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CRAFTING A CUSTOMER VALUE PROPOSITION AND POSITIONING 171 The U.S. Armed Forces changed the focus of its recruitment advertising from the military as
patriotic duty to the military as a place to learn leadership skills—a much more rational than
emotional pitch that better competes with private industry.9 In stable markets where little short-term change is likely, it may be fairly easy to define one, two,
or perhaps three key competitors. In dynamic categories where competition may exist or arise in a
variety of different forms, multiple frames of reference may be present. Identifying Potential Points of Difference
and Points of Parity Once marketers have fixed the frame of reference for positioning by defining the customer market
and the nature of the competition, they can define the appropriate points of difference (attributes or
benefits that are unique to the company’s offering) and points of parity (attributes or benefits that
the company’s offering has in common with the competition).10 We discuss points-of-parity and
points-of-difference associations in the following sections. IDENTIFYING POINTS OF DIFFERENCE Points of difference (PODs) are attributes or benefits that differentiate the company’s offering from
the competition. These are attributes or benefits that consumers strongly associate with a brand,
that they positively evaluate, and that they believe could not be found to the same extent with a
competitive brand. Associations that make up points of difference can be based on virtually any type of attribute or
benefit.11 Louis Vuitton may seek a point of difference as having the most stylish handbags, Energizer
as having the longest-lasting battery, and Fidelity Investments as offering the best financial advice and
planning. Successfully establishing meaningful points of difference can provide financial payoffs. As part of
its IPO, the UK mobile phone operator O2 was rebranded from British Telecom’s struggling BT Cellnet,
based on a powerful emotional campaign about freedom and enablement. When customer acquisi- tion, loyalty, and average revenue soared, the business was quickly acquired by Spanish multinational
Telefonica for more than three times its IPO price.12 An increasingly important aspect of differentiation is brand authenticity—the extent to which
consumers perceive a brand to be faithful to its essence and its reason for being.13 Brands such as
Hershey’s, Kraft, Crayola, Kellogg’s, and Johnson & Johnson that are seen as authentic and genuine can
evoke trust, affection, and strong loyalty. Welch’s—owned by the National Grape Cooperative, which is
made up of 1,150 Concord and Niagara grape farmers—is seen by consumers as “wholesome, authen- tic and real.” The brand reinforces those credentials by focusing on its local sourcing of ingredients,
an attribute that is increasingly important for consumers who want to know where their foods come
from and how they were made.14 Strong brands often have multiple points of difference. Some examples are Apple (design, ease of
use, and irreverent attitude), Nike (performance, innovative technology, and winning), and Southwest Airlines
(value, reliability, and fun personality). Creating strong, favorable, and unique associations is a real challenge, but it is essential for compet- itive brand positioning. Although successfully positioning a new product in a well-established market
may seem particularly difficult, Method Products shows that it is not impossible. Method Products The brainchild of former high school buddies Eric Ryan and
Adam Lowry, Method Products was started with the realization that although cleaning and
household products are sizable categories by sales, taking up an entire supermarket aisle or
more, they are also incredibly boring ones. Method launched a sleek, uncluttered dish soap
container that also had a functional advantage—the bottle, shaped like a chess piece, was
built to let soap flow out the bottom so users would never have to turn it upside down. This
signature product, with its pleasant fragrance, was designed by award-winning industrial
designer Karim Rashid. Sustainability also became part of the brand’s core, from sourcing
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DEVELOPING A VIABLE MARKET STRATEGY Three criteria determine whether a brand association can truly function as a point of difference:
desirability, deliverability, and differentiability. Some key considerations follow. • Desirable to consumer. Consumers must see the brand association as personally relevant to
them. Select Comfort made a splash in the mattress industry with its Sleep Number beds, which
allow consumers to adjust the support and fit of the mattress for optimal comfort with a simple
numbering index. Consumers must also be given a compelling reason to believe and an under- standable rationale for why the brand can deliver the desired benefit. Mountain Dew may argue
that it is more energizing than other soft drinks and support this claim by noting that it has a
higher level of caffeine. Chanel No. 5 perfume may claim to be the quintessentially elegant French
perfume and support this claim by noting the long association between Chanel and haute
couture.
Substantiators can also come in the form of patented, branded ingredients, such as NIVEA
Wrinkle
Control Crème with coenzyme Q10. • Deliverable by the company. The company must have the internal resources and commitment
to feasibly and profitably create and maintain the brand association in the minds of consumers.
The product design and the way the product is marketed must support the desired association.
Does communicating the desired association require actual changes to the product itself or just
perceptual shifts in the way the consumer thinks of the product or brand? Creating the latter is
typically easier. General Motors has had to work to overcome public perceptions that Cadillac is
not a youthful, modern brand and has done so through bold designs, solid craftsmanship, and
active, contemporary images. The ideal brand association is preemptive, defensible, and difficult
to attack. It is generally easier for market leaders such as ADM, Visa, and SAP to sustain their
positioning, based as it is on demonstrable product or service performance, than it is for market
leaders such as Fendi, Prada, and Hermès, whose positioning is based on fashion and thus subject
to the whims of a more fickle market. • Differentiating from competitors. Finally, consumers must see the brand association as
distinctive and superior to relevant competitors. Splenda sugar substitute overtook Equal and
Sweet’N Low to become the leader in its category by differentiating itself as a product derived
from sugar without the associated drawbacks of an artificial low-calorie sweetener. In the crowded
energy-drink category, Monster has become a nearly $2 billion brand, and a threat to category
pioneer Red Bull, by differentiating itself on its innovative 16-ounce can and an extensive line of
products targeting nearly every need state related to energy consumption.16 IDENTIFYING POINTS OF PARITY Points of parity (POPs), on the other hand, are attribute or benefit associations that are not neces- sarily unique to the brand but may in fact be shared with other brands.17 These types of associations
come in three basic forms: category, correlational, and competitive. and labor practices to material reduction and the
use of nontoxic materials. By creating a line of
unique, eco-friendly, biodegradable household
cleaning products with bright colors and sleek
designs, Method grew to company with more
than $100 million in revenues. A big break came
with the placement of its product in Target, which
frequently partners with well-known designers to
produce standout products at affordable prices.
Because of its limited advertising budget, the
company believes its attractive packaging and
innovative products must work harder to express
the brand positioning. Social media campaigns
have been able to put some teeth into the
company’s “People Against Dirty” slogan and into
its desire to make full disclosure of ingredients an
industry requirement.15 >> Method Products
has managed to catch
the eye of consumers
and take boring cleaning
and household offerings
to the next level with
sleek, distinctive pack- aging of its line of eco- friendly, biodegradable
products.
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CRAFTING A CUSTOMER VALUE PROPOSITION AND POSITIONING 173 • Category points of parity are attributes or benefits that consumers view as essential to a
legitimate
and credible offering within a certain product or service category. In other words, they represent
necessary—but not sufficient—conditions for brand choice. Consumers may not consider a travel
agency truly a travel agency unless it is able to make air and hotel reservations, provide advice about
leisure packages, and offer various ticket payment and delivery options. Category points of parity
may change over time because of technological advances, legal developments, or consumer trends,
but to use a golfing analogy, they are the “greens fees” necessary to play the marketing game. • Correlational points of parity are potentially negative associations that arise from the exis- tence of positive associations for the brand. One challenge for marketers is that many attributes
or benefits that make up their POPs or PODs are inversely related. In other words, if your brand
is good at one thing, such as being inexpensive, consumers can’t see it as also good at something
else, like being “of the highest quality.” Consumer research into the trade-offs consumers make in
their purchasing decisions can be informative here. • Competitive points of parity are associations designed to overcome perceived weaknesses of
the brand in light of competitors’ points of difference. One way to uncover key competitive points
of parity is to role-play competitors’ positioning and infer their intended points of difference.
Competitor’s PODs will, in turn, suggest the brand’s POPs. Regardless of the source of perceived weaknesses, if, in the eyes of consumers, a brand can “break
even” in those areas where it appears to be at a disadvantage and achieve advantages in other areas, it
should be in a strong—and perhaps unbeatable—competitive position. Consider the introduction of
Miller Lite beer, the first major light beer in North America. Miller Lite The initial advertising strategy for Miller Lite beer had two goals: ensuring parity
with key competitors in the regular, full-strength beer category by stating that Miller Lite “tastes
great,” while at the same time creating a point of difference around the fact that it contained
one-third fewer calories and was thus “less filling.” As often happens, the point of parity and
point of difference were somewhat conflicting because consumers tend to equate taste with
calories. To overcome potential resistance, Miller employed credible spokespeople, primarily
popular former professional athletes, who would presumably not drink a beer unless it tasted
good. These ex-jocks humorously debated which of the two product benefits—“tastes great” or
“less filling”—was more descriptive of the beer. The ads ended with the clever tagline “Everything
You’ve Always Wanted in a Beer . . . and Less.” As time went on, the brand positioning evolved
to encompass “Miller Time” in its advertising, an emotional appeal about the brand’s “sociability”
and capacity to serve as a catalyst for good times with friends.18 For an offering to achieve parity on a particular attribute or benefit, a sufficient number of con- sumers must believe the brand is “good enough” on that dimension. There is a zone or range of tol- erance or acceptance with points of parity. The brand does not literally need to be seen as equal to
competitors, but consumers must feel it does well enough on that particular attribute or benefit. If they
do, they may be willing to base their evaluations and decisions on other factors more favorable to the
brand. A light beer presumably would never taste as good as a full-strength beer, but it would need to
taste close enough to be able to effectively compete. Often, the key to positioning is not so much achieving a point of difference as achieving points of
parity! Consider the competition between Visa and American Express in the card industry: Visa and American Express Visa’s point of difference in the credit card category is that
it is the most widely available card, which underscores the category’s main benefit—convenience.
American Express, on the other hand, has built the equity of its brand by highlighting the prestige
associated with the use of its card. Visa and American Express now compete to create points
of parity by attempting to blunt each other’s advantage. Visa offers gold and platinum cards to
enhance the prestige of its brand, and for years it advertised, “It’s Everywhere You Want to Be,”
showing desirable travel and leisure locations that accept only the Visa card to reinforce both its
own exclusivity and its acceptability. American Express has substantially increased the number
of merchants that accept its cards and created other value enhancements, while also reinforcing
its cachet through advertising that showcases celebrities such as Robert De Niro, Tina Fey, Ellen
DeGeneres, and Beyoncé, as well as promotions for exclusive access to special events.19 M07_KOTL4813_16_GE_C07.indd
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DEVELOPING A VIABLE MARKET STRATEGY ALIGNING THE FRAME OF REFERENCE, POINTS OF PARITY,
AND POINTS OF DIFFERENCE It is not uncommon for a brand to identify more than one actual or potential competitive frame of ref- erence if competition widens or the firm plans to expand into new categories. For example, Starbucks
could define very distinct sets of competitors, suggesting different possible POPs and PODs as a result:20 Quick-serve restaurants and convenience shops (McDonald’s and Dunkin’ Donuts)—Intended PODs might
be quality, image, experience, and variety; intended POPs might be convenience and value. Home and office consumption (Folgers, NESCAFÉ instant, and Green Mountain Coffee K-Cups)—Intended
PODs might be quality, image, experience, variety, and freshness; intended POPs might be con- venience and value. Local cafés—Intended PODs might be convenience and service quality; intended POPs might be
product quality, variety, price, and community. Note that some potential POPs and PODs for Starbucks are shared across competitors; others are
unique to a particular competitor. Under such circumstances, marketers have to decide what to do. There are two main options with
multiple frames of reference. One is to first develop the best possible positioning for each type or class
of competitors and then see whether there is a way to create one combined positioning robust enough
to effectively address them all. If competition is too diverse, however, it may be necessary to prioritize
competitors and then choose the most important set of competitors to serve as the competitive frame.
One crucial consideration is not to try to be all things to all people; this leads to “lowest common
denominator” positioning, which is typically ineffective.21 Finally, if there are many competitors in different categories or subcategories, it may be useful
to develop the positioning either at the category level for all relevant categories (“quick-serve restau- rants” or “supermarket take-home coffee” for Starbucks) or with an exemplar from each category
( McDonald’s or NESCAFÉ for Starbucks). Occasionally, a company will be able to straddle two frames of reference with one set of points of
difference and points of parity. In these cases, the points of difference for one category become points
of parity for the other, and vice versa. Subway restaurants are positioned as offering healthy, good- tasting sandwiches. This positioning allows the brand to create a POP on taste and a POD on health
with respect to quick-serve restaurants such as McDonald’s and Burger King and, at the same time, to
create a POP on health and a POD on taste with respect to health food restaurants and cafés! Straddle positions allow brands to expand their market coverage and potential customer base.
One example of such straddle positioning is BMW. >> While Visa strives
to match the prestige
of competitor American
Express by offering gold
and platinum cards,
American Express is
aiming to extend the
reach of its card to erase
Visa’s advantage as the
most widely available
credit card. S ou rc e:
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