Summary

The core strategy of a company shows how it will address the markets it has targeted. By differentiation it develops the strengths of the company, so that they meet the target markets' needs; then, by market positioning, it manages the way consumers view the company and its products.

Differentiation helps a firm compete profitably. It gives it a competitive advantage. If a firm does not differentiate, it will be like 'all the rest' and be forced to compete on price. Differentiation is harder in some industries than others, but it is rare that a creative marketer cannot differentiate a market in some way. There are four main ways to differentiate: product differentiation, service differentiation, personnel differentiation and image differentiation. The ease of following new technological innovations means that the product is becoming an increasingly difficult way to differentiate. Now service and image are the main ways people distinguish between products. As systems and methods become more common, personnel differentiation becomes more important. The firm is its people and they arc usually what the customer is most sensitive to.

A firm's functional strengths give it its competitive advantage. Market positioning is about managing customers' view of the company and its products. It is about perception. Perceptual maps are a way of revealing how customers see markets. They show which products customers see as alike and those that are not. They ean also show segments and the dimensions that customers use to split up the market.

There are several positioning strategies for shifting and holding customers' perceptions. Positioning works by associating products with product attributes or other stimuli. Successful firms usually maintain a clear differential advantage and do not make violent changes to their market positions.

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