When It’s Time toChange Direction
After they are initially introduced to the market, products, services, and brands are constantly being repositioned as a result of changes in competitive and market situations. Repositioning involves changing the market’s perceptions of an offering so that it can compete more effectively in its present market or in other targetsegments.
Generally it is good to consider repositioning when you see the need or opportunity to improve demand for the offering. Perhaps sales have slowed down, your target segment is getting smaller, or you’ve developed a new innovation you’d like to introduce to the product. Specific factors that can trigger the decision to reposition a product, service, or brand include the following:
- Competition: New competitors entering or leaving the market; competitors joining forces; a competitor’s innovation that threatens to make your offering obsolete; competitive pricing strategies
- Market environment: Economic slow-down or recovery; changes in consumer confidence, the political climate, or social forces like the movement around social responsibility and sustainability
- Consumer trends: Changing tastes and preferences; evolving attitudes and behaviors such as how consumers use technology to learn about, acquire, or interact with your offering; new segments emerging as targets for your offering
- Internal environment: Changes in organizational leadership and strategy; acquisition or development of new technology; introduction of innovation that offers new competitive advantages and differentiators
The tax preparation service H&R Block provides a useful example. As technology-savvy millennials (people born between 1980 and 2000) began entering the workforce and caring about taxes, H&R Block saw that this sizable young segment overwhelmingly preferred TurboTax and other technology-based, do-it-yourself tools, rather than hiringtax professionals like H&R Block. Even after introducing its own online tax preparation tools, H&R was not able to capture this market segment. With its competitive advantage undermined by technology and its established customer base getting older, H&R Block knew that if it wanted to survive, it had to figure outhow to appeal to younger taxpayers.
In 2012 and 2014, the companyinvested in repositioning campaigns to alter the company’s image and appeal to millennials. The campaigns combinedsatirical humor, social media, and social responsibility (in the form of charitable donations) to getmillennials’ attention and create buzz around the H&R Block brand.[1]The following H&R Block video ad from the 2012 “Stache Act” campaign makes the casefor a fictional Million Mustache March on Washingtonto alter the tax code toinclude a $250 deduction for facial hair grooming materials:
The Repositioning Process
The repositioning process is very similar to the original positioning process, but it has a different starting point. The original positioning process focuses on creating anew position or market niche for an offering that wasn’t there previously. The repositioning process, on the other hand, evaluates the established position of aproduct, service, or brand and focuseson how to alter the positioning–and, with positioning, market perceptions–in order to improve competitiveness.
To change marketperceptions, repositioning may involvechanges in the tangible product or in its selling price, but this is not always required. Often the new positioning and differentiation areaccomplished through changes in the promotional message and approach. It is very common to see companies launch marketing campaigns focused on repositioning a product or service, but few, if any changes, made to the product or service itself. These repositioning efforts oftenfocus on trying to get a current target segment to take another look at a product or service and see it with a new perspective. Repositioning often aims to shift market perceptions in ways that make an offering more appealing to a broader swath of the market.
An important ongoing part ofrepositioning is to monitor the position of a product, service, or brand over time. This is necessary in order to evaluate what is working or not working about the current position and generate feedback to inform future positioning strategies. A product position, like the score in a ball game, may change readily; keeping track and making necessary adjustments is very important.
Repositioning Risks and Pitfalls
While repositioning is quite common, it carries risks and complexities that marketers must consider. Repositioning happens after initial market perceptions have already been established. Effective repositioning isn’t just creating something new. Instead, it is trying to preserve what is good from the existing market positions and build or shift thinking toward something new. Repositioning offers the opportunity to makesomething new and better than what you had previously, but it also has the potential to undermine orweaken market perceptions.
Repositioning must always consider carefully what has comebefore, as well as what’s ahead. In the repositioning process there’s inevitablybaggage: residual issues left over from earlierpositioning work, which is what led you to the point of needing to reposition. Your product, service, or brand has a history, and people have memories: some people rememberwhat the offering used to stand for, and they will try to figure out how the new positioning fits with their perceptions. Customers, employees, and other stakeholders will have opinions–sometimes very vocal ones–about whether the new positioning is better or worse, effective or ineffective. All of this represents a potential minefield for marketers. Despite these challenges, repositioning can also be very rewarding if you are successful at reshaping perceptions and creating a more powerful, meaningful product, service, or brand.
As you consider repositioning opportunities, try to avoid the followingcommon pitfalls:
- Insufficientresearch: Marketing research should inform your choices about how to shift positioning in order to improve market perceptions of your product, service, or brand. You should also conduct research to help you understand how your target segment will react to the repositioning, so you’re not caught off guard by adverse reactions.
- A bridge too far: It can be tempting to get wild and crazy with repositioning, especially if you’re trying to freshen things up. While this strategy can work, sometimesmarketers go so far in the new direction that customers no longer believe the claims. Their perceptions of the offering can’t accommodate the new message or image, and the offering loses credibility.
- Underestimating “back to basics”:Sometimes repositioning is undertaken because the target segment isn’t sure what a product, service, or brand stands for. Instead of trying to infuse more new ideas and new meaning, marketers are sometimes better served by stripping positioning down to its bare essentials of competitive advantage, benefit, and message. Reinforcing the simple “basics” can be very powerful: this is what customers usually care about most.
- Overpromising:When faced with strong competitive threats, it can be easy for repositioning to overpromise benefits that a product, service, or brand is really ready to deliver. This can be disastrous because it createscustomer expectations that the organization cannot live up to. Rarely does this end well.
- Confusing positioning:Repositioning can introduce confusion between the old positioning and the new, especially if they seem to contradict each other. Repositioning needs to offer a clear message for customers; otherwise they are not sure what to believe.
The risks and pitfalls of repositioning are evident in the example of United Airlines and its “Rising” campaign. For decades, United positioned itself as a passenger-center carrier providing great service embodied in the iconic tagline “Fly the Friendly Skies.” Seeking a change in the late 1990s, United introduced a new positioning approach it called “Rising.” Their strategy was to to highlight common frustrations with air travel and make bold promises about how United Airlines provided a different, better level of service. However, the airline was unable to operationalize the changes neededto live up to these promises. The companyabandoned the campaign after just two years because the positioning–and the airline–had lost credibility with the customer.[2]
Repositioning Success
Despite the risks, repositioning can be wildly successful when it is handled effectively.A good case in point is the American Red Cross. In 2009, the U.S. had sunk into the Great Recession, and the American Red Cross (ARC) was also feeling the pain. With its budget relying heavily on charitable donations, and with Americans giving less due to the recession, the nonprofit organization faced a budget deficit going into the fourth quarter.
For many nonprofit organizations, the last quarter of the year is prime fundraising season, since people open their wallets for holiday giving. Up until 2009, this was not the case for the Red Cross. Americans gave generously to the organization during disasters, but the ARCwasn’t people’s top choice for holiday giving. Seeing an opportunity in this apparent disconnect, the ARCengaged a creative agency to help repositioning the organization in the minds of potential donors.
Research confirmed that the competitive advantage of the American Red Cross, in consumers’ minds, was providing help in times of disaster. The organization’s then-current positioning of “Change a Life, Starting with Your Own“shared a powerful emotional message, but it did not reinforce the competitive advantage or create a sense of urgency around giving to the ARC. The repositioning effort developed a new positioning direction expressed in the tag line “Give the gift that saves the day.”
This messagereinforced the powerful role that the Red Cross plays in times of disaster and invited Americans to be part of that important work. With words like “give the gift,” it also implanted the idea of the ARC as a great recipientfor holiday giving. The following video was created as part of the 2009 integrated marketing campaign that introduced this new positioning.
The repositioning was a resounding success. Income increased more than5 percent compared to prior years. People who saw ads associated with the repositioning campaign were twice as likely to donate as people who didn’t see them. The fourth quarter of 2009 was one of the strongest since 2000. Brand awareness increased by 6 percentage points. The benefits didn’t stop in 2009, either. Building on theirsuccess, the ARC expanded the repositioning campaign in 2010. By the end of the year, income had increased 26 percent over 2009, and the average gift size increased 43 percent.[3]
These impressive results revealthe power of repositioning when it is handled well.
Check Your Understanding
Answer the question(s) below to see how well you understand the topics covered in this outcome. This short quiz doesnotcount toward your grade in the class, and you can retake it an unlimited number of times.
Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.
