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Any organization’s goal is to find a lucrative and morally defensible market position in its marketplace. This can be accomplished by differentiated products or lower relative costs, i.e., fulfilling distinctive requirements from competitors or serving the exact needs differently.
An organization is strategically positioned in a market when it has a profitable and protectable market position, and there are only two methods to do so: reducing relative unit costs or differentiating products.
Lower relative costs suggest that your goods and services are produced at a lower price per unit than competing alternatives. In contrast, differentiation means that your goods and services are distinctive and valuable to your target consumers.
As a result, strategic positioning represents the decisions you make in two areas:
- The value type that your goods and services will provide to potential customers (the “Value Proposition” of the product)
- How that value will be delivered in a way that is distinct from that of other organizations (as defined by your organization’s “Value Chain”)
We’ll go over a few key concepts in strategic positioning, strategic positioning meaning, and strategic positioning examples in this piece.
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Strategic Positioning Meaning
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Strategic Positioning Examples
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Marketing-Related Importance Of Strategic Positioning
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How Do You Develop A Market Positioning Strategy That Works?
Strategic Positioning Meaning
Any established firm’s primary priority is to safeguard the earnings generated by its core business or operations. You should have a solid yet realistic strategy to maintain that fundamental value source, and battle, bite and scratch to defend it if required before thinking about new goods, expansion projects or the current management trend.
A corporation that doesn’t have control over its primary business or emphasizes other areas, such as growth, risks failing in both.
The only way to protect your organization effectively, that is, ensuring that it has a profitable and morally defensible market position, is to place its goods and services strategically.
When it is about a firm’s strategic positioning meaning, the dilemma for managers is to keep finding a “profitable” yet “defensible” position in the marketplace, either through lower prices, a differentiated offer or a combination of both, where the organization can maximize returns to shareholders for each dollar invested in it.
Because of the dynamism and complexity of industries and rivalry, the market position seems more of a “process” of constantly adjusting the perception of your firm’s goods and services in the eyes of your target customers.
Strategic Positioning Examples
If you’re mapping the sports drinks sector, you will notice that Gatorade well positions with a higher perceived value in the sports drink segment, but Powerade positions as a low-cost option in the same market.
Coca-Cola’s aim is the promotion of the Powerade as a low-cost alternative to Pepsi’s Gatorade in the sports drink industry, rather than competing with Pepsi’s Gatorade for the target customers.
Customers who buy Gatorade willingly pay more for a sports drink of high quality. But, Coca-Cola realized that an underserved price-sensitive market segment exists that would be glad to pay less for a more basic product laced with vitamins and electrolytes. Hence, it decided to position its Powerade product as a low-cost alternative to Gatorade.
Coca-Cola acquired Glacéau in 2007, introducing brands like SmartWater and VitaminWater into its portfolio to address the premium market segment.
Although Powerade costs around half as much as Gatorade, the larger market it serves allows Coca-Cola to offset lower per-unit margins, allowing the product to be as profitable as or more beneficial than Gatorade.
Powerade’s strategic positioning plan is to be the “price leader” in the sports drink industry. It is one of the prominent strategic positioning examples.
Marketing-Related Importance Of Strategic Positioning
There are a variety of reasons why positioning should be a component of your business model. You may improve your marketing messaging, design your services, and arrange pricing plans to stay competitive with the correct positioning strategy. Here is a brief on the marketing importance of strategic positioning:
- Make a solid competitive position for yourself: The way your product or service positions concerning the competition impacts how buyers perceive it. You’re more likely to maintain a market edge if you develop a positive image of your goods and services in the eyes of your clients. It allows you to assert your place in the competitive landscape, which greatly aids your ability to stay ahead of the competition
- Increase your sales: Improving sales and revenue is one of any organization’s primary objectives. Your organization may reach a new market by having a more relevant offering and communicating it more effectively, which can result in new clients and sales
- Define a more specific target market: In marketing, strategic positioning lets you claim a unique functionality or benefit and target your goods and services accordingly, giving you the appearance of being an expert in the field. As a result, your perceived value among prospects will skyrocket
- Make more informed selections: You’ll get better positioned to make more effective judgments throughout the process once you have the core message that supports successful positioning tactics. In addition, precise positioning in marketing facilitates successful communication and fosters healthier and stronger customer connections
- Connect with what customers want: organizations have the potential to explain the essential benefits of their goods and service through positioning in marketing. It not only energizes the product but also connects it to the exact customer who requires it
With that said, let’s see how such a marketing strategy can be devised.
How Do You Develop A Market Positioning Strategy That Works?
Create a strategic positioning statement to help customers recognize your organization and how you want them to perceive your brand.
- Compare your firm to competitors to determine its distinctiveness: To uncover opportunities, compare and contrast your organization with its competitors. Concentrate on your assets and how you might use them to take advantage of them.
- Determine the present market situation: Determine your current position and how the new positioning will help you stand out from the competition.
- Analysis of competitor positioning: Determine the market’s conditions and the extent to which one competitor can influence the other.
- Create a positioning plan: You should have a good idea of your organization, how it differs from competitors, market conditions, market potential, and how it can position itself after going through the initial processes.
These were the basic steps of implementing strategic positioning.
If you want to know more about new marketing strategies and concepts or improve your existing marketing plan, Harappa’s Select A Strategy pathway will guide you in the right direction. You’ll be introduced to key concepts on how to navigate issues in strategic decision-making. Learn about each framework with real-world examples from our expert faculty. Sign up for more!
