Updated December, 2019.
Stand out from the crowd and reap the rewards.
Product positioning is an important part of a product marketing strategy. It helps buyers and users understand where a product ‘fits’ in terms of what it offers and how it compares with competing products so that they can select the product that will best serve their needs.
Simple example: think of a major car manufacturer like Toyota. It has several distinct brands, each of which are designed with specific buyers in mind. Its utility vehicle Hilux is designed for “guys that like to get their hands dirty” whereas its small, zippy Yaris is for “urbanites to make short trips around the city”.
Why does product positioning matter?
For almost any idea or Product there are competing alternatives. Product Positioning is a core marketing tool that can help to convince potential buyers to select your product from the sea of other possibilities.
Product positioning feeds into the development of marketing activities like the channels where it’s sold and the messaging you use to promote it. Done well, product positioning can boost your sale price, sales volume and customer satisfaction. Done badly, even a strong product can fail.
Take note: buyers will draw their own conclusions on where your products fit, and your competitors will position their own products (and perhaps even try to cast yours in a negative light). For all these reasons, it’s worth taking the time to position your product correctly, before someone else does it for you.
Easy as S-T-P
Product positioning should not be rushed. Take the time to speak to customers, both existing and potential, to make sure you’re getting things right. While it can be a complex and lengthy process, you can break it down into three simple steps: Segmentation, Targeting and Positioning.
Step 1: Segment the market
Before you can position a Product for a customer, you need to be able to describe who the customers are. Start off with a big-picture view. What is the market in which your product or service will be sold? What type of people do you imagine will get the most value from using it?
The fact is, no Product appeals to everyone. So, if you try to position your Product too broadly, you often don’t end up pleasing anyone enough for them to buy your product.
To overcome this, you should break your potential customers down into smaller “segments” with shared traits, characteristics and requirements until you have clearly defined groups that generally behave the same way in the specific situations that your product is intended for. These groups or “segments” are likely to have similar problems, pain points or frustrations and be interested in Products that solve these.
If you are segmenting for an existing Product, look at who your customers are and find out why they like your Product. What do they have in common? What makes them different from people who use competing, or similar products, in the market?
To uncover a valuable opportunity that a product can serve, you need to find a sizable customer group, which has a specific problem, in a clear context.
The output of segmentation will be several possible groups of an overall market of customers. To effectively position your Product, you need to focus on one group at a time by “Targeting” the segments.
Read our “How to…” Segment your market guide for more information about this topic
Step 2: Target a specific segment
Now that you’ve split your market up into segments, you need to decide which one(s) you should focus on.
You should target whichever segment you think will give you the best return on your investment. Which segment is the most likely to use your Product and bring your organisation closer to its mission or purpose (whatever that is)?
This doesn’t mean that you will be stuck with this targeted segment forever. In fact, you might initially pick a segment that turns out to be of a lower value than others, but you won’t realise this until you start focussing on, and exploring, one target segment at a time.
By targeting one specific group at a time we can build a better understanding of the people within that group. What do they want or need? What problems or barriers stop them from getting what they want or need? The better we understand the target segment the better we can deliver products that address their problems. We can also get better at communicating to potential buyers how the product will serve them better than competing alternatives.
So, our goal with targeting is to select the group that is the best match between their problems and the solution that your Product (or future product) will provide.
Step 3: Position the product
Once you’ve picked your target segment, the next step is to prioritise their needs and wants and cross-check this with your Product.
What do they want most? What don’t they care about? What customer problems does your Product solve better than any other alternatives?
Try to quantify and prioritise these requirements so that you can determine which are most important.
Compare your Product with those of your competitors – how does it stack up? If it has unique strengths or significant advantages, then emphasise these. If you’re lacking in a dimension that’s of low importance, then don’t pay it too much attention.
If your Product is significantly misaligned with your target market’s requirements, have a think about whether you can adapt your Product, or if you need to refine your target.
Using Product positioning to create compelling products and services
Going through the above steps will allow you to develop a Product Positioning Statement – a one or two sentence description that articulates why your Product is the absolute best solution to the target segment’s requirements.
One of my favourite templates for this is:
For (the selected Target Market),
Who (has a specific and well understood problem when trying to achieve a goal),
The (Product / feature description) is a (Solution category)
That will (deliver a benefit by solving the problem above),
UNLIKE, (the competing alternative or other choices)
The (Product / feature description)
Will (deliver a differentiating or unique benefit to the target market).
Here’s a worked up sample for Uber:
For the CBD Saturday night party goer, traveling from home to a party and is worrying about drinking and driving
Who can’t easily get a taxi from home and doesn’t want to deal with parking their own car in the busy CBD,
The Uber app provides access to Uber’s ride sharing services,
That will give you the feeling of having your own personal driver without the cost,
UNLIKE booking a taxi,
The Uber app
Will give you peace of mind when you are on your way out to a party by letting you know that there is a ride arriving within seconds.
In turn, this should be used to develop three to four clear and simple marketing messages – ideally backed up and validated by data. Taking the Uber app sample further (not real data):
- Uber is 10% cheaper than an average taxi fare
- 7 out of 10 people say Uber is easier to use than a standard taxi
- People feel safer with Uber
Do this correctly and you’ll cut through the clutter better and be perceived as relevant and of interest to your target buyers and users.Position your Product correctly and you'll cut through the clutter better and be perceived as relevant and of interest to your target buyers and users – here's how. Click To Tweet
Learn how to do this in our Product Marketing course
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