bobby - marketing project

8/2/2019 Bobby - Marketing Project

1/8

Bobby Christopher

[1]

MARKETING PROJECT

AN INVESTIGATIVE STUDY ON THE POSITIONING OF A NEW PRODUCT: A CASE OF THE

MICROSOFT KIN SMARTPHONE

Hypothesis: Positioning of a product is the key marketing practice that will ensure either the success

or the failure of a new product or service.

INTRODUCTION

The IT industry is perhaps one of the sectors in the market that has high competition owing to the

fact that the entire industry revolves around technology which keeps advancing every day (Johnson

et al., 2005). Positioning a product is all about being able to say to the customers that a product or

service of the company is superior to the products and services of other companies due to the

differentiation it offers (Kotler et al., 1999). It has been said that [C]onsumers typically chose theproducts that give them the greatest value (Kotler et al., 1999, p.434). As such, when positioning a

new product, it is vital that the consumers can see this differentiation that is being offered. The aim

of this assignment is to identify the impact of positioning on new products and services. Additionally,

this assignment also aims to analyse the extent to which a positioning strategy can impact the

success or failure of a new product, with particular emphasis on the Microsoft Kin mobile phones.

It has been seen that although Microsoft has dominated the PC sector in the IT industry with its

Windows line of operating systems (Kiss, 2008), the company has not really been able to capitalise

the market in other sectors such as the search engine marketing sector or the mobile phone sector

(Emerald Group, 2005). Microsoft has however established itself as a major player in the gamingsector of the IT industry with products such as the Xbox and its accessories (City AM, 2010a; City AM,

2010b). As such, this report examines to see if the positioning strategies of Microsoft were

instrumental in the downfall of the Smartphone the Microsoft Kin.

LITERATURE REVIEW

Positioning is one of the elements in the STP process which is segmentation, targeting, and

positioning (Kotler et al., 2005). As positioning is a part of the segmentation process, it deals with

dividing the market into smaller segments in order to cater to the needs of this niche market and

additionally to be able to offer consumers a level of differentiation in the products (Jobber, 2010). Inorder to define positioning, it is important to understand what position means in marketing

Position is the place a product, brand, or group of products occupies in consumers minds relative to

competing offerings(Lamb et al., 2011, p.281). In other words, it may be said that the positioning of

a product in the modern context is not about what is done to the product, but rather what is done

to the mind of the prospect(Kalafatis et al., 2000, p.417).

It is interesting to note that the positioning practices that are undertaken by an organisation also

influence the packaging of the products as well (Ampuero & Vila, 2006). Additionally, it has been

noticed that positioning actually has its origin in the packaging of the products. The reason as to why

packaging was considered to be an important positioning tool was because it gave the consumers avisual differentiation of the products of different companies. To an extent this was quite successful


2/8

Bobby Christopher

[2]

as well (Maggard, 1976). Additionally, marketers also focussed on the actual shape and the size of

the products in comparison with those of their competitors (Ampuero & Vila, 2006). However, with

the advent of globalisation, the entire market has changed with respect to the number and the kinds

of products that were available to consumers (Kurtz, 2008). As such, positioning strategies had to

concentrate on more than just the packaging of the product. The general idea is to be able to

communicate to the target market what the organisation wants them to think about a given product

or service.

In the past, it was seen that the positioning strategies of an organisation had to be based on the

value and the differentiation that a product could offer to the potential customers (for example

packaging and size of the product). This was due to the assumption that consumers would make

purchase decisions based on the budgetary limitations (Gavish et al., 1983). While this paradigm still

applies to the positioning strategies that are undertaken today, it is well to note that the consumer

buying behaviour has become much more complex owing to the various cues in the decision making

process as well as level of competition in the market (Jobber, 2010; Kotler et al., 2005). Additionally,

it is also seen that the positioning strategies may have to vary from one market to another market as

these strategies may not work in every market identically (Spyropoulou et al., 2011).

As mentioned earlier, positioning offers differentiation to the potential customers of an

organisation. If this differentiation is not offered to the customers, then the general tendency of the

customers would be to think that the brand is just a copy cat version of another brand that they are

familiar (Jobber, 2010). Additionally, positioning can help a brand improve its brand image as well

(Fuchs & Diamantopoulos, 2010). In many cases it is seen that several companies struggle to

establish themselves as identifiable brands because of the inability to provide differentiation to the

consumers (Fuchs & Diamantopoulos, 2010; Martinez & Pina, 2010). It is seen that the differences in

products affects consumers especially in high involvement products such as electronics and

automobiles. On the other hand, it is noticed that consumers are generally less concerned about the

brand and its image for daily consumption products such as groceries (Ahmed et al., 2004).

Additionally, from a customers perspective, it is seen that brand positioning is a very influential

factor in the consumer purchasing decisions (Fuchs & Diamantopoulos, 2010). As such, it may not be

sufficient that a company positions its products efficiently but it may also be required that the

company should position itself effectively in the market as a brand. The positioning of a brand/firm

in the market should be based on factors such as market predictability, production flexibility, and

design complexity (Mukhopadhyay & Gupta, 1998). Taking these factors into consideration would

perhaps give the company the flexibility to change with the demand in the market or the targetmarket.

It may be well to note that no amount of positioning will however be able to sell a wrong product

to the target market. What this essentially means is that the marketers may have gone terribly

wrong in choosing the target market and may not have identified the specific needs of the

consumers (Jobber, 2010). In other words, if the segmentation is not done efficiently, then the

target market is bound to be wrong and as a result, the positioning strategies that are employed by

the organisation may become a failure as well. It has been aptly stated that, [P]ositioning improves

when the destination image is matched with the customer psychographic profile (Balakrishnan,

2009, p.61). What this implies is that the image that the organisation would like to achieve shouldmatch that of the image of the target customer groups. Additionally, the product should meet the


3/8

Bobby Christopher

[3]

specifications according to this target group. As such, in consistency with what has been discussed, it

may be said that effective positioning also depends on the product and its features to a large extent

(Ampuero & Vila, 2006).

If a company is already well positioned in one market, and decides to extend the market through

product development (development of new products), the extent to which the new product may

depend on two attributes which are the brand image and the product attributes. When a company

decides to extend its market through product development, this constitutes an indirect positioning

strategy as the company tries to capitalise on its reputation and brand image with respect to the

new product (Martinez & Chernatony, 2004). As a positioning strategy, it has been noticed that this

concept is relatively efficient as consumers generally associate the brand image with the new

product category quite easily (Wu & Yen, 2007). However, for the product to be successful, the

brand image of the company should be favourable in the first place. Additionally, with brand

extension, it is seen that the company will have to compete with several companies that already

exist in the new market. As such, the brand image serves as a starting point for positioning of the

product (Martinez & Pina, 2010). However, wrong positioning of a bad product may damage the

reputation of the company to an extent. This damage may be applicable to the new market of the

company more than the existing, established market of the company (Wu & Yen, 2007). Additionally,

it may be safe to assume, in consistency with existing literature, that before undertaking a brand

extension and positioning project, the company must first understand how the competitors are

positioned in the new market (Kotler et al., 2005).

In positioning, there is one aspect that is generally not discussed in literature the country of origin

effect. The country of origin effect has become one of the cues for the decision making process of

the modern consumer (Lamb et al., 2011; Onkvisit & Shaw, 2004). It is seen that when marketers can

position the products of a company based on the country of origin effect (if it is favourable) the

products are usually more successful and consumers are willing to buy these products more readily

(Ahmed et al., 2004; Al-Sulaiti & Baker, 1998). As such, when the opportunity exists for an

organisation to capitalise on the country of origin effect, the organisation should very well use these

stimulants in the positioning practices. However, it is also well to note that the country of origin

effect may become negative in certain cases and must be avoided thus adopting a different

positioning strategy for each market (Onkvisit & Shaw, 2004; Kotler et al., 1999).

The importance of positioning stems from the fact that the development of the marketing mix, to an

extent, depends on the positioning strategy that is employed by the organisation (Kotler et al.,

2005). Additionally, the fact that effective segmentation and targeting are needed in the first place

cannot be ignored along with the need for a good product. Without these elements, the positioning

strategy may not work as effectively as expected (Jobber, 2010). As a result the marketing efforts

and the product development efforts may go in vain.

ANALYSIS OF THE MICROSOFT KIN PHONE

The Microsoft Kin phone was introduced as a Smartphone in the market. Unlike the predecessors,

this phone was supposed to be different and was to appeal to a different target market the youth.

The target market for the Microsoft kin phone was consumers in the age group between 15 and 30

years of age (Fried, 2010). It doesnt seem like the phone was targeted at any particular socio-


4/8

Bobby Christopher

[4]

economic group, but it may be assumed that since the aim of the company was to compete with

Apple and Google (City AM, 2010c); the socio-economic target for the phone was perhaps C2DE

(Dinneen, 2011). This assumption is made as the phone company was trying to position the product

as an aspirational brand which is usually targeted at this socio-economic group.

As stated by Robbbie Bach (president of the Entertainment and Devices division at Microsoft, cited

in Beaumont, 2010)

We built Kin for people who live to be connected, share, express and relate to

their friends and family. This social generation wants and needs more from their

phone, and Kin is the one place to get the stuff you care about to the people you

care about most.

This phone was being positioned as a highly competitive social networking phone. However, it has

been noticed that the access to networking sites such as Facebook and Twitter was limited. In other

words, although the phone was positioned as a phone for social networking, the phone did notactually possess the ability to serve its purpose (Fried, 2010; City AM, 2010c). Additionally, when the

phone was released in the market, people noticed that although the phone was supposed to be a

Smartphone, didn't have many features that smart phones are supposed to possess. It can be said

that the company was all set to take advantage of the social networking revolution, however, the

phone failed to capture the attention of the target market as the phone lacked several features

(Douglas, 2010; Ionescu, 2010).

One of the main problems with the positioning strategy of the Microsoft Kin is that Microsoft was

trying to play catch-up with companies such as Apple and Google rather than trying to establish their

own brand in the market (City AM, 2010c). As such, there was very little product differentiation interms of what the target market would want from the company. It has been established that

differentiation is one of the most important aspects of product to enable effective positioning of the

brand or the product (Lamb et al., 2011). Additionally, Microsoft has not been able to get into the

minds of the consumers and position themselves as a mobile phone manufacturer since the

company did not offer differentiation to the consumers (Kalafatis et al., 2000). Another problem that

is evident from the product Microsoft kin is that it lacked features that the competitors products

had. For example, it is seen that the iPhone has several features such as Internet, social networking,

gaming, and many more features which were absent in the Microsoft kin phone (Ganapati, 2010). If

the target population was people in the age group between 15 and 30 years, Microsoft should have

considered the option of including downloadable applications and games as well as several other

features. The result of the lack of features in the mobile phone warranted criticism from the

consumers as well as various marketing and technology experts that the phone was not complete

(City AM, 2010c; Douglas, 2010).

Another positioning problem that comes to the surface is that Microsoft may not have conducted

appropriate survey of the customer base of the target customer base with respect to the

competitors target customers (Kotler et al., 2005). If the company had an understanding of how

other competitors were positioned in the market, the company would not have made a mess of this

phone as they did. A clearer understanding of the competitors products on the market would have

revealed to Microsoft that it needs to position itself differently and offer better options to the

customers than the existing ones instead of removing existing options that are offered by


5/8

Bobby Christopher

[5]

competitors (Douglas, 2010). Additionally, it was also seen that Microsofts pricing of the phone was

too high or at par with those of the competitors phones such as the iPhone or other Android

(Google) phones (Ionescu, 2010; Wray, 2010).

Microsoft is primarily known for manufacturing the Windows operating system for computers. As

such developing mobile phones is a function of brand extension for Microsoft. Additionally,

Microsoft is perhaps the best known company when it comes to personal computers due to their

Windows operating system. It is also seen that the company has monopolised on the PC market

(Kiss, 2008). Although the company tried to capitalise on the new market by extending its brand

image to the new product, this positioning strategy did not work for the company. The reason as to

why this strategy may have failed is because, instead of trying to make an impact on the market by

improving on the existing products and being innovative, the company decided to play catch-up with

industry leaders such as Apple and Google and follow in their steps (City AM, 2010c). Additionally,

the Microsoft kin was positioned as a phone with extensive social networking capabilities which

were already present in the phones of the competitors. As such, it may be said that there was

nothing new brought to the market that did not already exist. To add to this, these phones even

lacked features (such as games, apps, unrestricted Facebook access, etc.) that the target market

would actually want or need (Fried, 2010; Ionescu, 2010).

With respect to the country of origin effect and positioning, it is seen that it has little bearing on

Microsoft owing to the brand image and the brand name that Microsoft possesses. The reason for

this is that the brand image of the company supersedes the country of origin effect and as a result it

does not have a great impact on the brand or its products (Onkvisit & Shaw, 2004).

FINDINGS AND CONCLUSIONFrom the literature review and analysis of the Microsoft Kin phones, it is seen that there are two

major problems that led to the failure of these phones in the market. The first problem is concerned

with targeting the wrong group and the second problem is concerned with wrong positioning

strategy. If Microsoft had perhaps conducted a thorough survey of the market before launching the

phone, they might have identified the different target group for the phone. Additionally, Microsoft's

claim that the phone was perhaps the best phone for social networking was falsified on two counts

first, the phone did not have all the features that it claimed to have, second, there were other

phones in the market which were seen to be better and more appealing to the same target group.

The hypothesis of the study was tested to be negative as positioning the product is not the key

marketing practice that ensures the success or failure of the new product or service. However,

positioning strategies are very important while launching new products as they create the first

impression that customers or potential customers get about the products, brands or organisations.

The major problem that surfaces is that companies fail to acknowledge the right target market and

develop products accordingly. If the quality or the features of the product are good, then, even

through bad positioning the product may become successful.


6/8

Bobby Christopher

[6]

WORKS CITED

Ahmed, Z.U. et al., 2004. Does country of origin matter for low involvement products? International

Marketing Review, 21(1), pp.102-20.

Al-Sulaiti, K. & Baker, M.J., 1998. Country of origin effects: a literature review. Marketing Intelligence& Planning, 16(3), pp.150-99.

Ampuero, O. & Vila, N., 2006. Consumer perceptions of product packaging. Journal of Consumer

Marketing, 23(2), pp.100-12.

Balakrishnan, M.S., 2009. Commentary: Strategic branding of destinations: a framework. European

Journal of Marketing, 43(5/6), pp.611-29.

Beaumont, C., 2010. Microsoft launches Kin social phones. [Online] Available at:

http://www.telegraph.co.uk/technology/microsoft/7584935/Microsoft-launches-Kin-social-

phones.html [Accessed 18 August 2011].

City AM, 2010a. Microsoft Xbox Kinect proving Christmas hit. [Online] Available at:

http://www.cityam.com/news-and-analysis/microsoft-xbox-kinect-proving-christmas-hit [Accessed

18 August 2011].

City AM, 2010b. Microsoft sees its profits double as Xbox sales rise. [Online] Available at:

http://www.cityam.com/news-and-analysis/microsoft-sees-its-profits-double-xbox-sales-rise

[Accessed 18 August 2011].

City AM, 2010c. Microsoft pulls plug on first venture into lucrative smartphone market. [Online]

Available at: http://www.cityam.com/news-and-analysis/microsoft-pulls-plug-first-venture-lucrative-

smartphone-market [Accessed 18 July 2011].

Dinneen, S., 2011. Microsoft gets ready for war with Android. [Online] Available at:

http://www.cityam.com/news-and-analysis/microsoft-gets-ready-war-android [Accessed 15 August

2011].

Douglas, I., 2010. Microsoft shoff off its spine, kills kin phone. [Online] Available at:

http://blogs.telegraph.co.uk/technology/iandouglas/100005303/microsoft-shows-off-its-spine-kills-

kin-phone/ [Accessed 19 August 2011].

Emerald Group, 2005. Microsoft's Fighting Future. Strategic Direction, 21(10), pp.5-8.

Fried, I., 2010. The 411 on Microsoft's Kin (FAQ). [Online] Available at: http://news.cnet.com/8301-

13860_3-20002378-56.html [Accessed 18 August 2011].

Fuchs, C. & Diamantopoulos, A., 2010. Evaluating the effectiveness of brand-positioning strategies

from a consumer perspective. European Journal of Marketing, 44(11/12), pp.1763-86.

Ganapati, P., 2010. 4 Reasons Why Microsofts Kin Phones Failed. [Online] Available at:

http://www.wired.com/gadgetlab/2010/06/four-reasons-why-microsofts-kin-phone-failed/



7/8

Bobby Christopher

[7]

Gavish, B., Horsky, D. & Srikanth, K., 1983. An approach to the optimal positioning of a new product.

management Science, 29(11), pp.1277-97.

Ionescu, D., 2010. Why Microsoft's Kin Phones Were Destined to Fail. [Online] Available at:

http://www.pcworld.com/article/200258/why_microsofts_kin_phones_were_destined_to_fail.html


Jobber, D., 2010. Principles and Practice of Marketing. 6th ed. Berkshire: McGraw-Hill Education.

Johnson, G., Scholes, K. & Whittington, R., 2005. Exploting Corporate Strategy - Text and Cases. 7th

ed. Harlow: FT Prentice Hall.

Kalafatis, S.P., Tsogas, M.H. & Blankson, C., 2000. Positioning Strategies in business markets. Journal

of Business & Industrial Marketing, 15(6), pp.416-37.

Kiss, J., 2008. Microsoft's monopoly costs it another 680m. [Online] Available at:

http://www.guardian.co.uk/media/pda/2008/feb/27/microsoftsmonopolycostsita?INTCMP=SRCH


Kotler, P., Armstrong, G., Saunders, J. & Wong, V., 1999. Principles of Marketing: Second European

Edition. 2nd ed. New Jersey: Prentice Hall Europe.

Kotler, P., Wong, V., Saunders, J. & Armstrong, G., 2005. Principles of Marketing. Fourth European

ed. Harlow: Pearson Education Limited.

Kurtz, D.L., 2008. Contemporary Marketing. Mason: Cengage Learning.

Lamb, C.W., Hair, J.F. & McDaniel, C., 2011. Marketing. Mason: South-Western Cengage Learning.

Maggard, J.P., 1976. Positioning revisited. Journal of Marketing, pp.63-66.

Martinez, E. & Chernatony, L.D., 2004. The effects of brand extension strategies upon brand image.

Journal of Consumer Marketing, 21(1), pp.39-50.

Martinez, E. & Pina, J.M., 2010. Consumer responses to brand extenstions: a comprehensive model.

European Journal of Marketing, 44(7/8), pp.1182-205.

Mukhopadhyay, S.K. & Gupta, A.V., 1998. Interfaces for resolving marketing, manufacturing and

design conflicts: A conceptual framework. European Journal of Marketing, 32(1/2), pp.101-24.

Onkvisit, S. & Shaw, J., 2004. International Marketing - Analysis and Strategy. 4th ed. London:

Routledge.

Spyropoulou, S., Skarmeas, D. & Katsikeas, C.S., 2011. An examination of branding advantage in

export ventures. European Journal of Marketing, 45(6), pp.910-35.

Wray, R., 2010. Microsoft unveils Kin its latest smartphone. [Online] Available at:

http://www.guardian.co.uk/business/2010/apr/12/microsoft-mobile-phone-kin [Accessed 15 August

2011].


8/8

Bobby Christopher

[8]

Wu, C. & Yen, Y.C., 2007. How the strength of the parent brand associations influence the interaction

effects of brand breadth and product similatiry with brand extension evaluations. Journal of Product

& Brand Management, 16(5), pp.334-41.

bobby - marketing project

Documents