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 reject 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, 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.

Another important principle is that a positioning strategy needs to be more than just a decision made in the office. Until the decision is rolled out through price, product, place and most importantly promotion - the current product positioning remains. It's how the customers think it is positioned that is important. Establishing a market position for a new product or repositioning an existing product requires time and money.

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.

JWPM Consulting