Elements of Positioning

Positioning is the perception or the image that customers have of the company and its products. A company has to select the target market in which it will offer its products. It will have to determine the differential value that it will provide to customers to make the product attractive to them, and communicate to customers the differential value it intends to provide to them.

Ries and Trout suggest that marketers are involved in a battle for minds of target customers. Successful positioning means creating favorable connotations in the minds of customers. Mercedes is associated with sophistication, prestige, world class German engineering and class round the world. McDonald’s is associated with cleanliness, consistency of product, fast service and value for money. These add up to a differential advantage in the minds of target consumers.

It is the customers’ beliefs about the company’s product being of, say, high quality, or low price, or durable, etc. This perception is the stimulus of customers’ attitude and behavior towards the company’s products. The customers’ positive perceptions will drive the business of the company and negative perceptions will sink it.

It is dangerous to allow customers to develop their own perceptions about a company. It is the responsibility of the company to manage its customers’ perceptions. A company should very clearly decide the perceptions that it wants its customers to have about the company and its products, and work consciously and diligently to create that image in customers’ mind. Every fact and act of the company shapes customer perceptions directly or indirectly. A company should evaluate its every activity in terms of its role in creating positive customer perceptions.

Target Market

Where  does the company want to compete? The company has to select the segments to which it will offer its products. It is very tempting to select the largest segment or the most profitable segment. The company should possess special competencies and resources to serve its target market, which means that before a company can zero on to its target markets, it should have done a comprehensive research of requirements of customers of various segments, and an honest audit of its own resources and competencies.

Quite often a company believes that it will be able to develop or acquire the required resources and  competencies after identifying a target market. But it is never easy. A company should have a clear road map of how it will acquire or develop the required competencies and resources.

Differential Advantage

How does the company want to compete? The company has to provide an answer to , “Why would a customer of the target market want to buy my product, and not those of competitors?” A company which is able to furnish an unambiguous answer has a clear positioning strategy.

Communicating the Differential Advantage to Customers

A company may have created the appropriate offering for its target market but its customers should know that it has. Most companies are content with using advertisements to convey their positioning. Advertisements have become more glossy and most advertising agencies do not understand the positioning of their client company empathically enough to be able to convey it in the ads that they make.

But even when an honest attempt is made to convey a company’s positioning through advertising, it cannot be done due to the short and impersonal pitch of advertisements. A company has to use all promotional means like publicity, sponsorship, personal selling, and direct mails to inundate customers with messages of its positioning. Of course, these messages emanating from the various sources should be consistent.

In addition, every contact between the customers and the company should be so structured that its positioning is unambiguously conveyed. The first products should reach customers who are likely to be very exuberant upon finding a good product. Word-of-mouth promotion will ultimately cement the company’s positioning in the customers’ mind.

The objective of positioning is to create and maintain a distinctive place in the market for the company’s products. Target market selection is a part of positioning. But to compete successfully in a target market involves providing customers with a differential advantage. This involves giving customers something better than what the competitors are offering.

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