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Home › Grow Your Business › Marketing and Sales

Product Positioning: Meaning, Why It Matters, Type and Strategy

January 21, 2025 · Ahmad Nasrudin

Product Positioning Meaning Why It Matters Type and Strategy

Contents

  • Why product positioning matters
  • Product positioning strategy
  • Product positioning type

What’s it: Product positioning is about placing the product in consumers’ eyes and among other products on the market. It is essential to influence customer perceptions of the value of a product.

For example, Apple positions the iPhone as a premium smartphone with high quality. The company influences consumer perceptions with its innovation while differentiating it from other products in the mass market, likewise with Nike, a shoe brand with high price and quality.

Next, a positioning statement describes target consumers, how to satisfy them, and do it differently (better) than competitors.

To create a position map, you can depict the products on the market on a two-dimensional chart. You analyze consumer perceptions of two characteristics of each competing product group. For example, you might use price and battery life for smartphone products. Or, you choose the design and features as selected variables.

Why product positioning matters

Business exists to meet consumer needs profitably. They must find a solution to get consumers to like the product and be satisfied. All at once, they can beat their competitors. Because of this, they have to develop product positioning. It is important for several reasons:

First, companies become more focused on their competitive strategy and resource allocation. To find the right position, they look for product attributes that can satisfy customers, whether about price, quality, or product performance. Then, they try to differentiate their product from competitors’ products in the market. That way, customers have a compelling reason to prefer their products over competitors’ products.

After firms develop successful positioning strategies, they find it easier to focus resource allocations to be more efficient without sacrificing product positioning. It also makes business decisions more effective in developing healthier and stronger relationships with customers.

Second, the product positioning statement is a crucial element of a marketing plan. It becomes the basis for determining how best to communicate product attributes and benefits to target consumers. It also becomes essential in developing the other marketing mix, such as distribution and promotion channels.

Third, the company can build a strong competitive image and position. Positioning affects how customers perceive a product relative to other products on the market. The right position creates a positive image in the mind of the customer. Consumers feel close to products and are reluctant to switch to competitor’s products. That ultimately contributes to the flow of money to the company in a sustainable manner.

Fourth, a strong market position increases sales. Companies can take advantage of the strong image of a product to develop other products. The new product may be a complement to the product. Such a strategy reduces the risk of rejection by customers.

Also, companies can take advantage of this image to enter new markets. They can communicate it more effectively and convince target customers. They can eventually generate new customers and additional sales.

Product positioning strategy

Developing product positioning involves two core objectives:

  1. Meet customer needs through price, product features, and attributes. It is about how companies satisfy consumers through their products.
  2. Distinguish products from competitors’ products. It is about encouraging consumers to prefer the company’s products and winning market competition.

The company then thinks of ways to achieve both goals by developing an appropriate product and marketing mix. The end result is a unique selling point.

In general, developing a position for a new product involves the following stages:

  • Segmenting the market through demographic, psychographic, or geographic variables. The main goal is to map customer needs and understand their perceptions more specifically. For mass products, the company may ignore this stage.
  • Choose a target market segment where the company will focus its marketing efforts and sell products. The segment must be profitable in the long run.
  • Identify product features that are considered essential to consumers in the target market. It may be the price, quality of the materials used, features, performance, design, or even the product’s size.
  • Prepare a new product position map. The company selects product characteristics to compare with several competing products in the market. To produce an objective assessment, it may develop qualitative research to determine consumer perceptions.
  • Decide what type of product to focus on development and launch. The end result of position mapping is a unique selling proposition that satisfies the customer and differentiates it from competitors’ products.
  • Monitor positions after launching into the market. The company looks at whether the product needs to be repositioned or not. It usually involves changing the message of an advertising campaign to influence consumer perceptions.

Product positioning type

Positioning is about creating a perception in the customer’s eyes through a series of product characteristics. It can be through:

  • Price. The price must be equal to or lower than the perceived value of the customer. If the price is higher, consumers are unsatisfied. Bulk products use low prices. Meanwhile, differentiated products rely on uniqueness as justification for higher prices.
  • Quality. The company makes products free from any defects or errors to satisfy customers. It’s not just about physical appearance, but also non-physical elements like performance, reliability, and durability.
  • Convenience. It is about creating a more comfortable life for customers. eCommerce offers consumers convenience because they can shop anywhere and anytime. They don’t have to spend money just to visit a conventional store.
  • Customer service. Take furniture, for example. Products may be standard at prices relatively similar to competitors. However, a company may offer a free service to set it up at a customer’s home. The customer is satisfied and wants to buy another product from the same company.

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About the Author

I'm Ahmad. As an introvert with a passion for storytelling, I leverage my analytical background in equity research and credit risk to provide you with clear, insightful information for your business and investment journeys. Learn more about me

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