What is market positioning? Finding space in the customers' minds.

29 August 2020

Positioning is born of the idea that the human brain has a natural tendency to categorise information.

It does this as an aid to effective storage and retrieval of information.

Thus, when we meet a person for the first time, subconsciously we are trying to categorise them based first on obvious attributes such as sex, race, colour, class, occupation, personality, age and context. We like to know what tribe people belong to. As we get to know them better, we will flesh out our knowledge.

However, without these initial hooks, the brain will less efficiently store away the memory and later recall will be more difficult.

We use the same categorisation system for the storage of all information. The more neural connections created the more easily information will be recalled later.

Importantly, we also actively filter information. We can't store everything so our brains constantly scan new information pieces that arrive and make a rapid decision - relevant or not relevant.

We like to pigeon-hole people and things. And, we actively filter-out the majority of information that our senses pick-up.

Companies, products, and services are similarly categorised; a feature that is utilised for positioning.

Typical categories or positioning dimensions are:

inexpensive or premium
utilitarian or luxurious
entry-level or high-end
traditional or contemporary
classic or on-trend
square or cool
low-tech or high-tech
local or imported

There are many others and often these are peculiar to the corporate, product, or service category.

Motor cars are a good example (safety, sports, luxury, supercars, SUV, family transporters, 4WD, utility etc.) and sports/exercise shoes (general sport, sport-specific, cross-trainers, fashion, budget etc.). Finding the most appropriate positioning dimensions is the first challenge in developing a positioning strategy, but the guiding principle is that the chosen dimensions should be categories that the target market are already familiar with.

Introducing a new way to categorise (as a positioning strategy) is a possibility which we will discuss later.

Marketers do not leave this categorisation up to chance and instead specify the intended market position. This practice is called positioning.

Being recalled at the moment of need - the downside of blurred positioning

Unless you want to rely heavily on last-mile demand capture, such as Search Engine Marketing, a brand needs to build memory before the buyer is actively searching.

The critical moment is when the buyer enters a buying situation: when they recognize a need, problem, occasion or motivation that leads them to consider a category.

This might be as simple as

“I am thirsty and want something tangy and sweet to drink”,
or as complex as “our computer infrastructure is no longer fit for purpose and we need to start looking for a more performant alternative.”

The Ehrenberg-Bass Institute refers to these buying triggers as Category Entry Points: the cues buyers use to access memories when they are faced with a buying situation. These cues may be internal, such as motives and emotions, or external, such as location, timing or context.

In B2B as well as B2C, the brands that are easiest to think of in these buying situations are more likely to become part of the buyer’s initial consideration set.

This ability to be noticed, recognized or thought of in buying situations is called mental availability. The related term brand salience refers to the propensity of a brand to be noticed or come to mind in buying situations.

Blurred positioning reduces sales because the buyer cannot easily categorize, remember, or explain the offer.

Human memory works through associations: brands become easier to retrieve when they are linked to clear, repeated and relevant cues. If a brand’s signals are confused, the buyer may struggle to form strong associations with it.

When competing brands have clearer associations with the buying situation, they are more likely to be recalled first.

The customer may not reject the blurred brand because it is bad; they may simply fail to remember why it matters.

This is especially important because buyers do not always begin with a blank search. In B2B buying situations, Ehrenberg-Bass notes that buyers first draw on existing memories to identify possible suppliers, and that search engines or colleagues are often consulted only when memory-generated options are insufficient.

Even when buyers do search externally, they still tend to show a bias toward brands they already know.

The implications of this should be startlingly clear by now (if you have fully understood the above) - if you rely ONLY on Search Engine Marketing (SEM) and ignore building a well positioned brand - you will be 2nd in line behind the established brands that come to mind first. Which doesn't mean you will never win but it does mean that you will need to work a hell of a lot harder - and that will cost you money somewhere.

Positioning is shaped by the signals customers receive

Market positioning is not simply a decision made inside the organization.

"Oh yeah - we've done a lot of work on our positioning" - yes but were your customers in those meetings? Because if they weren't then you have achieved nothing.

A business may decide that it wants a product or service to be seen as premium, affordable, innovative, convenient, luxurious or environmentally responsible, but that position only becomes real when customers recognize it. In this sense, positioning exists in the mind of the consumer.

It is shaped by the signals they receive and the conclusions they draw from those signals.

These signals come from many sources. Price, product features, packaging, location, distribution channels, brand name, advertising, reviews, photography, store design, website quality and customer service all help consumers work out where an offer fits relative to competing alternatives. A positioning strategy therefore has to be translated into the marketing mix. Until the intended position is reflected through the product itself, its price, the places where it is sold and, most importantly, the way it is promoted, the existing market position remains unchanged.

The smallest detail can spoil the illusion -

A wellness brand positions itself as clean, calm and trustworthy, but: The customer experience feels rushed or transactional rather than calm and reassuring.
A product is positioned as cutting-edge, but: The website is slow, clunky or not mobile-friendly.
A clothing brand positions itself as high-end, but: The website uses constant discount pop-ups.
A restaurant presents itself as fine dining, but: The table setting includes elegant plates but cheap paper napkins.
A hotel positions itself as premium, but: The toilet seat is sealed with a stupid strip of paper saying “Sanitized for your protection.”

Inconsistent brand positioning signals: one small detail can spoil the premium brand image

What matters is not only how the company wants to be positioned, but how the customer believes it is positioned.

However, if one of these cues is misaligned, doubt can quickly appear. A hotel claiming to be luxurious but charging a surprisingly low price may raise suspicion. A premium price combined with poor photography, a weak brand, a remote location or ordinary-looking rooms may create uncertainty. In a market where consumers can compare many alternatives within seconds, even a small inconsistency can be enough to make them move on.

Positioning is fragile because consumers are constantly interpreting whether the evidence supports the claim.

For this reason, effective positioning requires consistency across every signal the consumer receives. A business cannot rely on advertising alone to create a desired position. The promise made through promotion must be supported by the product, the price, the distribution method and the overall customer experience. Every touchpoint either strengthens or weakens the intended position.

Spoiling the ship for a halfpenny's worth of tar: A luxury car maker could save (estimated) AUD$7,000 manufacturing cost per car by fitting it with pressed steel wheels instead of prestige alloys. But what would that do to the brand?

Finally, the actual experience must match the position that has been claimed. If a hotel presents itself online as expensive, elegant and luxurious, the guest experience must confirm that expectation. The rooms, service, cleanliness, amenities, food and atmosphere must all feel consistent with the promise. If the experience falls short, the positioning collapses. Establishing or changing a market position therefore takes time, investment and discipline. It requires not only a clear strategic decision, but careful alignment of every cue that shapes customer perception.

Positioning a product or brand as “cheap”

Positioning a product or brand as “cheap” is not necessarily a mistake. In many markets, low price is a deliberate and powerful position. Some customers are actively looking for the cheapest acceptable option, especially for routine purchases, commodities, travel, basic services or products where they do not see much value in paying more.

In these cases, “cheap” can mean sensible, efficient, practical and good value.

However, cheap positioning needs to be managed carefully because the word “cheap” has two meanings. It can mean low-priced, which may be attractive, or it can mean poor quality, which is usually undesirable. The task for the marketer is to signal that the product is inexpensive because the business has removed unnecessary cost, not because the product is unreliable, unsafe or badly made.

It can cost a lot of money to make a store look cheap. Bunnings is a good example: its warehouse format, simple signage, staff-led advertising and low-price messaging all reinforce the impression of value.

A brand positioned as cheap therefore needs a different set of signals from a premium brand. The customer expects simple packaging, functional design, clear pricing, basic service, limited extras, modest store environments, straightforward language and a strong emphasis on savings. These cues reassure the customer that the business is focused on efficiency rather than luxury. A budget airline, for example, does not need to provide fine dining, generous legroom or a luxurious lounge experience. In fact, too many luxury cues may confuse the positioning and make customers wonder whether they are really getting the lowest possible price.

The key is congruence. A cheap product should look and feel cheap in the right ways, but not in the wrong ways.

A plain package may support a low-cost position. A package that looks dirty, damaged or careless may suggest poor quality. A basic website may be acceptable for a budget service. A broken, confusing or insecure website may create distrust. A simple store layout may reinforce efficiency. Poor cleanliness, rude staff or hidden charges may make the customer feel that the business is cutting corners.

This is why low-cost brands still need to invest in the details that matter most to the customer. The customer may accept fewer features, less personal service, plain packaging or limited choice, provided the core promise is kept. A cheap hotel does not need marble bathrooms or concierge service, but it must be clean, safe and accurately represented. A cheap supermarket product does not need premium packaging, but it must perform its basic function. A cheap mobile phone plan may not include premium support, but the pricing must be clear and the network must work as promised.

There is also a danger in trying to position a product as both cheap and premium at the same time. Phrases such as “affordable luxury” or “premium quality at budget prices” can work, but only when the customer can see a believable reason for the saving. Otherwise, the claim may appear suspicious. Consumers are used to trade-offs. If the price is much lower than competing offers, they will look for an explanation. If the explanation is not clear, they may assume there is a hidden weakness.

A successful cheap positioning strategy therefore requires discipline. The business must decide which costs to remove and which standards must be protected. It should remove the extras that customers are willing to sacrifice, while preserving the attributes that make the product acceptable and trustworthy.

The positioning message should make the trade-off clear: “we are cheaper because we are simpler, faster, more efficient, more direct, no-frills or higher-volume.”

In this way, cheap positioning is not about appearing careless. It is about making low price believable. The customer should feel that they are making a smart saving, not taking a risky gamble. When the signals are aligned, “cheap” can become a strong and attractive market position.

When the signals are inconsistent, the customer may conclude that the product is not good value, but simply low quality.

Positioning and differentiation

The aim of the positioning strategy is to...

if possible, find a unique market position.
Or, to find a market position that is less crowded.
Position a product into an existing lucrative category.

This requires several things...

The distinguishing attributes of the company, product or service must be reasonably obvious to consumers so they may correctly categorise.
The dimensions that you have chosen for positioning have some meaningful relevance and value to the consumer
The company, product, or service strategy must be consistent with the chosen positioning.
To be unique, your company, product, or service must be the only one occupying that position.

Finding a unique market position is one way of creating differentiation which simply means providing the consumer with a way of distinguishing your corporation, product or service from the competitors.

Differentiation works best when the point of difference (also known as a Unique Selling Proposition or USP) provides some perceived extra value to the consumer.

Positioning forms the basis of corporate and marketing strategy.

Market segmentation - you can't be all things to all people

The problem with adopting a unique market position is that your chosen position may not appeal to all people. This leads to the concept of market segmentation, the idea that not all consumers are the same they are in fact segmented into groups having different characteristics. The buyers of automobiles for example can be segmented as Status seekers, Families, DINKS (double income no kids), Rev-Heads, Young Single Women, Young Single Males, Retirees and Tradies. And in each of these, there will be sub-segments.

Marketing is about either designing a product to suit an identified market segment or finding the most suitable market segment for an existing product.

Tools such as psycho-graphic profiling are used to define market segments.

First you must understand the consumer and the competition

The critical first step in developing a positioning strategy is to delve into the minds of the target market and understand their view of the world as it relates to the corporate, product, or service segment. What you will be looking for is...

What they currently buy to solve their problem (applying the idea of consumers as people seeking solutions to problems like "I need to eat and I want it to be nutritious and tasty" or "I want a car to drive and it needs to fit both my practical needs as well as my self-image.")
Their motivations: people are motivated by a wide variety of mental forces: parental influences from childhood ("scripting"), what ideology they subscribe to (for example Veganism), the fashions and styles that resonate with them, the list is long.
The positioning dimensions that they see as relevant
Where they perceive your products/services and those of your competition, fit on those positioning dimensions.

Most often this is done in the reverse order. The marketer is given an existing corporation, product or service and must identify what position it currently occupies in the market and identify the target market most suited.

Product, Price, Distribution and Promotion

The so-called four 'P's' of marketing (explained here what is marketing?) are leveraged to develop a competitive advantage. However, their settings should be governed by the positioning strategy.

For example, a luxury car must live up to the luxury claim and be well-engineered, high design aesthetic, high-quality finishes and standard equipment (product strategy). It should also be priced at the high end of the price dimension (and it will need to be), distributed through a dealer network with high standards of service and well-manicured staff and premises. The promotion strategy would have high creative values and reek of luxury.

If any of these settings are Inconsistent with the positioning strategy, a confusing message will be received by the consumer thus creating a blurred market position.

How to create a clear market position

A clear market position is created when the business can answer a few basic questions with precision, and then align the whole marketing mix around those answers.

Buyer clarity: The intended buyer is clearly defined. The business knows which customer segment it is targeting, what those buyers value, what problem they are trying to solve, and what alternatives they are likely to consider.
Category clarity: Customers can quickly understand what kind of product, service or brand this is. The offer fits into a category the buyer already recognises, such as budget, premium, specialist, convenient, luxury, practical, innovative or traditional.
Competitor clarity: The business understands where competing offers sit in the market. It knows which positions are crowded, which positions are available, and where its own offer can credibly sit relative to alternatives.
Difference clarity: The offer has a meaningful point of difference. Customers can see why this product or brand is not just another version of the same thing, and why the difference matters to them.
Value clarity: The position gives the buyer a reason to choose. Whether the promise is lower price, higher quality, convenience, expertise, status, reliability or simplicity, the customer can understand the value being offered.
Signal consistency: Product, price, place, promotion, presentation and service all send the same message. The business does not claim one position in its advertising while contradicting that position through pricing, packaging, distribution, sales behaviour or customer experience.
Proof clarity: The claimed position is supported by evidence. Features, design, materials, reviews, credentials, guarantees, service standards, brand reputation and the actual experience all help make the position believable.

Or, put more simply:

A clear market position is created when the business knows exactly who it is for, where it wants to sit in the customer’s mind, how it is different from competing offers, and then makes every signal the customer receives support that position.

Simple final test for clear market positioning

A clear market position should pass five tests:

Category clarity: Customers know what kind of product, service or company this is.
Audience clarity: Customers know who it is for.
Difference clarity: Customers know how it differs from alternatives.
Signal consistency: Product, price, place, promotion and experience all support the same message.
Experience confirmation: The actual customer experience proves the claim.