What Is Strategic Positioning? (Definition and Benefits)

By Indeed Editorial Team

Published 16 November 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Positioning in the market can determine how clients perceive a product and a brand. Companies that develop strategies for positioning brands, products and services within the market can improve brand awareness and profits. If you're a marketing specialist or brand manager, learning more about how to improve positioning within the market can help you develop your marketing skills and knowledge.

In this article, we explain what strategic positioning is, detail why it's important, provide the steps you can follow to create an effective strategy, outline the benefits you can experience when you use this strategy and offer helpful tips for implementing it.

What is strategic positioning?

Strategic positioning is a marketing approach through which a company attempts to change its value, perception and position within the market. A brand's position within the market refers to how potential customers view it compared to competitors. Companies can use strategy for positioning by considering the competitors within the market and determining how they want customers to perceive them compared to other options.

For example, a food company enters the frozen breakfast market by introducing its own brand of frozen breakfast bowls. When assessing the market, the brand discovers that there are many frozen breakfast options available to choose from. After considering the target audience, the food company positions its frozen breakfast products as the healthier frozen option, with no preservatives and a fresh taste.

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Why are positioning strategies important?

Using a strategy for effective positioning is important because it allows companies to be clear about what makes them different from other options. When a business introduces a new product into a market, it's likely there are many other products that customers can choose from. Companies that focus on product or brand positioning can send a clear message to consumers and draw more customers, which may help them increase profits and brand awareness. These are some benefits of using positioning strategies:

  • Target audience understanding: When you implement positioning strategies, you evaluate your target audience, or the people most likely to purchase the product. Conscious positioning helps you better understand your target audience, which improves other marketing efforts.

  • Simpler re-branding: Re-branding happens when a company or brand changes elements like tone, value, perception, purpose or image. Using positioning strategies helps you understand where the brand exists within the market and how to re-brand effectively.

  • Customer value clarification: Having a clear idea of customer value is important for marketing. When you use positioning strategies, you define the product or brand's value in a simple, concise way.

Related: What Does a Product Developer Do? (Definitions and Examples)

Types of strategic positioning

These are three types of positioning strategies you can use:

Differentiation

When marketing specialists use the differentiation strategy, they separate their product from others by making it high-quality and marketing it as luxury or premium. This allows the company to charge more for the product. Though this may eliminate customers who shop based on price, it can attract customers focused on purchasing the best products. There are many ways a company can market their product or service as being premium compared to other choices, such as excellent customer service, higher quality materials or a unique manufacturing process.

For example, a company may market their foods as having the best flavours and nutrients. They may design the packaging to be more unique and luxurious than competitors. By charging a premium price for this product, the company can generate a profit by focusing on the market that's willing to pay more for a better experience.

Niche marketing

Niche marketing is the form of positioning in which the company completes market research and creates a product based on a specific market to which other businesses aren't marketing. When using this strategy, companies often create or provide a highly specialised product that's specifically for the target audience. For example, a company may notice a market that only eats plant-based food, and then create a food line that only has plant-based ingredients.

Cost leadership

Another way to position a product or brand within the market is to do so based on price. While niche marketing and differentiation focus on the product, cost leadership focuses on how much the product costs. This can be a difficult strategy to use, as even when lowering costs, it's important to maintain a product quality that customers are willing to pay for.

Another potential difficulty you may experience when using this strategy is competitor price changes. Competitors may recognise that you're using this strategy and lower their prices, which can make it more difficult to further lower your prices and maintain your cost difference. It's important to conduct market research to determine if this strategy applies to your target market.

How to create an effective positioning strategy

These are some steps you can follow to create an effective positioning strategy:

1. Identify your target audience

The first step in using a strategy for positioning is identifying your target audience, or the clients and customers most likely to purchase your product or service. Consider creating a clear statement about the customer who purchases your product. For example, you may identify your target audience with a statement like this:

Example: Our target customer is someone who wants a simple solution for doing dishes without a dishwasher.

During this step, determine who's likely to purchase your product, including factors like where they live and their occupation. For example, the company from the example statement may identify its target audience as busy individuals without dishwashers. This may include university students or those living in apartments. Here are some other factors to consider when identifying your target audience:

  • location

  • age

  • gender

  • interests

  • occupation

  • income

  • family

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2. Evaluate your competitor's strategy

After identifying your target audience, complete market research and consider competitors within the market. To do this, make a list of other companies that sell the same product or offer the same service. Visit their web pages and social media sites to learn more about the marketing strategies they use. This is important because your competitor's strategies can affect the success of your own.

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3. Choose a positioning strategy

Once you've identified the target audience and evaluated the competitors, consider which positioning strategy can work best for the brand, product or service. If the target market is small and has specific needs, niche marketing may be the best. For markets in which there are no luxury options, consider using differentiation. It's important to consider your competitors, because if one or many of them use cost leadership, it may not be an effective strategy for you, depending on the market and the company's manufacturing or operation costs.

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4. Create a branding and marketing plan

Incorporate your positioning strategy into branding and marketing plans. Develop messaging that helps to position the brand according to the strategy you've chosen. Gather test groups and conduct marketing reviews to see how customers may react to branding and marketing before launching, as this can help you make adjustments and ensure your target audience responds positively to your positioning efforts.

Related: What Does a Strategic Planner Do? Role, Skills and Salary

Tips for developing an effective strategy

These are some helpful tips for implementing a strategic approach to positioning:

  • Implement a system for assessing results. When you use strategies for positioning, it's important to know how your efforts affect the brand and the audience. Some things to measure include brand awareness, total sales, customer satisfaction and repeat purchases.

  • Adjust your strategy for better outcomes. If you notice an approach doesn't improve brand awareness or sales, consider trying other methods. It's important to give each strategy time to enact change, but if that doesn't happen, be flexible.

  • Design a genuine marketing strategy. Be truthful and genuine in your marketing. Provide customers with low-cost or high-quality products, as promised in your branding.

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