Companies and strategists Essay
The author used various examples, (namely Jet blue airlines, who did not serve food but made seating more comfortable for short hall flights and of a commerce bank) to illustrate how the repositioning of services created a strong sense of brand loyalty. Breakaway positioning of packaged goods is illustrated via examples of Heinz which positioned their EZ Squirt bottles for the kids as a new reason to buy ketchup because of their advertisements which showed children drawing faces on their sandwich breads. It also reflects on swatch’s strategy which positioned itself as a fashion accessory as well as a watch.
Breakaway positioning does not always provide the solution for decline of the product. Sometimes the death of a product is necessary because its production can cause losses to the company in terms of profit and reputation. With reference to technology, the phasing out of cameras with film rolls by digital cameras is actually happening because the technology seems to become obsolete and so does not carry a lot of importance. Obsolete products and technology can’t be repositioned. VCR’s (www.worldmagblog.com) and audio – video cassettes have become obsolete technology and cannot be repositioned because they have been taken over by other sophisticated methods
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Breakaway positioning might prove to be an option for the packaged goods as advocated by Moon but the smaller firms find it quite tough to compete with the other giants in the market offering the same line of products because the bigger players in the market could use the concept of loss leader. It is a pricing strategy that sells products on a lower price than required, sometimes not even covering all the costs. It is a part of penetration strategy to attract the customers to start using the products on a wider base with the introduction of bargain. The aim of this strategy is to eliminate competition rising or coming into the market for the same product (www.bizhelp24.com).
A breakaway positioning failure case could be Videocon International Pvt Ltd. who in 2000 launched numerous discounts on television sets with life time warranties when Akai wanted to penetrate into the Indian markets with their low cost television sets with hands free headsets. Videocon with their brand leader image dropped their prices inevitably, making it very difficult for Akai to penetrate into the market.
Stealth positioning of technology is explained by Moon by the example of Sony’s AIBO robot that failed in the market but later became a success when it was positioned as a pet for home. Sony AIBO achieved stealth positioning by changing customer perception to adjust the product in the market is basically psychologically changing the mind-set of the target audience, which by itself is not very easy and at various attempts to do so have failed.
We could look at Maruti Suzuki Motors for an example. Maruti Van was one of the more successful cars the group made which had a “family car” perception but with the introduction of other brands of motor vehicle companies in the same segment, the sales of the Maruti van dropped and it started to phase out. It shows the product in the decline stage of the product life cycle. Maruti Suzuki motors relaunched the Maruti Van as a “Goods Carrier” which is not such a great success. (www.marutiudyog.com)
Implementation: An example that explains the working of the repositioning strategy would be of Parachute coconut oil by Marico Products Limited, India. (www.maricoindia.com) Parachute coconut oil has been the premium seller in coconut oil since long time but recently its success was invaded by an influx of companies trying to enter the market and found reasonable success. Marico then found out the reasons for decline with its tools for market research and found out that the quality of content of the product was excellent but their attributes in packaging needed change because the rural people wanted something in less quantities which they could buy at a low price according to their need, the urban people did not like the twist around cap and preferred the flip top cap and people in the climatically cooler areas in India wanted a bigger neck so to facilitate usage during winters (www.maricoindia.com). The attributes as identified were added to the core product and the product was repositioned in the market with the relative changes. Parachute coconut oil regained its success in the market and gradually became the market leader again.
In terms of repositioning of services, I would like to take an example of a bank. Banks more or less provide the same kind of services at similar rates of interest. So competition is quite stiff in their market. It shows a relatively longer maturity stage leading to a decline. To reposition themselves in a market, banks would certainly need to move out from the old provision of services of providing fixed and saving accounts and interest rates and other associates facilities for withdrawal and input of cash. They would need to increase their span of services and include attributes which will make them fore runners in the market like Personalized Banking. It is a relatively new form of service offered by banks for increasing the customer base and loyalty towards the bank. It means that the bank would assign a personalized banker for you, who will customize your investment solutions and give you more investment options. It could also include wealth management programs to invest with minimum risk.
Besides these services the banks need to be competitive to provide the other facilities like a range of networks for ATM’s and De-mat accounts for shares etc. Also ease of transactions which are related to net, phone and mobile banking by which the various details of the account can be known needs to be accessed in the most simplified manner. A package of the abovementioned services would give them a competitive edge over other banks and thus help them to reposition themselves from the long maturity stage, back to the growth stage to make a larger customer base.
The above examples demonstrate the effectiveness of the repositioning strategy. In my previous years I have also worked for an exports firm, Kayson International, which dealt with manufactured Light engineering goods. After achieving constant success they branched out into manufacturing the product called “Weather proof socket box” (www.angelfire.com). It was a relatively new product in the market and the reproduction of that product would include a huge cost of R&D and technology because of its supreme nature.