Product Positioning

Product positioning is a specific marketing strategy that highlights the benefits of a product or service with a particular focus on the target demographic and what makes its offering unique when compared to competitors. 

Product positioning can be clarified by asking specific questions, for example, why should consumers purchase your product over the competition’s? What makes your product special? How do you want consumers to think of your product? What do you want your product’s brand identity to be?

There are three things that businesses need to understand to ensure effective product positioning¹:

The target audience

First, it’s important to determine what customers want, now and in the future. To achieve this, marketing teams and researchers often gather demographic data such as age, gender, location, and consumer habits from the target market segment they aim to reach.

For example, Nike targets a wide range of consumers with its running shoes, from professional athletes to casual fitness enthusiasts. Nike gathers data on factors like age, fitness level, and lifestyle, as well as consumers' fitness goals (e.g., running marathons or simply jogging for health). Nike’s understanding of its audience allows it to segment its products accordingly, offering specialized shoes for different types of runners—those who prioritize speed, comfort, or injury prevention.

The market as a whole

But, there are other running shoes out there. What can Nike do to make sure consumers pick them? Companies will regularly conduct market research to analyze the alternatives to their product. This may involve interacting directly with consumers through surveys and focus groups. 

By identifying strengths and pain points, businesses can gain insight as to how they can build their product to be the ultimate solution. For example, in the early 1970s, Nike identified a gap in track shoe selection. Through their competitor and market analysis, they found that the greater market lacked a comfortable and light track shoe. They differentiated their product by making it both affordable and more durable than that of competitors.²

The product

Nike understands its wide consumer base, and they also have a great grasp on who their competitors are. Getting to the specifics, why should the consumer choose the Nike race shoe over another brand? 

This comes down to the differentiating factor of their product—the unique selling proposition—which then informs how the item will be marketed. The unique selling proposition can refer to anything from a long list of differentiators. Perhaps it’s the price (cheaper compared to competitors), the quality (of better quality or more luxurious than other options), or even its suitability (why it fulfills the needs of the target audience better than its competitors). 

In 2021, Nike launched a campaign titled “Play New” which featured regular people trying, and failing, at their sport. It was meant to demonstrate the joy of learning something new and all of the hard work and dedication that goes in to becoming ‘great.’ This campaign reinforced the brand's suitability for the everyday consumer, illustrating that it is accessible to all athletes—not just the superstars.3 Not only that, Nike integrates this concept into its brand positioning, with aspirational messaging (e.g., "Just Do It") consistently aligning with the everyday athlete persona.

Buyer Persona: A research-based profile that provides information on the characteristics, attitudes, concerns, and decision criteria of a target audience.⁵

Unique selling proposition (USP): A distinctive feature or benefit that sets a product or service apart from its competitors. It highlights the specific value or advantage that makes the product unique and compelling to consumers.¹

Differentiation: A broader strategy of making the distinction between a product or service in the larger marketplace.

Brand Equity: The value and strength of a brand as perceived by consumers, which influences their behavior and preferences. It encompasses both tangible and intangible assets such as brand recognition, customer loyalty, perceived quality, and associations with positive experiences or values.

Market Segmentation: The process of dividing a broad consumer or business market into smaller, specific groups based on shared characteristics.

Marketing Myopia: A term coined by Theodore Levitt to describe the tendency for businesses to be too focused on selling products and services instead of understanding their consumers’ needs.⁶

Early economic theories in the 17th and 18th centuries posited humans as rational agents—making decisions to maximize benefit and minimize cost. During this time it was assumed that price was the most important factor guiding consumer decision-making. But, by the 20th century, the rational actor theory saw a dip in popularity as psychological perspectives were applied to economic theory. This new interpretation shed light on how other factors, like emotions, influence the choices we make. 

This shift led to a rise in the importance of marketing.  In the 1960s, Theodore Levitt, a marketing professor at Harvard Business School, published an article emphasizing the need for businesses to focus on understanding and meeting consumer needs. Levitt argued that businesses should define themselves by the customers they serve (and their changing needs) rather than having a rigid product-oriented approach.⁵  

This marked a fundamental shift from the belief that a good product would naturally sell itself, to the belief that businesses must shape their products according to customer preference. In this way successful businesses don’t just create products — they design solutions that resonate with consumers.   

In 1981, Al Ries and Jack Trout introduced the concept of positioning, a strategy for businesses to shape consumer perceptions. They argued that products don't necessarily need to be objectively different; they just need to be perceived as different by consumers. Ries and Trout also noted that the human mind can only recall around 7 items within a category, so businesses must strategically position their brand to occupy that limited mental space.

For example, Apple doesn't just sell smartphones—they sell an experience. Their marketing taps into emotions like creativity, innovation, and empowerment, showcasing how their products enable users to push boundaries and think differently. By featuring diverse individuals in their campaigns—ranging in profession, age, and background—Apple establishes a brand identity that resonates with a broad audience, making their products feel inclusive and aspirational.

As consumerism and globalization increased, markets became more complex, and there was a greater need for effective positioning strategies. Since then, advances in technology have allowed companies to collect vast amounts of data to better understand their consumers, and use targeted, personalized marketing strategies which allows them to position differently depending on who the ad is reaching.

Theodore Levitt

German-American economist and Harvard Business School professor, Levitt urged businesses to shift from a product-centric approach to a consumer-centric approach. Levitt noted the importance of differentiation which he believed was integral for a company’s success.⁶ 

Rosser Reeves

Reeves coined the term unique selling proposition (USP) in the 40s, suggesting the most effective way to sell a product was to emphasize what made it unique compared to its competitors. He was an American advertising executive at the Ted Bates agency, who was well known for catchy slogans that differentiated products from their competitors, such as “M&M’s melt in your mouth, not your hand.”⁷

Al Ries and Jack Trout

Advertising executives Ries and Trout are known as the fathers of positioning, which was introduced in their 1969 paper “Positioning is A Game People Play In Today’s Me-Too Market Place,” which laid the foundation for their book Positioning: The Battle for Your Mind. Ries and Trout emphasized that the way people feel and perceive a brand or product is important in determining how successful it would be.⁷

Product positioning is a central element of a business’s marketing strategy, and when done effectively, it can contribute significantly to a brand’s success. Strong positioning involves shaping how consumers think and feel about your product, often by creating a distinct and compelling identity that motivates them to choose your product over competitors. However, positioning must be supported by product quality, pricing, and customer experience to fully achieve success.

In marketing, businesses often apply principles of behavioral economics and leverage cognitive biases to drive consumer behavior. One such principle is anchoring, which demonstrates that the first price a consumer sees sets a reference point for evaluating subsequent prices. For example, if Apple introduces a higher-priced iPhone, that price becomes the anchor. When a lower-priced option is introduced afterward, consumers perceive the more affordable option as a better deal, even if the price is still relatively high.

The way a product is framed can also influence its attractiveness to the consumer. Two all-purpose spray cleaners could be virtually the same in their composition and price, but if one markets itself as “killing 95% of all germs” and the other as “only 5% of germs survive,” a consumer is more likely to go with the first (the ideas of any germs surviving is not a positive thought).

While product positioning is often conducted just before the launch of a new product or service, it should continue throughout the product's lifecycle. Initial product positioning helps a business define its goals and create a product that aligns with them. However, ongoing positioning is essential to ensure the product remains relevant and competitive as the market evolves.

As the focus on marketing has grown many new jobs and position titles have been created—it’s not just about developing a product. This starts with market research analysts, who study consumer and competitor data to gain key insights about the target audience and the market. If a bank sees that their consumer base is mostly composed of individuals aged 60+, it will want to create products that serve the needs of that demographic. 

This market research is crucial for engineers and developers to design a product that fits the needs of the target audience—for example, it would be more worthwhile to create an app that helps these customers manage their pensions rather than one that helps them manage their mortgage on a first home. 

Next, marketing specialists will need to find ways to connect with consumers and emphasize their unique selling proposition. Folks 60+ are likely not going to be enticed by messaging that highlights the cool tech features of a financial app, so instead, the marketing team may want to emphasize the simplicity of the app.

As you can see, product positioning is a dynamic process that integrates various roles within a business. It includes rigorous research, focus on the functionality of a product, and creative and innovative ways on how to best market the product for success.

Privacy Concerns

Research into the target audience provides businesses with a lot of personal information about their client base, making them vulnerable to potential information leaks. This also highlights ethical privacy concerns, as businesses gather in-depth personal data such as browsing history, purchasing history, age, gender, and location—often without consumers being fully aware of the extent of the data being gathered.

Misrepresentation & Manipulation

If product positioning is ultimately about influencing the perception of a product within a consumer’s mind, it can be argued that, in certain cases, businesses are manipulating their consumers into buying products that they do not need or are not as beneficial as advertised.

Ideally, businesses would use product positioning to really understand the values and pain points of their target audience to develop a product that acts as a solution, but oftentimes, businesses only use product positioning to figure out how to market their products, not design them. It’s especially dangerous if the business is targeting vulnerable populations, like children. Imagine if a fast food restaurant advertised their combo as a healthy food choice. That’s why there are regulatory boards and policies, such as the Competitive Act in Canada, that prevent businesses from using false or misleading representations and deceptive marketing practices.

Product positioning also often highlights the best aspects of a product while downplaying the negative aspects. For example, some fast fashion brands will position themselves as affordable and trendy, while diminishing the environmental issues caused by fast fashion or unethical labor practices. With product positioning, consumers are often not getting the full picture and can be misled to purchase products that do not align with their values.

Monopolization

The focus on differentiation and marketing a product as superior to competitors can also lead to monopolization and the homogenization of choices. If a product successfully distinguishes itself as better than others, they eliminate their competition, which gives them the power to hike up prices and reduce quality, and discourage innovation.⁹ That means consumers may not necessarily be getting the best product possible and having to settle for what is available. 

Importance of Positioning for Brands: A Disney Case Study

Today, many companies sell a range of products or services that fall under multiple categories. That means that they are competing in a range of markets, and against a lot of different competitors. For consumers, if the company does not have a strong brand positioning, it can be difficult for them to connect to the overall mission and values of the product.

Disney found themselves in this position in the 1980s. Other businesses were using their characters on their products, anywhere from diapers to cars. While this had been an effective marketing strategy, when they conducted a consumer research study, it was found that consumers thought Disney was exploiting its power. Many believed Disney was manipulating children to want certain products over others, and diluting their brand values by having characters placed on such a range of products. 

Based on this research, Disney developed their brand motto as “fun family entertainment” and started more carefully selecting product placement opportunities that would fit with the motto. That way they were able to better control their brand positioning and make sure consumers always related their characters and name with products that fit their values.¹¹

Brand Authenticity: How to create wins for consumers and companies during inflationary times

With rising costs of living and inflation during the COVID-19 pandemic, consumers began to be more conservative with their money and avoid risk. Some brands used inflation as an excuse for raising their prices, causing more distrust with consumers. In this article, The Decision Lab’s co-founder Dan Pilat explores how brands can position themselves as trusting and display social responsibility in order to maintain loyalty from their consumers during difficult times. 

Burgers With Balance

There is growing demand from consumers for healthy food options, especially for children. Yet, at the same time, parents are looking for convenience and accessibility - which often means hitting a fast food restaurant. This article outlines how The Decision Lab collaborated with one of the world’s largest fast-food chains to understand consumer needs and recommend how the businesses could effectively position their product to meet them. 

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