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How are positioning and differentiation interrelated

The interrelationship between positioning and differentiation in marketing

Positioning and differentiation are two different but closely related topics in marketing management.

They are connected in some important ways.

Sometimes differentiation can lead to effective positioning.

Position and differentiation both are strategic processes.

Before proceeding to analyze the relationship between the two, let’s learn the definition of each one.

What is positioning?

When a company plans to launch a new product, the marketer’s job is to determine what place or position will the product occupy in the market relative to its substitutes.

It involves answering a few important questions.

  • What place or position should the product offering occupy in the given market?
  • How does the offering perform against competing offerings on key factors that customers use to decide which product to buy?
  • What should be the customers’ perception of the product offering and the benefits it offers?
  • What should be done to ensure that the product offering delivers on its promises or performs according to the selected positioning strategy?

Positioning simply means the distinctive position of a product offering in the market.

Marketers focus on positioning to identify the distinctive position that the product offering should occupy in the minds of the target audience.

The role of the target market is very important in this regard.

Effective positioning always focuses on a specific target market.

The main aim of positioning is to tailor the general value proposition to the needs and interests of a particular market segment.

Sometimes, it may be difficult to identify the positioning strategy, but you can easily spot it when the product conforms to your perception as a consumer.

For example, there is a difference between how BMW cars and those by Kia Motors are positioned.

BMW promises luxurious driving and sheer driving pleasure.

It has positioned itself as an innovative brand that offers premium cars designed for performance and luxury.

Kia Motors on the other hand offers products that are targeted at a larger market segment which likes value for its price.

It offers high quality and value at competitive prices.

What is differentiation?

Differentiation is also closely related to positioning.

It is the method companies adopt to make their product offering stand out from the competing products in ways that offer unique value to the customer.

The focus of differentiation is on those characteristics or attributes that make a product different and superior for the target customers compared to rival products.

Ideally, there must be two qualities to make a product stand out easily.

It should have the attributes that customers, value when making buy decisions.

It should be difficult for competitors to copy the product.

When these two conditions are satisfied, the product becomes more attractive for customers and can stand out easily from its competition.

Whenever, a customer selects from among several products in the same category, like soft drinks or fast food products, differentiation is at work.

While Coca Cola and Pepsi make similar products, whenever a customer chooses between Coke and Pepsi, differentiation is at work.

There are both tangible and intangible qualities that differentiate one product from the other.

For example, for some people, the taste or the sugar level might be the important differentiating factor and for the others, it is simply their connection with the brand.

How are positioning and differentiation interconnected?

Positioning and differentiation are interconnected in several important ways.

Differentiation is a key criteria for effective positioning.

You can position a product in a manner that it remains hidden among rival brands or you can differentiate it to position it in a manner that makes it stand out.

The differentiating characteristic or attributes that make the product stand out compared to rival offerings are important for effective positioning.

Both positioning and differentiation are strategic activities in marketing that require planning.

Marketers are involved in planning the distinctive positioning for a product.

Effective positioning results in the creation of a market focused value proposition.

A market focused value proposition offers the customers or the target market a compelling reason to buy that particular product.

Several key elements in the marketing mix depend on the position of the product and are created accordingly including product strategy, pricing and promotions.

The marketers will identify the attributes that matter the most to differentiate the product.

Apart from it, the positioning strategy also helps decide the marketing messages or marketing communication and the pricing that will help achieve the distinctive positioning of the product offering.

Sometimes, the role of place or distribution is also based on the positioning of the product.

For example, there are several retail brands in the United States.

Walmart has positioned itself as a customer friendly retail house that offers a very wide selection of products at the lowest prices in the entire US market.

The factors that differentiate it from its rivals include its lower prices, and the wide assortment of products.

Costco has also positioned itself as a customer friendly retailer that offers a comparatively limited selection of good quality products at competitive prices with a very strong focus on customer experience.

Its differentiating features are quality products and customer service.

Target corporation has positioned itself as a retailer offering a nice range of trendy products at reasonable prices.

Its differentiating feature is its trendy product selection.

In each of the three cases outlined above, the focus of positioning is on the factors that customers consider important when making buying decisions.

Walmart’s commitment to every day lowest prices has helped it win brand loyal customers.

On the other hand, Costco has also been able to win strong customer loyalty through its focus on quality and customer service.

The Target customers like to buy trendy products at reasonable prices.

So, what marketers do is to carve out a niche of the target market with the help of their positioning strategies.

In each of the above cases, the positioning strategy defines the differentiating factor or key strength of each of the three retail chains.

Creating a positioning strategy is essential when launching a new product.

First of all, it helps understand how a product offering fits into the set of available substitutes.

Next, it clarifies why should customers consider buying the product.

Not just at the time of product launch, but at later stages too, it helps at making clear what differentiates the product from the rival products, and why people would prefer it over the others.

How to create a positioning statement?

Positioning of a product is often articulated as a statement.

It has an important role in helping the marketers know how they will make the product attractive for the customers.

At the time of the product launch and later, it helps the marketers educate the customers about the options available to the them so that they can select the best choice available.

It is generally expressed as a concise one sentence statement that identifies the target market and how you want your customers to perceive your brand.

A positioning statement should ideally include the following:

  • The target market or customer segment.
  • Brand name
  • Key differentiators
  • The category in which you want to establish the product offering
  • The reasons why the customers must believe your positioning claim.

However, marketers need to consider several factors while crafting positioning statements.

First of all, it needs to be true because you cannot misguide customers about your product offering or brand.

Otherwise, if your positioning statement is different from what you are going to deliver, then it will be ineffective.

If it is different from the reality, customers will find out sooner or later so only make promises you can keep.

An effective positioning statement focuses on establishing credibility and that’s how it convinces the customers.

It has to be based on the characteristics that matter to the customers when they consider buying the product.

If you are dealing with attributes that do not matter to your customer in your positioning statement, customers will go for the ones that focus on things that matter to them.

In that case, your positioning will have failed and so will your product.

Effective positioning is always tied to a definite target segment.

Marketers must not forget their target audience when they are crafting positioning statements.

However, sometimes, the same product/service offering might target more than one segments and then the marketers might need to position it differently for two different customer segments.

This is done in order to communicate the right message to each target segment.

Suppose there are two target segments that are looking for different attributes, you might need to craft two positioning statements for the same product/service offering to communicate the value of the product more effectively to each target segment.

A few last words:

Both positioning and differentiation are strategically important tools for marketers.

They help you establish the market position you want for your product/service offering.

However, positioning and differentiation both are critical to gaining a competitive advantage in the market.

Effective positioning, which also includes differentiation is like half the battle won.

They help you make the product offering stand out from the rivals and attract customers.

Without effective positioning, it will not be possible to make your product successful since your promotion mix also depends on your positioning strategy.

Any marketer who wants his product/service offering to be effectively positioned and win against the competition will focus on the differentiators since they are the most important factors that will make your customers think favorably about your product.