What is Market Positioning?
Market positioning is the process of creating a desired image of your product or service, or even your brand, in the minds of consumers.
It involves the many factors and characteristics that make up a product or service, from what products are made from, to how they’re designed, to how they’re marketed and advertised, to where they’re sold. All of these factors contribute to how consumers perceive a product or service relative to its competitors. The result is the product’s or service’s market position.
Companies make strategic decisions along many axes for market positioning, such as price and quality. But these are not the only dimensions in which a product or brand exists. They also compete on “attributes and benefits” and “use and application” — what it is, what it does for consumers, and how it does it.
Consider, for example, a chain of burger joints and a chain of vegan burger joints selling meatless burgers. The latter may emphasize its healthfulness and ethics, and if its marketing does so explicitly in comparison to beef burgers, it’s engaging in a form of market positioning that directly attacks the characteristics of its competitors.
Proactive, reactive, and passive market positioning
Jack Trout, in Branding Strategy Insider, said the following:
“[Market positioning] will happen whether or not a company’s management is proactive, reactive or passive about the on-going process of evolving a position. But a company can positively influence the perceptions through enlightened strategic actions,” said Jack Trout, in Branding Strategy Insider.
The discipline of market positioning can force a company to do the research necessary to understand its customers and its competitors. And because marketing positioning is something that exists in the minds of consumers, businesses that want to enter new markets sometimes have to make new investments based on the market positions they can realistically pursue.
Market positioning example
Toyota Motor Corp., for example, earned amazing loyalty in the United States specifically as a manufacturer of reliable, affordable, fuel-efficient automobiles. When it wanted to enter the luxury market in the United States, it willed the Lexus brand into existence, investing about $1B to do so.
After years of preparation, the brand launched in 1989, centered around a flagship sedan. It remains entirely answerable to the CEO of Toyota Motor Corp., however, who in May 2021 talked about the need to electrify Lexus models to better position the brand in that growing market.
Distribution as a market
The way consumers buy things is as much a market as what they buy. When Netflix launched in 1997, it went head-to-head with the market leader for movie rentals at the time, Blockbuster, but not by launching a competing chain of physical stores renting DVDs.
Netflix competed, and ultimately won, by being, very deliberately, the Amazon of movie rentals. It listed its movies online for consumers to choose from, then offered the convenience of sending DVDs by mail straight to consumers with pre-paid envelopes for them to send the movies back. It positioned itself in the market by competing on a very different definition of convenience than Blockbuster, which still had the advantage of offering consumers movies they could watch the same day they rented them.
Netflix has since become an internet content streaming powerhouse, but interestingly, that was its plan all along. Co-founder Reed Hastings always intended to outdo Blockbuster not only on home delivery, but also on instantaneous home delivery via the internet.
However, the internet of the time was too slow to reliably stream movie files, and another 10 years would pass before Netflix could offer streaming content. It has since changed its market position yet again by becoming a producer of original content, such as the hit show “Stranger Things,” while maintaining its market positions for streaming content and even for DVDs by mail.
Market positioning is a process through which companies aim to cultivate a specific, positive image of a brand, product, or service in the minds of its target consumers. Companies can use a variety of market positioning strategies to differentiate its brand or products from competitors, such as differentiating based on price, features, convenience, or any number of factors that contribute to a brand’s or product’s unique selling proposition.