Marketing Management Sonic PDA Porter's Research Paper
Excerpt from Research Paper :
Apple has a very strong brand name that is helping it to build share for the iPhone, but the product is expensive. It is believed that there is considerable room for a competitor to target the student market with a lower-priced but also feature-rich device.
The mainstream player in this market is the humble cell phone. Popular phones such as the Motorola Razr have camera functions, and new phones are being introduced with mp3 players and other technology. It appears as though there is some degree of technological convergence happening between cell phones and PDAs/Smartphones. The result is that the Sonic 1000, compared with these devices, is a superior product. Yet its pricing is fairly competitive relative to the new wave of feature-rich cell phones. This leads to the following positioning statement for the Sonic 1000:
"The Sonic 1000 is a portable device that will replace the cellphones of the past with the integrated, feature-rich smartphone of the future. Competitive priced, the Sonic 1000 will appeal to students who want a well-made phone with all the features they love, but at a price they can afford."
Kotler and Keller argued that a positioning statement should focus on competitive frames of reference, points of difference, points of parity and establishing and communicating category membership. This positioning statement for the Sonic 1000 meets all of those criteria. The two competitive frames of reference are both implied in this statement. Implication in this case is acceptable for a couple of reasons. The first is that the consumer is savvy about these products; the second is that it leaves the door open to address new competitors in the market. The cellphones that dominate the low end of the student market (or the student mass market, to view it another way) are framed deliberately as stale technology. The issue of price is raised twice, highlighting that relative to the main smartphone competitor in the student market, the Sonic 1000 is taking a cost leadership position.
The positioning statement highlights points of difference. The technology difference between the Sonic 1000 and cell phones is highlighted ("feature-rich"). The price difference with the iPhone is also highlighted ("a price they can afford"). In highlighting these two differences, the Sonic 1000 is positioned clearly between two established competitors. Porter's generic strategy theory argues that this is a bad tactic, but the Sonic 1000 makes the case for this positioning in the current marketplace with the phrase 'the cellphones of the past." Sonic is positioning itself more with an eye to the future, in which it sees cell phones as a declining technology. The vision of the Sonic's positioning a few years down the road is of a two-product universe, not the three-product universe that currently exists in the student market.
The points of parity are also highlighted. The second clause identifies the Sonic 1000 as having "the features they love," implying a consistency of features with the iPhone. The point of parity with the cell phone is stated less explicitly. By portraying the cell phone as a technology of the past, it is implied that the Sonic 1000 -- no matter who it compares cost-wise with cellphones -- is a better value. While this implication can be considered weak, the Sonic vision of a two-product universe precludes the need for excessive comparison with cellphones.
Category membership is clearly defined with the multiple references to both features and price. The positioning statement is explicit that the Sonic 1000 is a smartphone. The positioning statement is also explicit about the target market, naming students directly. Put together, the positioning statement clearly identifies the Sonic 1000 as a low cost smartphone for students, while highlighting the points of difference with competing products and the points of parity with the aspirational product (the iPhone) and simultaneously creating aspiration for the Sonic 1000 among cell phone users.
4. One of the biggest reasons why Sonic must compete as a low cost producer is because the company does not have a strong brand with which it can charge premium prices for its product. Indeed, its main competitor Apple thrives on the power of its brand. Apple, however, has been building its brand since the 1970s, while Sonic is a new product. The process of building the Sonic brand begins now. Over time, Sonic will need that brand to fend off generic competitors once the smartphone market becomes commoditized. Only a handful of domestic technology players remain in part because of the commoditization affect and the inability of most competitors to develop...
...The brand first needs to be defined, then communicated (Brandwerks, 2010). The value proposition that Sonic hopes to communicate is that it has great smartphones at an affordable price. The price is one area of focus at present, largely because the main competitor in the student market is differentiated. Over time, however, the price issue will fade because not only will generics enter the market with an even lower price but Sonic will have built the reputation of its brand.
The brand definition being a company that produces quality, good value smartphones should be the focus of the marketing campaign. This branding can be carried for the company for years, and will help it to defend against both differentiated competitors moving into the mainstream and generic competitors attempting to cleave off share at the low end of the market. Generics and no-name or unfamiliar brands often suffer from the perception that quality is poor. Sonic needs to avoid this, so while the company's communications must discuss price, the quality should be the primary focus with the price speaking for itself, which is possible because of the high level of knowledge among mobile device consumers about the products available to them.
Brand equity is crucial to Sonic over the long run, so the way in which the company communicates its value proposition to the marketplace should be consistent from the launch of the low-end Sonic 1000 through the company's future endeavors years from the present. Kotler and Keller argue that building the brand's equity is critical to long-run survival because brand equity is added value on products and services. The value added is value to the consumers, and is something that they are willing to pay for.
The brand message should be focused on elements that will transcend the Sonic 1000 product. In this case, quality is the strongest brand element that should be contained. This works for the Sonic 1000 because if the product is seen as low quality, consumers will still turn to the iPhone it costs more. Such a result would mean that the communication of the points of parity has failed.
The brand message should also focus strongly on the Sonic name. This name will transcend the individual product, the same way that Blackberry, Palm and Apple all have names that transcend their individual products. In an industry characterized by a rapid pace of technological change, the 1000 version of the Sonic might have a very short life span, so the company needs to focus on the branding element of the company name and logo, and create strong associations with quality and value with the name and iconography. This means that the branding should focus on building brand resonance.
The brand imagery is also critical, so that Sonic products are instantly recognizable. This is especially critical in mobile devices, where consumers can see the device in use, recognize it, and ultimately acquire the idea that the device is popular. In addition, the branding should focus on eliciting a strong emotional response. This is necessary in large part because the main competitor in the student market, Apple, relies on such a tactic. Its users tend to overlook rational considerations about new products and make decisions based on emotional responses. If Sonic markets strictly on rational points of difference, it will have trouble winning over any Apple fans. Taking a lesson from its competitor, Sonic should establish an emotional connection with its customers (and potential customers) so that they are willing to buy Sonic products as they are released. This increases the long-term potential of the Sonic brand, especially in an industry that relies on a rapid succession of new product introductions. Thus, the most important branding elements are brand feelings, brand resonance and brand imagery.
Quick MBA.com (2007). Porter's generic strategies. QuickMBA.com. Retrieved September 15, 2010 from http://www.quickmba.com/strategy/generic.shtml
Kinetz, E. (2010). Indian industry groups reject RIM security forum. Globe and Mail. Retrieved September 15, 2010 from http://www.theglobeandmail.com/report-on-business/indian-industry-groups-reject-rim-security-forum/article1687525/
Precis Marketing. (2010). How to develop a positioning statement. Precis Marketing. Retrieved September 15, 2010 from…
Sources Used in Documents:
Cite This Research Paper: