During my first few marketing classes during MBA (I'm a finance major btw) I noticed the word 'positioning' being thrown around about the same way 'synergy' would have been- had it been a class on valuation. While there were other aspects to marketing being mentioned, such as targeting and what not, positioning is probably what seemed most important. And at the time, Apple was the favourite case for the everyone. You just could not talk about positioning without talking about Apple and how it had positioned itself succesfully (a year later when Samsung beat Apple across most global markets, the hype died down). I had just bought a new phone and also done some research on new laptops though I didn't buy one and for me, the only thing that mattered were specifications- things like brand value did not mean much to me, unless of course the brand meant that I would face equipment failure. This meant that I would not really have the courage to buy a Micromax (and these days, a Xiaomi- however it's spelt) but I wouldn't bother much with the esteem that comes with owning an Apple product for instance.
After sitting through a few of these classes, I became convinced that there was no point in going for the premium products just because they were being positioned as premium products, and that I should only look for tangible value. What's the point getting fooled by marketers and their advertisements, right? But as time passed by, I noticed how our marketing professor would prefer premium products even though he knew all about branding strategies. The same was the case with my colleagues- for instance, some would die for a bottle of coke but would never touch pepsi. And of course there was the decent number of apple fanboys. From the point when I started realising this, even I started to value the intangible value that comes with owning something that others look up to.
So, why does this happen? Why does positioning work, even when we know deep inside that there is no practical difference between the features of some products? One reason (which isn't the main one) is probably that successful grown ups can simply afford to spend that bit more on the higher positioned product. There are people who want the best and they don't want to really compromise on brand image when they have the money. As a kid, I used to look for an enormous amount of value and do weeks of research before buying a new phone, but as of now I would just buy the phone which is most suggested by colleagues. A second reason (which still isn't the main one) is the frequency of purchase of certain products. Notice how even at moderately highly priced restaurants, you tend to see lower middle class people. In a country like India, this can happen due to the sheer size of population. People go out as a family to eat once a while, and when they do go out- they want to eat at a place that makes them feel good- a place which is slightly above their means. Which is why you tend to see slightly poorer people than you would expect at a restaurant of a particular class. The same applies to products, and keeping a product at a slightly higher price than you should keep tends to encourage such kind of customers (and the number of such customers is substantial). A third (not yet) reason is that a product/brand which can afford to spend a lot on advertising and has successfully been in the market for a large number of years is a relatively safer product/brand. This is particularly important in the case of services and not THAT important when it comes to products. I would get a loan from an SBI and sleep properly at night but I would probably be a bit worried if I took it from a co-operative society or something which might cheat me in the future and charge high interest rates. This isn't that relevant for products- Micromax phones for instance can be thrown away if they stop working, so it doesn't really affect your sleep that much. The third point is relevant to risk-averse customers in general (like me) and not so much for others.
The fourth and possibly the most important reason is that practical, successful people do not look at all the features and such things while buying a new product. For them, brand image is the most important- if people talk about it in a good way and look up to a product, then you buy it. Unless you want to be different- then you buy a super high priced product which no one talks about. Either way, you cannot go wrong while targeting successful people (By successful, I mean people who work hard earn high incomes). The world is never going to run out of successful people, and to add icing to the cake- they have all the money. So the bottom-line when you're setting up a brand is - target the 'successful' and position it as premium. Like BMW. And while you're at it make sure that the product has features at least comparable to those of competitors (it's the hygiene factor).
After sitting through a few of these classes, I became convinced that there was no point in going for the premium products just because they were being positioned as premium products, and that I should only look for tangible value. What's the point getting fooled by marketers and their advertisements, right? But as time passed by, I noticed how our marketing professor would prefer premium products even though he knew all about branding strategies. The same was the case with my colleagues- for instance, some would die for a bottle of coke but would never touch pepsi. And of course there was the decent number of apple fanboys. From the point when I started realising this, even I started to value the intangible value that comes with owning something that others look up to.
So, why does this happen? Why does positioning work, even when we know deep inside that there is no practical difference between the features of some products? One reason (which isn't the main one) is probably that successful grown ups can simply afford to spend that bit more on the higher positioned product. There are people who want the best and they don't want to really compromise on brand image when they have the money. As a kid, I used to look for an enormous amount of value and do weeks of research before buying a new phone, but as of now I would just buy the phone which is most suggested by colleagues. A second reason (which still isn't the main one) is the frequency of purchase of certain products. Notice how even at moderately highly priced restaurants, you tend to see lower middle class people. In a country like India, this can happen due to the sheer size of population. People go out as a family to eat once a while, and when they do go out- they want to eat at a place that makes them feel good- a place which is slightly above their means. Which is why you tend to see slightly poorer people than you would expect at a restaurant of a particular class. The same applies to products, and keeping a product at a slightly higher price than you should keep tends to encourage such kind of customers (and the number of such customers is substantial). A third (not yet) reason is that a product/brand which can afford to spend a lot on advertising and has successfully been in the market for a large number of years is a relatively safer product/brand. This is particularly important in the case of services and not THAT important when it comes to products. I would get a loan from an SBI and sleep properly at night but I would probably be a bit worried if I took it from a co-operative society or something which might cheat me in the future and charge high interest rates. This isn't that relevant for products- Micromax phones for instance can be thrown away if they stop working, so it doesn't really affect your sleep that much. The third point is relevant to risk-averse customers in general (like me) and not so much for others.
The fourth and possibly the most important reason is that practical, successful people do not look at all the features and such things while buying a new product. For them, brand image is the most important- if people talk about it in a good way and look up to a product, then you buy it. Unless you want to be different- then you buy a super high priced product which no one talks about. Either way, you cannot go wrong while targeting successful people (By successful, I mean people who work hard earn high incomes). The world is never going to run out of successful people, and to add icing to the cake- they have all the money. So the bottom-line when you're setting up a brand is - target the 'successful' and position it as premium. Like BMW. And while you're at it make sure that the product has features at least comparable to those of competitors (it's the hygiene factor).
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