…Based on the rivalry among competition, target market, sensitivity of the market and number of competitors and their product attributes, one can define the actual point of difference (POD) and point of parity (POP). Point of difference, POD’s are the attributes of the brand which customers believe that they cannot find, in the same extent in the competition brands. For example, POD’s for Apple would be design, ease of use and irreverent attitude and POD’s of Nike would be associated with Performance, innovative technology and winning. Point of parity or POP can be defined as the benefits or attributes associated with the brand which are common for the brands in its competition. These are attributes or benefits which customers consider as essential and legitimate for a certain product offering (Kotler & Keller, Marketing Management, 2012). Here it should be mentioned that consumer brand choices often depends on perceived uniqueness of brand association like what IKEA does. They took a luxury product line and made it reasonable for mass market through. Also it should be noted that category POP’s are never constant and tend to change with changes in technology, legal development and consumer trends but the attributes and benefits still tend to have a certain impact in the marketing segment of the product. Category POP’s are especially effective when a brand launches a brand extension in a new category (Keller, Strategic Brand Management, 2008) So, in order to do perceptual mapping and positioning of a product in accordance to its competitors the POP’s and the POD’s of the product are relevant.
2.1.1 Perceptual Mapping
Perceptual Mapping results in a geometric comparison as how competitive product are perceived by consumers generally. Product positions are typically represented as circles or dotted points. A product position on the grid is determined based on the attribute it possesses. The closer the products are positioned, the more intense is the competition and vice versa. One of the widely used technique of perceptual mapping is Multiple Discriminant Analysis (MDA) which is used extensively to identify differences among various marketing segments. MDA finds the weightage combination of attributes which discriminates products based on customer perceptions (Sinclair & Stalling, 1990).
Interpreting positioning map gives a company the liberty to understand the flaws in the positioning of the product and clear out the fog that shroud the competitive landscape. It also helps valuing intangible benefits as is evident from the fact that Harley Davidson in spite of having a lesser powerful engine compared to some of its Japanese contemporaries like Honda, Yamaha managed to reach a cult status in the baby boomer generation. However a 2004 perceptual map revealed that though Harley Davidson motorbikes demanded higher premiums but it was leaving money on the table and other American companies where earning premiums in the range of 41%. Harley Davidson was complacent, thus ended up losing money to new generation Japanese and American bikes. Later in 2006, understanding the problem, they modified their campaign and got back the lost glory through a face lift, making women merchandise and appealing to the new generation who had a different take on America. Perceptual mapping helps anticipating shifts in the value of benefits and help executives decide on which feature to invest upon. It also helps finding path of least resistance and throws light on areas of improvement and investment. Price benefit maps also help understand rivals and their strategies better and find ways to preempt them. The perceptual mapping also helps companies understand the shift in the value of benefits over time and value intangible benefits without giving away freebees. (D’Aveni, 2007)
Most of the industries sell their product to a range of buyers which makes selection of buyer an intrinsic property of competitive analysis. From a structural point of view, it can be said that the buyer group is homogeneous. Many producer good firms sell their products to a wide variety of businesses which in turn use those products for varied applications. An industry buyer also differs in their purchasing needs. Different buyers require different level of customer service, product quality, durability etc. So it clears out why buyers have different structural bargaining power. Buyers also differ in their growth potential as is evident from the fact that selling a product to a growing digital company where the market in digital business is on a rising scale that selling to an almost dead market of black and white television. Also in certain specific markets, selection of buyer largely depends on servicing buyers who orders components in small quantities than servicing the buyers who orders in bulk. So, selection of buyer becomes very important while strategizing a product to the market. Ideally it’s required that the product be sold to the most suitable customer to the extent it has any choice. One theory of strategic implication also suggests that a firm can create ‘good buyers’. (Porter, 2004).
2.1.2 Framework for buyer selection
There are four broad criterion required to make a suitable buyer selection:
I. Purchasing needs versus company capabilities:
II. Growth potential
III. Structural position
o Intrinsic bargaining power
o Prosperity to exercise the bargaining power in demanding low prices.
IV. Cost of servicing (Porter, 2004)
In case of heat pump all the points stand true and applicable to the situation. Company capability is important and should be checked for solvency to ensure smooth business transaction. Heat pump will attract buyers where there will be an intrinsic need of the product. A buyer who has future projects in the pipeline will always be a valuable account for the seller. The industry of heat pump is very price sensitive with very little product differentiation. So, the bargaining power of a buyer will play an important role. Cost of servicing should always be considered, no matter which industry one is dealing with
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