What is "positioning" in marketing?

The concept of positioning in marketing became popular after its introduction in a featured article in Advertising Age by Al Ries in 1972. Now that half a century has passed, the concept of positioning remains highly relevant to any company’s success.

Conventionally, marketing was believed to be all about communication. However, effective positioning makes the communication more tailored and strategic. The goal positioning is to create and occupy a specific position in your target customer's brain. 

Why is positioning important?

Why do companies need to position themselves strategically? Companies need to establish a position because we live in an overly connected world where our brains have limited capacity to retain information. In order to retain new information, our brains have to forgo some competing information to make room. This happens unconsciously. 

In communication, less is more. We have to be very specific and conscious about what and when to communicate. We have previously talked about how to avoid overwhelming your customers with information. Being generic and trying to catch everything will usually lead to catching nothing. 

What are some examples of positioning?

Thanks to positioning, many companies can coexist in the same industry. In his book Positioning, Al Ries gave the classic example of Avis in 1962, the #2 car-rental company, battling against Hertz, the industry leader. Essentially, there wasn't a lot of differentiation between what Avis and Hertz offered to customers. In order for Avis to steal market share away from Hertz, the most efficient way is to make people think of Avis on top of Hertz when they need to rent a car. What was Avis’s message? 

“Avis is only number 2. We try harder.” 

Within a year, Avis went from losing $3.2 million to earning $1.2 million.

The Avis example is an effective positioning tactic to position yourself against your competitor by spelling out how your company differs from your rival’s. Another example of such differentiation in positioning was the introduction of the Beetle at a time when every car company was competing for the larger and longer model. When all car companies were going in that direction of developing a larger model, VW introduced the Beetle - “Think small”. That is a clear differentiation against its competitors. It successfully occupied a position in customers’ minds.

What are some other common tactics for positioning?

Pricing positioning

This can include pricing the product or service higher to position it as a premium offering or lower to position it as a budget-friendly option. Competing for a low-cost position will lead to a lower profit margin, and, by definition, only one company can offer the lowest price ever. On the other extreme, a brand can position itself on the high end with no compromise on price, but that also requires other qualities of the product to justify such a premium. Regardless, don’t get stuck in the middle if your positioning is only based on pricing. Both Dollarama and Louis Vuitton are great companies, but being average is not memorable. 

Product positioning 

Product positioning is to identify the product gaps in the market space, and the company introduces a new product that is clearly different from the existing solutions to offer new functions or value to the world. Introducing a new concept or product is very difficult because it requires a lot of advanced R&D investment without a definitive ROI. In a good scenario, the product is successful and lucrative, which will then lead to a lot of copycats joining the market, driving down the value of the product. In the past few decades, some successful product positioning has included the iPhone, Tesla, Bitcoin, and so on. The first mover gains a lot of advantages. However, the chance of making mistakes is also high when introducing a new product. That’s why there is also the so-called “second-mover advantage."

Quality positioning

Quality positioning emphasizes the high quality of a product or service in order to differentiate it from competing offerings in the market. It involves using messaging and branding to communicate the superior features and benefits of the product or service. Think about Apple and BMW. By positioning a product or service as high-quality, companies can command a higher price point, attract customers who are willing to pay a premium for quality, and build a strong brand reputation. 

Positioning is a battle for mindshare. Effective positioning requires a deep understanding of the target audience, the competitive landscape, and the unique features and benefits of the product or service. In a world where our attention span is getting shorter and shorter and we receive more information than ever that competes for our attention, positioning is imperative to any company’s sustained success.