Sevak Hovhannisyan | July, 2010
At the footsteps of positioning revolution
The rules of the game have changed significantly in the Armenian consumer market and it has become generally more competitive. Not so long ago there was a chronic shortage of market conditions where the primary issue was meeting demand either by means of production or import. There was not any necessity of even thinking about marketing. Along with the increase in the number of players, product and service differentiation, the competition for each market segment and even for each consumer has intensified extremely. Nowadays the large step up in the expansion of the number of products offered by supermarkets exceeds 10.000. In the U.S. it averages about 45,000. Considering that the average human has an active vocabulary of about 5000-6000 words, it is a challenge for companies to impress their potential clients and strengthen their position. Here the role of marketing communication becomes a critical success factor and the basis of marketing is communication. It is the main link between consumers and companies. Throughout time marketing has had sequential stages of development and the focus of marketing communication varies in each cycle.
Goods Era (the 50s): That was the time when the main emphasis was on product features and consumer value. During this era the “Unique value offer” was the basis of communication which was based on product feature and consumer benefits. However, as a result of technological progress many companies began to produce the same quality, products and services, and all of them assured that their products were the best. Subsequently the creation of special offers became a much more difficult task.
The 80s was the reputation (image) era when companies realized that not only product features but also the company reputation and image had value added importance. This led to a change in marketing communication where the creation of a brand image ("Hathaway" shirts, "Rolls-Royce" cars, "Schweppes" soft drinks) became a priority. Again however in this case too, "competitor - followers" began to invest aggressively in image advertising, adding "noise" and uncertainty into the market.
In today’s positioning era the foreground is to have a strong position in consumer minds.
The strategy era started in advertising. It is not enough to create or invent a new product and it may even be unnecessary. The most important thing is to be the first to access the consumer conscience with a clear idea which is indelibly associated with the company. The first computer was created by “Sperry-Rand” but “IMB” was the first to take the prime position of computer products in people’s minds.
In fact, in Armenia developments take place with the same logic, but very quickly as it is easier to embrace what already exists rather than invent it... Previously Armenian companies spared no efforts to let their clients know that their product was the best quality, the purest, most modern and extraordinary. This method was undoubtedly implemented by all companies and ended up confusing the customers. Who was the and how did they differ from each other?
For example all the dairy companies sent the same message to their consumers, “Fresh products made from real milk with traditional technology”. At the same time we saw advertisements of Armenian companies promoting brand image. There are good examples such as "IMEX Group" or "VivaCell - MTS". Today we can notice positioning attempts by some Armenian companies but the leading positions in the current market categories are still unoccupied. The majority of consumers will hardly agree about the leaders in natural juice, meat, computers, clothes or shoes but as in most other countries in the world they will mention “Coca-Cola” as the leader of carbonated soft drinks. The classification of companies starts from the positioning of the leader. When a company “owns” the largest earned profit, it has the highest position in the hierarchy of consumer benefits. In other words it has the central place in their specific category such as, "Polaroid" – in instant Photography. "Heinz "- in ketchup and "IBM"- for personal computers.
In the current Armenian market preview where there are no clear frontrunners it gives opportunities to other companies for positioning and differentiation. Leadership is the best distinctive. Being the first in the market is important but it is not enough to take the lead role and not always the first companies become the leaders. “ArmenTell” was the first to enter the telecommunication sector but today the market leader is VivaCell MTS.
In the competition for leadership the winners are the first to realize the importance of their positioning and to having the ability to create the hierarchy in consumer minds thus putting their brand on the top.. It supposes a comprehensive, consistent and targeted branding policy, as well as appropriate behavior by the leader. The “responsible” company for market development in any given category becomes the leader.
Therefore the state of the Armenian market is unique in many sectors “for companies to become a leading brand. In the end the list of preferred companies will be created by consumers and uncertainties will not remain for too long. Currently the main imperative of companies having leadership potential is to find a central place in their market and product categories and to implement an effective positioning policy. It also supposes significant investment in their own marketing capacity with implementation of strategy based on reliable consumer preferences and behavior as well as the use of modern analytical tools.