Product Positioning: How To Define Your Space in the Market

Product positioning is the lifeblood of a successful marketing strategy. The strategic exercise defines how a product or service is perceived in customers’ minds and differentiates it from the competition. But what exactly is product positioning, and why does it matter? More importantly, how can you do it right to ensure your product stands out in the increasingly crowded market?

This guide aims to demystify product positioning and provide a roadmap for a compelling positioning strategy. We’ll start with the basics, define product positioning, and explain why it is crucial in today’s competitive business landscape. Then, we’ll delve into the different positioning strategies, help you understand how to develop your own, and highlight several real-life examples of successful product positioning. We will also point out common pitfalls to avoid and discuss the tools and techniques you can use to fine-tune your positioning. Finally, we’ll look ahead to the future of product positioning, focusing on emerging trends and their implications.

Whether you’re a marketing professional seeking to improve your skills, a business owner trying to carve out a niche, or a startup founder looking to launch a product, this guide is for you. So let’s begin your journey to mastering product positioning and making your product truly resonate with your target customers.

Understanding Product Positioning

Product positioning is a strategic marketing approach that involves creating a specific image or identity for a product or a brand in the customer’s mind. It’s how you want your existing and potential customers to perceive your product compared to the competition. Product positioning aims not just to distinguish your product from others but also to make it seem the best possible choice for your target customers.

The positioning process primarily focuses on the following key elements:

  1. Target Market: Who are your customers? What are their needs, preferences, and behaviors? Your product should be positioned to appeal to this specific group of people.
  2. Competitive Landscape: Who are your direct and indirect competitors? How are their products positioned? Understanding this can help you find a unique space for your product in the market.
  3. Unique Selling Proposition (USP): What makes your product unique and valuable? Your USP is the core differentiating factor differentiating your product from the competition.
  4. Product Benefits and Features: What are the key features of your product, and how do they translate into benefits for the customer? These benefits and features should align with your target market’s needs.

Why Product Positioning Matters

Product positioning can significantly impact a brand’s image and how consumers perceive it. According to a study by the Corporate Executive Board (CEB), 64% of consumers cite shared values as the main reason they have a relationship with a brand. This shows the importance of positioning your product to resonate with your target audience’s beliefs and values.

Moreover, effective product positioning can help you gain a competitive edge in the market. In the words of Philip Kotler, the father of modern marketing, “The best marketing doesn’t feel like marketing.” If done right, product positioning can help you achieve just that – it can make your marketing efforts seamless and natural, leading to increased customer engagement and loyalty.

A well-positioned product also has a higher likelihood of success in the market. For example, a Harvard Business Review article revealed that companies with well-positioned products achieved 14% higher annual growth and 18% higher profit margins than their peers.

Types of Product Positioning Strategies

Depending on your product, target market, and overall business strategy, there are several ways you can position your product:

  1. Quality-Based Positioning: This involves positioning your product as offering superior quality compared to competitors. An example is Rolex, which sets its watches as high-quality, luxury items.
  2. Price-Based Positioning: Here, the product is positioned based on its price. It could be a low-cost, value-for-money option or a high-cost, premium product. For instance, Walmart uses a low-cost positioning strategy.
  3. Benefit-Based Positioning: This positioning strategy focuses on the unique benefits that your product provides. Dove, for instance, positions its products as not just soaps or shampoos but as beauty products that enhance skin and hair health.
  4. Problem/Solution-Based Positioning: In this case, the product is positioned as a solution to a specific problem. Dropbox, for example, sets itself as a solution to the problem of storing and accessing files from anywhere.
  5. User-Based Positioning: This positioning strategy targets a specific user group or demographic. An example is Old Spice, which has positioned itself as a brand for young, confident men.

How to Develop an Effective Product Positioning Strategy

Creating a winning product positioning strategy involves several steps. Here’s a comprehensive guide to help you through the process:

  1. Identify Your Target Market: Your first step should be to identify who your product is for. This involves conducting market research to understand your potential customers’ demographics, behaviors, needs, and preferences. According to HubSpot, companies that exceed lead and revenue goals are over twice as likely to create personas than companies that miss these goals.
  2. Understand the Competitive Landscape: Next, analyze your competition. Identify your direct and indirect competitors, what products they offer, and how they are positioning these products. A 2019 Gartner study found that companies that monitor their competitors’ customer reviews grow up to 30% faster than their peers.
  3. Define Your Unique Selling Proposition (USP): What makes your product different and better than the competition? This could be a unique feature, an innovative approach, superior quality, or a lower price. In a study by the University of Pennsylvania, researchers found that messages highlighting a product’s unique benefit were 2.4 times more likely to persuade consumers than messages emphasizing multiple benefits.
  4. Develop a Positioning Statement: Your positioning statement should clearly and briefly describe your target market, your product’s unique value, and why it’s better than the competition. For example, Amazon’s positioning statement is: “For consumers who want a wide selection of products at low prices, Amazon provides a world-class e-commerce platform with a commitment to customer satisfaction.”
  5. Test and Refine Your Positioning: Test your product positioning with your target market. Use surveys, focus groups, or A/B testing to evaluate how your target audience perceives your product. According to Forbes, 77% of successful companies say A/B testing helps them drive critical business decisions.

Case Studies of Successful Product Positioning

Let’s look at some real-world examples of successful product positioning:

  1. Apple’s Premium Positioning: Apple has positioned its products as high-end, innovative, and user-friendly. This positioning aligns with its target audience’s willingness to pay a premium for high-quality, stylish, and easy-to-use devices.
  2. Tesla’s Innovation-Based Positioning: Tesla is a leader in electric vehicle technology and sustainable energy. This positioning resonates with eco-conscious consumers who are also interested in innovative, high-performing vehicles.
  3. IKEA’s Cost-Leadership Positioning: IKEA positions its products as affordable, functional, and stylish. This positioning appeals to budget-conscious consumers who still want well-designed, modern furniture.

Common Mistakes in Product Positioning and How to Avoid Them

Despite its importance, many companies still struggle with product positioning. Here are some common mistakes and how to avoid them:

  1. Not Clearly Defining the Target Market: According to the Harvard Business Review, 85% of 30,000 new product launches in the US fail because of poor market segmentation. It’s crucial to clearly define and understand your target market before developing your product positioning.
  2. Failing to Differentiate from Competitors: A study by Bain & Company found that companies that successfully differentiate themselves outperform their competitors by 13% to 15%. Therefore, your positioning should highlight what makes your product unique and why it’s better than similar products.
  3. Inconsistent Messaging: Inconsistent messaging can confuse your customers and dilute your positioning. A study by Lucidpress found that consistent branding can increase revenue by 23%. Ensure all your marketing messages align with your positioning statement.
  4. Overcomplicating the Positioning Statement: A survey by Siegel+Gale found that 55% of consumers are willing to pay more for simpler experiences. So avoid jargon and keep your positioning statement simple.

Tools and Techniques for Effective Product Positioning

To effectively position your product, you can leverage several tools and techniques:

  1. Market Research Tools: Tools like Nielsen, Statista, and Google Trends can help you gain insights into your target market and industry trends.
  2. Customer Persona Creation Tools: Tools like HubSpot’s Make My Persona and Xtensio can help you create detailed customer personas, which can guide your positioning strategy.
  3. Competitive Analysis Tools: Platforms like SEMrush, SimilarWeb, and SpyFu can help you analyze your competitors’ digital strategies and positioning.
  4. Product Positioning Map Tools: Tools like Canva and SmartDraw allow you to create product positioning maps to visualize where your product stands among competitors.

Future Trends in Product Positioning

Several key trends are shaping the future of product positioning:

  1. Impact of Digital Transformation: As more businesses shift online, digital positioning becomes increasingly essential. According to a McKinsey report, COVID-19 has accelerated the digital transformation of enterprises by approximately three years.
  2. Influence of Social Media: Social media is growing in positioning products. A survey by Sprout Social found that 77% of consumers are more likely to buy from brands they follow on social media.
  3. Importance of Sustainability in Product Positioning: With increasing awareness about environmental issues, more companies are positioning their products as sustainable or eco-friendly. A Nielsen report found that products with sustainability claims grew 5.6 times faster than those without such claims.


In conclusion, product positioning is a crucial aspect of marketing that can significantly impact a product’s success. By understanding your target market, analyzing your competition, defining your unique selling proposition, developing a clear positioning statement, and continually testing and refining your positioning, you can create a strong brand image and differentiate your product in the market.