GuidesProduct developmentA beginner’s guide to product positioning

A beginner’s guide to product positioning

Last updated

12 May 2023

Reviewed by

Jen Lee

Product positioning is essential for building brand loyalty. Is your company doing enough to stand out and clearly articulate its value?

No matter how amazing your product is, if your target audience doesn’t understand how your product meets their needs or solves their problems, you aren’t going to make many sales.

To avoid this fate, your company must use clear product positioning to help your brand stand out in a crowded market. It’s also a great way to become a well-known, well-loved expert in your field.

Effective product positioning helps your team create engaging, compelling brand messages. These can go company-wide, from your CEO’s elevator pitches to detailed marketing copy.

If your company’s sales are stagnating, it’s time to put your customer’s needs first. Hone in on a product positioning statement. We promise this is well worth your time and investment.

What is product positioning?

Product positioning is a business strategy to determine where your product fits within your target market. You can also compare your competitors’ products to ensure yours is unique. Completing a product positioning exercise should help you answer these questions:

  • What is our target audience?

  • What do our customers need?

  • How does our product solve this problem?

  • Why will people choose our solution over others?

Your team will need to conduct detailed customer research to find the answers. 

Here, you’ll gain valuable insights and a customer-centric understanding that will translate into ultra-powerful messaging, features, and branding. Your company can use these to meet your target audience’s top desires. 

Product positioning goes beyond listing your product specs and features. Your positioning should build a compelling, emotional story that leads your customers to a happy ending: Using your product to solve their problem. 

What is a product positioning statement?

A product positioning statement is a simple sentence that communicates crucial information about your company’s value to a target market. 

In most cases, a product positioning statement describes: 

  • Your target audience

  • Their needs and wants

  • How your product solves this problem

  • Why your customers want it

Here’s an example: 

For [target audience] that wants [specific need/problem], [company/product] is a [explanation/solution] that offers [benefit].

Customer research and a thorough market understanding will provide a better insight into your target audience's needs. It’ll also help you craft a product positioning statement. 

Let’s look at how to achieve effective product positioning.

The three essential components of product positioning

Your team needs to complete these exercises to create an effective product positioning strategy: 

Define your customers

To effectively position your product as the must-have solution in your particular niche, you need an in-depth understanding of your customers.

This includes: 

  • Demographics

  • Preferences

  • Spending behaviors

  • Pain points along 

  • Alternative solutions they’re currently trying 

Creating personas is a helpful way to connect the dots between these insights.

Fill marketplace gaps

Chances are, you aren’t the only company offering a competitive solution to your audience’s problems. Past startup attempts and current successful businesses allow you to learn from your peers. Research what is and isn’t working for your users and competitors.

For the best results, conduct research with potential customers using surveys or focus groups. This is a great way to gain valuable intel about the industry gaps your product can fill.

Building empathy

Even if your product perfectly solves your customer’s problems, you will likely miss out on sales if they don’t relate to your brand’s story. 

Whatever industry you operate in, your customers want to be the champion of their story, so your products are merely just a tool to get them to their end goal. 

Because of this, your team needs to use your customer research to create emotionally resonant, compelling copy that pinpoints your audience’s feelings and directs them toward victory. Showing your customers that you understand their perspective can lead to greater sales and loyalty. 

8 product positioning strategies

Many successful businesses use product positioning, so we’re going to look at their strategies. Check out these examples and see which you can adapt to your niche:

Quality-based product positioning

Does your company create high-quality or expensive luxury products? If so, marketing your brand on quality and social status can help you stand out from your competitors. 

Designer watch brand Rolex uses this product positioning strategy. It offers a luxury watch experience at a high cost to the customers willing to pay for the quality.

Performance-based product positioning

Performance-based companies demonstrate the clear advantages of using their products. 

Bounty is a strong example of this positioning strategy. The company compares its paper towel products to competitors in live demos, showing how much more efficient and cost-effective its products are. These eye-catching adverts show a clear advantage of purchasing Bounty. 

Variety-based product positioning

If your company offers a wide selection of product variations, you may benefit from a variety-based product positioning strategy. 

Ben and Jerry’s ice cream is the perfect example of this strategy. The company is known for offering a seemingly endless number of ice cream flavors for customers to choose from.

Aesthetic-based product positioning

Does your product help customers achieve a particular look or aesthetic? If so, an aesthetic-based product positioning strategy will help your brand attract loyal customers. 

Nike uses this strategy to its advantage when marketing products like Air Force and Air Max shoes, giving them a competitive edge over other footwear brands.

Efficiency-based product positioning

If your company offers a product that saves customers time and money, an efficiency-based product positioning strategy may work for you. 

Clickup and reduce wasted time and costs while making teams more efficient. 

The companies use data to clearly articulate how many hours per week you save when you increase team productivity. That’s solid marketing!

Sustainability-based product positioning

Green, environmentally conscious initiatives are increasingly popular in modern business with growing climate concerns and needs. 

Brands like Patagonia use this product positioning strategy to build trust and a sense of joint responsibility with their customers. In 2022, the owner donated 98% of shares and future profits to fight climate change.

Reliability-based product positioning

For many customers, knowing they can return and get a familiar product experience is incredibly important. That’s why reliability-based product positioning is critical. 

Companies like McDonald’s use reliability-based product positioning to build a stronger sense of familiarity and brand loyalty. A Big Mac is a Big Mac, no matter which McDonald’s franchise you order it from!

DIY-based product positioning

Do-it-yourself (DIY) is growing in popularity, especially with how-to videos on Youtube and Wikihow guiding you.

If your product allows your customers to construct something, a DIY-based product positioning strategy may be a good company approach. 

Furniture brand IKEA is well-known for encouraging its customers to build their own furniture. It’s a great example of how this product positioning can help your brand stand out.

How to build an effective product positioning strategy

With these excellent examples at your fingertips, you’re now ready to develop a product positioning strategy that works for your business:

Study your customers

Conducting thorough customer research is essential for product positioning success. In-depth user research replaces assumptions with valid data. 

Simply asking your target audience key questions about their wants and needs can ensure your product solves their problem and matches their requirements. This is far better than developing a product and discovering later that your customers didn’t need it in the first place!

Developing focused questions, launching surveys, and conducting focus groups means your team will produce data to enhance your product’s positioning in the market.

Your customers are an incredibly valuable resource to capitalize on, so don’t skip this step. User research insights are worth their weight in gold for building a sustainable business.

Tell a compelling story

Storytelling is an incredibly effective tool for positioning your product, especially when you paint your customer as a hero. 

You may be tempted to market your product or brand as the hero swooping in to save the day, but this positioning often doesn’t land as well with customers. 

Instead, build a compelling story about your product. Focusing on the accomplishments of your customers is one of the best ways to build long-term brand loyalty while positioning your company as an expert in the industry.

We recommend using customer research data to dig deep into your target audience’s underlying emotions and motivations. Once you tap into these insights, you can use them in your marketing and messaging.

Focus on your unique selling point (USP)

As your team works to create a compelling brand and product story, your unique selling point is an important aspect to consider. This lets you clearly state why someone should choose you over a competitor.

Marketing your USP is a classic example of operating as a generalist versus a specialist. Does your company want to offer a product for a broader audience or focus on a smaller group of customers that may be more loyal? 

If the second option speaks to you and your team, you should create and market your product with a strong USP. 

Key questions to ask around USP are:

  • Who needs us most, and where is the demand? 

  • Why are we unique, and what makes them choose us over others? 

  • Should we focus on a niche or serve a few target markets? 

  • Which target market is most sustainable for growth? 

  • How will we dominate our chosen niche? 

Perhaps you’re unsure what makes your product stand out from your competitors. Ask your top customers for feedback. You can use their insights to find other potential customers with the same needs and wants to expand your offerings to. 

Write a positioning statement

With the help of your customer research insights and story narrative, it’s time to write a product positioning statement. This will become the mantra of your business, helping you fulfill the company's vision. 

It’s a concise statement that your company should be able to understand and repeat. The product positioning statement clearly communicates your offerings, and you can use it to foster a sense of unity and focus within your organization.

Using the formula from earlier, here’s an example product positioning statement for Dovetail. You can use this as an exercise to complete your own:

For [modern companies] that want [to better understand their customers], [Dovetail] is an [easy-to-use software] that offers [a clear way to organize and analyze customer insights].

Test, test, and test again

Product positioning is a dynamic, adaptable process that serves your company as it grows and pivots. Adjusting your product positioning strategy over time to better serve your business is essential.

Whether your team is fresh off a product redesign or is looking to expand into a new market, speaking to your target audience is essential. Collecting feedback will guide your decisions through data as the product evolves. 

Your team should continually conduct customer research. Those valuable insights are the bread and butter of effective market research

Product positioning reduces development expenditures on unwanted features and helps you create winning products that stick around in the marketplace. 

Become a product positioning pro with Dovetail

Feeling ready to tackle product positioning head-on?

Using customer insight software like Dovetail, your team can get in-depth information about your target audience’s needs, wants, and preferences. These valuable insights will make product positioning easier and more effective, giving your users a highly desirable platform.

Get started today

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