Market Positioning

Market positioning is a critically important part of marketing strategy since it determines to a large extent what customers perceive is being offered to them.

The role of market positioning in marketing strategy

Businesses use marketing to create value for customers by making two key decisions:

Decision 1: Choose which customers to serve

This involves:

• Market segmentation (analysing the different parts of a market)
• Targeting (deciding with market segments to enter)

Decision 2: Choose how to serve those customers

This also involves two important parts of marketing strategy:

• Product differentiation (what makes it difference from the competition)
• Market positioning (how customers perceive the product)

Having chosen which segments to target – a business needs to decide how to compete in those segments. Marketing people call this choice the value proposition. What position will be taken?

It is important to remember that the market position (or value proposition) is defined by customers – the place a product occupies in customer minds relative to competing products.

A useful framework for analysing market positioning is a “positioning map”. A market (or positioning) map illustrates the range of “positions” that a product can take in a market based on two dimensions that are important to customers.

Some possible dimensions for the axes of a positioning map include:

An example of a positioning map for chocolate bars (using dimensions of price and quality) might look like the one below (note: you'll probably disagree with our subjective judgement applied as to where to place certain bars!)

Whilst positioning maps are useful conceptual models, care has to be taken when using them in marketing decision-making:

Advantages of positioning maps

• Help spot gaps in the market
• Useful for analysing competitors
• Encourages use of market research

Disadvantages of positioning maps

• Just because there is a “gap” doesn’t mean there is demand
• Not a guarantee of success
• How reliable is the market research?

Market Positioning and Competitive Advantage

Remember that customers choose products based on their perception of a product’s value proposition – how they perceive the merits of the product relative to the alternatives (competing products).

Therefore, providing a superior value proposition than the competition is a likely source of competitive advantage – but only if it can be sustained.

There are various possible value differences that have the potential to deliver competitive advantage:

Offer more for less: E.g. Aldi: good quality at low prices

Offer more for more: E.g. high-priced luxury products with prestige value

Offer more for the same: E.g. introduce new features & better performance for the same price

Offer less for much less: E.g. no-frills low cost flying and hotels; good quality, back to basics & low price