What is positioning and why is it important?

If someone is looking for a brown goat for their project it would be beneficial to own the only one in your area, right? Now, think of the brown goat to be your service.

Positioning is about choosing how and where you can compete in the market. 

Are you planning to become a market leader, market challenger or to invest in a niche market?

If you are an entrepreneur or small business, the niche market is usually the way to go. 

Here are some positioning factors

  • Target markets
  • Marketing
  • Distribution
  • Manufacturing
  • Labor
  • Purchasing
  • Research and development
  • Finance & control
  • Product line

There are three common ways to position yourself or your company.

1. Differentiation

Choosing differentiation as a strategy means that the company offers products and services that differ from the competitors offer, in such a way that customers are willing to pay a higher price.

Ways to differentiate

  • Visual identity design (branding)
  • Technology 
  • Product features
  • Customer service

Often it is a combination of different methods that makes the product or the company stand out and contributes to successful differentiation.

2. Focus

Focus on a specific buying group, or narrow customer group, with a limited product range in a defined geographic area.

Instead of reaching out widely to many, the goal is to serve this narrow target group better.

Ways to focus

  • One/few products instead of many
  • Specializing at one/few services
  • Serving a specific group of people. 

For example: 

Websites for female entrepreneurs in New York, USA. Only one service for one target group in one city.

3. Cost leadership

Cost leadership involves streamlining operations to reduce costs. 

A business that focuses on cost leadership reduces operating and production costs and not necessarily the price of the product.

Such a strategy requires that the company invests maximum in cost-minimizing measures.

Questions to ask yourself:

Should the company choose to sell products or services that are unique and different from those offered by competitors?

Should the company concentrate on reaching a specific purchasing group/narrow customer group in a defined geographical area?

Should the company choose to compete on price and be concerned with gaining market share or becoming a market leader? 

If you position yourself correctly, you can:

  • Be unique
  • Be loved by your customers
  • Charge more – get a price premium
  • Have a feeling of being the expert
  • Receive more engagement 

These are some benefits of positioning your firm correctly and why it is important.

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