Product positioning is a marketing strategy that influences how consumers view a product.
It’s about communicating how a product can better solve consumer needs than its competitors.
In this post, learn the full definition of product positioning, how to develop positioning strategies, and download a free positioning template.
What is product positioning?
Product positioning is a form of marketing that presents the benefits of a product to a defined target audience. Through market research and product analysis, marketers use the product positioning process to determine how to talk about a product and who they should talk to.
A product positioning strategy will also highlight which product benefits are most relevant to potential customers. Knowing this information helps streamline marketing efforts and messaging. It also helps differentiate your product or service in the marketplace.
Product positioning is an effective way to define a product and customer base, but you can produce multiple definitions and audiences. For example, a product might be positioned as the most convenient option for one target audience while being promoted as the highest-quality choice to another set of consumers.
Product positioning statement
A product positioning statement concisely describes a product’s unique value to a specific audience. It includes a target market, key product benefits, and competitive advantages.
A well-written positioning statement acts as an internal guide for marketing and sales, keeping communications consistent.
Here’s what a product positioning statement for an eco-friendly cleaning product might look like:
Product vs. brand vs. market positioning
Positioning is a key concept across your business, not just for individual products. Here’s how brand and market position differ from product positioning:
Brand positioning
Instead of defining a space for a product, brand positioning looks at how elements of your brand affect consumer interactions. It’s about defining what your brand stands for, its values, and how it’s different from competitors.
Another way of understanding brand position is to consider what consumers associate with your business. For instance, when you think of Tesla, you might associate it with innovation and sustainability. Or Nike with accessible performance. For instance:
- Apple positions itself as the world leader in user experience.
- McDonald’s is synonymous with affordable, fast, and satisfying meals.
- Red Bull’s brand says adventure, excitement, and energy.
- Rolex is positioned to communicate prestige and exclusivity.
💡 Brand positioning focuses on a business’s strengths and ignores its flaws. The high price point of Apple devices and the questionable nutritional value of McDonald’s recipes aren’t addressed by the brand positioning statement.
Market positioning
Market positioning, meanwhile, is a broader look at how a vertical or an entire business interacts with a market sector. Beyond product and brand considerations, market positioning analysis will help decide product lines, pricing, acquisitions, partnerships, and the platforms and sales channels through which your business reaches potential customers.
Product positioning examples
You can see product positioning at work in advertising, marketing content, sponsorships, taglines, packaging, pricing, and other business-to-consumer channels.
Experimenting with those channels can help you validate your position. Let’s say market research reveals that a product—a hypoallergenic baby lotion—is popular among new mothers. To better position this product for its consumers, we need to know what new mothers appreciate about the lotion.
To find out, we could speak directly to the target audience using our social media channels.
Or, we could create content that promotes different features of the lotion—perhaps its low price or commitment to natural ingredients. Then, we can run an A/B test to discover which features are most discussed.
This approach allowed Shopify entrepreneurs Need/Want to hone positioning for several products, including its Smart Bedding:
Smart Bedding: An example of effective product positioning
Need/Want, a company that began with a single product, has effectively utilized product positioning to build a portfolio of several small businesses.
Its journey began with Smart Bedding, a product designed to solve the problem of unmade beds.
To validate their product positioning, Need/Want turned to Facebook ads. It created several ads, each with a different tag line that referenced a benefit or its unique bedding design. For example, one ad positioned Smart Bedding as a luxury item, while another presented it as a practical solution to an everyday problem.
Each ad was shown to a different audience segment. When the campaign was completed, the ad that read “Never make your bed again” outperformed the others significantly. This allowed Need/Want to validate their product’s position as a practical, time-saving solution to a consumer need.
How small businesses can position products to compete
Even without the deep pockets of large corporations, small businesses can find a competitive edge by using an effective product positioning strategy. Here are four steps to consider when strategizing.
1. Understand your customers
Instead of investing in expensive focus groups, small business owners can use ecommerce analytics to find customer insights. Data on customer habits can provide a real-world basis for future product positioning strategies.
At this point, you can also look at other data points to create a persona of your target customers—things like their browsing habits and online behavior. You can study the queries your website visitors enter into search engines or analyze stand-out aspects of your niche’s most popular products and SKUs.
Building customer personas guides your positioning strategies and fosters a team-wide understanding of the people who buy your products.
2. Explore the market landscape
To position your product, you need to understand how shoppers choose between your products and competitor offerings. Market research will reveal alternative options and identify what makes your items unique.
Researching direct and indirect competitors can shed light on how other businesses cater to customer needs. Additionally, engaging directly with potential customers through surveys or social selling may show how your brand compares to others.
3. Evaluate your product (SWOT analysis)
What are the distinct advantages of your product? To fully grasp them, it’s beneficial to undertake a comprehensive SWOT analysis. The SWOT method—which can be applied to your products, brand, or business—allows you to delve into your product’s strongest features and find areas for refinement.
💡 Download our free SWOT analysis template.
Leverage the customer personas you built in step one and the potential market opportunities uncovered during step two to find a unique space for your product in the minds of your customers.
This step is connected to the concept of a unique value proposition—the promise you make to your customer to solve their problem or meet their need through your product or service:
4. Write a positioning statement and plan your marketing
With personas, market fit, and product strengths defined, you have everything needed to write a product positioning statement.
With an agreed statement, you can build a product marketing plan to fulfill your value proposition.
Remember, a big marketing budget isn’t a prerequisite for effective positioning. As long as you understand your target customer and can craft a narrative about your product’s benefits, there are many budget-friendly ways to promote your catalog.
Positioning templates
Positioning templates are tools to guide your thought process during product or brand positioning discussions. They provide a structured format to help you identify a target audience, define your unique selling proposition, and articulate how you differ from competitors.
Here are three common types of positioning templates:
1. Product positioning matrix
A positioning matrix is a chart to visually represent where your product stands compared to your competitors. It’s based on two or more key factors that are important to your customers. To create a positioning matrix:
- Identify two product attributes that your customers care about. For example, this could be price and quality.
- Draw a two-dimensional chart with one attribute on each axis.
- Plot your and your competitors’ products on the chart.
2. Perceptual maps
Perceptual maps are similar to positioning matrices. However, these charts are based on customer perceptions rather than objective data. To create a perceptual map:
- Identify two key attributes that your customers care about
- Survey your customers to rate your product and your competitors’ products on these attributes
- Plot the average scores for each product on a two-dimensional chart
3. Brand positioning template
A brand positioning template uses the same framework to visualize the uniqueness of your brand, by plotting your business and its competitors against various brand elements.
You can compare where brands lie in terms of specific elements such as pricing, color schemes, or sales channels. Or, you can consider more abstract factors like a brand’s moral values. When completed, a brand template will reveal where the market is crowded and the areas you can pursue to make your brand stand out.
Start with this simple free brand positioning template to help position your brand. It will identify unoccupied spots in your niche. To use the template, place your business and its competitors on the chart for a visual representation of your market.
Pole position
Product positioning can give your product space to breathe in a crowded marketplace. Even the smallest businesses can use product positioning to compete with national brands.
It’s the art of understanding your customers, studying your competitors, and finding the problem for which your product provides the best solution.
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Product positioning FAQ
What is positioning, and why is it important?
What are the 4 main components of product positioning?
- Target market: Identifying the target market and understanding their needs, wants, and preferences.
- Unique selling proposition (USP): Developing a unique selling proposition that clearly distinguishes the product from its competitors.
- Brand identity: Creating an identity that resonates with the target market and builds loyalty.
- Communication strategy: Developing a communication strategy that effectively conveys the brand’s message.
