Product Positioning

What is Product Positioning?

Product positioning refers to the space your product occupies in the minds of your target customers and how they perceive it in relation to others in the market. If a product’s unique value aligns with the specific audience that needs it, it has a strong positioning.

Although positioning is something that occurs from the customer’s point of view, influencing or guiding it is one of the primary goals of marketing and branding efforts. From a product development standpoint, it’s also how you design and differentiate your product to meet the needs of your ideal customer profile (ICP).

It involves deciding and communicating how you want your market to perceive your product, highlighting its unique features, benefits, and advantages. The end goal is to achieve product-market fit — the ideal combination of product, customer, and market that leads to success.

Synonyms

• Product position map
• Product positioning statement
• Product positioning strategy
• Product differentiation

Purpose of a Product Positioning Statement

Positioning is what enables you to capture a larger market share. By hitting the sweet spot between what you offer and who wants it (and effectively communicating that), you create a memorable impression that resonates with your customers’ needs, wants, and goals.

But incorrectly positioning yourself among competitors, over-differentiating, or targeting too broad of a market makes it quite difficult to draw in, close, and retain customers. And that’s a costly mistake you might not be able to recover from.

That’s why you need a product positioning statement. It’s a concise statement that:

• Describes your product’s unique value, and the specific audience that benefits from it
• Acts as an internal guide for Sales and Marketing
• Sets baseline expectations and messaging for your target customers
• Aligns various marketing efforts, including content creation and ad campaigns
• Differentiates you from competitors

Elements of Product Positioning

Like every aspect of running a business, your positioning is entirely unique to you. But successful product positioning statements and strategies always share a few common variables and considerations.

1. Your Target Market

Your target market is made up of your ideal customers. Although we discuss the “ideal customer profile” in its singular form, you’ll almost certainly have several different types of potential customers. They’ll use your product differently (and for different reasons).

Start by zeroing in on your core customer attributes. From there…

• Make a list of your best (current) customers.
• Talk to them to reveal common characteristics.
• Put your finger on the problems they’re trying to solve (their pain points).
• Document how your product uniquely addresses those pain points (its features and benefits).

Of course, don’t forget to revisit it regularly. And don’t treat it as a set-in-stone list. Think of it more as a North Star you can use to stay on course and continually grow.

2. Unique Selling Proposition (USP)

When you determine which types of prospective customers are most worth going after, avoid focusing too much on demographics/firmographics (nobody ever bought from someone because they’re a “25-40-year-old male in marketing at a SaaS company”).

Instead, the bulk of your focus should be on what problems your product solves and for whom it solves them. If you complete the above exercise correctly, you’ll realize your target customers are sometimes quite different from what you might have guessed.

The unifying thread is that they all have the same problem and your product is uniquely positioned to solve it. To communicate that, you need a USP (also called a value proposition).

Your USP is a quick, memorable, and differentiated way to articulate what sets you apart from the competition in your target market. It highlights the sweet spot between (a) what your customers want and (b) what your company does well.

3. Brand Image

How you want others to perceive your company is a big part of positioning.

• Your website content (and how it’s written)
• The colors you choose
• Your font style
• The images and graphics you use
• Your social media presence
• Where your C-level executives appear online
• Anything and everything that conveys your company’s public image

As you think about how to position your product, ask yourself: Is our brand image consistent, and does it make our target buyers feel the way we want them to?

4. The Competitive Landscape

Think of the entire competitive landscape as a large spectrum. It includes:

• Direct competitors (products similar to yours in your market)
• Indirect competitors (different solutions that solve the same problem)
• Generalists (products that don’t hit all the checkboxes for your target customers, but might be “good enough” for some)

For each competitor, examine everything.

• What do they do that you don’t?
• What do you do that they don’t?
• Where is there overlap between products?
• Which features of yours perform better or worse for a particular customer segment?
• Do they offer complementary products and bundles that make them a more complete solution?

Also, look at their messaging and sales/marketing strategies. Ideally, you’ll want to create a brand image that looks and feels different, in addition to differentiating your product.

5. Price Positioning

Since everyone places a specific level of value on things and has at least some level of price sensitivity, your pricing structure is one of the most significant differentiators. It determines whether your product will be well-received by your target customer base.

Depending on the type of product you sell, your product pricing could range from remarkably simple to exceedingly complex.

A simple SaaS product will use tiered pricing and set a base price for each product tier. When customers add additional users or product features, they’ll pay more. So, there are flat-rate and usage-based components to SaaS products.

Meanwhile, enterprise SaaS pricing is quote-based, meaning there’s a cost-plus, usage-based, and value-based aspect to it. In other words, the more you use and the more value you get from your product, the higher your price will be (generally).

Pricing models (and how your customers will respond to yours) vary wildly. The main goal is to set a price your customers can understand and are willing to pay for the value exchange while leaving plenty of room to turn a profit.

6. Distribution Channels

Distribution channels are pathways through which goods or services flow from the producer to the consumer. They include:

• Direct sales and marketing
• Marketplaces
• Affiliate marketing
• Retailers
• Wholesalers and distributors
• Value-added resellers
• Agents and brokers

The less reliance you have on one type of channel, the better. There are tried and true methods for every industry (software companies do well with inside sales). But, since your main goal is to connect with buyers where they’re already hanging out, the unique mix of channels you sell through is a big part of your product positioning.

7. Messaging and Communication

How your audience feels when they look at your content is just as important to your success as the product itself. Two companies in the same space could take an entirely different approach to messaging, and both could succeed.

For example, ClickUp takes a more playful approach to its marketing than the typical B2B. On TikTok and YouTube, you’ll find videos of employees and users lip-syncing to popular songs and other silly content. Its CEO dresses in bright colors that piggyback off its colorful branding.

Jira is also a PM software vendor. But its messaging and communication are all about the serious business of productivity.

When you think about who they’re each targeting, this makes total sense. ClickUp wants to capture the attention of younger, more fun-loving teams. Jira is a project management tool for software dev teams that want an “all-business” solution.

8. Positioning Statement

Your product positioning statement is a shorter version of your USP. It’s a one or two-sentence summary that tells your target customers why they should choose your product over the competition.

As an example, here’s a product positioning statement for DealHub’s product suite might be:

“Designed for efficiency and ease of use, DealHub enables SaaS sales teams to build quotes, centralize sales communication, manage contracts, and automate subscriptions and billing with its no-code, fully integrated platform.”

9. Perceived Value

Product value according to you and product value according to your potential customers are two completely different things. Your ability to reflect what customers are willing to pay for a solution like yours (or justify a higher price) is entirely dependent on your ability to market and position yourselves correctly.

There are lots of things that impact how much customers are willing to pay:

• Marketing
• Brand reputation
• Price sensitivity
• Feelings you invoke
• Market entry/timing
• Economy
• ROI
• Competitor’s prices

Think about why luxury fashion houses like Gucci and Louis Vuitton consistently perform so well, even though they sell $500 t-shirts that cost a few dollars to make.

• Their image feels luxurious.
• They’re known for quality (some even see their pieces as investments).
• Target customers have lots of money and don’t care about the price.
• Some people treat it as a status symbol.
• They’ve been around for hundreds of years.
• Direct competitors’ prices are around the same.

Effective positioning in B2B applies the same logic. To achieve price optimization, you have to consider what customers are paying for similar products and the general consensus on a “reasonable price.”

From there, you can justify a higher price by proving ROI, driving home critical benefits, or changing your marketing. Or, you can reinforce the value for the cost through your copy and sales outreach.

That’s how you play into perceived value while shifting it in your favor.

10. Consistency

At the end of the day, you’ll never tap into a specific part of your market or make them feel any type of way about your products unless you reinforce the same values over and over.

Consistent branding can give you a 10% to 20% revenue boost. And the cumulative effect of continuously making the same arguments for your product and delivering positive customer experiences builds unprecedented trust in your brand.

Think of the mere exposure effect as a simple example. The more someone sees something, the more they tend to like it.

If your messaging is all over the place, they’ll never recall it when they’re ready to buy. If you’re consistent with everything from the tone of voice to color schemes and visuals, you’ll be at the forefront of their minds.

5 Types of Product Positioning Strategies

An effective product positioning strategy could take numerous different forms. Today’s companies use most or all of the following five positioning techniques:

1. Price-Based Positioning

Generally, when a company positions its product based on price, it’s going for one of two things:

• Affordability (they’re selling a budget-friendly product)
• Premium status (features might be similar to others, but their product raises the price by virtue of being associated with luxury)

Apple’s product strategy is a solid example. While Apple products are among the best (and some will tell you they definitively are), status and aesthetics play a role in why people pay a higher sticker price for them.

Plenty of research has shown typical green text bubbles (as opposed to blue iMessages) to be a “red flag” for singles in the dating scene, highschoolers choosing members of their friend groups,  and even venture capitalists deciding which startups to fund.

So it’s safe to say the iPhone’s reputation throughout the US isn’t just about how great the product is. It’s also about materialism (and yes, this is deliberate).

Plenty of companies find success as an affordable option, too. Think of any store-brand product line you’ve ever seen.

As a tech startup, you might price your product lower for the first few customers (penetration pricing). That way, customer acquisition is easier, and you can prove your value.

2. Quality or Feature-Based Positioning

By focusing on your product’s unique features or superior quality, you can differentiate yourself from the competition. Especially if you’ve identified specific pain points other products don’t solve as well or non-monetary reasons people buy, this is an easy way to reel in new buyers and close a few of them fast.

Examples include:

• Superior craftsmanship
• The highest-quality materials
• Small-batch or handmade products
• The most robust feature set on the market (think of how Adobe markets its Creative Cloud)
• The most unique feature set on the market (think of how Canva markets its drag-and-drop graphic design)
• Product reliability
• Sustainable practices

The great thing about these aspects of your marketing strategy is they reinforce your price-based positioning. For example, Canva’s unique feature set is available for a remarkably low cost — it’s accessible to everyone. Small-batch or sustainable products often cost more, but buyers know that’s partially because production costs are much higher.

3. Use or Application-Based Positioning

This often goes hand-in-hand with feature-based positioning. Use or application-based positioning takes note of the way customers use your product, then positions it in their minds as “the thing for that.”

Think of how Shopify positions itself as the best place to build your business “from hello world to IPO.” You could have a basic store with a few products. Or, you could be like Red Bull, Gymshark, Sephora, or another one of the thousands of multinational enterprises using the same platform.

Again, this is really about tapping into your target audience’s pain points and finding ways to eliminate them through your product or service.

4. Benefit-Based Positioning

Highlighting benefits is something you’ll primarily do in your marketing. That said, you can also use it effectively at the point of sale, to close deals, and in your sales outreach.

Typically, benefits are a bigger-picture view of the value you provide. It has less to do with the product specs and more to do with what your customers stand to gain.

For example, when Salesforce markets its CRM platform, it talks about lead gen data and pipeline visibility. But that’s really a way to show how you can ultimately leverage the product to achieve better business results, like higher revenue and increased customer retention.

This kind of piggybacks off your application-based positioning. For instance, the “go-to skincare for sun-damaged skin” (application) can help you “look 5 years younger in just 2 weeks” (benefit).

5. Competitor-Based Positioning

Almost 90% of B2B buyers conduct research online to make buying decisions. According to other research, 81% of everyday consumers do the same.

One of the main reasons to look up a product on Google is to compare it to alternatives. So, a huge part of effective product positioning is highlighting what your product does well, specifically in relation to competitors.

This could be:

• A t-shirt with a softer fabric or better fit
• Healthy snacks that taste better than brand-name fried ones
• A CRM with more native integrations than its four main competitors
• The most secure data-storage product on the market

The idea here is to show how your product stands out and reinforce who it’s for. You want to help people further along in the purchase funnel make a buying decision.

Steps to Create a Product Positioning Strategy

Believe it or not, product positioning isn’t that complicated. It requires plenty of research and a little creativity, but every company is capable of achieving it.

Follow these steps to position your product in a way that resonates with your target buyers:

1. Start with the product, not the marketing.

Rather than worry upfront about how you’ll bring a product idea to market, think about how you can design a product around customers’ existing (and, ideally, unmet) needs. That’s your ICP.

• What are their main challenges?
• How can you solve these problems with a product or service?
• What unique features and functionalities does it need to have?
• Why do they use your product in the first place? (for your current customers)

Once you have those insights from your current and target customers, your product team is responsible for creating an innovative product that meets those needs.

2. Identify your USP.

Audience research and product teams can get you 90% of the way to your USP. But, the rest is up to you.

Using the examples and types of product positioning outlined above, map out what makes your product unique, and how it aligns with the needs of your target audience. Then, do the same for your direct and indirect competitors.

From there, you can create a USP that addresses everything you need it to.

3. Assess your market’s maturity.

This is important because it dictates what types of messaging will be most effective. Essentially, you’re trying to figure out, “How much do our future customers already know about what we’re selling.

• In a mature market, like CRM software, product features and benefits generally match those of their competitors (at least somewhat). Practically everyone in the market for CRM also knows what it does and why they need it.
• An emerging market, like virtual reality, leaves a lot of room for differentiation based on features. Since fewer people know about VR, it’s easier to position your product as unique but harder to educate potential buyers.

The more mature your market is, the more important your branding and storytelling will be. That’s how prospective customers will distinguish between you and the rest of the pack.

4. Figure out your buyer’s state of mind.

Broadly speaking, there are four forces dictating whether someone will buy from you or not.

• Push (the motive to change is always rooted in fear, unhappiness, or discomfort with their current solution)
• Pull (they’re attracted to you for some reason, be it sales, marketing, product, or a trusted rec)
• Apprehension (how do they know you’re the real deal, and what might they object with?)
• Habit (switching to something new is cumbersome and annoying)

The push and pull are what draw your customers into the funnel. Their levels of apprehension and current habits determine whether they’ll make the switch.

5. Tie it all together.

By this point, the best way to speak to your customers should be fairly obvious. You know their problems, objections, and how integrated into their daily workflow their current solution is.

But the final step is harder than you might think because your “market position” is something that already has to exist in your customers’ heads.

It triggers a set of anticipations:

• Your competition can’t to X, Y, and Z.
• Inability to fix that is painful to users.
• You offer features X, Y, and Z.
• Your customers benefit from this.

You want to paint the picture that your offering already exists in their minds, so that they focus on your brand instead of just the features.

Your tone and approach to this will vary, depending on your market’s maturity and your buyer’s state of mind. But, the easiest way to break it down is by demonstrating what their…

• Lives
• Workflow
• Status
• Security
• Feelings

…are like before and after using your product.

6. Write a positioning statement and plan your strategy.

The positioning statement is easy. What’s harder is all the stuff that comes once you plan and execute your market positioning.

Creativity is required to create effective branding elements. Choose your colors, fonts, style, design elements, and words carefully, decide what they mean, and stick to them across all your sales and marketing channels.

As far as your sales methodology is concerned, you’ll need to create unique sales assets that show your USP. And you’ll have to ensure your sales reps target the right accounts with messaging based on the above.

Product Positioning Examples

Cuts Clothing: Direct-to-Consumer

On the surface, Cuts is nothing more than a company that sells high-quality t-shirts. But they’ve tapped into the workleisure apparel market by saying they’re designed for the “Sport of Business.”

They target ambitious individuals who value both style and comfort in their workwear, which elevates their brand. Since it’s versatile clothing that meets the demands of both professional and casual settings, it also appeals to a broader audience.

Picky Bars: B2B Ecommerce

Picky Bars, a healthy snacks vendor, positions itself by offering seamless buying experiences for its energy bars, oatmeal, and granola products. The brand targets retailers in various countries with a B2B storefront that mirrors the friendly feel of its B2C counterpart, emphasizing quick and seamless bulk ordering and providing direct access to brand assets for easy promotion.

Userpilot: B2B SaaS

Userpilot positions itself by targeting mid-market enterprises with its platform that enhances user engagement and improves UX throughout the customer journey. The company carefully selects its audience, focusing on businesses of a certain size and resources, evident in their marketing materials aimed at Product Teams.

Userpilot’s approach includes a no-discounts policy and annual pricing, setting a premium standard for its services​​.

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