What is market position? In marketing and business strategy, market position refers to the consumer’s perception of a brand or product in relation to competing brands or products. Market positioning refers to the process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way.
For example, a car maker may position itself as a luxury status symbol. Whereas a battery maker may position its batteries as the most reliable and long-lasting. And a fast-food restaurant chain may position itself as a provider of cheap and quick standardized meals. A coffee company may position itself as a source of premium upscale coffee beverages. Then a retailer might position itself as a place to buy household necessities at low prices. And a computer company may position itself as offering hip, innovative, and use-friendly technology products.
The positioning of a brand or product is a strategic process that involves marketing the brand or product in a certain way to create and establish an image or identity within the minds of the consumers in the target market. Market positioning of a brand or product must be maintained over the life of the brand or product. Doing this requires ongoing marketing initiatives intended to reinforce the target market’s perceptions of the product or brand.
Repositioning a brand or product means altering its place in the minds of the consumer, or essentially changing the brand’s or product’s image or identity. When you are repositioning, or trying to change the consumers’ perception of a brand or product after it has already been solidified, may confuse or alienate consumers in the target market.
For example, if a premium luxury car maker suddenly slashed the prices of its vehicles and began selling them at the same prices as cheaper brand-name vehicles, consumers would no longer perceive the vehicles made by the luxury car maker as prestigious status symbols, even though the car features may remain unchanged.
There are two broad categories of market position: cost leadership and differentiation. Cost leadership and differentiation market positioning strategies are applicable to any business and any industry. A business can choose to position itself using a cost leader strategy or a differentiation business strategy.
Cost Leader Strategy
A company using a cost leader strategy attempts to position itself in the minds of the consumers as a company that provides products the consumers want at a price that is lower than competing products available in the marketplace. Consumers expect basic products with no bells and whistles from a company using a cost leader strategy. Instead, consumers just expect the products to meet their needs and nothing more or less.
A company using a differentiation business strategy attempts to position itself in the minds of the consumers as a company that provides unique products that consumers will pay more for because they cannot find comparable products or product features anywhere else in the marketplace. Consumers expect more from a differentiated product and therefore are willing to pay a premium for a differentiated product. This is true as long as the unique features of the product add some value to the product that makes it more valuable to the consumer, whether a functional feature or an aspect of image or prestige that enhances the perception of the product.
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