Your ultimate guide to product positioning and how to do it right

What is product positioning?

At its simplest, product positioning is where your product or service fits into its market, what features make it unique and why it’s better than competitors’ offerings.

It takes into account your target market’s needs and wants, and aims to fulfil them. It’s the marketing strategy that sets your business apart from all the rest.

Getting a little more psychological here, product positioning is also a campaign to make an impression in your target customers’ minds. You want them to know your brand as something unique, positive and desirable. As Ries and Trout pointed out in Positioning: The Battle for your Mind:

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Why is good product positioning important?

• Your product will stand out from the crowd as different
• Customers will hear your message above the general noise and chatter of advertising and marketing
• It makes purchasing easier; people will buy what they know, like, and trust
• You will know your product’s value
• You can justify the price
• You’ll be able to write your product’s story, content and marketing messages from a position of authority
• It informs creative visual design

How do customers perceive products?

Customer perception of a brand is one of the three essential components of brand equity. It’s not enough to be the best product on the market; you need to be the ‘must have’. What customers think of your product will depend on:

• Their personal experience of it
• Advertising
• Social media
• Influencers: from a friend or family member, to Instagrammers with 1m+ followers
• Online customer reviews

As a business, you can influence potential customers’ perception of your product with a complete product experience (CPE). When all the following components of your CPE work well, you’re on your way to brand equity:

1. Marketing: how consumers find out about your product and decide it’s right for them.
2. Sales: the information to make the decision to purchase, from sales reps, store assistants, digital communications
3. Technology: this covers what the consumer actually buys: a financial product, an insurance policy, a phone, a car, software, etc.
4. Internal systems: the behind-the-scenes of how the product is delivered – billing, stock control, shipping, purchase history, etc.
5. Ecosystem: how the product fits in with a customer’s life, needs and wants, and other products.
6. Support: anything that helps your customer use and get the best out of their product – training, assistance, helplines
7. Policies: rules that set out how a company does business with customers – returns, guarantees, refunds, complaint escalations, etc.

How to design an effective product positioning strategy

1. Understand the market

This is so much more than knowing which products are selling in your sector. It’s all about analysing your market’s context, and seeing a bigger picture.

Watch out for:

• Demographic trends: age, gender, education, employment issues, e.g. Gen Z entering the world of work.
• Technology trends: AI, VR, robotics, the 4th Industrial Revolution, e.g. how would voice recognition augment your business?
• Rules and regulations: Scan the politics pages for debates about new laws on privacy, security, consumer rights, compliance etc.
• Economy: Developments that might affect your business now and in the future e.g, higher taxes on, or shortage of, certain commodities, environmental concerns.
• Competition: Expect the unexpected here; watch for new and disruptive competitors.
• Uncertainties: None of us has a crystal ball, but we can keep an eye on potential impacts and be ready to act if they happen.

2. Ask your customers

You won’t know exactly what they want unless you ask them. Invest in customer surveys, market research and social listening to pick up current trends, needs and wants.

3. Tell a story

We naturally find stories compelling, more so than a dry list of features, product benefits and prices. Stories make us believe in things. Follow the traditional storytelling arc (problem, villain, hero saves the day) to convey your brand narrative. E.g. a bathroom cleaner is the hero in the battle against dirt, vanquishing limescale and saving the day with a spotless bathroom before your mom comes round.

4. Know your competitors

You’ll need to do two things here: determine your competition to find out who you’re up against. You can do this with market research, customer surveys and social media/forum searching. And research your competition to find out what products or services they’re offering; their market position; their marketing strategies; their strengths and weaknesses; and compare and contrast with yours.

5. Know your product’s unique selling point (USP)

Once you’ve done competitor analysis, you’ll see patterns, strengths and weaknesses emerging, as well as gaps. You’ll be able to identify what it is that you do better than the others, and this is what makes your product unique in the market.

6. Craft a positioning statement

Once you know your product and its market environment inside out, it’s time to create a positioning statement. This is a one or two-sentence declaration of your product’s unique offering to customers, and has a set formula: ‘For [users] who have a [need or want], [our product/service] is a [solution] that solves it with [this benefit]’.

Take this example from Slack: “Slack is the collaboration hub [our product] that brings the right people, information, and tools together to get work done [need or want]. From Fortune 100 companies to corner markets, millions of people around the world use Slack [users] to connect their teams, unify their systems, [solution] and drive their business forward [this benefit].”

7. Test your product positioning

You understand your market, your customers, and your competitors, you’ve got a USP, an engaging brand story and a killer positioning statement. Now you need to test your model before getting your marketing plan underway. Market research is your way forward here, using a mixture of qualitative and quantitative research drawn from surveys, focus groups, interviews and polls.

Examples of companies who do product positioning well

• Dove: The toiletry brand’s ‘Real Beauty’ campaign focused on women’s real beauty instead of airbrushed fantasy, tapping into the emotional story of personal care.
• Apple: dominates the tech market, even able to convince customers to need things that they never even knew they wanted: “People don’t know what they want until you show it to them…. Our task is to read things that are not yet on the page,” Steve Jobs.
• Tesla: the car manufacturer’s product positioning is at the expensive, quality end of the electric vehicle market, complete with added eccentric quirks.
• McDonalds: the fast-food giant is so successful internationally because it understands its customers in each region, its cultural wants and needs, and offers them the best experience possible.