What is Market Positioning and How-To Develop a Strategy

Market positioning, like branding positioning strategy, is about identifying and committing to the unique thoughts you want to own in the minds of your customers and prospects, versus your competition.  Once you commit to the thoughts you want to own, you establish a particular place in the market versus others. That place should be differentiated from others, and relevant to the customers you intend to attract, for it to be successful. It must also establish a unique and defensible space for you in the marketplace.

Market Positioning Definition

Market positioning goes hand and hand with positioning strategy. Not only does it depend on a clear, differentiated and relevant idea,  but it depends on the niche you want to own versus your competitors. Think about a shelf full of cereals. You’ve got sugary cereals, healthy cereals, cereals for kids, cereals for adults, all natural cereals, gluten-free cereals, and so on.  Each one has staked out a niche, and a reason to be placed on that shelf. Each is different from the others, usually in noticeable ways. In this case, flavor, ingredients, and audience are some decision criteria for establishing a market position, the price is yet another.  All of these attributes combined create a unique market positioning for each brand of cereal, as well as each automobile, and each cable channel.

Market Positioning Strategies

Companies, products, and services can choose from many strategies to establish a clear and defensible market positioning,  three of the most common are to position for a clear audience segment,  tocreate a preference, and to command a premium.

1. Position for an audience segment – In the case of the cereals above, many decide to go after a particular type of audience.  Health conscious, kids, soccer moms, etc. By defining the subset of the audience for which you want to appeal,  it reduces the number of competitors against whom you need to create your market positioning. In the case of B2B products, like software,  some decide that they will go after large enterprises, some after small and medium businesses, and some choose specific industries and sectors to go after.  This audience segmentation strategy can enable fast growth for an organization, but as that growth continues, you will need to create a market positioning strategy that appeals to larger and larger audiences.
2. Position to create a preference – in commoditized markets like gasoline, air travel, and credit cards,  most brands look for ways to differentiate a product or services that is more or less the same as the competition.  Special features, conveniences, or ingredients can be used to create a preference, like Chevron with Techron, or Capital One with rewards points. Another way to create a preference can be to price your product or service competitively.  Creating a preference via features or price can set off an “arms race” in the marketplace, however, driving prices down or creating even more parity, so it is important to also create a preference in more fundamental ways, such as creating a unique brand personality to which your customers can relate, and feel connected. American Express set itself apart in the 80s and 90s with unique features and an international cache that still sets it apart today.
3. Position to command a premium – In the automotive, travel and fashion industries,  there are clear layers of products and services – those that cater to the utilitarian, no frills audience, those that cater to the “luxury” audience, and many layers in between.  The decision to command a premium sets many priorities for a market positioning because it raises the expectations for the quality, experience, and of course price of your product or service.  Mercedes long ago set out to be the premium auto in every class that it produced a car. Similarly, anything you buy from Prada is going to be priced, and perceived, as top of the line, even a pair of plastic sunglasses. While commanding a premium can appeal powerfully to the aspirations of many consumers and businesses,  it also attracts followers. In recent years, most new hotel brands to enter the marketplace positioned themselves as “luxury” hotels, meaning there were more competitors at the top end of the market than at the bottom end. This opened opportunities for existing hotels with loyal customers to add one or two features, reposition themselves as some flavor of “luxury” and remain in consideration.

Any market positioning strategy comes with decisions and priorities. If you want to establish and own an idea,  whether feature, price or audience specific, you need to orient your business, your operations, and your marketing to fulfill the right expectations and deliver the right experience.  You also need to watch the rest of the market, to successfully differentiate and defend your market position as the market grows and changes.