How Market Positioning Helps You Connect With the Right Customers

Proper market positioning can boost your sales

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Market positioning is a strategic process that you can use to accentuate and differentiate your brand from the competition in the minds of customers in your target market. Take a look at how to use market positioning to help you connect with the right customers and increase your sales.

What's the Importance of Market Positioning?

The goal of market positioning is to get your customers to perceive your brand as distinct and superior.

For example, when they're shopping for laundry detergent, many people automatically think of Tide or some other brand as the best at cleaning clothes. Given that people tend to stick with a particular brand for years or even decades, establishing this impression of your brand is one of your keys to business success.

A market positioning strategy should be an essential part of the marketing section of your business plan when you're starting a business. For existing businesses, market positioning may need to be refined and optimized periodically to respond to changes in the marketplace. In general, the life span of a market positioning statement is approximately five years. 

What Are the Steps to Achieving Successful Market Positioning?

Four critical steps toward attaining optimal market positioning comprise figuring out where your brand is positioned now and where you want it to go from here, studying the competition, working out your strategy, and writing a market positioning statement.

1. Examine your existing or intended position in the marketplace by asking yourself:

  • What are the key attributes of your brand, such as price, quality, and customer service, that set it apart from your competitors?
  • What is your target market? Which customers are best served by your products/services? This may involve demographic, geographic, and psychographic analysis. 
  • How will you serve the needs of your target market on a consistent basis?

2. Analyze your competitors:

Gather as much information as possible about your competitors so you have a comprehensive view of their strengths and weaknesses. It may be helpful to organize the information in the form of a matrix so you can compare your brand against the competition. The example presented in the Competitive Matrix Analysis Example uses a fictional company called Java Jones that intends to enter the local coffee shop marketplace: 

Competitive Matrix Analysis Example
CriteriaCompany ACompany BCompany CCompany DJava Jones
PriceHighAverageAverageLowHigh
QualityMediumAverageAverageLowHigh
Hours8-5 Mon.-Sat.8-5 Mon.-Fri.8-5 Mon.-Fri.8-5 Mon.-Fri.8-8 Mon.-Sun.
ServiceExcellentGoodFairFairExcellent
Customer LoyaltyMediumFairFairLowHigh
AdvertisingNoneFairFairNilGood
WebsiteYesYesNoNoYes
FacebookNoNoNoNoYes

 

Competitive analysis can clearly reveal:

  • Segments of the market you may wish to avoid, such as those where there is already significant competition, where one competitor has established a dominant position, or where larger competitors exist that have the advantage of economies of scale.
  • Areas of the market that are not currently being addressed (or are not adequately addressed) by any of your competitors.

    3. Decide on your positioning strategy:

    The goal of competitive analysis is to reveal gaps in the marketplace that you can exploit and use to focus your positioning strategy. Typical strategies include:

    • Value positioning: Targeting cost-conscious consumers by competing on price.
    • Service positioning: Catering to the market segment that demands a high level of customer service. This approach is commonly used by smaller businesses that are competing with larger chains or big-box stores.
    • Quality positioning: For the upper segment of the market that's willing to pay for a higher-quality product.
    • Demographic positioning: Targeting a particular demographic stratum such as gender, age, income level, or education.

    Most likely your strategy will be a combination of value, service, quality, and demographic positioning.

    For instance, in the competitive matrix example, Java Jones" obviously intends to cater to the more-affluent coffee drinker who's willing to spend more for quality and excellent customer service. Given that none of the competitors are open from 5 to 8 p.m. or on Sunday, Java Jones also intends to lure the evening and weekend coffee consumer.

    Issues to be aware of when deciding on your strategy are:

    • Your positioning may need to take into account other factors, such as the general (or local) state of the economy, consumer trends, and so forth.
    • Consider how the competition might react to your entry into the marketplace. In the competitive matrix example, for instance, Company A could respond by extending its hours into the evening and opening for business on weekends. 

    Once you've decided on the segment of the market you wish to target, you should be able to clearly articulate your brand, your target market, the needs of the target market and how you will address them, and how you will back up your promises.

    4. Draft a market positioning statement:

    Using the information you've obtained in steps 1, 2 and 3, you're now ready to compose a market positioning statement, which is a simple one-paragraph summary that describes:

    • Your target market.
    • How you want your brand to be perceived by your target market.

    Keep in mind that the positioning statement should be your reference point for all subsequent product decisions and marketing efforts and should include five main elements:

    1. The target market
    2. Your brand
    3. How your brand sets you apart from your competitors
    4. Frame of reference
    5. Reasons that customers should believe your claims

    Example: Java Jones' market positioning statement: For sophisticated coffee lovers who aren't confined to weekday-morning coffee, Java Jones is the place to go for the best specialty coffees and snacks in townUnlike other coffee shops, we use only the highest-quality beans, top-of-the-line equipment, and trained, certified baristas.

    Breaking it down: 

    1. The target market: sophisticated coffee lovers who aren't confined to weekday-morning coffee
    2. Your brand: Java Jones
    3. How your brand sets you apart from your competitors: the best specialty coffees and snacks
    4. Frame of reference: local (in town)
    5. Reasons that customers should believe your claims: we use only the highest-quality beans, top-of-the-line equipment, and trained, certified baristas

    Although a market positioning statement is mainly for internal use, it should resonate with your customers.

    Examples of Market Positioning Statements

    City of Whitehorse: The City of Whitehorse is a municipal government focused on creating the conditions necessary to sustain a unique standard of living for citizens who expect a balance of robust recreation and cultural opportunities to fortify them in body, spirit and mind and who demand comfort, safety and civil amenities without forgoing independence. The City accomplishes this with strong and reliable revenue streams, uncommonly extensive community infrastructure, an independent, problem-solving culture and virtually unlimited access to wilderness spaces and corresponding values.

    Amazon (2001): For World Wide Web users who enjoy books, Amazon.com is a retail bookseller that provides instant access to over 1.1 million books. Unlike traditional book retailers, Amazon.com provides a combination of extraordinary convenience, low prices, and comprehensive selection.