Reading: The Positioning Process

Getting to the Right Position

Arriving at the best positioning and differentiation strategy involves a process. The goal of the process is to design an identity that both confirms the value of the product, service, or brand in the customer’s mind and explains why and how the offering is better than the competition. To reach that goal, marketers typically follow a positioning process comprised of the following five steps:

The Five Steps of the Positioning Process

1. Confirm your understanding of market dynamics
2. Identify your competitive advantages
3. Choose competitive advantages that define your market “niche”
4. Define your positioning strategy
5. Communicate and deliver on the positioning strategy

Step 1: Confirm Your Understanding of Market Dynamics

At the start of the positioning process, you need a firm understanding of your target market and answers to the following questions:

• In which product, service, or market category (also called the “frame of reference”) do you plan to use this positioning?
• Which target segment is your focus for the positioning you are developing?
• What factors do these buyers evaluate when they make a purchasing decision?
• How do these buyers view your competitors in the category?

If you don’t have answers to these questions, you should consider conducting formal or informal marketing research  to reach a better understanding of your target market and the market dynamics around it. Some marketers may have the time and resources to conduct extensive research, while others may need to rely on their own experience and anecdotal conversations with target customers. Either way, you’ll remember that the customer is at the centre of the marketing mix, so knowing whom you’re targeting is the only place to start.

Step 2: Identify Your Competitive Advantages

A competitive advantage is some trait, quality, or capability that allows you to outperform the competition. It gives your product, service, or brand an advantage over others in purchasing decisions. Competitive advantage may come from any or all of the following:

• Price: Something in your production process or supply chain may make it possible for you to provide comparable value at a lower cost than competitors.
• Features: You may provide tangible or intangible features that your competitors do not: for example, more colours, better taste, a more elegant design, quicker delivery, personalized service, etc.
• Benefits: You may provide unique benefits to customers that your competitors cannot match. Benefits are intangible strengths or outcomes your customer gets when they use your offering. For example, time savings, convenience, increased control, enjoyment, relaxation, more choices, feeling better about oneself, being more attractive, etc.

Create a list of the things that make you different from competitors in positive ways. Then identify which of these factors are also competitive advantages: the influential factors that help you perform better in the marketplace and cause customers to choose your product, service, or brand over other options.

As a rule, it is relatively easy for competitors to undercut your pricing or match your features, so it is difficult to maintain a consistent competitive advantage in either of these areas. Market-leading products, services, and brands are most likely to differentiate based on benefits—the intangible strengths and outcomes that are harder for competitors to match.

For example, many car companies achieve strong ratings in safety tests, but driving a Volvo provides an extra, intangible benefit for the driver of feeling safer because of Volvo’s longstanding record and reputation for safety. A variety of theme parks in Southern California offer exciting rides and family fun, but only Disneyland’s Magic Kingdom makes people feel like they’re in the happiest place on earth.

You don’t necessarily need a long list of competitive advantages, but your list should be substantive: it should include the things that truly create distance between your offering and competitors. Dig deep to identify the intangible benefits  your customers experience–or intangible benefits they could experience—from your offering that make it different and better than the alternatives.

Step 3: Choose Competitive Advantages That Define Your Niche

Your list of competitive advantages represents a set of possible positioning strategies you could pursue for your product, service, or brand. The next step is to examine how these factors fit into customer perceptions of your broader competitive set. Your goal is to pick a positioning approach that gives you a unique and valued position in the market that competitors are not addressing.

A perceptual map is a great tool for this step. A perceptual map is a visual tool that shows how customers perceive different brands, products, or services in relation to one another. Examples of two different perceptual maps are included below. The first one maps  canadian retailers on two key dimensions—price (budget to premium) and value orientation (functional to lifestyle). The second maps automobile brands based on customer perceptions of price and quality.  

Remember the positioning statements for Canadian retailers we saw earlier in the chapter? Those statements captured how Walmart, Costco, Loblaws, Canadian Tire, and Simons each target distinct customer segments with different promises of value. A perceptual map helps us visualize those positions on two key dimensions—price (budget to premium) and value orientation (functional to lifestyle).

Looking at the perceptual map below, we can see that Walmart Canada anchors the budget end of the spectrum w

ith a strong emphasis on functional value for price-sensitive families. Costco is also value-driven but differentiates itself through exclusivity and its membership model, appealing to bulk buyers and small businesses. Loblaws/PC Express positions itself further up the premium scale, integrating grocery with digital convenience and loyalty programs to attract families seeking ease and rewards. Canadian Tire lands in the mid-range, blending tradition with lifestyle relevance for homeowners, do-it-yourselfers, and outdoor enthusiasts. Finally, Simons sits closest to the premium-lifestyle quadrant, appealing to fashion-conscious and sustainability-minded Canadians with curated and design-focused offerings.

Together, these positions illustrate how Canadian retailers occupy distinct niches, ensuring customers can find a fit that reflects both their budgets and the values they care about most.

Here is another example, this time using automotive brands and looking at quality and price. Note that in this second example the axes is split in the middle to form four quadrants.

You can create a perceptual map similar to these by identifying the key criteria customers use when deciding what to buy and setting these as the horizontal and vertical axes. Then you can overlay competitors in the perceptual space where they seem to fit. You can even create multiple maps of the same market with different criteria on the horizontal and vertical axes to get a different view of how competitors are positioned. Perceptual maps are most robust when they are based on actual marketing research data, but marketers can also create directional maps based on their experience and anecdotal understanding of market dynamics.

With your maps in hand, look for areas where there are fewer competitors: these are the spaces where you are most likely to be successful creating your own niche. Consider where your competitive advantages would help you fit well into these gaps; this will direct you to the strongest positioning opportunities for your product, service, or brand.

Give this approach a try: Suppose you are exploring whether to introduce your homemade, artisan-style ice cream to a wider audience, which will mean competing with national brands carried in local and regional grocery stores. Looking at the following perceptual map, where are the gaps in which you could create a niche for your product? Who would be your closest competitors?

If you choose not to create a perceptual map, an alternate approach is to list competitors and their competitive advantages. Then, add your own own offering and competitive advantages to the list. Based on the alternatives available to customers, think about where there are gaps between what customers want and value most and what they can get from the choices available today. Identify where your competitive advantages can help you fit into these gaps, since they will be the most promising positioning approaches for you.

Remember to think creatively as you are defining your competitive advantages and choosing those that will define your positioning and market niche. You have a greater likelihood of success if you are also the first in the market to claim your positioning. You won’t have to displace anyone else, and you can generate excitement by fulfilling a previously unmet need.

Perceptual maps give us a snapshot of how customers currently view different competitors in a market. But while these maps reveal the present state of customer perceptions, marketers also need tools to chart the future state—how they want their brand to be positioned in customers’ minds.

This is where positioning maps come in. A positioning map looks similar to a perceptual map, but instead of showing current customer perceptions, it reflects the intended strategy of the company. In other words, perceptual maps capture “reality as it is,” while positioning maps illustrate “where we want to be.” Marketers use positioning maps to highlight their desired place in the market relative to competitors, and to guide decisions about product design, pricing, promotion, and distribution. Together, perceptual and positioning maps provide a powerful one–two punch: understanding the customer’s view of the world and then defining the company’s unique, strategic niche within it.

Recall the perceptual map we looked at earlier that showed how Canadian retailers are currently perceived by customers in terms of price (budget to premium) and value orientation (functional to lifestyle). That map reflected customer perceptions—where the brands stand today. Now let’s imagine how these same companies might want to shift their positions strategically in the future.

For example:

• Walmart may want to move slightly toward lifestyle by strengthening its fashion, home décor, and health product lines, while still remaining firmly in the budget quadrant.

• Costco could aim to reinforce its value-for-money perception while edging slightly up-market to attract more affluent families alongside small businesses.

• Loblaws might target an even stronger premium–lifestyle position by leveraging its PC Optimum loyalty program, private label brands, and digital convenience.

• Canadian Tire may wish to expand its lifestyle credentials, highlighting outdoor living and home innovation to differentiate itself from purely functional retailers.

• Simons may strive to double down on sustainability and digital curation, moving deeper into the premium–lifestyle quadrant as an aspirational fashion destination.

A positioning map visualizes these intended future shifts. It helps marketers set a strategic course by clarifying the niche they want to claim, even if customer perceptions haven’t caught up yet. Over time, marketing actions (products, pricing, promotions, etc.) work to move the brand closer to its desired position on the map.

Step 4: Define Your Positioning Strategy

With your competitive advantages identified and information about how key competitors are positioned, you’re ready to evaluate and select your positioning strategy. This is the decision you make about how, exactly, you plan to position your offering relative to the rest of the field. How will you be different and better?

Hallmark = Caring shared
Hawaii = Aloha spirit
Guess Jeans = Sexy chic
Virgin Atlantic = Ultra cool fun

There are several common positioning strategies you should consider, shown in the following table:

Strong positioning is simple: it focuses on a single, powerful concept that is important to the customer. It uses your most promising competitive advantage to carve out the niche you will fill better than anyone else. Your positioning strategy puts this competitive advantage into the context of your competitive set: it explains what distinguishes you from the competition. Perhaps you deliver an emotional benefit that your target audience doesn’t get anywhere else (escape? balance?) Perhaps you are hands down the best choice for a geeky, gear-head audience (bikers, coders). Perhaps you provide great customer service in a category where customer service is unheard of (cable TV, contractors).

Your positioning will become the “special sauce” that sets you apart. Concoct it well.

Step 5: Communicate and Deliver on Your Positioning Strategy

The next sections of this module will delve deeper into this step, but don’t underestimate its importance. Communicating your positioning strategy begins with creating a positioning statement and sharing it internally across the organization to make sure that everyone understands how and where your offering will fit in the market. Your positioning builds on a competitive advantage, and it is essential for you to deliver on the expectations your positioning sets in customers’ minds. You should design your positioning strategy to endure over time, while recognizing that it can and should be adjusted from time to time to reflect changes in the competitive set, your target segment, market trends, and so forth.

If your positioning is based on being an ideal “lifestyle” fit for your target audience, for example, you need to demonstrate how your offering is attuned to the needs and experiences of this audience. This includes evolving as your target segment evolves. If your positioning is based on “owning” an important benefit like security or reliability or delight, then you should explore all the ways you can deliver that benefit better than any competitor who might try to imitate you.

The marketing mix provides the set of coordinated tools you use to execute on your positioning strategy. You might think of your positioning strategy as the tune you want your target segment to hear. The marketing mix is how you orchestrate and harmonize that tune, making it a memorable, preferred choice for your target customers.

Creation note: This content was updated with the assistance of ChatGPT, a language model developed by OpenAI, and was subsequently reviewed and edited by the author for clarity and accuracy.