Differentiation and Positioning are the last steps of the marketing strategy.
We will now look at the process of positioning in more detail.
What is the “Position” in Positioning?
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. By why does this positioning in customers’ minds take place? The reason is that consumers are, without doubt, overloaded with information about the huge variety of different products and services. They cannot afford to reevaluate every product every time they make a buying decision.
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. Thus, the mind uses a shortcut. To simplify the whole buying process, the mind organises products, brands and companies into categories. These categories are positioned in their minds.
Therefore, the product’s position is the set of feelings, impressions and perceptions that consumers have for the product in comparison to competing products.
Why is Positioning important?
As we have just learned, positioning is a process that occurs in consumers’ minds. It applies to every product and every brand, although it may be an unconscious process. Consequently, consumers position products with or without the help of marketers. Therefore, we should better not leave the positioning to chance. It is much better to plan the positioning. We have to plan the position that the product will occupy in consumers’ minds. This position should be the one that gives our products the greatest advantage in the selected and targeted segments. By an effective marketing mix we should then create and realize this planned position.
Finding the right positioning strategy requires selecting a value proposition and developing a positioning statement.
The Value Proposition for Positioning
The full positioning of a brand or a product is called the value proposition. The value proposition refers to the full mix of benefits on which the product or brand is positioned. In simple terms, it is the answer to the customer’s question: Why should I buy this product (or brand)? If you look at a Volvo car, you can observe that its value proposition relies mainly on safety and style, all for an above-average price which seems justifiable regarding the benefits. On the contrary, small Hondas and Nissans are positioned on economy, while brands such as Mercedes and Lexus aim at the position of luxury. BMW and Porsche go for a performance position. Thus, differing value propositions can be identified with different prices relative to the benefits offered.
Possible value propositions on basis of which positioning might work well are depicted in the graphic below. The five green cells show the “winning” value propositions. This means that these five positions give the company competitive advantage. The red cells are “losing” value propositions.
More for More
More-for-more positioning means more benefits for a higher price. Thus, you offer a product with superior customer value and charge higher prices for that. Think of Rolex watches, Mercedes-Benz cars or Rolls Royce. The more often stands for better quality, durability, performance or style. These types of products usually carry prestige and status to the buyer and are perceived as lifestyle products. Also, the price difference is often larger than the actual difference in benefits, such as quality.
More for the same
More-for-the-same positioning calls for more benefits at the same price. Lexus can be taken as an example. It offers more value, being a luxury car brand, while not claiming exceptionally higher prices, in contrast to competitors such as Mercedes.
The same for less
The-same-for-less positioning is applied by discounters. It can be a very powerful value proposition, because every customer likes a good deal. Companies pursuing this strategy do not claim to offer better products, but the same for a lower price.
Less for much less
Less-for-much-less positioning can be identified in nearly every market. Often, consumers are searching for much lower prices and therefore accept less benefits. For example, many travellers will take a cheap flight offered by Ryanair although it offers less benefits than premium airlines would. Also, they might choose a cheap hotel, because they do not need extras such as a swimming pool or mints on the pillow.
More for less
More-for-less positioning would of course be the winning value proposition, the best of all. At least in theory. In practise, it often simply does not work. Although many companies claim to offer more benefits for a lower price, it is not possible in the long run to maintain this best-of-both positioning strategy. The reason is that offering more normally costs more and therefore requires a higher price.
On the whole it is obvious that companies should adopt the positioning strategy that serves the needs and wants of the targeted segments best. One target market may seek for a more-for-more offering, while another looks for a less-for-much-less positioning. Important is that you develop your own, unique positioning strategy that gives you a special position in the minds of target customers.
The Positioning Statement
The whole positioning can be summed up in one statement, which is called the positioning statement. Another name is the brand strategy. The form is usually takes is: To (target segment) our (brand) is (concept) that (point of differentiation). For instance, this may be: To busy, mobile professionals who need to stay connected at any time, the uPhone 6 is a wireless connectivity solution that provides you with an easier, more reliable way to stay in connection with data and people while on the go.