Millennium Marketing Research®

Tom Schori DBA Millennium Marketing Research®, 808 Ironwood, Normal IL 61761, 309-532-8466

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Identifying an optimal positioning to maximize share: a soft drink industry example.

By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals,  Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. 

It has been our observation that organizations, almost universally, want to do that which will increase market share and avoid doing that which will hurt market share. Consequently, years ago, one of our senior consulting partners developed a procedure, in cooperation with another colleague, which permits a marketer to identify a positioning which will maximize a brand's market share, a positioning which will most hurt share and all the gradients in between.

Not wanting to "hide our light under a bushel" (actually, we know it to be more like a very valuable directional beacon), one of the senior partners published an article in a scientific journal last year which described just how the procedure, which we call our Optimal Brand Positioning Model, can be used to maximize a brand’s share or avoid hurting a brand’s share. ["Getting the most out of image: An example from the fast-food industry," Psychological Reports, 1996, 78, 1299-1303]

NOTE: To read the journal article, "click" here Journal article

Summarizing the gist of that article, 225 consumers had been asked to indicate the importance, in selecting a fast food restaurant, of 15 attributes by distributing 15 points among the 15 attributes. For example, if they thought just one attribute far outweighed the others in importance, then they would assign all 15 points to that one attribute and no points to the remaining 14, etc. Having done this, the respondents then expressed their beliefs about Burger KingÒ , McDonald'sÒ , Wendy'sÒ , their favorite fast-food restaurant (if not among the three mentioned), plus their "ideal" fast food restaurant. The model was then exercised, from the perspective of each named brand, to determine how slight changes in beliefs about a brand¾ using just one attribute at a time¾ could be expected to impact share, either positively or negatively.

In light of what the world now knows, the most startling conclusion was that McDonald'sÒ should avoid doing anything which would make them appear less "kid-oriented," since that had the greatest potential for hurting their share. Of course, we know that McDonald'sÒ did exactly that, with hurtful results. The article also concluded that Burger KingÒ could most enhance their share by opening more stores, and that Wendy'sÒ could most enhance their share through better staff training.

As it turned out, one of our senior consulting partners had also collected comparable data, from 250 consumers, about the soft drink industry. It occurred to us that more marketing practitioners could be made aware of the Optimal Brand Position Model’s potential if we were to publish the results in Marketing Corner. Consequently, we decided to do just that with our soft drink industry data.

Keep two things in mind as we describe our soft drink industry effort:

• The attributes we used simply came out of our heads. They would have been much more suited to the soft drink industry had we conducted the study in conjunction with one of the players in the soft drink industry;
• The respondents were upper divisional university students in one of the author's marketing classes and, thus, in no way representative of what would have constituted the target market for some player in the soft drink industry.

Now let's look at what we did!

Just as had been the case with the fast food industry study, each of the 250 respondents:

• Indicated the relative importance of 15 soft drink attributes;
• Expressed his or her beliefs (on a 5-point scale) as to how Coca-ColaÒ , Pepsi-ColaÒ , and Seven-UpÒ , and his or her preferred soft drink (if not one of those mentioned) performed on those 15 attributes, plus how his or her ideal soft drink would perform.

We then exercised the Optimal Brand Positioning Model from the perspective of each of soft drink industry players considered. In simple terms, this means that we evaluated the impact that small changes in beliefs, one attribute at a time, would have on that brand's market share. To be more specific, we increased, then later decreased, each individual's belief about that brand by one point (if not already at the maximum or minimum) and observed the potential impact on market share. This we did one attribute at a time, one brand at a time.

Here's the actual share of preference exhibited by the 250 respondents:

Clearly, among these 250 upper divisional university students, Pepsi-ColaÒ led the pack for preference. However, nearly 50% preferred some soft drink other than Coca-ColaÒ , Pepsi-ColaÒ , or Seven-UpÒ .

Given the fact that we'd only changed beliefs on one attribute at a time, slightly up or slightly down, this means that we looked at 30 positioning changes for each brand. Here are the potential market share consequences of these positioning changes:

• For Coca-ColaÒ , 26 of those positioning changes would mean increased share of preference; three would mean share decreases. Among these 250 respondents, share of preference for Coca-ColaÒ has the potential of a seven share point increase in preference (i.e., a 50% increase in preference) by ever so slightly changing beliefs on the "low calorie" attribute¾ six share points of which would come at Pepsi-ColaÒ 's expense. On the other hand, they have the potential for dropping three share points (two points of which they'd donate to Seven-UpÒ ) by positioning themselves as more frequently "on sale." Interestingly enough, they could also hurt their share somewhat by being perceived as somewhat more "sweet." If memory serves us correctly, that’s just what they did some years ago with the introduction of New CokeÒ .

• Just the opposite of Coca-ColaÒ , most of the changed positionings would hurt Pepsi-ColaÒ 's share of preference. In fact 28 of the 30 possible changes would hurt their share. Only one would improve Pepsi-ColaÒ ’s share¾ by just one point if Pepsi-ColaÒ were to be perceived as performing slightly less well on the "low calorie" attribute. Perplexing, but the respondents were university students. Like Coca-ColaÒ , the worst changed positioning would be for the market to believe Pepsi-ColaÒ to be more frequently "on sale." This would cost Pepsi-ColaÒ eight share points, with six share points going to Coca-ColaÒ and the remainder going to Seven-UpÒ . Undoubtedly, being "on sale" cheapens the Pepsi-ColaÒ image, and makes it less attractive to the market.

• While being "on sale" more frequently would hurt share most for both Coca-ColaÒ and Pepsi-ColaÒ , it has the potential of enhancing Seven-UpÒ 's share the most, from 7 share points to 11 share points, or an increase in share of more than 50%¾ share which would come at the expense of "other" brands. How intriguing! While we have no way of knowing, it may mean that Seven-UpÒ is rarely perceived as being sold at sale prices and that putting it on sale more frequently could help build its share. A total of 22 of the possible positioning changes would result in share increase for Seven-UpÒ . None of the other eight changes would result in share decreases¾ which means that "switchers-in" would counter the effect of "switchers-out," resulting in net changes in share of zero.

Assuming that the attributes used in the soft drink effort did reflect that which soft drink experts would consider the right ones, and that the respondents in this study were representative of the soft drink industry's target market, what actions the various players should take would be obvious. But, of course, the attributes used are not the "right" ones and the respondents were not representative of the industry's target market. The findings do demonstrate, however, that a marketer can use consumer inputs to identify that position which has the potential of maximize his or her share. Likewise, a marketer can identify positioning that can harm or even devastate share. Or, at least they can do so by using our Optimal Brand Position Model, which, as was mentioned above, has previously been fully described in the literature and is readily available to anyone willing to take the time and make the effort to investigate.