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MARKETING PROJECT
AN

INVESTIGATIVE

PRODUCT:

STUDY

CASE OF THE

ON

THE

POSITIONING

OF

NEW

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
technolo0gy and technology 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 the products 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 gaming
sector 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). In order
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).

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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 a visual differentiation of the products of different companies. To an
extent this was quite successful 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
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(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 target market.
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 should match that of
the image of the target customer groups. Additionally, the product should meet
the 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,
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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 socioeconomic 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 not actually 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).

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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 in terms 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 did not offer differentiation to
the customer with respect to their products (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 understood how other competitors are positioned in the market,
the company would not have made a mess of this phone as it 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 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 most known company when it
comes to computers due to the 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 product the market that do not
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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 CONCLUSION

From 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. Additionally, if the quality or the
features of the product are good, even bad positioning may not be able to stop
the product from becoming successful.

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