Product Positioning Definition, Process, and Examples

Product Positioning Definition February 13, 2021

Chloe Henderson

Writer

While most companies have their preferred marketing strategies, many overlook the value that product positioning insights bring to market penetration.

The product positioning process allows businesses to define target markets for each product line to identify what features set it apart from similar items. This information can be used to enhance marketing language, outreach, and branding to boost sales.

What is Product Positioning?

Product positioning is a marketing technique in which a product's benefits are emphasized to the target market to showcase why they need it. This requires businesses to define their customer base, consumer needs, and relevant inventory. In other words, retailers must communicate to their customers that certain products will satisfy their needs.

When performed correctly, retailers can use product positioning to manipulate the consumer's perception of their brand. However, this method requires extensive market research to determine which of the product's attributes will generate the most sales. It also helps customers differentiate similar products from competing retailers. When these elements are defined, companies can gain a stable foothold within their marketplace.

Product positioning is not limited to one target audience. In fact, marketers can use the technique to identify additional customer bases that may also be interested in the same goods. However, different audiences may like the same products for different reasons, requiring retailers to tailor their marketing tactics accordingly.

While it is impossible to market a product to all consumers, as different customers have different preferences, product positioning enables businesses to finetune their marketing strategies to target various shoppers. This can help retailers boost sales for the slow-moving stock, optimize product launches, and penetrate new markets.

An Example of Product Positioning

Australian Yellow Tail Wines successfully utilized product positioning to enter the US market and make their mark.

At the time this company entered the market, most other wine brands were using business jargon and wine terminology that the typical layman wouldn't understand. Australian Yellow Tail Wines saw this and shifted their marketing strategy so they could appeal to everyone, regardless of their wine knowledge.

By using language that every consumer can understand, Australian Yellow Tail Wines uses brand positioning to appeal to the average customer.

The Product - The wine itself is slightly sweet and not particularly dry, making it easy to drink without having a refined palette.

The Name - The name is fun, easy to pronounce, and a nod to the company's roots, making it easy to understand from the first customer interaction.

The Brand - The brand features a drawn kangaroo and a bright band on their labels, ranging in colors depending on the type of wine. This advertisement makes the brand eye-catching, easy to locate, and unintimidating.

The Language - The company continues its approachable language throughout its various marketing campaigns but focuses its communication on in-store promotions.

The Price - Most Australian Yellow Tail Wines are sold for $10 or less to compete with other cost-effective spirits.

3 Steps to Product Positioning

It is important to remember that product positioning is not decided by the business, instead, the business discovers its product position. Therefore, managers must remain open-minded to how they should market items to yield the best results.

However, companies have little control over how consumers perceive their brand. In order to understand how product positioning may affect marketing approaches, management should review the method's stages.

1. Get to Know the Average Buyer

First, businesses need to get to know the customers that are attracted to specific items by identifying common variables, such as

Age range
Geographic location
Ethnicity
Family situation
Education level
Gender

When the key demographics are defined, businesses can then investigate their

Sales channel preference
Pain points
Concerns
Goals
Purchase influences

This portion requires market research, which can be performed by generating surveys, holding focus groups, or simply talking to customers. Regardless of the method, companies need to gain insight into the buyer's thought process while shopping.

2. Analyze the Competitors

When the target market is identified, companies can begin evaluating the competition and their marketing tactics. This assessment is crucial as it can enlighten businesses of gaps within the market that can help them differentiate their products from competitors'.

For example, Milk Duds was in a market flooded with chocolate candies but discovered a segment that wasn't touched. Milk Duds offers caramel-covered chocolate that takes longer to eat and provides a unique flavor profile. This created a new target market for smaller treats that are long-lasting.

3. Determine the Desired Brand Perception

The last step is typically the most challenging as businesses need to transform their findings into actionable insights. It is not enough to understand the available market segments. Companies must be able to accurately promote their products by emphasizing consumers' preferences.

Businesses need to be able to connect with shoppers on a personal level to develop a sense of trust and, eventually, loyalty.