MARKET POSITIONING IS CENTRAL TO CREATING COMPETITIVE ADVANTAGE IN THE DIGITAL AGE

Matt Pollington; London Southbank University Article History: Received 21 May 2012, Accepted 21 May 2012, Available online 21 May 2012 Keywords: market positioning, competitive advantage, positioning strategy, Internet positioning
ABSTRACT This paper presents an investigation into the relevance of market positioning in the digital age based on the founding principles of competitive advantage by Porter, and market positioning by Keller. Proceeding the theoretical framework of market positioning, and Porters generic strategies, the paper takes the case study of a modern technology brand, Clyp, to contextualize the focus generic strategy, and explore relationship between positioning and market share/profit, concluding that, for a modern brand whose product is enabled by, and mutually dependant of the digital age, a founding and flexible positioning strategy is essential in order to compete in a market, and gain a sustained competitive advantage. The impact of the Internet on market positioning is explored further, identifying enabling tools of cost leadership, which have caused a paradigm shift in the way that brands position themselves to achieve competitive advantage online. Finally, the paper reviews modern differentiation surrounding the evolution of reputation and the impact of social media forcing the alignment of actual and intended positioning, and concludes with the evidence that the digital age forces brands to align positioning more responsibly, and remain flexible with the shifting demographic and market trends, thus a market positioning strategy remains central to sustaining a competitive advantage in the digital age. INTRODUCTION The purpose of this paper is to investigate the relevance of market positioning in the digital age and to identify if it is central to the business marketing strategy of a brand in creating a competitive advantage. It is important to determine the climate of the digital age, embodied primarily by the world wide web (the Internet). Soloman defines the digital age through the transformation of business marketplace their competition now comes not only from the shop across the street, but from thousands of Websites spanning the globe (Soloman, 2010). This will continue to have a huge impact on the competitive landscape of industries, with 12.4% of the UK's GDP will come from the internet by 2016 (Econsultancy, 2012). WHAT IS MARKET POSITIONING It is recognized that market positioning and brand positioning can be distinguished as individual concepts. Market positioning on a business level, is the market standing of a firm against its competitors (Fuchs, 2010). Further to this, on a consumer marketing level, Kotler (2009) proposes that positioning is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market. (Kotler 2009). Vukasovic (2009) also refers to positioning in relation to the competition describes market positioning as forming of a desired perception of the brandaccording to the competition. (Vukasovic, 2009). Clearly, the constant of positioning strategy lies in an explicit frame of reference (Fuchs, 2010; Keller, 2008) with regards to the competition, and establishing differentiation (Fuchs, 2010; Keller, 2008; Vukasovic, 2009). It proves increasingly challenging to identify an industry or market sector where a competitive force is not existent. Indeed, the existence of competition identifies that there is a market and as such a demand for a given product or service. Porter identifies three generic strategic approaches, or generic strategies, to outperforming other

brands in a market (Porter, 2004) which form the structure of this paper: 1. Focus targeting a customer segment, product line, geographic market etc, creating the perception of the market leader 2. Overall cost leadership achieving economies of scale and cost minimization, creating something that is perceived as the cheapest 3. Differentiation creating something that is perceived as unique, creating the perception of the best value The positioning of a brand in an industry/product category ultimately depends on the consumer, and how they perceive the quality, advantages and disadvantages, price, value, and image of the brand. It is the concept of a brand that is held by the consumer (Keller, 2008; Vukasovic, 2009). Furthermore, the long term overall objective is to build a brand equity, defined as an emotional connection to the brand (Keller, 2008), which will in turn achieve a positive long-term purchase behavior. Within long term purchase behavior, it is assumed a brand will achieve a superior market share, and as such return on business and marketing investment. This bottom line relevance of positioning emphasized by Blankson et al (2008) who details evidence that the type of positioning strategy has an impact on core financial performance measures including "sales," "profits," "ROI," "market share," "company image," and "consumer perceptions" (Blankson et al, 2008). FOCUS: COMPETITIVE ADVANTAGE & MARKET SHARE In academic circles the relationship between market share and profitability is fiercely contested. An empirical study using PIMS identifies a positive correlation between market share and ROI (Buzzell, 1975). Porter identifies a U-Shaped relationship between profitability and market share (Figure 1). The position of a business in within the U depends on the strategic direction chosen by a business within the previously discussed generic strategies (Porter 2004). Reimer (2010) recognizes this in the modern technology market in the case study of Clyp, a telecoms software brand. In 2010, Clyp experienced price

erosion at the upper end of the marketand launched no new product features for quite some time, plus. ...It had fallen behind average market growth, which meant Clyp was not gaining market share. (Reimer, 2010). This placed Clyp in a market position Porter describes as stuck in the middle, where a brand is in an extremely poor strategic position, lacking market share required to achieve cost benefit, in addition to lacking the focus to achieve sufficient differentiation (Porter, 2004). Reimer (2010) details further the strategic route taken by Clyp to invest in new communication technology which seemed inevitable [driver] in the future i.e. choosing to differentiate as one of Porters generic strategies (Porter 2004).

Figure 1 Porter's U-Shaped relationship between profitability and market share (Image credit: authors own) (Porter, 2004)

In reality, this relationship will differ significantly on competition within the specific industry sector, and the optimum equilibrium can be reached if brands analyze their own positions in order to achieve the best balance of costs and benefits of the different strategies. (Buzzell, 1975). This would suggest that, even in a modern company whose product is enabled by, and mutually dependant of the digital age, a robust but flexible positioning strategy is essential in order to compete in a market, and gain a sustainable competitive advantage. This is supported by Fuchs who argues positioning effectiveness can be compromised by choosing the wrong positioning strategy [and] by poorly executing a sound strategy, or a combination of both. (Fuchs, 2010). COST LEADERSHIP: THE IMPACT OF THE INTERNET ON MARKET POSITIONING Soloman describes the digital age as one of the most significant influences on

consumer behavior (Soloman, 2010). The model for positioning in the context for the Internet is unique in that there are strategies and tools, which can be employed to deviate a particular competitive force. The digital age has resulted in a new positioning types. For a brand to successfully position themselves in the market, they must consider; people positioning, Internet positioning and search engines positioning (Serrano-Cinca, 2010). Furthermore, Serrano-Cinca identifies four different angles to Internet positioning. These include: web visibility, relevance in search engines, popularity in blogs and news portals, and reputation. The impact of the Internet on market positioning is clear; empirical study identifies that successful Internet businesses with positive image in the minds of consumers are as successful as those with positive image in the minds of search engines (Serrano-Cinca, 2010). The impact of Internet search is unquestionable, Serrano-Cinca (2010) cite Truman who discovered a positive and significant relationship between revenue and web traffic. This theory is modeled by the actions of brands; with spend on paid search by increasing 19% year-on-year during 2011 (Econsultancy, 2012). This would suggest that the competitive market for search is becoming ever more challenging, and brands will need to be increasingly innovative and creative, in addition to allocating necessary budget to achieve positioning in search engine results pages. Serrano-Cinca (2010) also identifies the exaggeration of Porters generic strategies with relation to Internet positioning, where brands follow either a cost leadership or differentiation strategy. An opportunity has arisen for new businesses to develop a positioning around a market niche, by, for example specializing on a narrow product line (Serrano-Cinca, 2010). It becomes clear brands continue to develop positioning and now consider the internet as key in achieving competitive advantage, for example with a brand choosing to achieve cost leadership by investing in search engine positioning, or a brand choosing to achieve differentiation leadership by investing in people positioning. SerranoCinca (2010) concludes, ...we have to consider that both people and engines enter a webpage. As such for a brand, the concept of positioning has evolved

significantly; evidence of it being key to competitive advantage can be found in the growth of the medium. DIFERENTIATION: CREDIBILITY REPUTATION AND

In addition to the digital age presenting new challenges to brands in gaining competitive advantage through positioning, there are challenges for consumers to trust the positioning of a brand online, and indeed through marketing channels. Serrano-Cinca (2010) summaries this as positioning in the light of intangibility - utilizing positioning as a strategy to overcome the lack of a tangible product presentation online, opposed to visiting a shop (Serrano-Cinca, 2010). This risk challenge is widespread, with 61% of adults concerned with shopping online (Econsultancy, 2012). Soloman identifies four factors predictive of customer judgments about attitudes towards a website: website design, fulfillment/reliability, security/privacy, and customer service (Soloman, 2010). It has been identified that the Internet allows a brand to manipulate its positioning through new tools such as Internet search engines. And herein lies the issue with, amongst other market differentials, the introduction of intermediaries who interrupt the brandcustomer relationship. Hill explains, there is a lack of accountability on the Internet that may explain why a certain population are reluctant to engage in online transactions (Hill, 2009). Therefore, another facet for brands to deliver as part of their marketing positioning strategy is a robust online customer experience which reflects their macro market positioning, Serrano-Cinca (2010) emphasis the practical importance of being well positioned is relevant when designing marketing strategies and when designing web pages. (Serrano-Cinca, 2010). The positioning challenge for brands to achieve a strong reputation and credibility with its customers has evolved: Today, a brand is defined by reputation, and a brands reputationmuch like a persons can change quickly. (Formosa, 2012). Brands are well aware that an alignment between the external communication of their brand positioning, and its intrinsic values represents an important competitive advantage. This is echoed by Keller who identifies sustainability as a key criteria of positioning if it is to endure (Keller, 2008). The growth of social media networks and

consumer adoption/use is indisputable. Facebook, for example, enjoys well over 500 million users, and whose visits have increased by 52.41% between October 2008 and October 2011 (Econsultancy, 2012). Here, the digital age enforces the accuracy of positioning for brands. Consumers are empowered to communicate to and about their brand experiences. Serrano-Cinca (2010) stresses that there needs to be an alignment with the positioning and the actual product/service, and it is suggested that social media has increased the level and rate of exposure of a disparity in the communicated position of a brand, particularly within business ethics, an emerging trend. It is suggested that reputation management could be the key to building a strong and correctly positioned brand this is emphasised by Vukasovic (2009) who suggests; reputation can provide sustainable competitive advantages because reputation is non-tradable, nonsubstitutable, non-imitable and rare. (Vukasovic, 2009). TOMORROWS MARKET It is often the competitive forces that influence the positioning of a brand; this will also dictate shifts in strategy over time (Keller, 2008; Porter 2004). Here we have identified the Internet a paradigm shift in how brands can utilize strategies to achieve a competitive advantage. As demographics shift and technology enhances, so will the competition, so brands will be required to position accordingly or risk eroding competitive advantage, and industry profit (Porter, 2004). In an interview with a Brand Executive, Soloman (2010) paraphrases this sentiment with a future valuable market segment If we want to communicate on the teens premises, we also have to make use of the Internet (Soloman, 2010).

technology company Clyp. The market positioning journey of Clyp became stuck in the middle, lacking market share required to achieve cost benefit, in addition to lacking the focus to achieve differentiation. Identified in a poor market position due to dwindling market share and profit, it was necessary for Clyp to re-evaluate its market position in order to achieve a sustainable competitive advantage. Cost leadership has been identified as experiencing significant evolution as a result of the digital age, with the Internet providing new positioning tools allowing brands to deviate traditional differentiation positioning strategies. The Internet is recognized as critical to competitive advantage, where a myriad of positioning considerations stand as a challenge, and as an opportunity to brands in gaining a competitive advantage. On the evidence of growth trends within the digital landscape, the current and future competitive advantage will continue to change at a drastic pace. In order to sustain a competitive advantage, and achieve market share and profit objectives, brands will need to remain agile with the changing needs and desires of their target demographic and the actions of the competition. As such, market positioning will remain central to the achieving competitive advantage in the digital age, but the strategies and tools with which to achieve market position will continue to evolve. REFERENCES
Blankson C, Kalafatis S, Cheng J, Hadjicharalambous C. (2008). Impact of Positioning Strategies on Corporate Performance. Journal Of Advertising Research, 48 (1), 106-122. Buzzell, R; Gale, B; Sultan, R. (1975). Market Share a Key to Profitability. Available: http://hbr.org/1975/01/market-share-a-key-toprofitability/ar/1. Last accessed 12/05/2012. Econsultancy. (2012). Internet Statistics Compendium. Available: http://econsultancy.com/uk/reports/internetstatistics-compendium. Last accessed 12/05/2012. Formosa, D. (2012). The sudden death of brands. Available: http://smartdesignworldwide.com/thinking/moneymatters/the-sudden-death-of-brands/. Last accessed 18/03/2012. Fuchs, C; Diamantopoulos, A. (2010). "Evaluating the effectiveness of brand-positioning strategies from a consumer perspective. European Journal of Marketing. 44 (11), 1763-1786.

CONCLUSION This study approaches the concept of market positioning from the perspective of Porters generic strategies, in the context of the strategies a brand can implement to outperform other brands in their market, and, as such, gain a competitive advantage. These strategies include focus, cost leadership and differentiation. Positioning with a competitive focus is demonstrated as remaining core to achieving competitive advantage in the scenario of modern

Hill, C (2009). Marketing Communications. 5th ed. Essex: Prentice Hall. 200-221. Keller, K (2008). Strategic brand management: building, measuring, and managing brand equity. University of California: Prentice Hall. 1-67. Kotler, P (2009). Marketing Management. England: Pearson One. 361. Porter, M (2004). Competitive Strategy; Techniques for Analyzing Industries and Competitors. New York: FREE PRESS. 40-45. Reimer, K. (2010). Strategic Positioning in Converging Technology Markets - The Clyp Case. Communication of the Association for information Systems. 27 (38), 695-710. Serrano-Cinca, C; Fuertes-Callen, Y; Gutierrez-Nieto, B. (2010). Internet positioning and performance of e-tailers: An empirical analysis. Electronic Commerce Research and Applications. 9 (3), 237248. Soloman, M (2010). Consumer Behavior: A European perspective. 3rd ed. Essex: Pearson Education Ltd. 252-256. Vukasovic, T. (2009). Searching for competitive advantage with the aid of the brand potential index. Journal of Product & Brand Management. 18 (3), 165-176.

strategies, in particular the impact of market positioning on market share and profit. Its relevance as a modern technology brand provided the paper with a credible scenario to identify the importance of market positioning to competitive advantage. Serrano-Cinca, C; Fuertes-Callen, Y; Gutierrez-Nieto, B. (2010). Internet positioning and performance of e-tailers: An empirical analysis. Electronic Commerce Research and Applications. 9 (3), 237-248. A unique perspective of market positioning in the context of the Internet identifying the unique principles that allow brands to deviate theoretical strategies and formulation of the concept of positioning alignment. In particular, powered the discussion surrounding cost leadership and the impact of the Internet on positioning strategies. Reinforced the argument that market positioning will remain central to the achieving competitive advantage in the digital age, but the strategies and tools with which to achieve market position will continue to evolve. Vukasovic, T. (2009). Searching for competitive advantage with the aid of the brand potential index. Journal of Product & Brand Management. 18 (3), 165-176. Introduction to two new brand/marketing concepts: BPI and PIMS. Literature overview enabled the conceptual understanding of market positioning / brand positioning being interdependent to a business/brand/product. Fuchs, C; (2010), "Evaluating the effectiveness of brand-positioning strategies from a consumer perspective. European Journal of Marketing. 44 (11), 1763-1786. Introduced significant relevant literature to build argument for positioning, particularly useful in the recency of publication identifying that Market Positioning is still a fierce academic subject even in the digital age is an supporting note in itself to Market positioning being central to creating competitive advantage in the digital age.

BIBLIOGRAPHY
Blankson, C; Kalafatis, S (2004), The development and validation of a scale measuring consumer/customer-derived generic typology of positioning strategies, Journal of Marketing Management, 20 (1/2), 5-43.

APPENDIX RESROUCE REVIEW As part of this article, a review of the key resources is required to identify the origin of specific points within the argument that Market positioning is central to creating competitive advantage in the digital age. Reimer, K. (2010). Strategic Positioning in Converging Technology Markets - The Clyp Case. Communication of the Association for information Systems. 27 (38), 695-710. A modern example of a business that exists due to the digital age and the impact of market positioning on the brand. Clyp enabled the discussion surrounding, and contextualization of Porters generic