Product positioning is a strategy that defines where a product or service sits in the marketplace compared to those offered by a competitor.
Aspect
Explanation
Concept Overview
Product Positioning is a strategic marketing process that involves defining and establishing a distinct and desirable place for a product or brand in the minds of target customers within a competitive marketplace. The goal of product positioning is to create a clear and favorable perception of a product relative to competitors, making it more attractive and relevant to the target audience. Effective positioning helps a product stand out, communicate its unique value, and fulfill customer needs.
Key Elements
Product positioning comprises several key elements: 1. Target Audience: Identifying the specific customer segment or audience that the product aims to serve. 2. Competitive Analysis: Understanding the strengths and weaknesses of competitors in the same market. 3. Unique Value Proposition (UVP): Defining what makes the product unique and valuable to customers. 4. Branding and Messaging: Crafting compelling messaging and branding that resonates with the target audience. 5. Perceptual Map: Visualizing the product’s position relative to competitors on a perceptual map. 6. Communication Strategy: Planning how to communicate the positioning to the target market through various marketing channels.
Positioning Strategies
There are several positioning strategies that companies can employ: 1. Value-Based Positioning: Emphasizing the product’s value and cost-effectiveness compared to competitors. 2. Quality Positioning: Highlighting the product’s superior quality or premium features. 3. Differentiation Positioning: Focusing on what sets the product apart from competitors in terms of features, design, or benefits. 4. Benefit Positioning: Emphasizing the specific benefits or solutions the product provides to customers. 5. User-Based Positioning: Positioning the product based on the user’s lifestyle, preferences, or demographics. 6. Competitive Positioning: Positioning the product as a direct alternative or superior choice to a specific competitor.
Process
The product positioning process typically involves the following steps: 1. Market Research: Conduct research to understand customer needs, preferences, and the competitive landscape. 2. Identify Unique Attributes: Determine what makes the product unique or superior. 3. Define Positioning Strategy: Choose a positioning strategy that aligns with the product’s strengths and customer preferences. 4. Develop Messaging: Craft compelling messaging and branding that conveys the chosen positioning. 5. Test and Refine: Test the positioning with target customers and refine it based on feedback. 6. Implement and Monitor: Execute the positioning strategy across marketing channels and monitor its effectiveness over time.
Benefits
Effective product positioning offers several benefits: 1. Competitive Advantage: Helps the product stand out in a crowded marketplace. 2. Brand Recognition: Builds brand recognition and loyalty among customers. 3. Customer Engagement: Resonates with customers and increases their engagement with the product. 4. Increased Sales: Attracts more customers and drives sales growth. 5. Clarity: Provides clarity in marketing and messaging efforts.
Challenges
Challenges in product positioning include accurately identifying customer preferences, staying ahead of changing market dynamics, and maintaining consistency in branding and messaging across different channels and regions.
Table of Contents
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:
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.
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.
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.
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.
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.
Key Highlights
Definition and Purpose:
Product positioning is a strategic approach that determines where a product or service stands in the market relative to competitors.
It focuses on highlighting unique features and contrasting them with competitors to make a lasting impression on customers.
Elements of Product Positioning:
Product positioning considers customer needs and desires, aiming to create a distinct brand image.
Effective communication channels and competitor offerings are important considerations.
Benefits and Objectives:
Successful product positioning meets customer expectations, reinforces the brand, and cultivates customer loyalty.
It can attract new customers, introduce new products, or promote new features.
Types of Product Positioning:
Characteristics-Based: Associating certain attributes with a product to create specific consumer perceptions. E.g., Volvo’s safety image.
Use or Application-Based: Positioning products based on how they fulfill customer needs in specific scenarios. E.g., nutritional supplements for active individuals.
Price-Based: Aligning the brand with competitive pricing. Often used by retailers with economies of scale.
Quality or Prestige-Based: Positioning products based on their superior quality or prestige. E.g., Rolex watches.
Competitor-Based: Leveraging competition by addressing pain points and offering alternatives. E.g., Dollar Shave Club vs. Gillette.
Product Positioning Statements:
Product positioning can be summarized in statements using a template: “For [target audience] who [need], [product/brand] is a [solution] that uniquely [benefit].”
An example: “For runners aged 18-29 seeking community engagement, Swift provides a leading social, data-driven running app that fosters a healthy competitive spirit and celebrates wins.”
Case Studies
Company
Product Positioning Strategy
Target Audience
Unique Selling Proposition (USP)
Marketing and Communication Tactics
Apple
Premium and user-friendly technology
Creative professionals, tech enthusiasts
Sleek design, intuitive interfaces, and ecosystem
Aesthetic-focused advertising, product showcases
Amazon
Convenience and vast product selection
Online shoppers of all demographics
Fast shipping, extensive product range, and Prime membership
Personalized recommendations, Prime Day sales events
Google
Search engine dominance and information
Internet users seeking information
Accurate and fast search results, simple interface
Minimalistic homepage, sponsored search results
Microsoft
Software and productivity tools expertise
Businesses, professionals, and individuals
Widely used operating systems and productivity software
Business partnerships, developer community engagement
Facebook
Social connection and personal networks
Social media users of all ages
Connect with friends and share life moments
News Feed algorithms, targeted advertising, user engagement
Business modelinnovation 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.
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.
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).
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 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.
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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.
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.
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.
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.
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).
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.
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.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
