Product positioning

Positioning:

Although there are different definitions of Positioning, probably the most common is: "A product's position is how potential buyers see the product", and is expressed relative to the position of competitors.

Positioning is a concept in marketing which was first popularized by Al Ries and Jack Trout in their bestseller book "Positioning - a battle for your mind". They iterate that any brand is valued by the perception it carries in the prospect or customer's mind. Each brand has thus to be 'Positioned' in a particular class or segment. For example, Mercedes is positioned as a luxury brand, and Volvo is positioned for safety.

The position of the brand has to be carefully maintained. When Malboro reduced its prices, sales dropped immediately because its customers began associating it with the generic segment. Rolex watches are even more dramatically positioned as a luxury items, and have become a symbol for accomplishment in life. If Rolex reduces its prices, it will reduce brand cachet and sales.

This differs slightly from the context in which the term was first published in 1969 by Al Ries and Jack Trout in the paper "Positioning" is a game people play in today’s me-too market place" in the publication Industrial Marketing, in which the case is made that the typical consumer is overwhelmed with unwanted advertising, and has a natural tendency to discard all information that does not immediately find a comfortable (and empty) slot in the consumers mind. It was then expanded into their ground-breaking first book, "Positioning: The Battle for Your Mind", in which they define Positioning as "an organized system for finding a window in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances." (p. 19 of 2001 paperback edition)

What most will agree on is that Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions.

Product positioning process

Generally, the product positioning process involves:

1.       Defining the market in which the product or brand will compete (who the relevant buyers are)

2.       Identifying the attributes (also called dimensions) that define the product 'space'

3.       Collecting information from a sample of customers about their perceptions of each product on the relevant attributes

4.       Determine each product's share of mind

5.       Determine each product's current location in the product space

6.       Determine the target market's preferred combination of attributes (referred to as an ideal vector)

7.       Examine the fit between:

The position of your product

The position of the ideal vector

8.       Position.

The process is similar for positioning your company's services. Services, however, don't have the physical attributes of products - that is, we can't feel them or touch them or show nice product pictures. So you need to ask first your customers and then yourself, what value do clients get from my services? How are they better off from doing business with me? Also ask: is there a characteristic that makes my services different?

Write out the value customers derive and the attributes your services offer to create the first draft of your positioning. Test it on people who don't really know what you do or what you sell, watch their facial expressions and listen for their response. When they want to know more because you've piqued their interest and started a conversation, you'll know you're on the right track.

Generally, there are six basic strategies for product positioning

1. By attribute or benefit- This is the most frequently used positioning strategy. For a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it might be the mint taste or tartar control.

2. By use or application- The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Apple positions its computers based on how the computer will be used.

3. By user- Facebook is a social networking site used exclusively by college students. Facebook is too cool for MySpace and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs.

4. By product or service class- Margarine competes as an alternative to butter. Margarine is positioned as a lower cost and healthier alternative to butter, while butter provides better taste and wholesome ingredients.

5. By competitor- BMW and Mercedes often compare themselves to each other segmenting the market to just the crème de la crème of the automobile market. Ford and Chevy need not apply.

6. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to believe that their diamonds are of the highest quality, while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices.