What is product positioning?

Product positioning is a strategy that defines where a product or service sits in the marketplace compared to those offered by a competitor.

Understanding product positioning

In essence, product positioning clarifies the features that make a product unique and how those features contrast with a competitor’s offering.

The strategy considers the needs and wants of the target audience and endeavors to make a lasting impression in customers’ minds. 

Product positioning requires that the business first determine how it wants its brand and products to be perceived.

To differentiate their brand from the competition, the marketing team must be able to describe the product benefits and connect them to customer needs, mission, vision, brand essence, and the market more generally.

Product positioning must also be sensitive to the most effective communication channels and competitor product alternatives.

Effective product positioning meets customer expectations, reinforces the brand, and secures customer loyalty. It can also be used to attract different customers, launch a new product, or promote the new features of an existing product.

Product positioning types

There are five main types of product positioning, with each having a different focus:

  1. Characteristics-based – some companies attribute certain characteristics to their products to create associations. Most consumers associate Volvo with safety and Toyota with reliability, for example.
  2. Use or application-based – a company that sells nutritional supplements may promote their products to customers who are active and want to increase their performance during exercise.
  3. Price-based – where companies associate themselves with competitive prices. Supermarkets and other retailers with access to economies of scale position their many of their products in this way.
  4. Quality or prestige-based – instead of focusing on price, some brands positions their products based on quality and prestige. Watch brand Rolex is one example.
  5. Competitor-based – some product-positioning strategies are based on the competition. To promote its razor blades, Dollar Shave Club indirectly referenced Gillette’s expensive, feature-rich razors, showed it understood the pain points, and then offered an alternative.

Product positioning statements

Product positioning can be clarified using the follow statement template: For a [group of users] who [want/need], [product/brand/company] is a [solution/category] that solves this in a unique way by [benefit].

Consider a fictitious company that builds a running app for those entering the sport to improve their fitness.

For the sake of the example, let’s call the company Swift. Market and customer research shows that the target audience is concerned with their physical condition but has trouble consistently exercising.

The research also showed that runners in the 18-29 age group are social, competitive, data-driven, and enjoy sharing their wins with a community of like-minded individuals.

With that in mind, the product positioning statement may read something like this: For runners in the 18-29 age group who want to connect with others, Swift offers the leading social, data-driven running performance app that provides a space for the running community to foster a healthy competitive spirit and celebrate wins.

Key takeaways:

  • Product positioning is a strategy that defines where a product or service sits in the marketplace compared to those offered by a competitor.
  • There are five main types of product positioning based on the following: characteristics, use or application, price, quality or prestige, and the competition.
  • Product position statements clarify the company’s target audience, what makes its product unique, and most importantly, why customers should care about it.

Related Innovation Frameworks

Business Engineering


Business Model Innovation

Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Types of Innovation

According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).

Continuous Innovation

That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

Disruptive Innovation

Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Business Competition

In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Diffusion of Innovation

Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.

Frugal Innovation

In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.” Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.

Constructive Disruption

A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.

Growth Matrix

In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Idea Generation


Design Thinking

Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.

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