Differentiation and Positioning

Posted on Posted in Marketing Explained

Differentiation and Positioning are the last steps of the marketing strategy. We know which customers we want to serve, having segmented the market and targeted the most promising segment(s). But how are we going to serve the selected customers? This involves differentiating ourselves from other offerings in the market: Differentiation. Also, we aim at a position in the market and in customers’ minds: Positioning.

Differentiation and Positioning are strongly related and depend on each other. Positioning, which is the process of arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target customers, depends on the differentiation, and vice versa. Because through the differentiation, which is the process of actually differentiating the product to create superior customer value, we can achieve the desired position in customers’ minds.

We will now look at the process of differentiating and positioning in more detail.

Differentiation and Positioning - Closely related Activities
Differentiation and Positioning – Closely related Activities

The differentiation and positioning process consists of three steps:

  1. Identifying a set of differentiating competitive advantages on which to build a position
  2. Choosing the right competitive advantages
  3. Selecting an overall positioning strategy.

Then, the company has to deliver its promises by effectively communicating and delivering the chosen position to the selected market.


In order to achieve a strong position in the segment the company has chosen, it has to find ways to set itself apart. To do so, it has to deal with competitive advantages. In other terms, each firm must differentiate itself and its offer by building a unique bundle of benefits. This bundle of benefits should appeal to a substantial group within the chosen and targeted segment. You see that by means of this differentiation, the right position in customers’ minds can be achieved, leading to a strong correlation of differentiation and positioning.

The firm can differentiate itself by identifying possible value differences and competitive advantages and then choosing the right ones. Find out how differentiating works in particular.


What position should the product occupy in consumers’ minds? That is dealt with by positioning. The place a product occupies in consumers’ minds relative to competing products is called the product’s position. Thus, it is not our own position of our product, but the way we would like our customers to think about it. This involves perceptions, impressions and feelings that customers should have for the product in comparison to competing products. Differentiation and Positioning are strongly related to each other. By differentiating the product, the company can achieve the position it wants to achieve in consumers’ minds.

Finding the right positioning strategy requires selecting a value proposition and developing a positioning statement. Find out how positioning works in particular.

Delivering the chosen Differentiation and Positioning Strategy

A differentiation and positioning strategy is worthless if it is not realized. Differentiation and positioning should, in other words, be delivered. That means that once a position has been chosen, the company must take steps to actually deliver and communicate the desired position to the target consumers. The means to do so is the marketing mix. If the company wants to build a strong position on basis of better quality, it must deliver better quality. Thus, the marketing mix elements have to support the chosen position. If the company pursues a more-for-more positioning strategy, it needs high-quality products, high prices, high-quality distribution and advertising in high-quality media.

Realizing the chosen differentiation and positioning strategy by means of the marketing mix is the only way to achieve the desired position in consumers’ minds.

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