What Is Market Position?
Market position, though related to a business’s marketing efforts, is a distinct concept in business strategy. In simple terms, market position refers to the perception that consumers have of your product, service, or brand as it relates to competitors in the existing market.
For example, fast-food restaurants exist within the broader market of food service industry. Within this market, they could position themselves as cheap and standardized alternatives. An urban coffee shop may try to position themselves as a hip, upscale provider of premium coffee that’s of a higher quality than existing players.
Your market position will depend on the nature of your product or service, the details of your target market, and the results of your market research on your potential customers.
How Does Market Position Relate To Your Marketing Plan?
Market positioning is the process of engineering your market position. You want to establish your product, brand, or service within the existing market to get consumers to perceive it in an optimal way. This involves building brand awareness, differentiating yourself from the competition, and getting the word out to key market segments.
Your market position will inform how you develop your marketing plan. In order to build a brand identity, you might focus more on content marketing strategies and public relations. To differentiate yourself within the market, you’ll focus your marketing on creating comparisons between yourself and your competitors. To target key market segments, you might use micro-targeting techniques on social media or Google Analytics and AdWords.
Through targeted and strategic marketing campaigns, you shape how consumers perceive your product, service, or brand.
Some Marketing Myths to Be Aware Of
The phrase “If you build it, they will come”, while sentimental, does not apply to the competitive world of small business. You could have the most brilliant and innovative product or business idea in the world, but if no one knows about it you won’t be making any money. A successful business relies heavily on good marketing practices. Small business owners understand this and work hard on their marketing efforts to get the word out about their product or service, but successful marketing requires a solid marketing strategy to motivate it.
A key aspect of a small business’s marketing strategy is market positioning: the process of fitting your product or service into an existing market to carve out a distinct identity in the minds of your target customers.
Here we discuss how market position differs from marketing and how it fits into a small business owner’s marketing strategy.
How Do You Develop An Effective Positioning Strategy?
Your positioning strategy is how you plan to fit into an existing market based on your idea of your market position. Developing your positioning strategy is a critical piece of building a strong foundation upon which you can execute your business plan and inform effective marketing.
Your positioning strategy depends on two key things: information about your market and how your product, service, or brand can fit into an existing market.
Through focus groups, market research reports, google searches, and other sources of information, you should work to understand these two aspects of positioning.
Information About Your Target Market:
Understanding your target market requires that you have the answers to these key questions:
- Who are the customers and who is my target customer?
- What are my target customer’s needs?
- What are the demographics of my target market?
- What are the key market segments in the customer base?
- What does the pricing landscape look like?
What’s the current market share of my competitors?
What’s my competitive advantage relative to existing products?
Knowing the answers to these questions and other points of key information, you will have the information necessary to understand how your product, service, or brand could fit into your target market.
How Your Product Or Service Can Fit Into That Market:
Given what you know about the market, you can strategize about how you can fit into and compete with existing players.
Can you offer a comparable low-cost substitute for an existing product? Is your service more convenient than existing players? Does your product address an unfilled consumer need that they’re willing to pay a premium for?
A good framework for understanding how you can fit into an existing market is a “positioning map”. A positioning map will visualize the range of potential “positions” that a product, service, or brand can take within a market against the two most important things to the target consumer.
Using our coffee shop from before as an example, let’s say that our research shows that the two most important things to consumers are the atmosphere of the location and the quality of the coffee. We’ll construct a two-dimensional matrix with luxuriousness along the x-axis and price along the y-axis. Then, using relevant market research, we’ll assign positions within the matrix to ourselves and our competitors and evaluate to see where we fit.
How you construct your positioning map will depend on the results of your market research and is different from case to case. When done right, this can be a powerful way to get a high-level idea of how you fit into an existing market.
Bringing It All Together
Using all of this information, small business owners should try to draft a positioning statement that clearly states how their product, service, or brand fits into an existing market. In this statement, you’ll include your target customer, their potentially unfilled or under-filled need, your product’s ability to fill that need, and comparisons to your competitors.
Geoffrey Moore, a famous expert on management and marketing, gives an excellent template for a positioning statement in his book Crossing the Chasm:
“For (target customer) who (statement of the need or opportunity), the (product name) is a (product category) that (statement of key benefit – that is, compelling reason to buy). Unlike (primary competitive alternative), our product (statement of primary differentiation).”
This positioning statement will act as your “north star” that will guide all of your marketing efforts. Using the positioning statement as a framework, you’ll be able to craft effective and successful marketing campaigns to carve out an optimal market position for you and your small business.