Consumer Behaviour and Positioning

“A position that takes into consideration not only a company’s own strengths and weaknesses, but those of its
competitors as well.” (Ries & Trout, 2001)

What Is Positioning?
Firms use positioning to create an image of their product or service in their target customers' minds.

Positioning defines how the brand’s offering is unique: how it provides a distinct benefit to customers.
Businesses use marketing to communicate their market position to customers and influence their perception of
their products or services.

Marketing establishes the brand identity, influencing consumer perceptions of its position in the market
relative to competitors' alternatives.

“Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is,
you position the product in the mind of the prospect.” (Ries & Trout, 2001)

Before determining its position in the market, a firm should decide on a market segment that they want to
target.

This market segment should be profitable — either there are many customers, or it is a niche in the market
that presents an opportunity due to a lack of competition. This stage is where positioning comes in.

A business must decide how to make their brand as attractive as possible to this group of customers they want
to target. Demographics such as gender, location and age, and criteria based on consumer behaviour define
this target market.

Unique Selling Proposition

Effectively positioning a product or service gives it a USP (Unique selling proposition).

A USP is an attractive feature or characteristic of a brand that differentiates it from similar alternatives.

In a modern marketplace cluttered with so many choices with similar benefits, you want your brand to stand
out from the rest.
 It becomes more memorable and can have a competitive advantage over alternatives. Your USP is your
unique benefit to entice customers to purchase your brand over another.

McDonald’s is a notable example of using a USP to help position their brand. They are the world’s most
widely known fast-food brand and compete with hundreds of other fast food outlets. They do not try and
position themselves as the fastest, cheapest or best tasting.

Instead, their USP is that they are a family-friendly restaurant. Their USP includes the children’s menu items,
the free toy with a kid’s meal, the playgrounds. They position themselves to target families.

Positioning statement
A USP and positioning statement are similar.

The most significant difference is that a USP is product or service-centric and focuses on what sets your
product or service apart from competitors. A business creates its positioning statement after the USP,
concentrate on the primary benefit of the product or services to their target market.

Businesses need to ask themselves, “How do I want our brand to be perceived?”

A positioning statement should be no longer than a paragraph, written in a specific way.

 First, the positioning statement describes your target market and what their specific needs
or goals are. Market research will help a business to understand it more intimately.
 Define what category your product or service belongs to and how it meets the needs of
consumers. Customers need a reference point to provide context to evaluate a brand’s
offering.
 What differentiates your product or service from the alternatives? One point of
differentiation is best, stating your difference from the customer’s perspective. How does
your differentiator will help solve the customer’s problem or help them achieve their
goals?
 Explain why consumers in your target market should believe your brand’s claims.
Consumers must see credibility in your positioning, so provide evidence to justify your
brand's claim in your positioning. Do not just say you are the fastest or best quality, state
HOW you are.
“There is a positive relationship between company performance (profitability/efficiency) and well-formulated
and clearly-defined positioning activities.” (Kalafatis, Tsogas & Blankson, 2000)

Determining a Positioning Strategy

A successful positioning strategy relies on a deep understanding of the marketplace that you want to compete.

It identifies how your company is different from the competitors and the conditions and opportunities in the
marketplace. A big mistake that many businesses make is assuming that positioning is just a marketing
strategy. It should be one of the foundations of the business strategy.

After all, you cannot position a product as a high-quality offering in your marketing if the product itself
cannot back up those claims.

Customers can recognise a clear positioning strategy — they understand whether a brand is competing on
price or quality.

Positioning must be a cohesive effort between the business strategy and sales and marketing tactics. It is far
more than just a communication strategy.

This integration is the only way the product or service will deliver on customer expectation and the promises
of its positioning. Organisations must clearly define their positioning across the value chain. Otherwise,
communication loses focus and can become confusing.

There are five main strategies upon which businesses can base their positioning.

1. Positioning based on product characteristics

Using product characteristics or benefits as a positioning strategy associates your brand with a particular
feature beneficial to customers.

For example, in the automobile industry — Toyota’s position in the market is reliability, Porsche’s position is
performance, and Volvo’s position is safety.
Brands consistently communicate a unique benefit or characteristic of the product with consumers.

2. Positioning based on price

Positioning your products or services on price is competitive pricing. Usually, with a pricing positioning
strategy, a brand aims to be the cheapest or cheapest market, and value becomes their position.
For example, Supermarket chains often have a house brand with very low-price products in many product
categories.

Their lower logistical and distribution costs allow them to price their products lower than the competitors, so
price-sensitive buyers will often purchase them without knowing the price because they know it is often the
cheapest option.

Brands can also position based on price if they find a market gap at a specific price point. Being the only
option in a certain price range becomes your market position. Often brands extend their product lines to fill a
gap in the market.

3. Positioning based on quality or luxury

Often the price and quality of a product align, certainly in the consumer's mind, as the high price is often
associated with high quality. However, positioning a product based on its high quality or ‘luxury’ is different
from positioning based on price.

Often these brands do not communicate their price point; instead, high quality or prestige is the focal point of
communication to create a desire, so customers want the product regardless of the price.

Note that luxury does not always mean better quality; however, customers still believe it is better because of
their reputation due to their long-term brand luxury positioning strategies.
For example, a $200,000 Rolls Royce car, the epitome of luxury, is likely to have a lower build quality than a
$30,000 Hyundai.

4. Positioning based on product use or application

Associating your product with a particular usage is another way to position your brand in the market.
For example, meal replacement supplements are of use to anyone wanting a quick, convenient meal on the go
or just lacking time.
There are also meal replacements explicitly designed for people who want high performance in the gym or
playing a sport, so they are often high in calories and have added vitamins and minerals.
Other firms create meal replacements for people on a diet, so they are low in calories and would not provide
much energy for somebody’s workout.
Performance supplements of target males and the diet low-calorie option target females: both meal
replacements, but different positioning.

5. Positioning based on the competition

Competitor based positioning focuses on using the competition as a reference point for differentiation.

Brands highlight a key difference their product/service offers in their marketing to make it seem favourable
and unique compared to other marketplace options. The product or service becomes unique.

However, brands can also use the competition as a reference point to follow a similar strategy.

Suppose a particular brand has a large market share. In that case, their positioning strategy must be attractive
to many customers. Hence, you try and convert some of their customers by offering a similar product with
similar benefits at the same price point.
Positioning Perceptual Maps

Businesses can create a perceptual map of the positioning of the dominant brands in a marketplace to identify
gaps and opportunities in that market.

The positioning map compares brands competing in a marketplace by illustrating those brands' consumer
perceptions using two key variables.
For example, businesses can apply price and quality for most markets; however, the map should focus on the
primary consumer needs or product benefits you want to understand, which will vary depending on the
market.
In conclusion, your positioning in the market determines where your brand sits relative to competitors and
gives your brand a unique identity.

It is essential for brands to have a point of difference and to emphasise it in their marketing.