Market position is how a brand is perceived by customers relative to its competitors. This perception is not determined by a company’s declarations but by the collective view of its target audience. Understanding this is the first step for a business to intentionally shape its identity and message.
Defining Market Position
Think of the market as a theater where each seat is a potential position. Established brands occupy seats, known for specific attributes. A new brand must find an unoccupied seat that appeals to a specific group, as the audience must agree it belongs there based on their experience.
This consumer-centric view means positioning is the sum of all experiences a customer has with a brand. A strong market position is clear, unique, and consistently communicated. This makes it easy for consumers to understand what the brand stands for.
The Importance of Market Position
A well-defined market position provides a competitive advantage. It allows a company to stand out by highlighting unique qualities, which helps attract and retain a loyal customer base. Without a clear position, a business risks being seen as just another option and is easily overlooked.
Positioning also impacts a company’s pricing strategy. A brand positioned as offering superior quality or innovation can justify a higher price. Consumers will pay more for a product they perceive as delivering greater value, which can increase profitability.
A clear market position also serves as an internal guide for business decisions. It informs product development by defining features that resonate with the target audience. It also directs marketing efforts, ensuring every message reinforces the brand’s core identity.
How to Determine Your Market Position
Identify Your Competitors
The first step is to understand the competitive landscape by identifying direct and indirect competitors. Direct competitors offer similar products to the same audience, while indirect ones solve the same problem with a different solution.
Analyze their marketing, pricing, and reviews to understand their perceived position. This reveals occupied market positions and potential opportunities for a unique identity. A perceptual map can visualize how brands compare on attributes like price and quality.
Define Your Target Audience
Next, define your target audience, as it is not feasible to appeal to everyone. Create a detailed profile of your ideal customer, including their demographics, needs, and motivations to craft a message that resonates.
The goal is to find a consumer group whose needs are not fully met by existing options. Focusing on a specific audience allows you to tailor your product and marketing to their desires, which is more effective than casting a wide net.
Determine Your Unique Value Proposition
Your unique value proposition (UVP) sets your brand apart for your target audience. It is the promise of value a customer receives from your product or service. To determine your UVP, identify your offering’s benefits and how they address the specific needs of your audience.
Your UVP should be a clear statement on what makes you different and better. It can be based on innovative features, superior quality, exceptional customer service, or a more convenient experience, but it must focus on a benefit that is unique and important to your customers.
Create a Positioning Statement
A positioning statement is an internal document that captures your market position in a single declaration. It guides marketing and branding efforts, ensuring company alignment. A common formula is: “For [target audience], [brand] is the [category] that provides [UVP] because [reason to believe].”
For example, Volvo’s statement is: “For upscale American families, Volvo is the family automobile that offers maximum safety.” This statement defines the target audience, product category, and key benefit, solidifying its position and guiding strategic decisions.
Common Market Positioning Strategies
Cost leadership is a strategy where a business aims to be the lowest-cost provider. This approach requires a focus on operational efficiency and cost control. By minimizing expenses, a company can offer lower prices than competitors, attracting price-sensitive customers in markets where price is a major factor.
Differentiation involves creating a product or service perceived as unique. This can be based on superior quality, innovative design, or exceptional customer service. The goal is to create a distinct identity that appeals to customers willing to pay a premium for added value, leading to brand loyalty.
Niche positioning is where a company serves a specific, narrow market segment. A niche player tailors its products to the unique needs of a particular group, such as a specific demographic or geographic area. By becoming an expert in a niche, a company can build a strong reputation.
Examples of Strong Market Positioning
Walmart is a prime example of the cost leadership strategy. The company built its business model around providing “Everyday Low Prices,” which appeals to a broad base of budget-conscious consumers. This clear position has made Walmart a dominant force in retail.
Apple exemplifies the differentiation strategy. Through its product design and user interface, Apple focuses on innovation, quality, and a seamless user experience. This allows the company to command a premium price and cultivate a loyal following of customers who value design and performance over cost.
Rolex demonstrates a niche strategy by targeting a high-end segment of the watch market. It positions itself as a symbol of luxury, prestige, and craftsmanship. Rolex does not compete on price, instead focusing on an exclusive image that resonates with its affluent target audience.