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The Product Attributes Model: A Tool for Evaluating Brand Positioning

Dec. 1, 2003

Adapted from a research study by

Carol F. Gwin and Carl R. Gwin

A brand's positioning is designed to develop a sustainable competitive advantage by instilling product attributes in the consumer's mind. To effectively position or reposition a brand, the company must know how it is perceived in relationship to other brands in the product category.

Development of positioning requires awareness of four considerations:

ò The target market;

ò How the product is different or better than that of competitors;

ò The value of this difference to the target market;

ò The ability to demonstrate or communicate this difference to the target market.

Evaluation of a brand's positioning can be performed using any of several evaluative tools; multidimensional scaling, factor analysis, discriminant analysis, and multiattribute compositional models are the most commonly used. Based on these tools, the marketer can evaluate whether:

ò The brand has a positioning that is differentiated from other brands in the market;

ò Potential opportunities exist for the introduction of new products or repositioning an existing brand;

ò Certain segments are underserved by existing brands in the category.

One flaw of the commonly used evaluative tools is that all fail to consider price in the analysis. However, economist Kelvin J. Lancaster's model of consumer demand, a less commonly used analytical tool, does reflect price and the consumer budget considerations in analyzing the competitive positioning for brands. The Australian-born Lancaster was the John Bates Clark Professor of Economics at Columbia University when he died at age 74 in July 1999.

Also known as the product attributes model, Lancaster's model allows the marketer to better understand the customer-perceived value in light of the price of the brand. From a marketing strategy standpoint, this understanding has specific implications for positioning, product design/re-design and pricing.

The product attributes model has three key analytical components: the perceived levels of the product attributes for a brand, the budget constraint (also called the "efficiency frontier"), and the indifference curve of a consumer or segment of consumers.

Lancaster shows that consumers have preferences for characteristics or attributes of products. Each product embodies a bundle of attributes. For example, automobiles and motorcycles differ in gas mileage, horsepower, styling, safety, and other characteristics. Rather than comparing the products themselves (as in indifference curve and budget constraint analysis), the theory assumes that individuals choose among the more basic attributes of the products. Understanding why a consumer chooses a product based upon its attributes helps us to understand why some consumers have preferences for specific brands. That awareness enables an analysis of brand competition.

The product attributes model explains individual choice as a process of selecting among bundles of product attributes inherent in goods and services. The model assumes that consumer choice is based on maximizing utility (or the level of satisfaction received) from the product attributes subject to a budget constraint. The model is particularly useful in analyzing differentiated product markets. These markets have brands that are substitutes for each other and are distinguished by their makeup of a specific set of characteristics. Understanding consumer preferences for attributes that differentiate brands can help in defining the best positioning and marketing mix for a particular brand.

The tastes and preferences of consumers for the various attributes can incorporate the attributes into a product designed for a particular segment of the consumer base. A firm also may look for market segments that are not satisfied with the current market offerings and then may develop a product to appeal to this segment.

The product attributes model allows a firm to see how its brand is perceived on critical attributes relative to the competition. The firm can assess whether it operates from a position of strength or if it is vulnerable to the competition. If it is vulnerable, it can determine the appropriate action to take: a new product, changes in the existing product, changes in price, or a new promotional strategy.

A firm may introduce a new product positioned to take advantage of an opportunity "gap" created by failure of existing products to satisfy a specific ratio of attributes. If a sufficient number of consumers want this ratio, a new product may be developed to appeal to this market segment.

The product attributes model can identify the attributes in which an existing product may be deficient. The firm can then make product improvements needed to shift the product to a more favorable position in the market. The product attributes model also can help predict increases in market share that will result from these product improvements.

Based upon their perceptions of the attributes of a product, consumers set a maximum price that they are willing to pay for a product. Advertising can change the perception of the product, and also can also influence a consumer's tastes for specific attributes. Advertising may raise the importance of an attribute that consumers might not have considered previously.

The importance of emphasizing attributes can be illustrated by analyzing the relative positioning of the Ford Focus, Taurus and Mustang with respect to luggage capacity and horsepower. For market segments emphasizing luggage capacity or horsepower, the Focus does not provide the value offered by Taurus and Mustang. However, the Focus does offer superior gas mileage at a modest price. Of the two cars remaining, the Taurus clearly appeals to the "family segment" members who desire luggage capacity. While family segment members prefer the Taurus for its greater luggage capacity, racing enthusiasts prefer the Mustang for its horsepower. Through this analysis, marketers can identify the key segments and their preferences in terms of attributes and brands to determine the best segment to target, opportunities for new products, or the need for modifications to existing products, appropriate positioning and promotional strategies, and potential pricing adjustments.

The product attributes model constitutes a powerful tool for analyzing marketing strategy based on the positioning of a brand. It provides a framework for incorporating brand price, consumer preferences and budget constraints into an analysis of the optimal combination of attributes that appeal to specific market segments. The model can indicate direction for marketing strategy with implications for pricing, product development, promotion, positioning and segmentation.

About the authors

Carol F. Gwin, Ph.D., is a marketing lecturer in the Hankamer School of Business specializing in marketing strategy and consumer policy. She has investigated strategic implications for decisions in sales management, promotion and e-commerce. Her consumer policy research encompasses privacy issues and studies of compulsive buying.

Carl Gwin

Carl R. Gwin, Ph.D., is an assistant professor of economics in the Hankamer School of Business with expertise in industrial organization and applied microeconomics. His research emphasizes the application and testing of game theoretic principles in understanding how business responds to asymmetric information problems.

Carl Gwin

Their full research study was published in the spring 2003 issue of the Journal of Marketing Theory and Practice.

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