The third and final part of the SEGMENT – TARGET – POSITION process is Product Positioning.
Product Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a consumer, you would proceed to position a product within that market segment.
Product Positioning shows the perception which customers have about the product or brand.
Customers usually think about products and brands in terms of Price and Quality, and make comparisons with other products and brands sold by competitors. That is why all products within a certain market segment are ranked by the general public using the most common attributes such as Price and Quality.
It is worth noting here that corporate image is important for Product Positioning because it is the consumers who hold those perceptions. Rather than what the business itself thinks about its own goods and services.
How is Product Positioning useful?
1. Develop strategies based on position.
In order to target appropriate market segment with a new product or brand, the firm will need to prepare a fresh marketing strategy to be used. For instance, it is because customers who are willing to pay high price usually expect to receive the best product possible in exchange for the money they spend. Hence, they firm will need to refresh its image to drive customers in.
Aim? REFRESH CURRENT IMAGE
2. Improve image when undesired perception exists.
Sometimes customers may have wrong perception about the firm’s product or brand. For example, this can be caused by multiple negative media reports about the business in recent weeks. When customers perceive a good product to be of low quality and too-high price, they will not be willing to pay the set price and will most likely turn to competitors’ products. Hence, the firm will need to improve its current image.
Aim? IMPROVE CURRENT IMAGE
3. Identify need to reposition.
When competition intensifies in or if the demand is declining, the firm may need to reposition its product or brand to appeal to new market segment with less competition or higher demand. For instance, to start selling cheaper cars of lower quality during economic downturn when people have less money to spend. Hence, the firm will need to change its image completely.
Aim? CHANGE CURRENT IMAGE
4. Identify gaps in the market.
Conducting detailed market research about the current position on the market will help the firm to identify any gaps in the market that can be targeted with new different products and brands. For instance, in the car market segment the firm may wish to target high-price-high-quality segment in addition selling cars of medium price and medium quality. Hence, the firm will need to create new image to make customers view the product or brand as of high quality.
Aim? CREATE NEW IMAGE
Perception of the firm and its products is a very important aspect in markets. It affects the corporate image of a business. And having impeccable image can play a vital part in the success of the entire business. On the contrary, having a poor corporate image will not only push customers away in the short-term, but can also cause irrevocable damages to the firm in the long-term threatening its existence.
Stages of Product Positioning
According to Jack Trout and Al Ries, Product Positioning is not what you do to a product, but what you do to the mind of the customer. Therefore, you position the product or brand in the mind of the potential buyer.
- Identify competitive advantage of the product or brand. List all the features of the kind product or brand type of product that might be considered important in the eye of customers.
- Decide what advantage to focus on. Decide which aspects of these key features should be marketed to customers, e.g. price, quality of raw materials used, design, durability, reliability, comfort, image, etc.
- Create appropriate marketing tactics. Use the appropriately composed Marketing Mix to achieve the desired positioning.
Framework for successful Product Positioning
Jack Trout and Al Ries suggest a six-step question framework for successful Product Positioning:
- What Product Position do you currently own?
- What Product Position do you want to own?
- Whom you have to defeat to own the Product Position you want?
- Do you have the resources to do it?
- Can you persist until you get there?
- Are your marketing tactics supporting the positioning objective you set?
Strategies to achieve Product Positioning success
Generally, there are three elementary competitive strategies for a business to achieve its market positioning success:
- Cost Leadership. Having the lowest cost of business operation in the whole industry. This will help the firm to become the low-cost supplier of particular products with the right quality. Cost Leadership can be achieved by high efficiency (productivity), large business size, mass-scale production, etc.
- High-Quality Focus. Offering high-end products of very high quality to a particular market segment. This strategy will fulfill desires of specific niche markets with products that are consisted in every premium interaction that customers have with the brand. High-Quality Focus can be achieved by using the best raw materials and components, offering exceptional customer service, exceeding all safety standards, etc.
- Differentiation. Producing distinct product products from rivals in the industry to create the perception among customers that the firm’s product or brand is different, unique, special, etc. This strategy makes the company stand out from others on the market. Differentiation can be achieved by having Unique Selling Point (USP) such as color, size, quality, design, after-sale care, packaging, purchase term, customer relations management, etc.
Business managers will need to make that choice whether to offer cheap products or products of high quality. It is unrealistic neither for a person to be good at everything nor for any business organization to be good in all market segments. Every time when you try to be good at everything, you will end up no being good at anything. Specialization matters! Consequently, a company cannot offer Cost Leadership and High-Quality Focus at the same time. You cannot be cheap and of high quality at the same time.
In summary, remember this important point. Product Positioning is all about ‘perception’. As perception differs from person to person. What you perceive as quality, price or value for money is different to my perception.
To visualize Product Positioning, a diagram called Product Position Map, or Perception Map, is used by managers. It shows what perceptions current customers and/or potential customers have towards the product or brand.
