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positioningstrategyPositioning strategy defines the tactics, tools and strategies used by a business to differentiate itself from competitors and gain market share.  In an ultra-competitive market, positioning strategy is often the difference between failure and success. In this blog post, we’ll learn the basics of positioning strategy and how you can leverage it to better market your business.

You can learn more about positioning strategy in this course on strategically growing your business.

What is Positioning Strategy?

According to the Kauffmann Foundation, more than 565,000 businesses are launched in America every month. This means that at any time, you are competing with hundreds, if not thousands of other businesses in your niche.

How you differentiate yourself from this competition comes under gamut of positioning strategy.

For example: the core ingredients in soap are largely the same – fatty oils, a few specialty oils, and perhaps, some lye. Since it is difficult for soap manufacturers to differentiate themselves based on ingredients, they must rely on positioning strategy to set themselves apart from competitors. Thus, Axe makes advertisements that emphasize masculine fantasies to gain market share among male users, while Dove’s marketing is largely women-centric. Smaller brands might focus on their soap’s organic, handmade manufacturing process, while some others may highlight how their soap doesn’t dehydrate the skin or costs less than competitors.

Essentially, each brand positions itself differently to gain customers. This is the essence of positioning strategy, wherein you consciously create a narrative that facilitates business growth.

Positioning is a catch-all term that includes multiple processes, including brand, product and pricing strategies. Let’s look at them in detail below:

1. Brand Positioning Strategy

In an age of unbridled competition, branding is often what sets apart businesses.

Consider an example: both Louis Vuitton and GAP sell clothes. Yet, Louis Vuitton is able to charge thousands of dollars for a suit, while GAP’s suits will rarely set you back by more than a couple of hundred dollars.

This is because the Louis Vuitton brand is perceived as a luxury brand, and thus, can command luxury brand prices. GAP, on the other hand, has consciously positioned itself as a brand for the middle-class urban consumer, hence the lower prices.

Building a brand is often very different from building a business. It involves identifying and communicating the qualities that make your business special. It is largely a marketing enterprise, though to be successful, it must reflect qualities your business truly values.

Creating a successful brand positioning strategy requires a number of steps, such as:

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2. Product Positioning Strategy

Product positioning strategy defines the processes used to market and differentiate products. Product and brand positioning goes hand in hand – how individual products are perceived affect brand perception, and vice versa. A well-received product might make the brand appear more attractive, while a beloved brand might be able to sell inferior products simply on the strength of the brand name.

For example, this graph shows sales of different Apple products over the years:

Source: Barefigur.es

As can be seen, sales of Apple products have fed off of each other. Nowhere is this more apparent than in unit sales of iMac. Before the launch of the iPod, Apple was a respected, but minor player in the desktop computing market. Total sales in 2001 – before the iPod launch – were around 3.087M units. In 2004, just as the iPod was beginning to pick up momentum, this increased to 3.29M units. By 2007, the iPod phenomenon had reached its peak and iMac sales increased more than twofold to 7.051M units.

This is a prime example of the interplay between brands and products. The iPod’s remarkable success introduced a lot of new customers to Apple’s desktop products. Positive feedback for these products further improved Apple’s brand perception, which, in turn helped improve iPod (and later, iPhone and iPad) sales.

Positioning a product, therefore, is key if you want to build a successful brand and business. Some of the questions you must ask when creating a product positioning strategy are:

Beyond this, you must also consider product pricing (see below) and how the product fits into the broader brand position as a whole.

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3. Pricing Strategy

Pricing your products is the final piece of the positioning puzzle. This is what makes or breaks most businesses. Therefore, you must consider the following when deciding on a pricing strategy for your product:

This is the essence of positioning strategy in business – a combination of brand, product and pricing strategies. The best way to approach this is to focus on the broad, company-wide brand strategy, then move onto narrower topics, such as individual product prices.

You can learn more about positioning strategy and branding without breaking the bank in this course!

Page Last Updated: February 2020

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