Market Positioning refers to creating a unique proposition for a product, brand, or enterprise in the minds of prospective customers, distinguishing it from competitors. It involves interpreting and meeting the requirements and preferences of target customers and presenting the product or service offering in a unique and attractive manner.
Businesses adopt various strategies to differentiate its product, service, or brand from other companies. Thus, they can capture a sizable portion of the niche market (Serviceable Obtainable Market) with robust positioning strategies. However, it is not a one-time action but a rigorous and continuous process of building a brand or product image in the target market.
Market Positioning enables businesses to establish a competitive advantage and a distinct value proposition in the market. It can be achieved through various strategies, such as emphasizing specific features, appealing to certain customer segments, or highlighting particular benefits. When done effectively, it attracts the desired customer base and fosters brand loyalty.
Market positioning, targeting, and segmentation is an inevitable part of customer acquisition for firms in the current competitive scenario. Effective positioning in marketing is a systematic approach based on the following steps:
Such strategies are typically based on algorithms. Companies may use cluster analysis or conjoint analysis to derive conclusions to determine their views on market positioning in a business plan. In cluster analysis, companies club a set of identical attributes like similar features, needs, or uses to develop a product and target the customer segment that values these attributes. However, a mix of different characteristics, such as benefits, uses, or features, is considered together in a conjoint analysis. This helps design a product or service that attracts customers who prefer a combination of these factors.
Successful positioning in marketing requires a clear interpretation of the target audience and their choices, as well as a consistent and compelling brand message. It involves various strategies:
Many brands we know today have successfully adopted market placing strategies, including Starbucks, Apple, Amazon, and Tesla, to create a distinguished image. Let us study some relevant examples.
Suppose there are two leading chains of restaurants in a country, A Group of Restaurants and B Group of Hotels and Restaurants. While A is known for its quality food and superior taste, B is known for its warm hospitality and polite and helpful staff. Hence, the A Group of Restaurants adopts a quality positioning strategy, and the B Group of Hotels and Restaurants positions itself to showcase and highlight its customer service proposition.
Inditex is known for its fast-fashion options. The company replicates the trending designs in a cheaper version to offer affordable, fast fashion across various brands like Zara, Zara Home, and others. The company has around 5,900 stores across 85 countries, producing approximately 840 million garments every year. Moreover, the company opens almost 500 stores every year. Since Inditex positioned itself as a pioneer in the affordable fashion garments category, it increased its revenue.
Over the past five years, Inditex has demonstrated remarkable growth, with its overall sales surging from 9.4 billion euros annually to an impressive 13.8 billion euros. The company's profits have also substantially increased during the same period, reaching nearly 2 billion euros annually. Inditex has expanded its workforce to 110,000 employees, up from approximately 80,000 in 2007. These achievements are even more remarkable considering the challenging economic conditions in Spain, marked by real estate and debt crises following the global financial downturn.
Market positioning is a potent tool that needs continuous monitoring and adjustment to align with dynamic market conditions and customer preferences. Let us go through its various benefits and drawbacks:
| Advantages | Disadvantages |
|---|---|
| Competitive Edge: Effective market positioning distinguishes a brand's product or service from its competitors, attracting more customers and increasing market share. | Limited Market Scope: A narrow positioning may restrict the brand's market reach, potentially overlooking other customer segments or emerging opportunities. |
| Target Market Focused: The brands can concentrate marketing efforts toward specific customer segments, expanding their reach toward the targeted audience. | Increased Competition: Competitors may respond by adjusting their positioning or launching similar products, hampering the impact of the brand's positioning efforts. |
| Brand Recognition: Clear positioning establishes a solid and recognizable brand identity, improving brand recall and customer loyalty. | Shifting Customer Preferences: Market dynamics and customer preferences can evolve rapidly, making it challenging to maintain relevance and adapt positioning strategies accordingly. |
| Revenue Maximization: Well-defined market positioning justifies premium pricing for a unique value proposition, potentially leading to higher profit margins. | High Costs: Developing and implementing effective market positioning strategies can be resource-intensive, particularly for small businesses with limited budgets. |
| Fulfills Consumer Needs: Understanding the market position can better guide product development to meet the target audience's needs and preferences. | Perception Risks: Misaligned market positioning with the actual product or service offering can lead to negative customer perceptions and harm the brand's reputation. |
| Better Decision-Making: It directs the team while outlining the factors that cannot be compromised, aiding effective decision-making. | Doesn't Guarantee Success: Such strategies do not guarantee customer base acquisition. |
| Limited Market Research: Since such positioning efforts rely on effective market research, the exercise may backfire in case of limited or non-reliable research data. |
Market positioning, product positioning, and brand positioning are distinct concepts that play crucial roles in how a company presents itself and its offerings in the market. To succeed in a competitive market environment, companies must consider all three aspects since they collectively contribute to effective marketing and differentiation strategies. However, they differ in the following ways:
| Basis | Market Positioning | Product Positioning | Brand Positioning |
|---|---|---|---|
| Definition | Market positioning is a strategic approach that differentiates a company from its competitors within a specific market or industry. | Product positioning is the process of shaping consumers' perceptions of a specific product or service. | Brand positioning focuses on the perception and image a company creates for its brand as a whole in the minds of consumers. |
| Purpose | Identifying and effectively communicating the unique value proposition of the company to its target customers is the primary purpose. | Defining the unique features, benefits, and value of the product compared to competing alternatives and effectively communicating this positioning to the target audience is the primary purpose. | The purpose is to define the brand's unique features, values, and positioning in a way that sets it apart from competitors and fosters strong brand loyalty. |
| Focuses on | Differentiating a product, service, feature, function, or brand from its competitors’ products is the focus area. | It focuses on fulfilling needs or closing demand gaps by offering customers the products they need. | It fills an emotional gap by establishing a connection between the brand name and customers and enhancing customer experience. |
| Measured by | A high market share, brand recognition, and customer loyalty indicate effective market positioning. | A high market share indicates effective product positioning. | A strong brand presence, emotional connection, and brand recall reflect good brand positioning. |
Market segmentation, targeting, and positioning are crucial steps followed in this sequence while finalizing a company or brand’s marketing mix.
2. What is a market positioning statement?A market positioning statement is a brief one- or two-liner idea that explains the unique proposition. It highlights the differentiating features or benefits a company's product or service offers compared to those offered by competitors. The purpose of this statement is to establish communication with existing and prospective customers and attract them to facilitate conversions.
3. How does market targeting differ from market positioning?While market targeting determines the potential customers or market segments a business must ideally cater to, market positioning is a systematic approach to building a brand perception or unique selling proposition to attract the target audience.
4. How to write market positioning statements?A positioning statement should be precise, catchy, and informative. While writing such a statement, the following aspects should be considered:
- Sticking to the unique attribute of the product or service
- Addressing the target audience
- Adopting a problem-solving approach or explaining how the product, service, features, benefits, or uses cater to the customers' specific needs
This article has been a guide to What Is Market Positioning. We explain its examples, types, advantages, and comparison with Product & Brand Positioning. You may also find some useful articles here -
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