What is strategic positioning? (With tips and benefits)
By Indeed Editorial Team
Published 2 May 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Attracting and retaining the attention of customers is vital for any business, regardless of the industry they operate in. This remains the primary area of focus for the product, marketing and sales teams, whether they're part of a start-up trying to enter a market for the first time or an existing organisation looking to surpass their competition. One effective method for capturing customer attention and driving up profits includes strategic positioning. In this article, we explain what strategic positioning is, why it's important, list its benefits and offer advice on how to use it effectively.
What is strategic positioning?
Strategic positioning refers to when a company holds a profitable and protectable market position. Most companies aim to find profitable and defendable market positions in their chosen sectors. They can accomplish this using differentiated products or lower relative costs by either serving different requirements from their competitors or serving the same needs but in different ways. Examples of this type of positioning include:
Cost leadership refers to when a corporation becomes the cheapest manufacturer or provider of a certain good or product amongst its competition. This approach is difficult to implement since management teams are constantly striving to reduce costs at all levels to stay profitable. It's important for a company's management team to lower the cost of not just one product, but their entire portfolio of items.
The phrase cost leadership doesn't imply that a company provides low-quality goods at low prices. To implement this approach, it's important for a company to offer items of acceptable quality, tailored to a certain group of clients at a significantly lower or competitive price than other companies manufacturing the same product.
Differentiation refers to a marketing technique that involves developing a high-end item or service and charging a higher price for it. Ensure that your products remain both distinctive and valuable to your target customers. Optimum positioning includes a location that only your business possesses and hence finds itself able to defend. This location remains distinct in ways that only the business perceives as meaningful.
Niche marketing is an advertising approach that focuses on a certain target market rather than advertising to everyone who potentially benefits from the product. Take, for instance, a business that sells products to left-handed people. For years, left-handed people have adapted to using things created for right-handed people because 90% of the public predominantly uses their right hand. This presented a business opportunity to open a shop selling things made specifically for 10% of the population.
The importance of positioning a business strategically
Even if a company has a great product, it's not likely to sell well until its name or reputation sticks in the minds of potential customers. Having a strong positioning strategy is important because it provides businesses with critical information that they can use to develop a solid strategy and operations. Companies that emphasise cost leadership focus on low-cost, high-efficiency production. They can outperform the competition by using either cost leadership or differentiation as a strategic edge. Their long-term success comes down to having solid foundations on which to build the company's identity and vision.
Benefits of positioning a business strategically
Aside from the primary goal of expanding a company's reach and profit, this concept has several advantages. Its benefits include:
This type of positioning requires companies to reassess their goals. If these have become confused over time, a fresh approach may be invaluable for moving the business forward. During the positioning process, they can reassess the type of value they seek to add to their clients' lives, the type of clients they hope to reach and the influence they hope to have on the community as a whole.
A corporation creates a new programme, objective or mission to set itself apart from its competitors. While the original goal was to distinguish themselves from their counterparts, the end result includes a new marketing or branding path that company officials hadn't considered previously. This allows them to move forward with their projects in innovative ways.
Make informed decisions
Having a well-defined positioning strategy guarantees that you have the information required to make well-informed decisions that can lead to greater outcomes and long-term client connections. It also makes it easier to customise a product's value to the interests and demands of individual audiences. With this type of positioning, you concentrate on how a product and its unique qualities match or surpass the target audience's demands while also adding value to them.
What helps with a positioning strategy?
Two propositions serve to simplify this concept while also laying the groundwork for a company's strategy and operations. These are strong unique selling points (USPs) and clear positioning statements. A USP refers to a quality or characteristic of a brand that sets it apart from its competitors. It's a one-of-a-kind offer designed to persuade shoppers to want this brand over others. The positioning statement outlines the target market segment, the problem addressed, how the solution differs from the competition and how this impacts branding. These techniques, when used together, clearly describe a company's why and how.
How to effectively use a positioning strategy
Businesses use rivalry as a model for developing their own approaches. If a business holds a substantial market share, it's important for the positioning strategy to appeal to a wide number of customers. Businesses try to convert some of their clients by offering a similar item with similar coverage at a similar price. You can use this type of positioning to stand out from competitors through:
1. Product positioning
When you use product qualities or attributes as a positioning approach, you associate the brand with a beneficial feature for customers. For example, in the automotive industry, Ferrari's position is its performance quality, whereas Volkswagen's position is safety. Positioning allows a business to stand out amongst its competitors and also gives them a unique brand image.
2. Price-based positioning
Affiliating your business with competitive pricing by promoting its products based on price remains a good way to start the positioning process. Typically, regardless of the industry, a brand's pricing aims to be the cheapest on the market. This remains a basic yet effective way of successfully attracting customers.
3. Competition-based positioning
The focus of competitor-based positioning is on exploiting the rival as a point of differentiation. To appear favourable and unique in comparison to other companies in the marketplace, it's important for brands to emphasise the main difference their product or service delivers in their marketing. This way, the item or service becomes unique to the business or organisation.
What to write in a positioning statement
A positioning statement is a concise explanation of your target market that also illustrates how you might like that market to feel about your business. Your positioning statement for internal usage helps set a clear view and image of your future goals. Every strategy you make for a product or service has to coincide and reflect with your positioning statement. While working on market strategy, it helps you stay focused on your business and its proposition. When creating a positioning statement, it's important to:
identify the target audience and explain their requirements and goals
explain what the item is and how it satisfies those requirements
describe what differentiates the product from similar items available at competing companies
provide proof and rationale for why buyers might believe your statements
use the positioning statement to help you define more precise project goals and processes upon completion
Best practices for a successful positioning strategy
When a company introduces a new product or service, it's beneficial to include a positioning conversation in the early stages of the project. This assists businesses in focusing their time and resources on projects that are more likely to become successful and generate revenue. It also assists them in creating more targeted and effective plans.
It's a good idea to think about what industry problem you're seeking to resolve when developing a positioning framework. This helps you develop a plan that adds a unique value to the consumer while also distinguishing the business from its competitors. For instance, a clock manufacturer considers that consumers can't see the hands of a clock during nighttime and designs clocks with luminescent hands and numerals. This solves a classic industry problem while also distinguishing the business with a speciality offering.
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