Unit H: Positioning

What you’ll learn to do: describe the process of implementing a positioning strategy

With your new positioning strategy and a well-formulated positioning statement, you are poised to take action.

But . . . how exactly?

What comes next is more familiar than you might think: You head back to the fundamentals of the marketing mix. The positioning strategy helps guide your adjustments to product, price, place (distribution), and promotion, so that you can effectively reach and shape the perceptions of your target market segment(s). In this section you’ll learn how to do this.

The specific things you’ll learn in this section include:

• Adjust the marketing mix to deliver on positioning strategy
• Develop promotion strategy based on new positioning
• Measure effectiveness

Putting Positioning into Practice

The positioning strategy, embodied in a strong positioning statement, is a touchstone for marketing and brand-building activities as marketers work to align everything they do in support of this core idea. In simple terms this means aligning the positioning strategy with the marketing mix. 

Positioning statements provide a relatively easy way to check whether some aspect of the marketing mix is on target or off target: if a particular marketing message or activity reinforces the positioning statement, it’s probably consistent with your goals for reaching a target segment. If a marketing activity doesn’t reinforce the positioning statement, it will probably create some confusion among customers about what your product, service, or brand stands for.

What does this mean in practice?

As you consider what you’re doing in each area of the marketing mix, think about what your positioning statement is communicating to customers. Then ask yourself how each part of the marketing mix is helping you deliver on the expectations you are setting with those customers.

• Product: Is your product, service, or brand capable of delivering everything your positioning statement claims? Are any competitors doing it better than you? How should you adjust your offering to ensure that it lives up to the promises?
• Price: When it comes to pricing, how are you positioning your offering relative to competitors? If pricing is part of your positioning strategy, is your offering well aligned with the price you’re asking customers to pay? What pricing strategies should you consider in order to compete more effectively? (More on this in the Pricing module.)
• Place (Distribution): Are any distribution-related themes like convenience or availability part of your positioning strategy or competitive advantage? If so, what are you doing to ensure that you can live up to what you promise? How are you communicating your new positioning approach to distribution and channel partners, and how does it impact them? (More on this in the Place module)
• Promotion: How are you translating your positioning strategy into messaging and actual communications with your target audiences? What behavioral shift are you trying to create as you launch your new positioning? Where and how do you need to alter existing materials to make them consistent with the new positioning (e.g., Web site, print, ads, social media, marketing content, sponsorships, events, etc.)? What types of campaigns will you use to introduce the new positioning? Which communication tools will be most effective at reaching target audiences, and what are you doing to coordinate marketing messages and activities across different channels? (Much much more to come in this area in the Promotion: Integrated Marketing Communications module.)

Persistence Pays

Implementing a new positioning or repositioning strategy is not a simple task. It takes time and effort to bring all the pieces together, to update the old and create the new. Implementing a positioning strategy resembles turning a ship: At first the maneuver is slow and deliberate. But once you’ve turned and charted the new direction, momentum picks up.

To be sure your positioning activities are having the effect you want, look for ways to measure the impact of your efforts. Depending on your goals and implementation activities, what you measure can vary, but may include one or more of the following:

• Sales/revenue
• Number of new/returning customers
• Average spending per transaction
• Brand/product awareness or perceptions
• Favorability toward product/service/brand
• New leads or inquiries from inside and outside your target segments
• Web site traffic
• Social media “buzz”
• Media attention
• Customer satisfaction
• Return on investment for marketing campaigns and other activities

Above all, don’t forget to check in with customers directly to monitor how they are responding to the new positioning efforts. In all likelihood, there are things that will work and things that won’t work as you introduce the new direction. Having a direct line to customers for constructive feedback and recommendations can help you identify potential improvements and adjust course early to strengthen your impact and results.

Before leaving the topic of implementing positioning, another application of positioning strategy deserves attention. For large, complex organizations that have many products and serve many different markets and customer types, effective positioning is crucial. It’s the only way to ensure that the organization can deliver a coherent message and unique value to each target segment.

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: explain repositioning and the associated risks and complexities of repositioning a product or service

When It’s Time to Change Direction

After they are initially introduced to the market, products, services, and brands are constantly being repositioned as a result of changes in competitive and market situations. Repositioning involves changing the market’s perceptions of an offering so that it can compete more effectively in its present market or in other target segments.

Generally it is good to consider repositioning when you see the need or opportunity to improve demand for the offering. Perhaps sales have slowed down, your target segment is getting smaller, or you’ve developed a new innovation you’d like to introduce to the product. Specific factors that can trigger the decision to reposition a product, service, or brand include the following:

• Competition: New competitors entering or leaving the market; competitors joining forces; a competitor’s innovation that threatens to make your offering obsolete; competitive pricing strategies
• Market environment: Economic slow-down or recovery; changes in consumer confidence, the political climate, or social forces like the movement around social responsibility and sustainability
• Consumer trends: Changing tastes and preferences; evolving attitudes and behaviors such as how consumers use technology to learn about, acquire, or interact with your offering; new segments emerging as targets for your offering
• Internal environment: Changes in organizational leadership and strategy; acquisition or development of new technology; introduction of innovation that offers new competitive advantages and differentiators

The tax preparation service H&R Block provides a useful example. As technology-savvy millennials (people born between 1980 and 2000) began entering the workforce and caring about taxes, H&R Block saw that this sizable young segment overwhelmingly preferred TurboTax and other technology-based, do-it-yourself tools, rather than hiring tax professionals like H&R Block. Even after introducing its own online tax preparation tools, H&R was not able to capture this market segment. With its competitive advantage undermined by technology and its established customer base getting older, H&R Block knew that if it wanted to survive, it had to figure out how to appeal to younger taxpayers.

In 2012 and 2014, the company invested in repositioning campaigns to alter the company’s image and appeal to millennials. The campaigns combined satirical humor, social media, and social responsibility (in the form of charitable donations) to get millennials’ attention and create buzz around the H&R Block brand.^[1] The following H&R Block video ad from the 2012 “Stache Act” campaign makes the case for a fictional Million Mustache March on Washington to alter the tax code to include a $250 deduction for facial hair grooming materials:

The Repositioning Process

The repositioning process is very similar to the original positioning process, but it has a different starting point. The original positioning process focuses on creating a new position or market niche for an offering that wasn’t there previously. The repositioning process, on the other hand, evaluates the established position of a product, service, or brand and focuses on how to alter the positioning–and, with positioning, market perceptions–in order to improve competitiveness.

To change market perceptions, repositioning may involve changes in the tangible product or in its selling price, but this is not always required. Often the new positioning and differentiation are accomplished through changes in the promotional message and approach. It is very common to see companies launch marketing campaigns focused on repositioning a product or service, but few, if any changes, made to the product or service itself. These repositioning efforts often focus on trying to get a current target segment to take another look at a product or service and see it with a new perspective. Repositioning often aims to shift market perceptions in ways that make an offering more appealing to a broader swath of the market.

An important ongoing part of repositioning is to monitor the position of a product, service, or brand over time. This is necessary in order to evaluate what is working or not working about the current position and generate feedback to inform future positioning strategies. A product position, like the score in a ball game, may change readily; keeping track and making necessary adjustments is very important.

Repositioning Risks and Pitfalls

While repositioning is quite common, it carries risks and complexities that marketers must consider. Repositioning happens after initial market perceptions have already been established. Effective repositioning isn’t just creating something new. Instead, it is trying to preserve what is good from the existing market positions and build or shift thinking toward something new. Repositioning offers the opportunity to make something new and better than what you had previously, but it also has the potential to undermine or weaken market perceptions.

Repositioning must always consider carefully what has come before, as well as what’s ahead. In the repositioning process there’s inevitably baggage: residual issues left over from earlier positioning work, which is what led you to the point of needing to reposition. Your product, service, or brand has a history, and people have memories: some people remember what the offering used to stand for, and they will try to figure out how the new positioning fits with their perceptions. Customers, employees, and other stakeholders will have opinions–sometimes very vocal ones–about whether the new positioning is better or worse, effective or ineffective. All of this represents a potential minefield for marketers. Despite these challenges, repositioning can also be very rewarding if you are successful at reshaping perceptions and creating a more powerful, meaningful product, service, or brand.

As you consider repositioning opportunities, try to avoid the following common pitfalls:

• Insufficient research: Marketing research should inform your choices about how to shift positioning in order to improve market perceptions of your product, service, or brand. You should also conduct research to help you understand how your target segment will react to the repositioning, so you’re not caught off guard by adverse reactions.
• A bridge too far: It can be tempting to get wild and crazy with repositioning, especially if you’re trying to freshen things up. While this strategy can work, sometimes marketers go so far in the new direction that customers no longer believe the claims. Their perceptions of the offering can’t accommodate the new message or image, and the offering loses credibility.
• Underestimating “back to basics”: Sometimes repositioning is undertaken because the target segment isn’t sure what a product, service, or brand stands for. Instead of trying to infuse more new ideas and new meaning, marketers are sometimes better served by stripping positioning down to its bare essentials of competitive advantage, benefit, and message. Reinforcing the simple “basics” can be very powerful: this is what customers usually care about most.
• Overpromising: When faced with strong competitive threats, it can be easy for repositioning to overpromise benefits that a product, service, or brand is really ready to deliver. This can be disastrous because it creates customer expectations that the organization cannot live up to. Rarely does this end well.
• Confusing positioning: Repositioning can introduce confusion between the old positioning and the new, especially if they seem to contradict each other. Repositioning needs to offer a clear message for customers; otherwise they are not sure what to believe.

The risks and pitfalls of repositioning are evident in the example of United Airlines and its “Rising” campaign. For decades, United positioned itself as a passenger-center carrier providing great service embodied in the iconic tagline “Fly the Friendly Skies.” Seeking a change in the late 1990s, United introduced a new positioning approach it called “Rising.” Their strategy was to to highlight common frustrations with air travel and make bold promises about how United Airlines provided a different, better level of service. However, the airline was unable to operationalize the changes needed to live up to these promises. The company abandoned the campaign after just two years because the positioning–and the airline–had lost credibility with the customer.^[2]

Repositioning Success

Despite the risks, repositioning can be wildly successful when it is handled effectively. A good case in point is the American Red Cross. In 2009, the U.S. had sunk into the Great Recession, and the American Red Cross (ARC) was also feeling the pain. With its budget relying heavily on charitable donations, and with Americans giving less due to the recession, the nonprofit organization faced a budget deficit going into the fourth quarter.

For many nonprofit organizations, the last quarter of the year is prime fundraising season, since people open their wallets for holiday giving. Up until 2009, this was not the case for the Red Cross. Americans gave generously to the organization during disasters, but the ARC wasn’t people’s top choice for holiday giving. Seeing an opportunity in this apparent disconnect, the ARC engaged a creative agency to help repositioning the organization in the minds of potential donors.

Research confirmed that the competitive advantage of the American Red Cross, in consumers’ minds, was providing help in times of disaster. The organization’s then-current positioning of “Change a Life, Starting with Your Own“ shared a powerful emotional message, but it did not reinforce the competitive advantage or create a sense of urgency around giving to the ARC. The repositioning effort developed a new positioning direction expressed in the tag line “Give the gift that saves the day.”

This message reinforced the powerful role that the Red Cross plays in times of disaster and invited Americans to be part of that important work. With words like “give the gift,” it also implanted the idea of the ARC as a great recipient for holiday giving. The following video was created as part of the 2009 integrated marketing campaign that introduced this new positioning.

The repositioning was a resounding success. Income increased more than 5 percent compared to prior years. People who saw ads associated with the repositioning campaign were twice as likely to donate as people who didn’t see them. The fourth quarter of 2009 was one of the strongest since 2000. Brand awareness increased by 6 percentage points. The benefits didn’t stop in 2009, either. Building on their success, the ARC expanded the repositioning campaign in 2010. By the end of the year, income had increased 26 percent over 2009, and the average gift size increased 43 percent.^[3]

These impressive results reveal the power of repositioning when it is handled well.

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: develop and evaluate positioning statements based on defined criteria

After marketers work through the process of homing in on the best positioning strategy, they arrive at the final step: the positioning statement. The positioning statement reflects everything you’ve learned up to that point about how your product, service, or brand can best reach your target segment. As a document, it explains exactly how you plan to provide value to those target customers. In effect, it’s a short, persuasive argument.

In this next section, you’ll learn a simple formula for creating effective positioning statements. You’ll also learn how to evaluate existing positioning statements and decide whether and how they might be improved.

The specific things you’ll learn in this section include:

• Describe a standard structure for positioning statements
• Outline criteria for a strong positioning statement
• Recognize good examples of positioning statements
• Create a positioning statement aligned with a value proposition and target audience

A Simple Formula

A positioning statement is one sentence that succinctly identifies the target market and spells out what you want them to think about your brand. This statement should include 1) the target segment, 2) the brand name, 3) the product/service category or frame of reference in which you are establishing this market position, 4) the key points of differentiation, and 5) the reasons customers should believe the positioning claims.

The brand consultancy EquiBrand recommends the following straightforward formula for writing positioning statements:

To [target audience], Product X is the only [category or frame of reference] that [points of differentiation/benefits delivered] because [reasons to believe].^[1]

The parts of the formula supplied by you (the marketer) are as follows:

• The “target audience” is a brief description of the segment you’re targeting with this positioning strategy. For example: young urban males, managing partners in law firms, or small business owners in the Pacific Northwest.
• “Product X” is your product, service, or brand name.
• The “category or frame of reference” is the category of products or services you’re competing in. For instance: spectator sporting events, virtual assistant services, or employer 401K benefit plans.
• The “points of differentiation/benefits delivered” explains both what problem you solve and how you solve it in a different and better way than competitors. It highlights the competitive advantage(s) underpinning your positioning strategy. Be sure to explain not just what is different about you, but why customers care about that difference.
• The “reasons to believe” are any proof points or evidence that show your customers how you live up to your claims about how you are different and better.

Let’s look at some examples of well-written positioning statements:

This clearly worded positioning statement follows the formula closely, even though the “reasons to believe” are added as a second sentence. It presents the competitive advantage (“instant access to over 1.1 million books“) as a clear differentiator, and with this wording we also understand the problem Amazon solves–convenient access to lots of books. The specific reasons to believe are highly desirable benefits for the target audience. Note that World Wide Web refers to the Internet.

The Motel 6 example is a very concise positioning statement. It’s interesting that the frame of reference is “staying with friends and family,” rather than “motels” generally. This shows an astute understanding of the target customer’s mindset and the recognition that the motel chain’s leading competitor is not staying in a motel. The point of differentiation also reveals the problem Motel 6 solves: where to get a “welcoming, comfortable night’s rest at a reasonable price.” Its points of differentiation and reasons to believe blur together, but the statement provides well-focused direction for a marketing mix that targets “frugal people.”

This third positioning statement identifies the target audience so specifically that it’s easy to create a vivid mental picture of the customer. The problem Tide solves is very clear: getting close clean. This statement emphasizes the product’s competitive advantage around cleaning power and superior formulation, while promising valued benefits that customers enjoy when they use this product. The onus here is on the brand to provide these concrete benefits around not “fading and fraying,” but these are definite reasons to believe if indeed the product can deliver.

Evaluating Positioning Statements

How do you know when a positioning statement is going to be effective? Obviously, positioning statements should contain all the elements in the formula above, since that information is needed to translate the positioning strategy into a well-developed marketing mix.  There are other criteria you should look for, as well. For example, the following:

• Is it tailored to the target market? Too often, positioning statements either leave out the target segment, or else the entire approach isn’t really suited to that unique group. If a positioning statement would work just as well if you plugged in a completely different target segment, then you probably haven’t thought deeply enough about your target’s unique needs and what will make them want your product. Or, you’ve defined your target segment too narrowly, in which case you should revisit whom you’re trying to reach.
• Is it simple, focused, and memorable? A positioning statement that is overly complex will be hard to execute against because it isn’t focused enough to deliver a clear message to the customer. Make sure it is very clear what problem(s) you solve. Use easy-to-understand words instead of jargon that muddles the meaning. If your statement is running long, consider trimming a few differentiators or benefits. It’s actually very good to prune down to the essentials so your meaning is crystal clear. Make every word count!
• Does it provide an unmistakable picture of your product, service, or brand? Your positioning statement should work beautifully for you, but not very well for your competitors. If you can substitute any competitor’s name for your own in the positioning statement—and it still sounds credible—then you need some additional work on your differentiators and competitive advantages. If you are going to own your market niche, it must be a place that no one else can easily occupy.
• Can you deliver on the promise you make? The positioning statement promises some benefits or outcomes to your customers. You must be able to consistently live up to this promise—otherwise you’ll lose credibility, and your offering will stand for something that’s untrustworthy. If you can’t live up to your promise, you need to take another, more realistic look at the offering’s benefits and the customers’ reasons to believe.
• Does it provide helpful direction for designing the marketing mix and other decisions? From the positioning statement, you should have a sense of what types of activities and messages are consistent with that positioning and support the brand you are working to build.

Practice: Evaluate These Statements

Read the following statements. For each one, ask yourself whether it’s a strong positioning statement based on the formula and criteria outlined in this reading. Why or why not?

1. Nike brings inspiration and innovation to every athlete in the world.^[5]
2. To married women over fifty, Victoria’s Secret is the brand of alluring lingerie that will reignite the passion in their marriage.^[6]
3. For taxpayers, H&R Block offers the best tools and tax professionals to examine their lives through taxes and find ways to help them save time and money.^[7]
4. For shoppers, Macy’s is a premier national omnichannel retailer with iconic brands that serve customers through outstanding stores and dynamic online sites.^[8]
5. To business leaders, Wieden+Kennedy is an independent, creatively driven advertising agency that creates strong and provocative relationships between good companies and their customers.^[9]

Analysis: Here is how these examples stack up:

1. Nike: This is a powerful mission statement, and it sets a perfect tone for the Nike brand. However, it is not an effective positioning statement because it doesn’t really articulate any points of differentiation, problems solved or reasons to believe.
2. Victoria’s Secret: This example works reasonably well as a positioning statement, since it contains all the key elements. Although the wording of the competitive advantage/benefit does a great job explaining the problem Victoria’s Secret solves (“alluring lingerie that reignites the passion in their marriage”), it’s unclear whether this positioning truly differentiates this brand from competitors. After all, isn’t all lingerie alluring? However, if no one else has claimed this niche and if Victoria’s Secret can truly “own” reigniting passion, it just might work!
3. H&R Block: This is an exemplary positioning statement, including each element of the formula in clear, concise terms. What’s memorable and unexpected about this statement is how it humanizes tax preparation services by presenting them as services that “examine your life” and “find ways to help.” There is room for improvement: it’s arguable whether “taxpayers” is too broad as a target segment. But overall, this is a great example.
4. Macy’s: This example exhibits a couple of obvious weaknesses as a positioning statement. First, it’s got a lot of jargon–terms like premier, omnichannel, and dynamic online sales. Second, as a segment, “shoppers” is too broad. Surely Macy’s has more detailed information about its target segments and what they want. Third, this statement discusses features (“outstanding stores,” “iconic brands,” “dynamic online sites”) but it does not mention any customer benefits. Positioning statements definitely need benefits–and reasons to believe. Full disclosure: This statement is actually taken from an “About Macy’s, Inc.” page on the company’s Web site, so it may be intended as a simple company description, not a positioning statement. 
5. Wieden+Kennedy: As we would expect from one of the world’s leading advertising agencies, this statement does a reasonably good job positioning the company for a broad business-leader audience. As with example #2 above, the competitive advantages and differentiators blur with the benefits, but “strong and provocative relationships” is a compelling promise for anyone investing in advertising and promotion.

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: explain the process of selecting a positioning and differentiation strategy

Positioning and differentiation are powerful tools to help you establish the market position you want for your product or service. In this section you’ll learn how various positioning approaches work for different target segments and how to choose an effective positioning and differentiation strategy.

The specific things you’ll learn in this section include:

• Explain the concept of competitive advantage and how it relates to positioning strategy
• Differentiate between product features and benefits
• Explain positioning (perceptual) maps
• Identify common positioning strategies

The Positioning Process

Arriving at the best positioning and differentiation strategy involves a process. The goal of the process is to design an identity that both confirms the value of the product, service, or brand in the customer’s mind and explains why and how the offering is better than the competition. To reach that goal, marketers typically follow a positioning process comprised of the following five steps:

Steps of the Positioning Process

1. Confirm your understanding of market dynamics
2. Identify your competitive advantages
3. Choose competitive advantages that define your market “niche”
4. Define your positioning strategy
5. Communicate and deliver on the positioning strategy

Step 1: Confirm Your Understanding of Market Dynamics

At the start of the positioning process, you need a firm understanding of your target market and answers to the following questions:

• In which product, service, or market category (also called the “frame of reference”) do you plan to use this positioning?
• Which target segment is your focus for the positioning you are developing?
• What factors do these buyers evaluate when they make a purchasing decision?
• How do these buyers view your competitors in the category?

If you don’t have answers to these questions, you should consider conducting formal or informal marketing research to reach a better understanding of your target market and the market dynamics around it. Some marketers may have the time and resources to conduct extensive research, while others may need to rely on their own experience and anecdotal conversations with target customers. Either way, you’ll remember that the customer is at the center of the marketing mix, so knowing whom you’re targeting is the only place to start.

Step 2: Identify Your Competitive Advantages

A competitive advantage is some trait, quality, or capability that allows you to outperform the competition. It gives your product, service, or brand an advantage over others in purchasing decisions. Competitive advantage may come from any or all of the following:

• Price: Something in your production process or supply chain may make it possible for you to provide comparable value at a lower cost than competitors.
• Features: You may provide tangible or intangible features that your competitors do not: for example, more colors, better taste, a more elegant design, quicker delivery, personalized service, etc.
• Benefits: You may provide unique benefits to customers that your competitors cannot match. Benefits are intangible strengths or outcomes your customer gets when they use your offering. For example, time savings, convenience, increased control, enjoyment, relaxation, more choices, feeling better about oneself, being more attractive, etc.

Create a list of the things that make you different from competitors in positive ways. Then identify which of these factors are also competitive advantages: the influential factors that help you perform better in the marketplace and cause customers to choose your product, service, or brand over other options.

As a rule, it is relatively easy for competitors to undercut your pricing or match your features, so it is difficult to maintain a consistent competitive advantage in either of these areas. Market-leading products, services, and brands are most likely to differentiate based on benefits—the intangible strengths and outcomes that are harder for competitors to match.

For example, many car companies achieve strong ratings in safety tests, but driving a Volvo provides an extra, intangible benefit for the driver of feeling safer because of Volvo’s longstanding record and reputation for safety. A variety of theme parks in Southern California offer exciting rides and family fun, but only Disneyland’s Magic Kingdom makes people feel like they’re in the happiest place on earth.

You don’t necessarily need a long list of competitive advantages, but your list should be substantive: it should include the things that truly create distance between your offering and competitors. Dig deep to identify the intangible benefits your customers experience–or intangible benefits they could experience—from your offering that make it different and better than the alternatives.

Step 3: Choose Competitive Advantages That Define Your Niche

Your list of competitive advantages represents a set of possible positioning strategies you could pursue for your product, service, or brand. The next step is to examine how these factors fit into customer perceptions of your broader competitive set. Your goal is to pick a positioning approach that gives you a unique and valued position in the market that competitors are not addressing.

A perceptual map is a great tool for this step. Perceptual maps create a picture of how different competitors are positioned in the market, based on the key criteria that strongly influence customer decisions.  Examples of two different perceptual maps are included below. The first one maps automobile brands based on customer perceptions of price and quality.  The second one maps lifestyle programming on cable TV channels, according to whether it is younger/edgier vs. older/mainstream and educational vs. entertainment.

Marketers use these sorts of perceptual maps to identify gaps in the market; these, in turn, represent opportunities to to fill a niche in the market that isn’t being addressed. For example, the lifestyle programming map suggests that there are not a lot of choices in the area of younger/edgier AND educational space. This might be a good place to position a new cable channel or programming direction. On the other hand, there are already lots of established players in the younger/edgier/entertaining space, so new entrants would have to beat out more competition to make an impact.

You can create a perceptual map similar to these by identifying the key criteria customers use when deciding what to buy and setting these as the horizontal and vertical axes. Then you can overlay competitors in the perceptual space where they seem to fit. You can even create multiple maps of the same market with different criteria on the horizontal and vertical axes to get a different view of how competitors are positioned. Perceptual maps are most robust when they are based on actual marketing research data, but marketers can also create directional maps based on their experience and anecdotal understanding of market dynamics.

With your maps in hand, look for areas where there are fewer competitors: these are the spaces where you are most likely to be successful creating your own niche. Consider where your competitive advantages would help you fit well into these gaps; this will direct you to the strongest positioning opportunities for your product, service, or brand.

Give this approach a try: Suppose you are exploring whether to introduce your homemade, artisan-style ice cream to a wider audience, which will mean competing with national brands carried in local and regional grocery stores. Looking at the following perceptual map, where are the gaps in which you could create a niche for your product? Who would be your closest competitors?

Your competitive advantage around a homemade, artisan-style product puts you on the upper half of the map. You would have to choose between more classic versus interesting and innovative ice cream choices. Based on your strengths and preferences, you can choose where to claim your positioning niche: Perhaps you stake your future on the classical side by introducing the most marvelous, pure, premium vanilla and chocolate ice creams your customers have ever tasted.  Alternatively, you might choose to introduce an ice cream line that capitalizes on interesting flavor combinations using local and seasonal ingredients, which would position you squarely in the innovative quadrant. Either approach could be a winning combination in a unique market niche.

If you choose not to create a perceptual map, an alternate approach is to list competitors and their competitive advantages. Then, add your own own offering and competitive advantages to the list. Based on the alternatives available to customers, think about where there are gaps between what customers want and value most and what they can get from the choices available today. Identify where your competitive advantages can help you fit into these gaps, since they will be the most promising positioning approaches for you.

Remember to think creatively as you are defining your competitive advantages and choosing those that will define your positioning and market niche. You have a greater likelihood of success if you are also the first in the market to claim your positioning. You won’t have to displace anyone else, and you can generate excitement by fulfilling a previously unmet need.

Step 4: Define Your Positioning Strategy

With your competitive advantages identified and information about how key competitors are positioned, you’re ready to evaluate and select your positioning strategy. This is the decision you make about how, exactly, you plan to position your offering relative to the rest of the field. How will you be different and better?

There are several common positioning strategies you should consider, shown in the following table:

Common Positioning Strategies
Differentiator	Positioning Strategy	Examples
Category Benefit	Position yourself as “owning” an important benefit and delivering it better than anyone else	Volvo = SafetyHallmark = Caring shared Hawaii = Aloha spirit
Best fit for the Customer	Position yourself as an ideal fit for the customer’s personality, style, and approach	Red Bull = ExtremeGuess Jeans = Sexy chic Virgin Atlantic = Ultra cool fun
Business Approach	Position yourself with a distinctive approach to doing business	Jimmy John’s = Unbelievably fastTurboTax = Easy DIY
Anti-Competition	Position yourself as a preferred alternative to the competition	Apple = Think differentSeven-Up = The Uncola
Price	Position yourself according to pricing: lowest cost, best value for the money, luxury or premium offering, etc.	Wal-Mart = Lowest pricesRyanAir = Cheap flights Old Navy = Affordable fashion
Quality	Position yourself according to a quality standard: high quality, best-in-class, or else reliably good quality at a reasonable price	Hearts on Fire = Perfect cutRitz Carlton = Ultimate luxury

Strong positioning is simple: it focuses on a single, powerful concept that is important to the customer. It uses your most promising competitive advantage to carve out the niche you will fill better than anyone else. Your positioning strategy puts this competitive advantage into the context of your competitive set: it explains what distinguishes you from the competition. Perhaps you deliver an emotional benefit that your target audience doesn’t get anywhere else (escape? balance?) Perhaps you are hands down the best choice for a geeky, gear-head audience (bikers, coders). Perhaps you provide great customer service in a category where customer service is unheard of (cable TV, contractors).

Your positioning will become the “special sauce” that sets you apart. Concoct it well.

Step 5: Communicate and Deliver on Your Positioning Strategy

The next sections of this module will delve deeper into this step, but don’t underestimate its importance. Communicating your positioning strategy begins with creating a positioning statement and sharing it internally across the organization to make sure that everyone understands how and where your offering will fit in the market. Your positioning builds on a competitive advantage, and it is essential for you to deliver on the expectations your positioning sets in customers’ minds. You should design your positioning strategy to endure over time, while recognizing that it can and should be adjusted from time to time to reflect changes in the competitive set, your target segment, market trends, and so forth.

If your positioning is based on being an ideal “lifestyle” fit for your target audience, for example, you need to demonstrate how your offering is attuned to the needs and experiences of this audience. This includes evolving as your target segment evolves. If your positioning is based on “owning” an important benefit like security or reliability or delight, then you should explore all the ways you can deliver that benefit better than any competitor who might try to imitate you.

The marketing mix provides the set of coordinated tools you use to execute on your positioning strategy. You might think of your positioning strategy as the tune you want your target segment to hear. The marketing mix is how you orchestrate and harmonize that tune, making it a memorable, preferred choice for your target customers.

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: define product positioning and differentiation, and explain why they are important to marketing a product or service

Positioning addresses an important question: What do you want to be known for?

Positioning provides the basic foundation for effectively marketing any product or service to a target audience. Positioning goes hand in hand with differentiation (in much the same way that segmentation and targeting work together). Differentiation is the process of figuring out what will make your product different and better in ways that matter to customers–and ways that are not easily replicated by competitors.

Positioning and differentiation offer something of a road map for marketing a product or service to the customers you’re targeting. Read on to learn more.

The specific things you’ll learn in this section include:

• Define positioning and differentiation
• Explain the relationship between positioning and value proposition
• Explain the importance of positioning in executing segmentation and targeting strategy

What Makes You Different and Better?

Positioning is a strategic process that marketers use to determine the place or “niche” an offering should occupy in a given market, relative to other customer alternatives. When you position a product or service, you answer these questions:

• Place: What place does the offering occupy in its market?
• Rank: How does the product or service fare against its competitors in the areas evaluated by customers deciding what to buy?
• Attitude: How do we want customers to think about this offering and the benefits it offers them?
• Outcomes: What must we do to ensure the product or service delivers on the positioning we select?

Marketers use the positioning process to identify the distinctive place they want a product or service to hold in the minds of a target market segment. Effective positioning is always aimed at a specific target segment. In fact, positioning tailors the generally focused value proposition to the needs and interests of a particular target segment.

Positioning can be subtle and hard to detect, but it can also be easy to spot when it conforms to your perceptions as a consumer. Perhaps one of the following positions appeals to you: Volvo, for example, positions itself as a family of premium vehicles that are well designed for performance, innovation, and safety. Kia strives to position itself as delivering practical, utilitarian vehicles that offer high quality and value for the price. Cadillac is, well, the Cadillac of automobiles: powerful, luxurious, and catering to every need of its well-heeled drivers and passengers.

Differentiation is closely related to positioning. Differentiation is the process companies use to make a product or service stand out from its competitors in ways that provide unique value to the customer. Differentiation identifies a set of characteristics and benefits that make a product different and better for a target audience. Ideally these qualities are things that 1) customers value when they are evaluating choices in a purchasing decision, and 2) competitors cannot easily copy. When both conditions exist, the offering is more attractive to target customers.

Differentiation is at work any time you’re choosing between two products in the same category. For example, when you’re buying a soft drink, why do you choose Coke, Pepsi, Sprite, or Mountain Dew? Is it because of the taste? The cost? The level of sugar or caffeine? Or is it something less tangible, like the way you just want to smile when you drink Coke, or you feel amped up when you drink Mountain Dew? These tangible and intangible qualities are what differentiate one soft drink from another.

Interconnected Strategies

Positioning and differentiation are connected in important ways. Effective positioning for a product or service is based on the differentiating characteristics or qualities that make the product/service better than the competition in the minds of the target segment. Positioning and differentiation are strategic activities: marketers work to create a desired position for a product or service in the market, rather than waiting for it to be created by customers, the public, or competitors. The end result of positioning is the successful creation of a market-focused value proposition: “This is the compelling reason why the target segment should buy the product.” Positioning shapes key elements of the marketing mix: which features matter most in the differentiation of a product or service, what messages to communicate about the offering, how to price it relative to competitors, and the role distribution might play in satisfying the customer.

To illustrate, think about American retail chains targeting American households as a target segment. The table below identifies the ways in which three large retail chains position themselves to attract customers and the key differentiators they use to set themselves apart.

Name	Positioning	Differentiators
Wal-Mart	Wide selection of products people want, at the lowest prices	Wide selection; low prices
Target	Trendy, fashionable products at reasonable prices	Continually refreshed, on-trend product selection
Macy’s	Preferred “go-to” shopping destination for upscale brands and current fashions.	Broad selection of most-wanted, upscale brands; engaging shopping experience

Note that, in each case, positioning is based on factors that are important to the target segment(s) each retailer focuses on. Wal-Mart customers are very brand-loyal because of the company’s commitment to low prices and huge selection. Loyal Target customers love browsing the latest, on-trend apparel, accessories, and home fashions. Macy’s shoppers appreciate a more elegant, upscale shopping experience and are willing to pay more for upscale brands. Each of these positioning strategies carves out a “niche” of the retail market that defines the particular, differentiating strengths of each chain in the minds of customers.

Positioning is essential for launching a new product or service, because it helps marketers and customers understand how the new offering fits into the set of available choices, and it makes a set of claims about why customers should consider it. Positioning can also be useful at any other stage of the product life cycle to help clarify what makes a product or service different from competitors and why people should prefer it.

Positioning Is a Statement

Positioning plays an important role for marketers in expressing how they will make an offering attractive to customers. It also helps customers become educated about the options available to them so they can evaluate and select the product or service that’s the best fit.

Positioning is most often articulated as a positioning statement. A positioning statement is one sentence that concisely identifies the target market and what you want customers to think about your brand. This statement should include 1) the target market, 2) the brand name, 3) the key points of differentiation, 4) the product/service category or frame of reference in which you are establishing this market position, and 5) the reasons customers should believe the positioning claims.

Positioning statements should also be statements of truth. Effective positioning is credible and convincing, reflecting customers’ actual experiences with the product or service. If a positioning statement does not reflect the customer’s reality, the positioning will fail because it will not take hold in the minds of consumers. Likewise, positioning must be based on qualities that matter to customers as they consider which product/service to purchase. If positioning is based on characteristics or customer benefits that do not matter, customers will opt for other offerings that deliver what they care about. We will discuss positioning statements in more detail later in this module.

Same Offering, Different Positioning

Because effective positioning is always linked to a specific target segment, it is worth pointing out that the same basic product or service may be positioned differently for different market segments. When this happens, it is because companies recognize that their target segments are looking for different qualities when they make their purchasing decisions. Different positioning strategies for the same product enable marketers to communicate the value of the product or service more effectively to each target audience.

For example, the airline JetBlue caters to two “sweet spot” target segments: 2) “high-value leisure travelers” and 2) “mixed-wallet customers,” who fly for both business and leisure. The airline’s positioning for “high-value leisure travelers” focuses on attractively priced airfare and packages to fun vacation destinations, along with a comfortable flying experience. For “mixed-wallet customers,” JetBlue positions itself as providing a competitively priced and convenient flying experience with features like expedited security and multiple fare options in case travel plans need to change. In both cases, JetBlue is selling air travel, but the positioning for each target segment is built around the differentiating qualities that make JetBlue particularly attractive to those segments.^[1]

 

 

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Why create a product or service positioning statement that aligns with a value proposition and a target segment?

Ever since you were small, you have loved special occasions and gatherings. It started with sprawling extended-family picnics when you were a child. From there, you graduated to bigger and more elaborate events: attending fairs and grand openings, crashing weddings and voter conventions, wandering through business expositions at the local convention center. In fact, one of your favorite memories is of the time you sneaked into the legendary Consumer Electronics Show when you were visiting your cousin in Las Vegas. As far as you’re concerned, the more people, the bigger the party and the better.

Now, as an adult, you’ve landed a job with Shindiggity, an events management firm that specializes in putting on conferences, trade shows, and events for industry associations and companies. You love getting to meet new people, travel, and work on making fun, memorable events.

Here’s the challenge: Shindiggity is relatively small and new on the events management scene. Although events management is a growing area for business services, it’s also a fairly crowded field. When you google “events management company,” you get 432 million results. Shindiggity is easily lost in the crowd.

At Shindiggity’s annual retreat, employees from across the company are divided into several groups, and each group is given the same task: How can we get Shindiggity to stand out from the competition?

You realize that the VP from your division has been assigned to your group and that this is a great chance for you to impress her with your creativity and initiative. You also want to help your company be successful. Right off, you jot down some questions to focus your thinking:

• What makes Shindiggity better than competitors? Is it the quality of events? The creative ideas? The amazing people? The way it uses technology to make things smoother and more efficient? Something else?
• Who do we need to talk to about Shindiggity, and what will make them decide to give us a try?
• How can we make sure they remember Shindiggity and what we stand for?

These are critical questions you need to answer in order to help your company (and, you think, impress the VP). At the core, they are questions about positioning and differentiation: What position do you hold in customers’ minds? What position do you want to hold? How are you different in positive ways that make you stand out from the pack?

If Shindiggity can’t figure out how to make a lasting impact in customers’ minds, it won’t win enough clients to stay in business. And, if it goes out of business, you’ll be job hunting instead of continuing to do the work you love. On the other hand, if you come up with great ideas, you may help Shindiggity position itself effectively against competitors, which could lead to new business and—who knows?—to more job responsibility or a promotion for you. It’s pretty obvious which scenario you decide to pursue.

Learning Outcomes

• Define positioning and differentiation, and why they are important to marketing a product or service
• Explain the process of selecting a positioning and differentiation strategy
• Develop and evaluate positioning statements based on defined criteria
• Explain repositioning and the associated risks and complexities of repositioning a product or service
• Describe the process of implementing a positioning strategy

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Instructions

Write a post for the Discussion on this topic, addressing the questions below. Unless otherwise specified, each part should be 1–2 paragraphs or several bullet points in length.

Part 1: Competitive Advantages

List the competitive advantages of the product, service or organization you’re focusing on: the things that make it different from competitors in positive ways.

Part 2: Market Niche and Positioning Strategy

Describe the market niche you want to fill, along with the positioning strategy you recommend using. Why do you think this is the right approach?

Part 3: Positioning Statement

Develop a positioning statement using this formula: “To [target audience], [product/service/organization name] is the only [category or frame of reference] that [points of differentiation/benefits delivered] because [reasons to believe].^[1]

Part 4: Respond to Classmates’ Posts

After you have created your own post, look over the discussion posts of your classmates and respond to at least two of them.

Part 5: Incorporate Feedback

Review the feedback you receive from classmates and your instructor. Use this feedback to revise and improve your work before submitting it as part of the “Marketing Plan, Part 2” assignment.

Grading Rubric for Discussion Posts

The following grading rubric may be used consistently for evaluating all discussion posts.

Discussion Grading Rubric

Criteria	Response Quality: Not Evident	Response Quality: Developing	Response Quality: Exemplary	Point Value Possible
Submit your initial response	No post made – 0 pts	Post is either late or off-topic – 2 pts	Post is made on time and is focused on the prompt – 5 pts	Point value possible – 5 pts
Respond to at least two peers’ presentations	No response to peers – 0 pts	Responded to only one peer – 2 pts	Responded to two peers – 5 pts	Point value possible –5 pts

Total Points Possible for Discussion Assignment: 10pts.

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Positioning Your Way Out of Obscurity

Let’s get back to the challenge that started this module: how to position and differentiate a company in a crowded field of competitors.

You’ll recall that you have a swell job at a newish events management company called Shindiggity. The company is struggling to find ways of setting itself apart in a crowded and growing field. At the company retreat, you have an opportunity to suggest some strategies that can help Shindiggity stand out from the competition. You also have a chance to impress your divisional VP, who is assigned to the same brainstorming and breakout group as you.

Now that you know something about positioning and differentiation, you step forward to lead your group through the positioning process.

Step 1: Confirm Your Understanding of Market Dynamics

Once your breakout group gets going, you start with a discussion about what you’re all seeing in the market generally. You ask Kara, your VP, to share perspectives from the executive team about where it plans to target growth for the company in the coming year, and whether there are particular industries or segments it plans to focus on. Kara says that the company has seen particular growth potential in the health care and pharmaceutical industries. Shindiggity has several clients in these segments already, and you know from your experience with these events that they can be quite technical and specialized.

In fact, recently Shindiggity won three proposals for health-care-related events that you helped write. You recall from the selection process that two factors helped push your proposals over the finish line: 1) knowledge and experience required to produce and manage an event with significant industry-specific technical needs; and 2) strong, established relationships with industry thought leaders whom Shindiggity could bring into the program at relatively short notice. As you share these insights, you realize the conversation is already moving on to the next step in the positioning strategy.

Step 2: Identify Your Competitive Advantages

You ask your colleagues to share what other factors are helping Shindiggity win new business. They agree that industry-specific technical knowledge and strong relationships with thought leaders are important distinguishing factors. While many other event management companies seem perfectly competent, there is an extra level of confidence customers express when they know Shindiggity has the expertise and connections to pull off highly technical, industry-specific events.

Someone mentions that since Shindiggity is a smaller firm than many others, it has lower overhead costs. This generally translates into somewhat lower pricing, which customers like. Kara expresses concern: “I don’t think we want to compete on lowest price. That just doesn’t feel like the right path.”

This is a perfect opportunity for you to jump in. You back her up and say, “Positioning as the low price alternative would be a mistake, since our customers don’t make their decisions based on price alone. But what about positioning Shindiggity as offering more value for the money?” Kara and the others seem to like this approach. It acknowledges the reality that pricing exercises important influence in technology decisions, but it doesn’t force the company into uncomfortably low budgets or profit margins.

Step 3: Choose Competitive Advantages That Define Your “Niche”

The group rounds out the discussion of Shindiggity’s strengths and advantages: creativity, caring people, strong partnership with clients to achieve all their goals for the event. Next you suggest listing out the company’s key competitors and their competitive advantages, to give everyone a common picture of the competitive landscape.

The list on the whiteboard runs long—nearly twenty companies are on it. As the team begins to enumerate the competitors’ strengths, a pattern emerges. At least half of the competitors have noted competitive advantages related to the industries where they do the most work: media, sports and recreation, finance, apparel, and automotive, to name a few. If this survey of key players is any indicator, industry expertise is a great way to establish a place for yourself in events management.

While Shindiggity is not the only company with particular expertise in health care and pharmaceuticals, it is the only smallish company that has established this expertise as a competitive advantage. The handful of others tends to be larger firms with higher overhead, and, according to client feedback you heard recently, they tend to be more “cookie cutter” in their approach to events, rather than going the extra mile to give clients exactly what they want. All this talk of relative strengths and weaknesses is exciting: you’re starting to see a positioning strategy come together.

Step 4: Define Your Positioning Strategy

After a short break, your group gets to work again. Kara observes, “We’ve got a great list of Shindiggity’s strengths here, but what do we want customers to remember about us? What’s going to make them seek us out and choose us over all these other companies they could work with?”

This is the moment you’ve been waiting for. “For our positioning strategy,” you say, “I think we should focus on owning a distinctive benefit, something we do better than anyone else, linked to Shindiggity’s strengths and competitive advantages. I’m not sure of the wording yet, but I think it’s a combination of our health care and pharma expertise, and the way we partner with clients creatively to make events feel unique and visionary. How does that sound?”

Your proposal generates excitement because it taps into what makes people at Shindiggity so enthusiastic about their jobs: creativity, vision, and the challenge of designing events that are out of the ordinary. Kara remarks that it’s a good sign when employees get this excited about a positioning strategy.

Step 5: Communicate and Deliver on the Positioning Strategy

Your breakout group needs to consolidate its thinking to share back with the rest of the company. You suggest translating the positioning strategy into a positioning statement, using the tried-and-true formula you learned in your marketing class:

To [target audience], Product X is the only [category or frame of reference] that [points of differentiation/benefits delivered] because [reasons to believe].^[1]

After a few minutes’ work, the group hammers out a positioning statement worth sharing:

To health care and pharmaceutical companies, Shindiggity is the only visionary partner that produces top-notch events health care professionals love to attend because they bring together great minds, enriching activities, and a dose of the extraordinary.

Heading back into the main meeting room, Kara compliments you on your great ideas and suggests that you be the spokesperson to share your group’s work with the rest of the company. “You should be proud,” she adds. “I think we’re really on to something here.”

 

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COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

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