Positioning (marketing)

Definitions

David Ogilvy noted that while there was no real consensus as to the meaning of positioning among marketing experts, his definition is what a "product does, and who it is for". For instance, Dove has been successfully positioned as bars of soap for women with dry hands, vs. a product for men with dirty hands.

Ries and Trout advanced several definitions of positioning. In an article Industrial Marketing, published in 1969, Jack Trout stated that positioning a mental device used by consumers to simplify information inputs and store new information in a logical place. He said this is important because the typical consumer is overwhelmed with unwanted advertising, and has a natural tendency to discard all information that does not immediately find a comfortable (and empty) slot in their mind. In Positioning: The Battle for Your Mind, the duo expanded the definition as "an organized system for finding a window in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances".

Value can be expressed in numerous forms including product benefits, features, style, value for money

Origins

See also Product differentiation

The precise origins of the positioning concept are unclear. Cano (2003), Schwartzkopf (2008) and others have argued that the concepts of market segmentation and positioning were central to the tacit knowledge that informed brand advertising from the 1920s, but did not become codified in marketing textbooks and journal articles until the 1950s and 60s. Cano, for example, has argued that marketing practitioners followed competitor-based approaches to both market segmentation and product positioning in the first decades of the twentieth century; long before these concepts were introduced into the marketing literature in the 1950s and 60s.

Al Ries and Jack Trout are often credited with developing the concept of product or brand positioning in the 1960s. However, in their early writing, Ries and Trout suggest that the positioning concept was widely used in the advertising industry prior to the 1950s. Some scholars credit advertising guru, David Ogilvy, with developing the concept in the mid-1950s, at least a decade before Ries and Trout published their classic articles. Ogilvy's own writings indicate that he was well aware of the concept and drilled his creative team with this idea. Among other things, Ogilvy wrote that "the most important decision is how to position your product" and, "Everyone in the organization should understand the brand positioning and use it as context for making decisions" and "Every advertisement is part of the long-term investment in the personality of the brand."

Ogilvy is on record as having used the positioning concept in several campaigns in the mid 1950s and early 1960s, well before Ries and Trout published their articles on positioning. In relation to a Dove campaign launched in 1957, Ogilvy explained, "I could have positioned Dove as a detergent bar for men with dirty hands, but chose instead to position it as a toilet bar for women with dry skin. This is still working 25 years later." In relation to a SAAB campaign launched in 1961, Ogilvy later recalled that "In Norway, the SAAB car had no measurable profile. We positioned it as a car for winter. Three years later it was voted the best car for Norwegian winters."

Some scholars have suggested that the positioning concept may have an even earlier heritage, attributing the concept to the work of advertising agencies in both the US and the UK in the first decades of the twentieth century. From around 1920, American agency, J. Walter Thompson company (JWT), began to focus on developing brand personality, brand image and brand identity - concepts that are very closely related to positioning. Across the Atlantic, the English agency, W. S. Crawford's Ltd, began to use the concept of 'product personality' and the 'advertising idea' arguing that in order to stimulate sales and create a ‘buying habit’ advertising had to ‘build a definitive association of ideas round the goods.’ For example, in 1915 JWT acquired the advertising account for Lux soap. The agency suggested that the traditional positioning as a product for woolen garments should be broadened so that consumers would see it as a soap for use on all fine fabrics in the household. To implement, Lux was repositioned with a more up-market posture, and began a long association with expensive clothing and high fashion. Cano has argued that the positioning strategy JWT used for Lux exhibited an insightful understanding of the way that consumers mentally construct brand images. JWT recognised that advertising effectively manipulated socially shared symbols. In the case of Lux, the brand disconnected from images of household drudgery, and connected with images of leisure and fashion.

As advertising executives in their early careers, both Ries and Trout would have been exposed to the positioning concept via their work. Ries and Trout codified the positioning concept with the publication of a series of articles published in Industrial Marketing in 1969 and Advertising Age in 1972. By the late 1960s and early 1970s, the concept of positioning began to spread out of the advertising community and into the marketing community following the publication of Ries and Trout's articles. Their articles were to become highly influential. By the early 1970s, positioning became a popular word with marketers, especially those that were working in the area of advertising and promotion and in 1981 Ries and Trout published their classic book, Positioning - The Battle for Your Mind. (McGraw-Hill 1981) The concept enjoys ongoing currency among both advertisers and marketers as suggested by Maggard who notes that positioning provides planners with a valuable conceptual vehicle, which is effectively used to make various strategy techniques more meaningful and more productive.

According to Stephen A. Fox, Al Ries and Jack Trout "resurrected the concept and made it their trademark. They stated that positioning means focusing on the consumer, rather than oneself. In addition to the previous focus on the product, positioning now includes building a brand's reputation and competitive standing. Ries and Trout, former advertising executives, published articles about positioning in Industrial Marketing in 1969 and Advertising Age in 1972. By the early 1970s, positioning became a popular word with marketers, especially those in advertising and promotion. In 1981, Ries and Trout published their classic book, Positioning - The Battle for Your Mind. John P. Maggard notes that positioning provides planners with a valuable conceptual vehicle for implementation of more meaningful and productive marketing strategies.

Several large brands—Lipton, Kraft, and Tide—developed "precisely worded" positioning statements that guided how products would be packaged, promoted and advertised in the 1950s and 1960s. The article, "How Brands Were Born: A Brief History of Modern Marketing," states "This marked the start of almost 50 years of marketing where 'winning' was determined by understanding the consumer better than your competitors and the getting the total 'brand mix' right. Advertising guru, David Ogilvy, stated in an article in 1963 that he believed that "the most important decision is how to position your product". This early positioning tactic was focused on the product itself—its "form, package size, and price", according to Al Ries and Jack Trout

Developing the positioning statement

Positioning is part of the broader marketing strategy which includes three basic decision levels, namely segmentation, targeting and positioning, sometimes known as the S-T-P approach:

Segmentation: refers to the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) Targeting: refers to the selection of segment or segments that will become the focus of special attention (known as target markets). Positioning: refers to an overall strategy that "aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer."

Positioning Statement

Both theorists and practitioners argue that the positioning statement should be written in a format that includes an identification of the target market, the market need, the product name and category, the key benefit delivered and the basis of the product's differentiation from any competing alternatives. Positioning statements should be written in the following format: "For (target customer) who (statement of the need or opportunity), the (product name) is a (product category) that (statement of key benefit – that is, compelling reason to buy). Unlike (primary competitive alternative), our product (statement of primary differentiation)." An annotated example of how this positioning statement might be translated for a specific application appears in the text-box that follows.

Notes: Annotations, added in square brackets, were not in the original positioning statement, but are included here to show how the general format and elements of positioning statements described in the preceding discussion, have been applied to the specific example, which in this case is Volvo.

Differentiation

Differentiation is how a company's product is unique, by being the first, least expensive, or another distinguishing factor. Whatever it is a business can use to stand out from the rest is called differentiation.

Positioning process

To be successful in a particular market a product must occupy an "explicit, distinct and proper place in the minds of all potential and existing consumers". It has to also be relative to other rival products with which the brand competes.

Visibility and recognition is what product positioning is all about as the positioning of a product is what the product represents for a buyer the business is targeting. In this day and age markets are showing an increase in the intensity of rivalries and competition, which gives the buyer a greater choice and identification of the products certain intrinsic values that then become critical for the company to gain customer purchase of their products. It is vital that a product or service needs to have a clear identity and placement to the needs of the consumers targeted as they will not only purchase the product, but can warrant a larger margin for the company through increased added value.

Generally, the brand positioning process involves segmentation, targeting and positioning.

Approaches to positioning

There are a number of different approaches to positioning:

Positioning against a competitor

e.g Hungry Jack's tastes better (with implicit assumption 'better than the market leader, McDonald's)

Positioning within a category

e.g. Within the prestige car category, Volvo is the safe alternative

Positioning according to product benefit

e.g. Toothpaste with whitening or Tartar control (or both)

Positioning according to product attribute

e.g. Dove is one quarter moisturiser

Positioning for Usage Occasion

e.g. Cadbury Roses Chocolates - for gift giving or saying 'Thank-you'

Positioning along price lines

e.g. a luxury brand or premium brand

Positioning for a User

e.g. Johnson and Johnson range of baby products (No Tears Shampoo)

Positioning by cultural symbols

e.g. Australia's Easter Bilby (as a culturally appropriate alternative to the Easter Bunny)

Perceptual maps

Also see Perceptual mapping

Perceptual maps are a diagrammatic representation of consumers' mental representations of the relative place various brands within a category. Traditionally perceptual maps selects two variables that are relevant to consumers (often, but not necessarily, price and quality) and then asks a sample of the market to explain where they would place various brands in terms of the two variables. Results are averaged across all respondents, and results are plotted on a graph to indicate how the average member of the population views the brand that make up a category and how each of the brands relates to other brands within the same category. While perceptual maps with two dimensions are common, multi-dimensional maps are also used.

Algorithms used in positioning analysis

The following statistical procedures have been found to be useful in carrying out positioning analysis:

Cluster analysis

Correspondence analysis

Conjoint Analysis

Multidimensional scaling especially non-metric scaling (NMS)

Multivariate analysis

Segmentation

See Market segmentation; Segmenting and positioning It is the process of identifying variables that allow someone to divide the market into distinct subsets that can be selected as a marketing target to be researched using the marketing mix.

A central point to a marketing strategy is market segmentation, this makes segmentation a key decision area for organisations in all sectors. Segmentation involves using groups of customers together that have similar preferences in products and buying behaviour which helps the business’ in dealing with market heterogeneity, this then goes on to help the business’ focus resources on relatively homogeneous customer segments and so ensuring there is efficient allocation of resources.

A segmentation-driven marketing strategy can help companies design products that are responsive, promotional tactics and campaigns developments that are effective, scale of competitive positions and fine-tune current marketing plans or ideas. Marketers must also recognize that a segmentation-driven strategy is generally more costly than mass marketing and brings a major commitment by management for "customer-oriented planning, research, implementation, and control".

Segmentation methods

See Audience segmentation; Geodemographic segmentation; Microsegment; Segmentation; Market analysis; Psychographics; Sagacity segmentation

Characteristics of the customers (male, female, rich, poor, etc.)

Benefits sought

Systematic Product Related Behavior (by purchasing behavior or by channel)

Cohort Analysis

Geographic Segmentation

Targeting

Attitudinal targeting; Behavioral targeting; Demographic profile; Demographic targeting; Geo-targeting; Serviceable available market; Total addressable market; Target market; Targeted advertising

Targeting is the process of evaluating the attractiveness of each segment and choose a target. In order to select a target segment, firms must first balance attractiveness with capability and monitor whether actual buyers match the target segment. One of the core parts of marketing is targeting. In the marketing strategy, targeting represents a particular stage in the process that is based on the selection of the specific segment to enter engagement with. Different customers have a variety of desires and interests in terms of buying behaviour, their needs, and benefits it can be sometimes near impossible to satisfy all customer segments with a unique value proposition.

The process through which a company engages in seeking and defining the desired customer and then develops its value proposition to reach the mind of customers is all apart of segmentation, targeting and positioning (STP) process. The foundation of positioning theory is made of one of the most important postulates of the science of marketing. Scholars Groucutt, Leanly, & Forsyth, (2004) state that "people are extremely diverse and that a product can not be liked equally by everyone" (p. 98). Referring to the postulate it is simple to define what the STP model is all about. The STP model states that for a customer to like the product we have to present the product to those consumers, who want it and are able to actually acquire that product. The STP models first two steps help us to find and define the desired consumer and correct positioning plays for us to place the product in the minds of the targeted consumers, putting it in a more desirable position.

Segment characteristics

Characteristics that may make a segment attractive include, segment size, growth, value and stability. Another is the ease of entry, or ease of competitive entry, as well as the number and strengths of the competitors. Lastly, the current company position within the segment is a characteristic.

Positioning

Positioning is the process of identifying concepts for each target segment, select the best and communicate it.

Positioning strategies help shape a consumers preferences which is a major source in guiding them towards a particular brand. It is essential to assess and analyse the consumers behaviour and psyche of how they will or already do perceive the offered brand by recalling the company's communications with them such as advertising or any marketing campaigns. The right positioning strategy at right time is what can help a brand build the right image of itself in the mind of consumer(s). Fishbein and Rosenberg's attitude models would be good examples of what is called, quantitative approaches. These models indicate that it is possible for a business to influence and likely change the positioning of the brand by manipulating various factors that will affect a consumer's attitude with the brand or company. Research on persons’ attitudes suggests that a brand's position in a prospective consumer's mind is likely to be determined by the "combined total of a number of product characteristics such as the price, quality, durability, reliability, colour, and flavour". The consumer places important weights on each of these product characteristics and it can be possible by using things such as promotional efforts to realign the weights of price, quality, durability, reliability, colour and flavour of which can then help adjust the position of a brand in the mind of the prospective consumer.

Positioning is something (perception) that happens in the minds of the target market. It is the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. An important concept in positioning is that it expects that consumers compare and analyze products in the marketplace, whether based on features of the product itself (quality, multiple uses, etc.), price, and/or packaging and image.

Elaboration Likelihood Model (ELM)

To position a brand, candidate, or idea/ideology you must communicate messages which resonate to the forefront of a receptor's mind. Communication of the brand relies on occupying the niche which appeals to the conviction of a receptor's narrative. A model in which we use to cater these messages is best known as The Elaboration Likelihood Model (ELM). This works alongside with Psychology, to deduce that there are two pathways of persuasive messages: Central, and Peripheral.

Traditional persuasion modelling assumes that persuasion occurs when receptors learn a message. Learning isn’t always part of persuasion, in that a receptor may dislike or disagree with a message, detest the brand/product/service, and may only receive the beginning of the message in which the receptor associates other memories as they were distracted, and don’t participate in the absorption of the initially intended message. The model indicates that prior to purchasing a high-involvement product, or engaging with a brand consciously, a receptor must process all given content, and carefully constructed a perception.

Cognitive Response Model (CRM)

States that receivers can be conscious reactive members in the persuasion process. The main theme of the CRM, is that persuasion isn’t directly caused by messages; but by thoughts which agree with the message – to align attitude of recipient, is to provide messages which build up their intuitional belief system; the receiver requires both motivation and competency to process the information centrally. "If the listener is distracted or has trouble understanding the message, he or she will lack the ability to do the central processing.". There are two elementary renditions of CRM: Chaiken, and Heuristic and Systemic Processing Theory.

Peripheral Response Model (PRM)

Communicating the brand's messages/ideas to the receptors involves a complex methodology of persuasion. A Peripheral route to persuasion is when a receptor's attitude is adjusted and/or aligned by other cues (such as emotionally appealing music) rather than the message itself. The Peripheral Response Model (PRM), is formed when recipients elect an assumption with lesser active processing than the CRM.

Criticisms for ELM

Some criticisms for ELM exist for brand positioning and has adapted since 1968, in that traditional methods of communication revolve around the theory that consumers require deliberate intervention with the brand. It assumes that to communicate and persuade a receptor, is to communicate through the two designated routes. It fails to take into account that communication isn’t something that is done to the receptor, rather, the receptor co-created within reality – abstract to customer centrality perceived by salespeople.

Positioning concepts

More generally, there are three types of positioning concepts: functional, symbolic, and experiential position. Functional positions resolve problems, provide benefits to customers, or get favorable perception by investors (stock profile) and lenders. Symbolic positions address self-image enhancement, ego identification, belongingness and social meaningfulness, and affective fulfillment. Experiential positions provide sensory and cognitive stimulation.

Persuasive techniques

Delivery of the aforementioned routes of persuasion is catered to the rendering and unique qualities which make up groups of persuasive powers. There are 5 main groups: Primary, Secondary, Aspirational, Dissociative, and Formal. The strongest primary band to shape the attitude of individuals is the family, but other groups can doctrine a belief system too. This group is most responsible for developing societal conform, shaping attitudes, and at its most elemental – forms the systemic institution in which an individual's perception of the world exists. A secondary class of individuals or group are those whose influences aren’t as severely impacting to the individual's narrative, and mostly align with their predisposed ideas - such as sports groups, political parties, charities, education facilities, etc. The third group is known as the aspirational group, where the individual aspires/desires to join this group, so shapes their perceptions to increase the likelihood on being accepted as a member. This can be observed closer in the behaviours of adolescent youths, in that they shape their opinions in favour of becoming a member of a peer group, and is lead on the ambition of becoming more endowed; financial and power. The fourth group – the Dissociative class – are the groups in which the individuals do not partake, or wish to involve themselves with. This can take many forms, but a common example is a stereotype; a person will go to great lengths to avoid being grouped with others under this segregated opinion. Previous studies have confirmed, that in the case of minority groups, members may avoid behaviours or clothing which reinforce the image of their perceived stereotype, which in turn may lead to reverse stereotype confirmation.

Repositioning a company

In volatile markets, it can be necessary - even urgent - to reposition an entire company, rather than just a product line or brand. When Goldman Sachs and Morgan Stanley suddenly shifted from investment to commercial banks, for example, the expectations of investors, employees, clients and regulators all needed to shift, and each company needed to influence how these perceptions changed. Doing so involves repositioning the entire firm.

This is especially true of small and medium-sized firms, many of which often lack strong brands for individual product lines. In a prolonged recession, business approaches that were effective during healthy economies often become ineffective and it becomes necessary to change a firm's positioning. Upscale restaurants, for example, which previously flourished on expense account dinners and corporate events, may for the first time need to stress value as a sale tool.

Repositioning a company involves more than a marketing challenge. It involves making hard decisions about how a market is shifting and how a firm's competitors will react. Often these decisions must be made without the benefit of sufficient information, simply because the definition of "volatility" is that change becomes difficult or impossible to predict.

Positioning is however difficult to measure, in the sense that customer perception of a product may not have been tested on quantitative measures.