Market positioning: How it can help you build a customer-focused business

Let’s get one thing straight before we get started.

Market positioning is not the same as brand positioning.

You might be familiar with brand positioning, where businesses identify how they wish to be perceived and then take steps to influence consumer perceptions. For example, David Jones says, “there’s no other store like David Jones” and works hard to ensure customers see it as a high-end department store, featuring luxury brands and high-quality in-store displays.

Meanwhile, Kmart promises “low prices for life” and is proudly budget-conscious and family-friendly. Their in-store experience is bright and cheerful, featuring low-cost products, a focus on value for money and everyday practicality for families. When you head online or in-store, you know what to expect. You understand where their brand fits in the market.

Both retailers have evolved over the years to meet consumer demand, but this isn’t just because of brand positioning. Their ongoing success is actually thanks to their understanding of their position in the market. To create a successful brand you first need to know the answer to three key questions:

• Who are you marketing to? (i.e. who is your ideal customer?)
• Where do you fit in the market? (i.e. who are your competitors?)
• What value do you provide? (i.e. what’s your point of difference?)

This is where market positioning comes into play.

What is market positioning?

Market positioning is about claiming a position or reputation in a market so you can then position your brand to potential customers. This involves identifying your target market, recognising where you fit in relation to the competition and understanding your point of difference to ascertain how you deliver value to your customers.

In the case of David Jones, their target market consists of older Australians who appreciate reputable high-end brands, while Kmart meets the needs of young families looking for low pricing on everyday items. Both retailers know who they serve, understand the value they deliver and clearly differentiate themselves in their respective markets.

Without undertaking market positioning, you can’t possibly know whether your offering will appeal to buyers. If you don’t know who you are selling to, who you are up against and what sets you apart from the competition, it’s impossible to create a compelling brand. Market positioning is a crucial first step that no business can afford to skip in the planning stages.

However, in my experience, it’s a step that so many business owners fail to take.

Over the years I’ve worked with many businesses that build all their marketing assets and leap into paid advertising without undertaking market positioning first. Instead of seeing results from their marketing investment, they are left disappointed and at risk of losing their business because they’ve skipped this crucial first step.

The fact is, there’s no point pouring all your energy into your brand if you don’t first understand how your business fits into the market.

The benefits of market positioning

While not undertaking market positioning can have dire consequences for your business, the benefits of securing your place in your market can set your business up for ongoing success.

• Become more competitive – you can adjust your offerings to increase market share based on your knowledge of your competitors and your target audience.
• Boost sales and conversions – you’ll be able to create a powerful brand that speaks directly to your customers, leading to more sales and a boost in revenue.
• Identify new opportunities – you may uncover gaps in the market that could present new opportunities for your business to explore.
• Attract your target market – you’ll know exactly who you want to talk to, understand their pain points and be able to create messaging that resonates with them.
• Make better decisions – you’ll be able to make business decisions based on the state of the market and your place in it, resulting in better outcomes.

 How to identify your market position

There are three key elements involved in identifying your market position:

• Who are you marketing to? (i.e. who is your ideal customer?)
• Where do you fit in the market? (i.e. who are your competitors?)
• What value do you provide? (i.e. what’s your point of difference?)

Step 1: Identify your target market

The first step in market positioning is to identify your target market. Instinct may tell you to target everyone but resist this urge. You need to dig down and think about who would most benefit from your product or service. This is how you’ll connect with those most likely to purchase from you.

Think about our earlier David Jones v Kmart example. These retailers don’t target everyone – they have very specific target audiences in mind that help them connect with their ideal customers. Think about where your ideal customer sits in terms of:

• Location – do they live in a specific area, state or country?
• Gender – what percentage are women or men?
• Age – how old are they?
• Income – what disposable income do they have to spend?
• Life stage – are they raising a family, looking to retire or just starting out?

Identifying these factors will help you create a specific audience that will most likely connect with your offering, your messaging and your value proposition. You’ll be able to position yourself in the market to best meet their needs, solve their problems and deliver the best value.

Step 2: Evaluate your competition

Next, you need to analyse the competition. Is there anyone else already claiming your desired position in the market? Chances are, there are other businesses trying to attract the same target market as you. This means you need to get to know your direct competitors, their offerings and how you fit in the market before claiming your position.

In the case of David Jones, Myer is a close competitor, while Kmart faces off Big W in their end of the retail market. While they are all fighting for their share, undertaking competitive analysis has helped David Jones and Kmart claim a strong position in their markets and build powerful brands. Competitive analysis helps you identify:

• Your primary competitors – who else is aiming for your target market?
• Their influence – how influential is each competitor in the market?
• Customer sentiment – what does the target market think of your competitors?
• Industry health – how are your competitors performing? Is it a growing market?
• Opportunities – are there gaps in the market you can fill?
• Threats – is the market ripe for disruption or upheaval?
• Your place – where do you sit in comparison to the competition?

Evaluating your competition can open up new opportunities for growth, help refine your offering and ensure your business compares favourably to your competitors. This will help you build a strong brand and positively influence consumer perceptions about your business.

Step 3: Uncover your point of difference

The final step in market positioning is identifying your point of difference. In other words, why should your audience buy from you? If you know who you are targeting and who you are up against, it’s much easier to differentiate your business and claim a strong position in the market.

How does your offering differ from those of your competitors? What value do you provide that your competitors can’t? If you can clearly convey your point of difference to your target market, they will be more likely to choose you over the competition. Points of difference can include:

• Offering – how do you meet the unique needs of your customers? Do you offer more features, better performance, longer durability, increased reliability or new uses?
• Service – do you prioritise customer satisfaction, deliver fast response times, create experiences, or offer unique expertise?
• Communication – do you provide easier ways for customers to interact with you, delivering more coverage, convenience and availability than others?
• Relationship – do you go the extra mile to develop relationships with your customers, focusing on courtesy, credibility, and responsiveness?
• Reputation – are you well known for delivering quality, speed, value, communication, results or anything else that sets you apart from your competition?
• Value – do you offer exceptional value, whether that’s through low prices, quality products and services or through other benefits customers can’t get from anywhere else?

By targeting a specific audience, understanding the competition and identifying your key point of difference, you can confidently claim your position in the market (market positioning) and use that to build an identity to establish and strengthen your place (brand positioning).

How to create a market positioning statement

Once you’ve identified your positioning, it’s time to create a market positioning statement. Made up of the key elements we’ve just discussed, a market positioning statement makes it easy to connect the dots between your target market, the competition and your point of difference.

To make things easier, there is a formula to writing market positioning statements:

Step 1: State your target market

Step 2: Identify the needs of your customers

Step 3: Explain the unique value you provide to your market

Step 4: Provide proof to back up your claim.

For [insert Target Market], [insert Brand] is the [insert Point of Differentiation] among all [insert Frame of Reference] because [insert Reason to Believe].

Examples

Atlassian – For developers and teams looking for affordable, open-source solutions, Atlassian creates remarkable software products, used by thousands of teams worldwide. Committed to making it as easy as possible for customers to discover the capability of their products, Atlassian aims to create great products that solve meaningful problems for customers. 

Xero – For small business owners wanting a complete cloud-based platform, Xero is here to help create a beautiful business. Other accounting products have more features, but those products overwhelm, frustrate and confuse people. Xero makes people smile. It’s not just our product, it’s also our people, our culture and our community.

Nike – For athletes in need of high-quality, fashionable athletic wear, Nike provides customers with top-performing sports apparel and shoes made of the highest quality materials. Its products are the most advanced in the athletic apparel industry because of Nike’s commitment to innovation and investment in the latest technologies.

Why you need to constantly update your market position

Once you land on your market position, it’s important to constantly review and update it. We live in a world of disruption and there’s no guarantee your position in the market won’t be challenged by new competitors or changing customer needs. The market position needs to be continuously monitored to ensure you still meet the needs of your customers and your market.
This means you have to be prepared to test and tweak to find the right product-market fit. To do this, you need to be willing to create a culture of learning in your business, so you and your team become comfortable with trying new things and can stay on top of the needs of your market.
Promoting a culture of learning and continuous improvement not only makes it easier to tweak your market position. It also boosts skills development, encourages innovation, helps your business become more responsive and keeps everyone motivated. So, there are positives all around!
Creating a learning culture also makes it easier to build a customer-focused approach as your business will be more open to looking outward and questioning existing processes to improve performance.

How to build a customer-focused business

By centring on the needs of your customer throughout your business, from management decisions to service and fulfilment functions, you’ll be able to stay abreast of their needs and ensure your market position remains relevant. Adopting a customer-focused approach means:

• leading from the top and welcoming feedback
• interacting with your customers at every stage of the purchase process
• harnessing data to understand customer behaviour
• investing in technology to improve the customer experience
• emphasising the role of each employee in the customer journey
• streamlining the supply chain to improve operations.

Building a customer-focused business is not just about embracing a change in attitude. It involves harnessing technology to improve relationships with customers, such as CRMs. It’s about business-wide training to deliver consistent customer service. It recognises that every part of the business has a role to play.
Ultimately, building a customer-focused business requires a whole-of-business approach, focusing on the customer and their needs and recognising that product and service development cannot occur in isolation. This means marketing has to have a role in every aspect of business operations, including product and service development.
For your business to be truly successful, you need to be willing to tweak your offerings so you can claim your rightful place in the market now and into the future. Market positioning is your way forward – don’t miss your opportunity to get the edge over your competition!
Marketing Sense is here to guide your small business toward marketing success and help you create a marketing strategy to supercharge your business. Give us a call to discuss your needs and download your FREE copy of our Brand Statement Worksheet to get crystal clear on your business, your offering, your audience, and your competition.