that are made in Japan, Europe or US as high price, high quality and the best. Another words, they are not just influenced by the size, colour, weight, shape, features and sonic performance but the brand and price as a symbol of high quality. Traditionally, Japan, UK or US have a long history of producing very good audiophile equipments. As a result of their strong branding and reputation, they are often perceived by the many audiophile as the best when compared to other country made. In addition, in the audiophile world, value is almost impossible to define. For example, a good quality CD player can cost around $5,000 while the top range can cost more than $20,000. There is a small incremental sonic improvement however in term of price and performance, it is four times the difference. In the highest strata of audiophilia, the effort, time and money spent is secondary or worthwhile in order to reach the ultimate stage of sonic performance.
DB – Analysing Pioneering Advantages:
Use your experience to identify the organisations that you believe have pioneered in markets successfully. Select one organisation, based on your understanding, and answer the following questions:
There are many companies that have pioneered in markets successfully since 1923. The companies include Gillett razors, P&G Pampers, Coca-Cola soft drinks, Campbell’s soup, Nabisco biscuits, Colgate toothpaste, Lipton tea, Palmolive toilet soap, Sony, IBM and Apple just to name a few [1]
What are the pioneering advantages that the chosen organisation may have had?
Taking the case of P&G Pampers, it was the first company to introduce disposable diaper that revolutionise the market in US and the rest of the world. Been the first company to introduce disposable diapers at an affordable price, it has created a strong demand in the infant market that was used by families on a daily basis not just for travelling previously due to high cost per diapers. Another words, it was able enjoyed higher-than-average market shares when compared to later entrants and Pamper still has a fair share of the market since the early 60’s.
According to Robinson and Fornell (1985), market pioneers tend to have higher perceived product quality by the customers. More importantly are the product line breadth advantages that show limited deterioration even after decades of competition for Pamper. For example, it launches the most highly super absorbent diapers for the biggest and best market segments after tough competition from Japan Unicharm and Kao to regain market share in the Japan market. Additionally, it was able to introduce minor extensions like sizes, packaging, variety, design colours and scents. Been a pioneer, it was able to establish a strong brand equity that help to maintain its higher market share levels.
How did these advantages turn into business performance outcomes?
Been a pioneer, Pamper was able to serve national or international markets like Japan and Europe compared to late entrants. The result has indicated the broader target markets and the associated product line breadth tend to benefit the market pioneer and limit a later entrant’s upside potential [2]. Moreover, it was able to maintain higher market shares due to brand equity. In addition, the breadth of the product line can increase the productivity of other elements of the marketing mix and better leverage a fixed expenditure. For instant, a whole product line can benefits from promotions for individual items in the line (e.g. signs, shelf talkers, coupons etc.) to increase the pioneer’s advertising productivity for P&G.