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Competition-based positioning entails choosing a category and a point of difference. The category provides a frame of reference by identifying other brands that might be used to achieve the same goal as the focal brand. The point of difference then specifies the way in which the brand is superior to other brands within that frame.
Suppose that you are unfamiliar with a brand called "Two Hands." If you were told that Two Hands is a wine, you would quickly understand what the brand is and when it might be appropriate to consume it. You might further refine your feelings about whether to purchase Two Hands wine if you also were told that it is a Shiraz from Australia that sells for about $30. For Two Hands, the category would be wine or, more narrowly, an Australian Shiraz. The point of difference from another Australian Shiraz, such as Yangarra, might be the longer finish and the silky mouth feeling provided by the concentrated blackberry, pepper, and spice flavors.
The competition-based approach to positioning has its origins in the hierarchical, taxonomic organization of memory. People organize their knowledge about the world by grouping objects that share features and separating them into objects that have different features. This organizational structure begins with highly abstract, inclusive categories and becomes more specific. Moving down the hierarchy, similarities within a category increase and the differences between categories decrease. The broad category of "alcoholic beverages" is heterogeneous; wines, beers, and hard liquors all belong, but they share few features beyond their alcohol content, which distinguishes them from nonalcoholic beverages such as milk, juice, and soft drinks. At the level of an Australian Shiraz, category members have a great deal in common—the grape varietal, the country of origin, the fullness and body—and brands may only differ in relatively subtle ways, such as the finish and mouth feel.
Often an intermediate-level category, such as wine or beer, is used in the competition-based approach positioning. Categories at this level are well understood and frequently used by consumers when framing a consumption decision. For example, a consumer may first decide that wine (rather than beer, hard liquor, or a nonalcoholic beverage) fits a particular occasion and then select among the brands of wine available by comparing their distinguishing features (i.e., points of difference). However, there are occasions when a more specific or a more abstract categorization may be used. For example, if Two Hands were targeted to wine connoisseurs, using the more specific categorization of an "Australian Shiraz" rather than a "wine" might be appropriate, because consumers with greater expertise naturally tend to think in terms of more specific categories. Alternatively, a brand may be categorized at a broad level in hopes of attracting customers from a variety of products that have little in common. Thus, Two Hands might represent its brand as an alcoholic beverage appropriate for situations where one wishes to appear sophisticated and demonstrate good taste, making it an alternative to champagne and cocktails. In general, the categorization that highlights a brand's strongest point of difference is preferred.
Contributed to Branding Strategy Insider By: John Wiley & Sons, excerpted from Kellogg on Marketing, 2nd Edition by Alice M. Tybout (editor), Bobby J. Calder (editor), Phillip Kotler (foreword by) (c) 2010 by The Kellogg School of Marketing.
Sponsored By: The Brand Positioning Workshop