Company X
“Navigating in the competitive boating industry with a reinforced position as the eventual objective”
Author: W.F.F. Kappers
The author is responsible for the content of the thesis. The copyright of this thesis rests with the author.
Title page
Title: “Navigating in the competitive boating industry with a reinforced position as the eventual objective”
Author: W.F.F. Kappers
Student number: 1228145
Supervisors:
Drs. J. Berger University of Groningen Drs. M.E. Boon University of Groningen CEO and President Company X
Date: 6
thof December 2005
The author is responsible for the content of the thesis. The copyright of this thesis rests with the author.
Preface
Finally, the result of 5 years studying management and organisation is ready. The last phase of the study implies writing a thesis, which is
combined with an internship within an organization. I was searching for an interesting marketing subject within a company that would attract my interest while I was studying in Lisbon. Suddenly a company that sells sailing yachts all over the world, crossed my path. Because they offered the possibility to do an interesting marketing assignment that was in line with the requirements of the faculty I decided to combine my passion for sailing with writing my thesis at company X
The internship at company X was very interesting. Particularly interesting was the fact that the company had just been taken over, and there were a lot of things to do. It was great to learn how to get a company back on track and to make my contribution to the process. The last 7 months have been a big challenge for me and I have learned a lot. There are several people who have contributed to this learning process that I would like to thank. First of all I would like to thank my academic supervisors of the faculty of management and organisation, Drs. J. Berger and Drs. M.E.
Boon, who guided me during the research and gave critical feedback.
Furthermore I would like to thank the CEO and president of Company X, mr. X, for offering me the opportunity to do an internship at company X and the way he has challenged me, and finally all employees and dealers of company X for their willingness to cooperate. Last but not least I want to thank my family and friends for their support during this period.
Without all these people it wouldn’t have been possible to make this thesis into what it is now.
Enschede, 6
thof December 2005
W.F.F. Kappers
Management summary
In the past company X was one of the most successful shipyards of Europe. Company X was known to build innovative, high quality sailing yachts for the mass market. In the beginning of the nineties company X went in another direction and started producing semi- custom built yachts.
Customer needs changed and company X wanted to position itself well against the competition. A lack of innovation, enthusiasm and bad management caused bad results the last couple of years.
In 2004 the company is taken over. The new management has the idea that the brand identity and brand image of the company aren’t in
congruence. It seems that the company has pursued an inconsistent marketing policy the last couple of years through which current and potential customers don’t know where company x stands for. Company X didn’t deliver a consistent message to the consumers as a result of which confusion reigned. There seems to be a problem with the positioning of the company. Company X wants to investigate her positioning, since positioning is the vital strategic decision for a company. The position of the company is central in the perceptions and decisions of consumers.
The objective of the research is to give company X recommendations about an improved positioning. The research question of the research is:
" How can company X reinforce her position in the market to gain a sustainable competitive advantage and become successful again? "
To obtain a certain position in the market a company needs to distinguish the major market segments, to chose the target group and to develop strategies to serve the chosen target group in a better and more profitable way than her competitors. This process exists of five steps: measuring and assuming the demand, market segmentation, choice of the target group, market positioning and a good positioning against the competition.
The first step of this research concerns the segmentation of the market.
There is investigated which segments can be distinguished in the market on which company X operates and their profiles are described. From different sources, among which inquiries with dealers, it seems that the market can be roughly divided in three segments: standardized, semi- customized and customized. There three segments can all be divided furthermore in three sub segments with different needs and behaviour:
the family & safety, adventure & cruising and comfort & luxury segments.
Subsequently the market is analysed to see how big and attractive the market is and which developments there are. It turned out that the
market can be characterized as a real import market that is very sensitive
for the economic situation. The market is not very attractive because of
the fierce competition. Besides, the growth potential of the market is
small because of the big shortage of berth places. The barriers to entry
and exit are substantial in this market. The analysis shows some trends in
the market like scaling- up, customisation, application new technologies, increasing need for comfort, etc.
In the next phase of the research the situation and position of the competition is analysed because this will have influence on the recommendations concerning the positioning of company X. The
competition can be roughly divided in three strategic groups: the big serial yacht builders, the serial semi- custom yacht builders and the smaller specialty yacht builders. The shipyards in a certain strategic group follow more or less the same competitive strategy and have similar
characteristics. These strategic groups are mainly distinguished on price and quality. The direct competition of company X comes from the strategic group with the serial semi- custom yacht builders. The most important perceptions of the consumers concerning the direct competition will be mentioned. Etap seems to rise above the other shipyards with their unsinkability. They are perceived as a shipyard that produces yachts of high quality. Dufour is perceived as the shipyard with a very good retail price. X- Yachts is known to be quite sportive, modern and fast. Grand Soleil is perceived as elegant and fast. Wauquiez is perceived as a brand that produces more cruising- oriented sailing yachts with exceptional comfort. Company X is known to be a bit classic and old fashioned.
Further on they are perceived as a shipyard that produces yachts of high quality with good sailing performance that are reasonable expensive. The current position of company X doesn’t fit with their brand identity. To get back at the frontline again they have to improve their position.
Further on it turned out that a dealership is the preferred distribution method in this market and the brand image of the shipyard is not only dependent on the shipyard itself, but on the performance of the dealers as well. The dealers are associated as part of the manufacturer’s brand. The dealers play a very important role for the shipyards. Therefore the next step in the research is to analyse the role of the dealers and their
relationship with the manufacturer. It appeared that the dealers are the ones who conclude the orders, provide the customers of all information, guide them during the buying process, etc. The manufacturer likes to have control over the communication of the dealers with their customers
because it is important to create a consistent experience and brand
image. The manufacturer seems to be dependent on the dealer network to create a certain image. However, it is difficult for the manufacturer to have control over the dealers.
In the following phase of the research company X is analysed in more detail. It turned out that company X follows a focus differentiation
strategy. They differentiate themselves by delivering surplus value, in the
form of high quality, to the customer. The production method and know-
how of company X can be seen as their core competences that are capable
of being the competitive basis for their business. It seems that company X
already improved a lot this year but there is still a lot to do. In the past
the marketing activities of company X were arranged by the dealers and
not centrally.
Besides, there were not real marketing programs tailored at specific target segments. For the future it is important for company X to coordinate the marketing activities in a certain degree to improve their position. It is impossible to arrange everything centrally because of scares financial resources. Therefore company X has to cooperate closely with her dealer network to improve her positioning and brand image. To achieve a good channel relationship trust, satisfaction and commitment turned out to be very important.
The following step in the research concerns the choice of the target group.
The whole semi-customized segment seemed to be attractive and fitted to the objectives, competences, etc. of the company X. Therefore this
segment is chosen as target group to serve. Afterwards there is determined which competitive advantage(s) there are available to company X. The production method and know how are substantial to make a difference and are valued by the target group. These competences are the basis for a competitive advantage.
Finally, in the next step of the research the recommendations concerning the positioning are given. It appeared that there aren’t a lot of possibilities to improve the position of company X since the positioning is based on one or more competitive advantages. There is recommended to company X to position itself as the shipyard that produces semi- customized, high quality performance cruisers for the sporty and demanding sailor that delivers speed, value for money and security.
A successful implementation of the positioning requires support
throughout the whole organisation. Therefore the different elements of the
marketing mix and other internal aspects like quality control, production
process and the dealers that will influence the implementation are given a
chance.
Contents
Preface
Management Summary 2
1. Company X 7
1.1 Organisation 7
1.2 Intention of the policy and objectives of company X 8
1.3 Production process 8
1.4 Description of the problem 9 2. Research plan 12 2.1 Problem definition 12
2.2 The research objective 12
2.3 Research question 12
2.4 Scope of the research and constraints 12 2.5 Definitions 13
2.6 Theoretical framework 14
2.6.1 Relation between the core variables 14 2.6.2 Development of marketing strategy 16 2.6.3 Positioning 18
2.7 Conceptual model and sub questions 22
2.8 Model of the research 25
2.9 Typology of the research 26
3. Market segmentation 28
3.1 The market to be examined 28
3.2 Characteristics of the market 29
3.3 Segmentation and motivations 32
Conclusion 36
4. Developments in the market 37
4.1. Actual and potential market size 37 4.2. Attractiveness of the market 41
4.3. Developments and trends in the market 43
Conclusion 45
5. Situation and position of the competition 47 5.1 Strategic groups 47
5.2 Direct competitors 49
5.2.1. X-Yachts 49
5.2.2. Grand Soleil 50
5.2.3. Dufour 52
5.2.4. Etap 53
5.2.5. Wauquiez 55
5.3 Position of the competition 56
Conclusion 59
6. Role of the dealers in this market 61
6.1 Comparison automotive and boating industry 61 6.2 Different tasks of dealer 61
6.3 Face-to-face interaction and brand image 62
6.4 Manufacturer- dealer relationship 63
Conclusion 64 7. Strategy and competences company X 66
7 .1 Past and current strategy 66
7.2 Financial performance 69 7.3 Export markets 72
7.4 Product category and portfolio 73
7.5 Current brand image 77
7.6 Marketing performance 78
7.7 Dealer network 79 Conclusion 82
8. Conclusions 84
8.1 SWOT- analysis 84 8.2 Choice of target group 85
8.3 Competitive advantage 88
9. Recommended positioning 90
9.1 Positioning 90
9.2 Product 92
9.3 Place 93
9.4 Price 94
9.5 Promotion 94 9.5.1. Publicity 95
9.5.2. Personal sale 97
9.5.3. Sales promotion 98
9.5.4. Pubic relations 98
9.5.5. Relationship Marketing 99
10. Implementation 100
10.1 Total quality management 100
10.2 Production process 100
10.3 Relationship marketing and new product activity 101 10.4 After-sales and external communication 101
10.5 Relationship with dealer network 102
Reflection 104
Bibliography 106
Annex 1 Consumer’s perceptions about different attributes and benefits of the direct competitors 110
Annex 2 Questionnaire for importers/ dealers 112
Chapter 1 Company X
In the past the shipyard envisaged to build comfortable regatta sailing yachts (performance cruisers) and wanted to make the sailing sport more accessible for a wider public. At the end of the nineties company X had a difficult period. In the past company X produced 300 to 400 yachts
annually and was known for the best quality in the market. They were one of the most successful boat builders in Europe. The company X´s image concerned innovativeness and yachts that were produced for the mass.
However, a lack of innovation, enthusiasm and bad management lead the company to reduced sales from year to year.
1.1 Organisation
At this moment, company X is alive again due to a capital injection. Since Company X is specialised in designing, developing, producing and selling performance cruisers. At this moment the organisation employs
approximately 100 people.
The produced performance cruisers are sold by a dealer network all over the world. The relationship between the manufacturer and dealers
represents an individually agreed contract for selling new sailing yachts through the shipyard’s selected dealers. The dealers don’t have a
franchise system. They are not limited to a single brand at the moment, which means that the competition in the showroom is not limited. The dealers sell & service points for the customers at the same time. There is always a close contact between company X and the different dealers. At the moment the most important countries of distribution for company X are the Netherlands, Germany, the United Kingdom and Italy, followed by Scandinavia, France and Spain.
1.2 Intention of the policy and objectives of company X The mission of company X is to be the leading designer, developer,
manufacturer and marketer of luxurious performance cruisers worldwide.
Moreover they want to deliver superior returns to their employees, partners and shareholders. The vision of company X is to provide their clients with fast top quality performance cruisers, in which the customer can feel sporty and modern, but at the time has a great sense of comfort.
At this moment the main objectives for company X are the improvement of their image and reputation in the market, a competitive position and their turnover. Company X defined the following core values of their policy:
Focus all the investments on strengthening the brand;
The customer is and will be the ultimate "boss";
The employees have the competence and know- how, they are the most important asset;
Winning through better products;
Be responsible to deliver superior returns to our shareholders;
Work hard, be flexible and keep promises, but most of all, have fun.
1.3 Production process
The type of production process of shipyards is very important but complicated. For a good comprehension of this market, the production process of company X will be explained briefly.
The first thing that one should realise concerning the production of a sailing yacht is that the production process begins with the outside of the yacht. Normally a production process starts with the core of the product but at a shipyard it is the other way around. At company X the
construction of the hull and the deck starts at the outside and then moves further inwards in three main layers that form a sandwich construction.
The hull and deck forms are made in moulds that are sprayed with gel coat. Afterwards the hull and the deck of the yacht are formed by using an outer shell and an inner liner of glass fibre and polyester resin. Between these liners balsawood is placed in panels before the two mouldings of the hull and the deck are joined together. The skin of the hull and the deck is laid- up in a conventional way (hand-lay-up method).
The next step in the production process concerns the lamination of the hull and deck whilst they are still in the moulds. After one day the bald yacht is removed from the moulds. Afterwards company X starts building the interior and installs equipment. Currently, the average production of a yacht takes about 8-9 fulltime weeks, but of course this differs for the different models in the range.
The production method of company X is unique in the boating industry because other shipyards join the hull and deck together when the yacht is completely finished with interior and equipment. In the past there were other shipyards that used the production method where the hull and deck were laminated together whilst they were still in the mould, because this creates a more homogenous, water resistant and extremely strong unit, which is very important when sailing. It is a matter of ensuring quality and security. However, because this production method is very labour and capital intensive, most of the shipyards stopped producing their yachts in this way. At the moment company X is the only one in the market who uses this production method.
1.4 Description of the problem
For a long time company has been a well-established name in the pleasure sailing yacht sector at international level. Company X is a synonym for quality, speed and excellent sailing characteristics. The company was a market leader in the past, but has gone through a very difficult period the last 10 years.
In the last couple of years the company has performed relatively well in the market. However, due to the developments of the economic situation, developments in the market (increased competition) and bad
management company X has achieved bad results the last two years. The turnover and profitability have declined dramatically.
Reasons for the decline are:
Bad financial management, company X spent more than possible;
Late deliveries;
Inconsistent marketing policy;
Money tied up in bank guarantees, so no money for payment of suppliers;
Demoralized and de-motivated dealers;
Too high production costs due to inefficiency;
No management, no clear objectives.
Despite the bad results, there is a strong belief in the market and at the new management that company X´s growth and profitability can be accelerated again. In the beginning of the nineties company X went in another direction. In the past company X made yachts for the mass, but in the nineties they decided to start producing semi- custom built yachts.
In order to serve their current and potential customers better and
differently, they decided to approach them in another way. They wanted to position themselves well against competitors. However, company X has the idea that the customers currently still have a perception of company X that doesn’t fit with the direction they have chosen.
The last couple of years company X and its dealers pursued an
inconsistent marketing policy, with the result, that it is not entirely clear for both current and potential customers what company X stands for and why they should buy a X yacht. Company X couldn’t deliver consistent messages easily and economically, and that’s why confusion reigns. There seems to be a problem with the congruence between the brand identity and brand image. This is mainly due to an unclear positioning. The brand identity of company X was not clear and consistent. However, the
positioning of a company is very important because it can visually separate and distinguish its products and services from those of the competitors with its brand identity. The visual elements of the brand identity (positioning) are the clues for the differences between one company and another to the stakeholders (Nelson, 2004). At the same time the positioning decision is generally the vital strategic decision for a company, because the position is central at making perceptions and crucial for decision making (Aaker e.l., 1982). The positioning should make the consumer choose for your product or brand. It seems obvious that in the future, company X has to communicate more clearly and consistently to its current customers and potential consumers what they stand for, in order to preserve their current customers and to attract new ones. Company X has to create a competitive advantage and improve their position in relation to their competitors, with the aim of raising its profitability again.
In 2004 company X was taken over. Because the results where bad the last years, something had to be done on the short- term. In order to bring the company back to the frontline again company X had to take some quick decisions. One of the most important things that had to be decided on was the positioning. Under time pressure the new management
developed a new positioning. Because the positioning is crucial for the
future and the current positioning was developed under time pressure,
mainly based on feelings and assumptions, company X extensively wants
to investigate her positioning.
To solve the problem concerning the brand identity, positioning and brand image is a prerequisite to get back to the frontline again. However, the competition in the market on which company X operates is very strong.
Company X is subject to pressure because of increased customer expectations and sailing yachts that are going to look more and more similar. Probably an improvement of the positioning is not enough to leave the competitors behind. It is preferable to develop a close relationship with the customers (Huber, 2001) because this will create customers that are loyal to the brand in the long term, which reduces the threat that they will buy elsewhere. In the case of company X, a closer long-term
relationship, with brand loyalty in the end can mainly be created by the dealers. They are the ones who are in contact with the customers. Their performance is crucial in creating customer satisfaction. The importance of customer loyalty is undervalued by company X and the dealers. In the research there will be an analysis of what went wrong, what positioning is desirable and how company X and their dealers can create their
customers’ brand loyalty, as this seems to be important. Brand loyalty is related to brand identity and brand image. An organisation can enhance her brand loyalty by ensuring that there is congruence between the brand identity and brand image (Nandan, 2005).
The description above shows that there are four key concepts that play a
role in this research. These concepts are brand identity, positioning, brand
image and brand loyalty. In the following chapter the approach to the
problem at hand will be discussed in more detail. The development of a
research objective, a research question, sub questions and limitations will
give more direction to the research. Besides, the theoretical concepts that
are central in the research and that will be helpful to come to a solution
for the problem at hand will be discussed.
Chapter 2 Research plan
In this chapter a reflection on the set-up of the research will be presented.
First of all the definition of the problem will be described. Afterwards the objective of the research and the research question which will be
answered at the end of the research will be discussed. Furthermore some theoretical concepts that are central in this research and the conceptual model that reflects the underlying views that form the basis of the research will be discussed. Later on the sub questions derived from the conceptual model will be described, as well as the typology of the research.
2.1. Problem definition
According to de Leeuw, one must clearly specify in the first phase of the research process what one wants to know, in order to guarantee that in the end useful knowledge will be obtained (de Leeuw, 2001). A problem definition is essential to give direction to the research. In the problem definition the aim of the research and the central question, which one would like to answer, will be discussed. Moreover, the preconditions will be established and the research area will be delimited. To be able to understand the problems and improve the ability of examination, some theoretical concepts will be used. From these theoretical concepts a conceptual model will be derived, from which sub questions will result logically. These sub questions will give a clear direction to the research.
When the type of research is established, the sources of the data and the research methods that will be used will be taken into consideration.
2.2 The research objective
According to de Leeuw, the objective makes clear, for whom the research is done, what kind of product should be provided, and what the relevance of the research is. In the objective the result aimed at will be reflected (de Leeuw, 2001: 85 & 210).
″ To give company X recommendations about an improved positioning, with the eventual aim of a reinforced position in the market and increased profitability ″
2.3 Research question
The research question indicates which knowledge should be obtained to be able to attain the objective. According to de Leeuw, the central question of the research should be in line with the objective of the research and the conceptual model (de Leeuw, 2001: 85).
″ How can company X reinforce her position in the market to gain a sustainable competitive advantage and become successful again? ″ 2.4 Scope of the research and constraints
The scope and constraints of the research will reflect the restrictions to
which the research will be liable. The constraints will be related to the
research results and research methods (Baarda and de Goede, 1997:150).
The research must be done in six months and with no budget.
Therefore, the data collection and methods of analysis may be limited;
In the past company X focused on the whole world, but now they focus on the following European countries: Germany, the Netherlands, the United Kingdom, Italy, France and Spain.
According to the management of company X, those countries have the greatest sales potential at the moment and are the ones where will be focused on in this research;
Next to the requirements of the University of Groningen, the research also has to meet the requirements of company X.
2.5 Definitions
The key concepts from the problem definition will be defined to ensure that there won’t be any misunderstanding about what is meant by a certain concept. The definitions serve to limit the area of research very well. Due to precise definitions, it will be clear what exactly will be examined in this research.
Segmentation: the act of identifying and profiling distinct groups of buyers who might require separate products and/ or marketing mixes (Kotler e.l., 2003: 322);
Positioning: the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market (Kotler e.l., 2003: 308);
Market: the monohull sailing yacht market (20-60ft) for Germany, Holland, Sweden, Denmark, United Kingdom, Italy, France and Spain except wooden yachts and racers;
Brand identity: the way the company/ brand wants to be perceived (Aaker, 1996);
Brand image: the way the brand is perceived by the consumers (Aaker, 1996);
Brand loyalty: the biased behavioural response (i.e. purchase) expressed over time, by some decision- making- unit, with respect to one or more alternative brands, which is a function of psychological processes resulting in brand commitment (Bloemer e.l., 1995);
Target group: group(s) of consumers with common needs or characteristics which the company decides to serve (Kotler et al., 2003: 908);
Sustainable competition advantage: means that a company has a relative strong point with respect to the competition and it is valued by the consumers (Aaker, 2001: 134);
Marketing strategy: determine a group of customers for who the company has a differential advantage and to position itself in the market (Kotler e.l., 2003:362);
Customer: the end-customer who buys the yacht from the
dealer.
2.6 Theoretical Framework
In this paragraph a theoretical framework will be developed, in which the concepts are discussed that can help answering the different sub
questions. First what the relationship is between the four key concepts will be explained: brand identity, positioning, brand image and brand loyalty.
Afterwards the main concept positioning will be described in more detail.
2.6.1 Relation between the core variables
Building strong brands is very important these days. A brand provides a visible representation of difference between products. A brand allows the customer confidence in an increasingly complex world, where the choices available have expanded exponentially and the products look more and more similar than before. The brand image can help consumers in
differentiating the product from competitive offerings. Ries and Trout say that developing, communicating and maintaining a brand’s image are crucial to the long- term success of a company (Ries e.l., 1986).
An organisation can seek to convey a certain image for the brand through brand strategies and advertising messages (Nadan, 2005). The image of the brand tells how the brand is perceived by the consumers (Aaker, 1996). The brand image refers to consumer perceptions and encompasses a set of beliefs that consumers have about the brand (Kotler, 1988).
Brand image has to do with the way a particular brand is positioned in the market. From all definitions there are about brand image one can
conclude that the image is a consumer- constructed notion of the brand.
The image of the brand is based on subjective perceptions of a set of associations they have about the brand. Keller outlines three dimensions of brand associations: attributes, benefits and attitudes. Attributes are those descriptive factors that characterize a product. Benefits refer to the consumer’s perception of the needs that are being satisfied. Attitudes are consumer’s overall evaluations of the brand (Keller, 1993).
A company always tries to build a certain brand image and has an idea about how they would like their brand to be perceived. This is what one calls the brand identity (Aaker, 1996). Brand identity can be further defined as a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the
organisation’s members (Aaker, 1996: 68). One can see that the brand identity originates form the company. A company is responsible for
creating a differentiated product with unique features. Brand identity deals with how the company likes to be perceived by the consumers. A company will often use its marketing mix to communicate its brand identity to
establish a certain brand image. The four P's, product, price, place and promotion play an important role in this process. The brand identity is made up of the following components:
brand vision;
brand culture;
positioning;
personality;
relationships;
presentations (Nandan, 2005).
The brand vision embodies the core purpose for a brand’s existence. It represents a set of values that, along with the brand culture, provides direction and guidance. A brand’s positioning seeks to emphasis the characteristics and attributes that make it unique. It seeks to convey the benefits that are being offered to consumers. Personality represents the emotional characteristics of the brand. It is influenced by the positioning as well as the core values and culture of the top management. Vision and culture are also responsible for the evolution of the relationship styles that are developed to present the brand identity. This should take into account the needs and aspirations of consumers (Nadan, 2005).
Because brand identity and brand image are often confused with each other the main differences between the two concepts will be summarized below:
Brand identity stems from the company, brand image is received by the consumer;
Brand identity is created by managerial activities, brand image by perceptions of the consumer;
Brand identity represents the firm’s reality, while brand image represents the perceptions of the consumers (Nandan, 2005).
It is logical that a company doesn’t want to leave her brand image to chance, but will try to have influence on it. A company would like her brand identity and brand image to be in congruence. However, because the consumers in the market determine the brand image of the company, it is difficult to achieve congruence. As mentioned before, the brand image is about the consumers’ perceptions of the brand/ company. The company doesn’t have that image of the brand completely under control. They can only try to have influence on it by positioning the brand. The most
important objective of developing the brand identity is establishing a unique brand image. Other objectives of the brand identity are to decrease the gap between the brand identity and image to establish durable relationships with consumers. The company wants the consumers to perceive the brand in the same way as they intend to express it.
By developing a brand identity a company wants to convey an intended position. In order to make the brand represent something, a well-
developed brand identity, a well-defined positioning is strategically
essential. Positioning is a decision at the strategic level, a marketing
method for creating the perception of a product/ brand. This is also
supported by Kotler, who says that the brand image is the result of the
positioning process. Positioning is the act of designing the company’s
offering and brand image (Kotler e.l., 2003: 308). The positioning of the
brand has to be actively communicated to the target audience and will
demonstrate the advantage over the competing brands. One can see that
the positioning is responsible for projecting the brand identity and creating
the perception and image of the brand in the people’s mind. Facilitated by
communication mechanisms, the positioning forms associations in the
consumer’s mind, which result in a brand image (Kapferer, 1997). The positioning guides all the communication programmes of the organisation.
Ries and Trout confirm this as well. They say that positioning a brand through a clear and consistent image- building campaign is the corner store of brand marketing practice (Ries e.l., 1986).
Brand identity and brand image are products of the communications environment in which they exist. In chapter 1 is mentioned that it is desirable for company X to enhance their brand loyalty because of the strong competition in the market, the increased customer expectations and the fact that products are going to look more and more similar.
Besides, company X and her dealers wish that in a later phase, when a customer climbs up the social ladder, he or she buys a more luxurious sailing yacht of the same brand because these are the models that are more profitable. Brand loyalty can be achieved by building a relationship with the customer. Another interesting way to create and maintain brand loyalty is by strengthening the image- identity link (Nandan, 2005). When there is congruence between brand identity and brand image the brand loyalty will increase. To create value for the firm (brand loyalty) and for the consumer can only be achieved when the customer understands the brand message. Besides, the brand has to be perceived to be addressing the consumer needs better than the brand of the competitors (Nandan, 2005).
In the over- communicated marketing- environment it is very easy for the brand identity and brand image to be out of congruence, company X’s situation is the evidence. When the two are out of congruence, the consumers will move on and can get seduced by the alluring message of the competitors. The congruence between a brand identity and image implies that the consumers have great understanding of and agreement with the brand message. This congruence will likely lead to loyal
consumers. In the end effective communication is necessary because it is about conveying the essence of a brand to the desired audience in such a way that the consumption experience is in accordance with purchase expectations.
Positioning seems to be the main variable, the concept that is the most important, in this research. Therefore this concept will be explained in more detail below. The description of the positioning concept will
contribute to the research. After the description, it will become clear what information the research needs to produce to be able to answer the
research question with the help of theories.
2.6.2 Development of marketing strategy
According to Kotler, marketing strategy consists of two parts: to
determine a group of customers for whom the company has a differential advantage and to position itself in the market. Positioning is a central part of the marketing strategy of a company. In these days, in which
consumers are submerged in information, is positioning an important
means for a company to distinguish itself. The ultimate result of
positioning, the brand image takes care that a brand is recognizable for consumers. It is important that a company or brand is distinguishable in the competitive environment.
Ries and Trout are writers that have done extensive research about positioning (Ries e.l., 1986). They say that positioning implies giving the brand a distinctive place in the mind of the target group and is part of the brand identity. The ultimate result of the positioning, the realised position, is the brand image. The positioning has to do with how the company likes to be perceived by the target group (brand identity) and the brand image is how the brand is perceived by the target group. Companies don’t like to leave their positioning to chance. A company plans her positioning that should deliver their product/ brand a favourable distinctive place in the mind of the target group and composes a marketing mix to realise the planned positioning. A company plans her positioning in the marketing strategy. The result the company strives for is that their image and brand identity correspond with each other, which depends on the positioning.
There are different steps that have to be made to develop a marketing strategy. For a company to be successful in the current environment, they have to aim at the customers. The company has to win customers over from the competitors by offering more to them. To be able to serve the customer in the right way one first has to analyse the consumers in more detail to get to know what their needs are. It seems impossible for a company to serve the whole market. A lot of companies nowadays find mass marketing (serving the whole market) unrewarding. They are increasingly embracing target marketing. This type of marketing helps to identify marketing opportunities better. In this way a company is able to make the right offer for each target segment.
To get a certain position in the market the company has to distinguish the major market segments, to target one or more of these segments and to develop strategies to serve the chosen segments in a better and more profitable way than the competitors do. This process implies 5 steps:
measuring and assuming the demand, market segmentation, choice of the target group, market positioning and a good positioning compared to the competitors (Kotler e.l., 2003:86). In order to predict the demand it is good to analyse the current and potential size of the market. To see which segments contribute best to the realisation of the objectives the market has to be divided in segments. After the market is divided in segments the company has to choose which segment(s) she is going to serve and which will be the target group. Once the company has chosen the target group, it has to decide about its position in that segment. A decision must be made about which distinctive place the product/ brand should have in the mind of the consumer compared to the competitors. A positioning is based on one or more competitive advantages. Therefore the company has to find ways to deliver more value to the consumers compared to the
competitors. Positioning has to do with differentiating the marketing offer
in a way that the consumer is delivered a higher value than that of the
competitors. To see which possible competitive advantage the company
has the company itself and the competitors need to be analysed carefully.
Once the positioning is chosen the company can base their composition of the marketing mix on it (Kotler e.l., 2003: 86-92).
This way of developing a marketing strategy shows a lot of similarities with the model of Kotler (see figure 2.6.2) about the three major steps of target marketing (Kotler e.l., 2003:322). This model demonstrates the steps to develop a positioning and marketing program tailored to the target group(s) and will be used as guideline throughout the whole research.
Market segmentation Choice of target group Market positioning
Figure 2.6.2 The six steps of market segmentation, choice of the target group and the positioning (Kotler e.l., 2003: 322).
2.6.3 Positioning
The main subject in this research is positioning and will be described in more detail by means of theory. Alsem’s positioning triangle (see fig.
2.6.3) shows what is central in the positioning. Central in the positioning is the selection of customer values (characteristics, consequences end values) that are perceived as important by the target group and the company is relatively strong in delivering these values with respect to the competition.
Alselm’s positioning triangle shows the need to gather information about the customers, the competitors, the market and the company itself to be able to make decisions about the right positioning. To select the values that are important to the target group one first needs to decide which segments there are and which of these are going to be the target groups.
Furthermore must be identified how the competitors distinguish
themselves, what their position is and which values they have selected for their positioning to be able to develop a successful positioning. Besides, an analysis should be made of the image the company at hand has at the moment (what their position is) and what their strong and weak points are. After all analyses are accomplished, one can conclude which values the company can present relatively well and which are important for the target group to decide on the positioning strategy. The description above shows that the different theories all depart from the same idea about what positioning is and what there has to be done to come to the right
positioning. To be able to develop the right positioning for the company at hand there has to be analysed what segments there exist in the market.
Market segmentation is an important prerequisite for positioning, which will be described in more detail below.
3. Formulate measures for the attractiveness of the segments
4. Choice of target group(s)
1. To determine the criteria for segmentation 2. Developing profiles to determine segments
5. Developing a positioning for each target group 6. Developing the marketing mix for the target group(s)
Figure 2.6.3 Positioning triangle (Alsem, 2005:293).
It is quite obvious that there will be differences in the benefits consumers search for and their buying behaviour. The objective of market
segmentation is to see which segment(s) are attractive for the company to serve. In the literature one can find different methods of market segmentation. Examples are geographical segmentation, demographic segmentation and volume segmentation, which were very popular in the past. These methods have the disadvantage that they rely on descriptive factors rather than causal factors. A segmentation method that relies on causal factors is more efficient in predicting the buying behaviour that is of interest to marketers (Haley, 1968). A method of market segmentation that uses causal factors is benefit segmentation. The belief underlying this segmentation strategy is that the benefits, which people are seeking in consuming a certain product, are the basic reasons for the existence of true market segments (Haley, 1968). The benefit segmentation has also the advantage that when segments are identified, in any case the
requirement of homogeneity/ heterogeneity will be satisfied. There is a direct relationship with the buying behaviour. For different segments that are attractive different products or varieties can be developed later on.
Because the benefit segmentation method predicts the buying behaviour better and at the same time is a basis for a customer- oriented approach it will be used in this research. Next to the benefits people search for more geographical or demographical data can still be used to get a reasonable understanding of the people who make up each segment. Each segment will be identified by the benefits it is seeking. However, it will be the total configuration of the benefits sought which differentiates one segment from another, rather than one segment is seeking for one particular benefit and another for quite a different benefit. One benefit is likely to appeal to several segments. Consumers would like as many benefits as possible.
Brand (Company):
current image and a strong point
Target group (customers):
relevant product characteristics, consequences, end values
Positioning:
relative distinctive position in the mind
of the target group
Competitors:
another position in the
mind
However the relative importance they attach to individual benefits can differ importantly. Therefore they can be used as an effective lever in segmentation of the market (Haley, 1968).
As mentioned before, after the market segmentation is done, a decision must be made on which segments the company is going to serve. The different market segments have to be evaluated to decide how many and which segments the company is going to serve. By choosing a target group, the attractiveness is highly dependent on how good the segment(s) fits in with the competences of the company. After the evaluation of the different segments the company hopes to find one or more segments that are attractive for them. Afterwards it has to be decided which positioning strategy fits best to the chosen target group and the circumstances of the company and the market to create a distinctive place in the mind of the customer.
There are different positioning strategies that are used in marketing.
These strategies work with associations to change the perceptions of the consumers with respect to the product and brands. Kotler distinguishes seven positioning strategies that are based on different grounds:
Specific product attributes: the company positions itself in an attribute;
Benefits offered: the product is positioned as the leader in a certain benefit;
Use or application: positioning the product as best for some use or application;
User: positioning the product as best for some user group;
Competitor positioning: the product limps to be better in some way than a named competitor;
Product category: the product is positioned as the leader in a certain product category;
Quality or price positioning; the product is positioned a delivering the best value (Kotler e.l., 2003: 311-312).
By choosing the right positioning strategy the possible competitive advantage(s) of the organisation has to be taken into account.
When determining what the possible competitive advantages are to base the positioning of the company, one has to select the right competitive advantage(s). When the company is lucky and has more possible
competitive advantages a selection must be made of those to be used as a basis for their positioning strategy. The company needs to choose
carefully on which advantage(s) she is going to base her positioning. The following criteria can be used to decide which advantage is worth to be used:
Important: the (differential) advantage should be valued by the target group as a quality;
Distinctive: the competition doesn’t offer the (differential)
advantage or the company is able to deliver it in a different manner;
Superior: the difference is superior to the other ones in which the
consumer could obtain an advantage;
Possible to communicate: the (differential) advantage can be communicated;
Exclusive: it is not possible for the competition to copy the (differential) advantage easily;
Payable: the buyers can afford the price difference;
Profitability: the company can make the competitive advantage profitable (Kotler e.l., 2003: 388- 389).
After the company has chosen the right positioning strategy they have to implement the positioning. The chosen positioning has to be
communicated to the stakeholders by the marketing mix. The marketing- mix activities have to support the positioning strategy. Besides developing a marketing mix one has to sort out which other things need to be
changed or improved by the company to secure a successful implementation of the positioning strategy.
Important objectives of a company are establishing a good position in the market and strengthening the linkage between brand identity and brand image, because this will enhance brand loyalty (Nandan, 2005). Nandan gives some suggestions how to achieve this. One of the suggestions he mentions that can be helpful in developing recommendations, is brand concept consistency. In order for consumers to understand a brand image, consistency of the brand concept has to be emphasized. Through various promotional strategies, the same brand concept has to be stressed. This will facilitate recognition and recall of the brand by the consumers in a setting where there are multiple competitive options. The linkage between identity and image will be strengthened if a consistent brand concept has been used for an extended period.
However, the brand image is a bit more complicated than normally in the case of company X. According to Huber and Herrmann customers often associate dealers as part of the manufacturer’s brand. In paragraph 1.1 is mentioned that company X sells its sailing yachts all over the world
through a network of dealers. Their brand image is not only dependent on the manufacturer himself, but on the dealers as well. Negative customer experiences with dealers can create a poor brand image for the
manufacturer, company X (Huber e.l., 1998). The customers’ perception of company X doesn’t match the direction they chose in the nineties.
There is a difference between how the organisation seeks to identify itself (brand identity) and the set of beliefs held about the brand by the
stakeholders (brand image / position). How the customers perceive the organisation is not only determined by the manufacturer, but dependent on the performance of the dealers as well.
Because the dealers play an important role in this research their relationship with the manufacturer, the channel relationship will be analysed in more detail. The manufacturer and dealer in this channel relationship are mutually dependent on each other. This reciprocal
dependency is not in balance most of the time. One of the parties is more
dependent in the relationship than the other. Because of this there is a
difference in power (the ability to influence). Dependent on the degree of the dealer’s dependency on the manufacturer, the manufacturer can use power to influence his dealer network. In the case of company X there seem to be difficulties with the supervision of the dealer network. This is due to a lack of power and thus control over the dealers. To be able to decrease the gap between the brand identity and brand image it is
necessary to deliver a consistent brand message to the consumers in the market, as we seen before. For the manufacturer to deliver a consistent brand message they need to cooperate with their dealer network. The interest of the company to influence the dealer’s operations in certain key areas is big. The greater that interest is, the greater the likelihood that the manufacturer will use available power to achieve influence or control over those dealer operations according to Wilkinson (Wilkinson, 1978).
The question that will arise later on in this research is how much power company X has to influence/ control the dealers.
Below we will show some sources of power that can exist in a channel relationship. These sources possibly can help later on in determining how much power company X has over its dealer network. The control a
manufacturer has over its dealers’ decisions is the result of socio-political forces characterized by attempts to control the decisions of others. As such, these relationships are viewed as political struggles based on power and dependence. The following sources of power are possible in channel relationships:
sales and profit: the importance of the percentage sales and profit contributed by the dealer, the commitment of the manufacturer, difficulty of replacing a dealer, etc.
role performance: dealer dependence related to interfirm agreement on marketing, dealer satisfaction and manufacturer’s perceived interest in dealer’s welfare, etc.
specific assets investments: replaceability according to transaction.
Specific investments (Frazier e.l., 1989).
Because the form of the relationship between the manufacturer and dealer will have influence on how the recommended positioning can be
implemented successfully to achieve a reinforced position (brand image) this will be analysed in more detail later on in this research.
2.7 Conceptual model and sub questions
The conceptual model reflects the global view that underlies the basis of
the research (Leeuw, 2001: 56). This model graphically reflects how the
different concepts in the research coincide with each other (Baarde and de
Goede, 1997: 44). The diagram below shows the conceptual model that
originates from the theoretical framework and the problem definition that
have already been developed and formulated.
Figure 2.7 Conceptual model
Below the sub questions of the research are summed up. These sub questions are a splitting-up of the research question and are founded in the theoretical framework and the conceptual model.
Developing the right positioning requires a segmentation of the market and a description of the different profiles of the segments. It seems impossible to serve the whole market. To be able to serve the consumers in the market in the right way it is necessary to know what their needs are and which benefits they are searching for. The two sub questions that concern the market segmentation are:
Sub question 1: Which segments can be distinguished in the market and what are their different profiles?
Sub question 2: Which benefits are important in the buying process of the different segments in this market?
In order to anticipate on the demand in the market the current and potential size of the market has to be examined. Besides, the
developments there are in the area of competition the trends in the
Situation & positionof company X Situation & position
of the competition Recommended target group(s)
Competitive advantage
Recommended positioning Segmentation Market developments
Manufacturer
company X Dealer network Implementation
market have to be taken into account. After analysing the market one can see if there is potential demand and which threats and opportunities there are. The third sub question will be:
Sub question 3: What developments are there in the market?
Because the positioning depends on the competition as well one has to determine the position of the different competitors and their strengths and weaknesses. The positioning is based on one or more competitive
advantages of the company. To be able to see what the possibilities are to create a sustainable competitive advantage one has to know how the competitors differentiate themselves. The fourth sub question will be:
Sub question 4: How do the competitors distinguish themselves from each other?
As mentioned in paragraph 2.6.2 the positioning and the ultimate brand image are not only dependent on the manufacturer but on the dealers as well. It is necessary to analyse the complex relationship between the manufacturer and dealer in more detail to see how the dealers can have influence on the brand image. Later on recommendations can be given about how to work on the right positioning together with the dealers and how the manufacturer and dealer can strengthen the link between identity and image and thereby enhance brand loyalty. The fifth sub question is:
Sub question 5: What role do the dealers play in supporting the positioning?
Further on, company X’s possibilities to create a competitive advantage have to be analysed. In paragraph 2.6.2 is already described that one or more competitive advantage(s) will form the basis for the positioning. One has to be aware of the strong and weak points of the company. Besides, the current brand image (position) has to be analysed to identify the differences with the brand identity, and to determine what has to be changed to improve the position. The sub question that will help in giving answer to this:
Sub question 6: How can company X create a competitive advantage and support the positioning?
The next step in developing a positioning strategy is the choice of the target group. One has to sort out which segments are most attractive for the company to serve. The sub question that concerns the targeting is:
Sub question 7: Which segment(s) should be recommended as target group(s) for company X?
After all the other sub questions have been answered the company can decide upon the positioning strategy. There will be given
recommendations about the desirable positioning. The sub question that
addresses the positioning is:
Sub question 8: Which positioning strategy should be recommended according to the target group and competition?
Then the implementation of the positioning must be worked out. The chosen positioning must be communicated to the stakeholders and will be implemented through the different marketing mix activities. Besides, decisions must be made on changes and improvements in the company to implement the positioning successfully. The sub question that addresses the implementation is:
Sub question 9: How can the positioning be implemented successfully by company X and their dealer network?
2.8 Model of the research
In the figure 2.8 the schematic outline of the research is represented.
Figure 2.8 Schematic set-up of the research
2.9 Typology of the research
The typology of the research according to the result aimed at will help us to obtain a good connection between the research result and the need of the management. The typology will also help with the choice of a suitable
Chapter 3: Segmentation of
the market (sub questions 1 & 2) Chapter 7: Strategy and competences company X
(sub question 6) Chapter 4: Developments in
the market (sub question 3)
Chapter 5: Position and situation of competition
(sub question 4)
Chapter 9: Recommended positioning (sub question 8)
Chapter 10: Implementation (sub question 9) Chapter 6: Role of the dealers
In this market (sub question 5)
Chapter 8: Conclusions (sub question 7)
