Marketing Concept of Positioning

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The Newspaper article used:
‘Woolworths Select hits 1000 products’
From: The Australian Financial Review August 27, 2007
Author: Neil Shoebridge

An article in The Australian Financial Review on 27 August 2007 shows how Woolworths uses the marketing concept of positioning in its sales efforts. Woolworths recognise their Home brand as a successful position for a product. Its Home brand is seen as a cheaper alternative with reasonable quality compared to the retail branded products. Woolworths has decided that there is a position in the market between retail branded and Home brand products that has not been utilised. Positioning is defined as “the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market” (Kotler, 2003 p.308). Thus Woolworth’s illustrates the concept of product line pricing and comes out with Select brand. Select brand addresses this position by being a more expensive alternative to Woolworth’s Home brand, yet still cheaper than retail branded products. Select brand does this by having a price point 10% lower than the retail brands instead of the 40% their Home brand has. The results are shown in the sales numbers, the article says that 75% of customers who try the Select brand become regular buyers. Clearly the position of the select brand in respect to the retail products positions in terms of value is a success. In customers minds the Select brand seems to supply the same quality product as the retail brand but for a cheaper price thus becoming a more valuable product. By providing another alternative to retail brands for a cheaper price, Woolworths could risk competing with its own brands. This would suggest that the Select brand could steal sales from the Home brand rather than the retail brands that it intends to compete with. Woolworths had to differentiate their two brands from each other. Differentiation is defined as “the process of adding a set of meaningful and valued...
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