Every entrepreneur that is trying to learn how to build a business strategy, needs to learn how to develop a brand positioning strategy. This can make the difference between a market leader and just another follower. This is true for every industry.
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What is a positioning strategy?
Positioning is the heart and soul of your brand. All the elements of your brand will be constructed around your brand positioning strategy.
A positioning strategy is the process of finding an open space, on the category ladder, in the mind of your prospect. It involves shaping the perception in a way that differentiates your product from competitors and appeals to the needs and desires of the target customers.
The goal of the positioning strategy is to establish a distinct and valuable position that makes the product stand out in the marketplace. By occupying a unique position on the brand ladder, a company can effectively communicate its value proposition and benefits to its target audience, leading to increased customer preference and competitive advantage.
A good Brand Positioning should underlie the emotional benefits that your client is feeling when he/she is using your product.
In my journey, I have tried different methods to find a winning Brand Positioning strategy and I failed many times. Luckily, after many trials and errors, I came across the book written by Jack Trout and Al Ries: Positioning: The Battle for Your Mind.
I absorbed the knowledge and wisdom from this book and tried to use it to develop my second business. It worked!
What have I learned about how to develop a brand positioning strategy in my 10 years of entrepreneurship?
Reflecting on the trials that I had, the ones that succeeded and the ones that failed, I concluded the following things:
- It is not important what you think about your position, it is more important what your target audience thinks about it. If you already have an ongoing business, you already have a Brand Positioning strategy. Even if you did not choose it conscious, everything you did until now positioned your brand, in one way or another. If you already have a business, start by making a brand audit. See why people think you are different? If it turns out that you have a favorable position, you can double down on it.
- The best open position on a category ladder can be found in the mind of your potential client.
- If you are trying to enter an existing market, would be best to find an unoccupied position. If this is not possible, you should introduce a new category in which your product will occupies the first step of the leader.
- Ideally, you can create an entirely new category, and you can own the first position in that category. You can do this by using the Blue Ocean Strategy. See the case of Uber or AIRBNB
- Be honest! Taking into consideration that you are trying to occupy a position in the mind of your customer (ex: the best marketing agency for local business), you can’t make affirmations about your company that are not true.
Ex: Ford tried this approach many times in the past and failed. They failed because the position they tried to occupy, was not something that their customer saw as being a true affirmations. They tried to position Ford as a Reliable car. It was not the case.
Why do we need a Positioning Strategy?
A positioning strategy is crucial for several reasons (and you can’t scale up your business without it):
1. Differentiation
In an overcompetitive marketplace, a positioning strategy helps you distinguish your product from competitors. It helps you create a unique value proposition, that helps customers understand what are you standing for. This could help you find the answers to questions like: Why are you in the market?; How can you improve the life of your customer?; Why your product or service is better than the ones of your competitors?
2. Targeting
Having a strategic position can help you better identify your customers. It will help you identify the main customer group, and divide them into intro segments. Further, it will be easier to start a conversation with them and to try to better understand their needs and wishes. This will lead to more efficient resource allocation, improved customer engagement, and better conversion rates.
3. Value Communication
One of the best positioning strategies that you can adopt is Value Based. This will help you identify a value-based differentiator. This approach requires you to start with the customer. You should first listen to their needs, understand their pain points, and after that you should try to innovate, to find better ways to satisfy those needs. In the end, you will have a clearer Value Proposition that will help you communicate what you stand for, and how you can better serve the client.
4. Competitive Advantage
The value-based differentiator presented above will create a competitive advantage in the long run. First, it will help you gain market share, after that, it will help you obtain customer loyalty, and in the long run, it will help you create entry barriers in the industry, to protect your business from newcomers.
5. Brand Perception
With a clear Positioning strategy, clients will understand your differentiator easier and it will be easier to build brand awareness and grow your market share. A clear positioning strategy, and an integrated marketing communication strategy, based on your Value Proposition, will increase the perceived Brand Value in the minds of your prospects.
6. Resource Optimization
A positioning strategy will help you to make more efficient and better decisions. Guided by your positioning strategy, it will be easy to make decisions regarding what are the priorities of your communication strategy, what resources to allocate to each activity, and what are the best communication channels. Also, you will have a better and narrower target audience, which will help you have a better conversion rate.
7. Adaptation to Market Changes
Markets evolve, customer preferences change, and new competitors emerge. A positioning strategy provides a framework for monitoring market dynamics and adapting to these changes. It allows a company to stay relevant, adjust its positioning if necessary, and maintain a competitive advantage in a dynamic business environment.
These are the general advantages of building and maintaining a Positioning Strategy. Depending on the peculiarities of your business, you may find other advantages as well.
How to build a positioning strategy, with a step-by-step strategic framework?
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First, you need to understand your customer.
Who they are? What are they doing? What problems do they have? How they are solving those problems? What are they considering delights? What are they considering „must-have” qualities for your product?
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Make a list with CTQ and delights.
This will help you understand what attributes you need to incorporate in your product, to meet the criteria of your customer.
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Use Pareto Low.
This is something that can help you prioritizing the list of attributes. Start with the first 20% of the attributes, which probably will bring 80% of the satisfaction. You will find out what are the most 20% of the attributes from the interactions that you will have with your customer.
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Understand the trends of the industry.
You need to understand the trends to know where your customer are heading. Find ways to innovate, or to create a blue ocean market.
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Study and understand your competitors – direct competitors and substitution competition.
Make a list, and see what your competitors are offering, and what are your customers need or wants.
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Find a gap in the market.
Every product category can generally be improved. The most common way of doing this is by finding a gap of specific attribute. This gap must be view from the point of view of the client. If your competitors dos not a clear list of CTQ, this mean that you can find place for improvement. Build a position as being the one company in the market that best satisfies a specific need, by doubling down on that specific attribute.
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Eliminate unnecessary attributes for having a better cost structure!
Alternatively, see if your competitors are offering unnecessary attributes to the customer, but at higher prices. If this is the case, use Pareto Law. Understand what are the most important 20% of the attributes that are responsible for 80% of the satisfaction, and see if you can build a better business by reinventing the business model. You can do this by changing the cost structure, with the scope of offering a product that has all the important attributes that customers need. This will help you have a better cost structure and automatically it gives you the possibility to practice significantly lower prices.
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Build an integrated marketing strategy!
Use all this information to build an integrated strategy that will allow you to build a unique position in the mind of your prospect. That specific image will help you to occupy an unique step on the brand ladder.
How to develop a brand positioning strategy (practical examples)?
The theory presented in the book: Positioning – the battled for your mind was tested many times in the last 40 years with great results. The general idea is that as humans we have limited memory. To be able to memorize everything, we tend to make categories. For each category, we tend to memorize 3-4 important things. This is true when it comes to brands. We have a category for brands that seal smartphones, a category for comedians, and another category for restaurants in our city. In each category, we have 3 or 4 brands that are put on a ladder, in the order of our preference.
The whole idea of building a positioning strategy is to find the right approach to place your brand in one of the first three steps of the category ladder.
You can do this by finding an open position, or you can try to replace someone on the ladder. This is what AVIS (a rent-a-car company) did with the slogan: „Why go with us? We try harder!”. This campaign was created against the brand that occupied the first place in the market, Herts. The scope of this campaign was to position AVIS as the number two brand on the category ladder. It worked. They become an uncontestable number two (until they decide to change their position).
Or, you can try to build a new category, in which you will occupy the first step of the category ladder. This is what FedeEx did. They created a new category of services: „overnight delivery”, and they positioned themselves as the first brand on the ladder.
How to develop a brand positioning strategy using the category ladder concept?
For that reason, when we are building your positioning strategy you should consider a Category ladder.
The term “category ladder” is not a widely recognized marketing concept. It is an hierarchical structure that help client categorize brand and products in a product categories within a market. In marketing and branding, products and services are often grouped into categories based on shared characteristics, functions, or customer needs.
For example, let’s consider the broader category of “beverages”. The categories include all brands: Coca Cola, Pepsi, Sprite, 7UP, Mountain Dew, etc.
In this example, “beverages” is the broadest category. If the category starts to have more and more products, usually more subcategories, and niches, appear. For each subcategory, it will be a top tree step ladder with a different brand. Each step on the ladder represents a subset of the previous category and offers more distinct attributes or characteristics. For example, in the „Lime Beverages” category, the first three steps of the leader are occupied by 7UP, Sprite, and Mountain Dew.
The category ladder is often used in brand positioning. This can help your to understand where a particular product or brand stands within the market landscape. It can help you identify the competitive landscape and allows companies to position their offerings relative to other products or brands..
By understanding the category ladder, companies can develop effective positioning strategies to differentiate their products or brands. Also, this can help you identify target markets, and tailor your marketing messages to specific customer needs.
Additional resources for learning how to develop a brand positioning strategy.
For further deep dive in this matter, I would recommend you strongly to read the book. Positioning – the battled for your mind by Al Ries , Jack Trout. Is a all in one book, that will teach you all you need to know regarding how to develop a brand positioning strategy.
