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.

Connected Business Frameworks

New Product Development

Product development, known as the new product development process comprises a set of steps that go from idea generation to post-launch review, which help companies analyze the various aspects of launching new products and bringing them to market. It comprises idea generation, screening, testing; business case analysis, product development, test marketing, commercialization, and post-launch review.

BCG Matrix

In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Ansoff Matrix

You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

User Experience Design

The term “user experience” was coined by researcher Dr. Donald Norman who said that “no product is an island. A product is more than the product. It is a cohesive, integrated set of experiences. Think through all of the stages of a product or service – from initial intentions through final reflections, from first usage to help, service, and maintenance. Make them all work together seamlessly.” User experience design is a process that design teams use to create products that are useful and relevant to consumers.

Cost-Benefit Analysis

A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

Empathy Mapping

Empathy mapping is a visual representation of knowledge regarding user behavior and attitudes. An empathy map can be built by defining the scope, purpose to gain user insights, and for each action, add a sticky note, summarize the findings. Expand the plan and revise.

Perceptual Mapping

Perceptual mapping is the visual representation of consumer perceptions of brands, products, services, and organizations as a whole. Indeed, perceptual mapping asks consumers to place competing products relative to one another on a graph to assess how they perform with respect to each other in terms of perception.

Value Stream Mapping

Value stream mapping uses flowcharts to analyze and then improve on the delivery of products and services. Value stream mapping (VSM) is based on the concept of value streams – which are a series of sequential steps that explain how a product or service is delivered to consumers.

8 Dimensions of Quality

The 8 dimensions of quality are used at a strategic level to analyze the product or service quality characteristics. They were first described by Harvard Business School Professor David A. Garvin in 1987. Instead of defensive measures to pre-empt quality control, Garvin proposed that American companies take a more aggressive stance where quality itself would be the basis of product differentiation and a competitive strategy to secure market share.

Product-Process Matrix

The product-process matrix was introduced in two articles published in the Harvard Business Review in 1979. Developed by Robert H. Hayes and Steven C. Wheelwright, the matrix assesses the relationship between: The stages of the product life cycle (from ideation to growth or decline), and The stages of the process (technological) life cycle.

Premium Pricing Strategy

The premium pricing strategy involves a company setting a price for its products that exceeds similar products offered by competitors.

Fast Follower Strategy

A fast follower is an organization that waits for a competitor to successfully innovate before imitating it with a similar product.

Brand Marketing

Brand marketing describes the process of an organization building a relationship between its brand and customers from the target audience. Instead of marketing the features of a particular product or service, brand marketing promotes the whole brand by mentioning how those products and services support the brand’s promise.

Promotional Channels

Promotional channels, sometimes referred to as marketing channels, are used by an organization to advertise its products and services and communicate with the target audience. News coverage is one of the most difficult promotional channels to secure, but it is also one of the most valuable. Editors are bombarded with pitches daily, so the brand needs a compelling and ideally topical story to tell. Other promotional channels include guest posting, influencer outreach, advertorial, and native LinkedIn feed advertising.
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