On the journey of building a new product or introducing a new brand, one of the core exercises is coming up with the brand positioning. Brand positioning guides the entire marketing mix strategy, and is the basis on which marketers build their decisions.
The brand positioning is an equation where one must have a target group and a value proposition. Then, the final outcome should be a relevant brand positioning statement. How to reach that? This is what you’ll find out in this step by step guide.
What is a Brand Positioning Statement?
So, let’s begin this article differently by stating where one should end. Of course, the easiest way to understand what a brand positioning statement is is to look at an example. Here’s how the household brand, Fairy, position themselves on the market:
“For the most demanding housewives, Fairy is the best detergent in class for cleaning up dishes because of its highly concentrated power.”
Like Fairy, once a company has defined the positioning for its products or its brands, it needs to communicate it well to the market and to its stakeholders; customers, investors, and employees. This is done through crafting a brand positioning statement. This is a brief and concise description of who your target group is and the competitive advantage your brand has against its competitors.
So, how do marketers define a brand positioning statement?
The positioning statement has many conditions to fulfil in order to be effective:
- Firstly, it must be simple and easy to remember.
- Secondly, it has to be clearly oriented towards the target group.
- Thirdly, it has to contain a value proposal that is credible, relevant and unique for that target group.
- Lastly, it has to include a clear frame of reference against competitors and be flexible enough to accommodate potential changes.
Often, it is important to include some evidence to make a brand positioning statement credible. In Fairy’s example, you can see how exceedingly focused and straight to the point the brand is about its target consumer, the true value it offers, and supporting their claim with reasons to believe.
It’s clear that to come up with this simple and concise statement, you need to have a full and rigorous understanding of the market, your competitors, what your product can and can’t do, your target consumers, their needs and their pain points, and finally the rationale to support your claim.
Brand Positioning Basics: What Is Positioning?
Positioning is the basis of your marketing plan and the core of your branding strategy. So what is positioning? Positioning is the process through which we design the company offering to attend to a segment, or a pool of segments, with a value proposition, which is going to be relevant for them.
The idea first came into life as a result of society being flooded with communication messages. Customers are unable to absorb all of these messages. The only way to overcome this was to create a clear image able to penetrate the mind of the relevant customers.
For a long time positioning was associated with communication, as this was the only way to occupy a distinctive and unique place in the mind of your audience.
However, this concept developed until positioning became one of the core concepts in any marketing strategy. It enables us to define a brand’s target group, and develop the value proposition which appeals to them.
The Evolution of Marketing
Like most aspects of life, marketing is a dynamic arena. It moves from one stage to the other, and continuously progresses to fit the ever-changing environment. The ‘selfish gene’ of evolutionary theory is the marketer fighting to survive. This means competing with rival companies against the background of a constantly changing consumer environment.
Like biological evolution, marketing evolution is non-purposive, beyond the immediate goals of year-end profitability and self-promotion.
Unlike biological evolution, change is achieved, not by random mutation of the gene, but by individuals who transcend best practice, and, through innovation, point marketing in a slightly new direction.
Benetton, Nike, Tango, The Body Shop, Virgin are all brands that have benefitted from the maverick thinking of successful ‘selfish genes’ bent on survival. In biological evolution, gene mutations or irregularities are responsible for the step-changes in development.
In marketing these are represented by the breakthrough product invention, or by the break-all-the-rules advertising campaign. Very often these rules are only recognised as rules once they are broken.
In other words, the factors that drive the evolutionary journey of marketing are growing choices, competition in the market place, and growing power and discrimination on the part of the consumer.
The marketer’s job is to develop winning strategies that deal with this smartly. Simply put, the more consumerised the environment, the more marketing will evolve.
The 5 Stages of Marketing Evolution
So, in order to identify whether or not your product needs positioning, and to build the right positioning, you need to understand the market and the environment thoroughly. Global marketers, for instance, realised that marketing isn’t the same across different parts of the world.
Most of them attributed these differences to culture. However, later it turned out that culture is only partly responsible for the variations that are seen in marketing today. A bigger factor is the stage at which a country or a product sector has arrived at in terms of marketing evolution.
Understanding this helps you decide what the customer expects and helps you build a value proposition and craft a message that fits within that market.
Stage #1: Commodity Selling
Unbranded commodities are the major proportion of goods in the non-industrialised world. It plays a minor part in Europe and North America. In such environments, the market is under-supplied, so the customers come to the manufacturer’s door. Commodities are often raw materials that are used in manufacturing consumer products.
Little attention is paid to differentiation or packaging in this case. In fact, products are packaged only to the extent that they can be handled. Purchasers may even have to use their own containers.
Considering this setting, where the manufacturer is sure that the products will be sold anyway, and there is little to no competition, there is no need to develop a brand name, or to advertise or commission research.
There is no segmentation of the customer base. Volume of sales at the right price is all the information that is necessary. The manufacturer has the power and for as long as the product sells, they don’t worry about consumers.
This also applies to a few in industrialised markets, if the product is essential, yet cheap, and there is no room for quality assurance or creative innovations. An example of this might be table salt, or flour
Stage #2: The Birth of Marketing (Brand as Reference)
Marketing, as opposed to selling, starts if and when the manufacturer is faced with competition and the customers have a choice.
The branding process may start with the stamping of the maker’s name on the product, or there may be an attempt to make the product different in some way. This can be as simple as making the product more noticeable or more attractive to the potential purchaser.
If competitors follow, then the manufacturer may be forced into other activities to protect their share of the market. Therefore, creating brands becomes the only answer to avoid price wars and undercover sabotage.
At this stage, brand name is usually associated with the manufacturer’s name. The brand name here is only used for identification. There is no brand promise or emotional attributes whatsoever. However, over a long period of time, or at the end of this stage, the brand name becomes a synonym for something deeper.
Brands that are born when the market is still at this stage have the advantage of having the time to develop when the market is not yet cluttered. For instance, brands that dominate the FMCG market in Europe and the US today are often the ones that were founded at this early stage. Think of Mars, Nestle, Coca-Cola.
Furthermore, advertising at this stage has a minimal role to play. Any advertising here is a straight sell that focuses on rational, functional attributes. The advertiser assumes the role of maker, ‘expert’, or salesman. The purpose of the advertising is to inform the consumer of the brand’s presence and, increasingly, convince them of its superior qualities.
The ‘straight sell’ becomes a ‘hard sell’ under competitive circumstances. This is the kind of advertising that respondents welcome when the brand is new but often find intolerable when the brand is familiar.
Unless there is something new to be said about the brand, the rational informational ad is often resented as an intrusion. This is exactly what moves the market to the next evolutionary stage.
Stage #3: Classic Branding
At this stage, a brand has a personality. It’s separated from the manufacturer’s name because manufacturers no longer have the same power they used to have in the past. It’s now the brands on the front line.
The shift from marketing to classic branding is never easy, for the consumer nor the companies. The focus shifts from selling the product to pleasing the customer. This involves learning about consumer emotions and letting them direct the branding strategy.
It is a shift from being in control to relinquishing control, from the pushy straight sell to persuasion. That’s why it needs heavy advertising support, and similarly heavy investment in packaging design and supporting materials.
With classic branding, companies aim to build a real relationship with the consumers through repeated purchases, after sales touch-points, and advertising that makes them feel better about choosing a specific brand.
Consumers become much more empowered as competition gets a lot more intense. The brand role now becomes really important. It is a product ‘with added values’, a bundle of associations that tap into consumer’s motivational psychology.
So, ‘advertising’ shifts to ‘communication’.
To shift the consumer’s mind from functional benefits to emotional ones, communication must take on a difficult quest. Commercials focus on appealing to emotions by placing the brand meaningfully into the lives of its users. Very often the Classic Brand plays the role of a magical agent that solves an emotional problem.
As this stage develops, communication becomes ‘a soft sell’ where moving from lifestyle to storytelling. In ‘soft selling’, the commercial motive is implicit and subordinate to pleasing the consumer.
The underlying paradigm for Classic Brand advertising is show business. Commercials are created as twenty-second or thirty-second movies. This is very popular advertising with consumers around the world. If sufficiently entertaining, it’s a safe option for brand leaders. A successful brand now has a personality and human characteristics that consumers can associate with it.
It’s important to note that new brands are born into the new world. Iif a new brand is born into this mature market, it can’t use communication techniques from the past. New brands must speak the language of their age by finding the right narrative, that combines functional and emotional benefits.
Stage #4: Customer Driven Branding
The market here is more mature. Mature brands that were founded at stage two are probably now the leaders of their categories. As the market place becomes saturated, some brands are capable of becoming icons.
These are brands that have, over time and usually with massive investment, become associated with primary motivational drives and values. Brands become celebrities. Examples include:
- Nike and aggressive winning,
- Marlboro and machismo,
- The Body Shop and harmony with nature,
- Dove and real beauty.
Stage #5: Postmodern Marketing
Postmodern in the marketing sense describes the knowing cynicism of the consumer, and their growing individualism. Both brands and consumers become multidimensional and multi-faced. Consumers become so literate about marketing and communication that they see through the conventions and devices designed to persuade them.
For instance, consumers may be searching for product quality without any ‘added values’, so they go for generic brands. Sometimes this search for authentic experience results in a barely perceptible layer of marketing.
In other areas of consumption, Classic Brands continue to persuade and please, simply because the consumer is willing to play the game. Therefore, brands become complex structures and consumers are no longer differentiated by personalities, but by needs.
Later, when we touch on segmentation, you’ll know this is known as needs-based segmentation.
Meanwhile, much more will be expected of the Icon brands. As political establishments lose their authority, it seems likely that major corporations will take their place. They can expect to play a part,by choice or by force, in the sociopolitical life of tomorrow.
Ethical marketing will emerge as a major strategic route for many. On the other hand, the proliferation of media coupled with new technology enables manufacturers to customise products to ever-smaller target groups. So, many brands are born to serve niche markets.
This deconstructed context calls for deconstructed advertising. Advertising for this stage is often playful and ironic. This is sometimes called ‘anti-advertising’. It acknowledges the consumer’s awareness of the advertiser’s intentions and the advertising conventions used. It knows when to give pleasure, when to surprise, and when to challenge.
Where to Start with Brand Positioning
So, if brand positioning ends with the positioning statement, where does it start? There are two points where marketers or business owners usually begin. The first point is where a marketer finds themselves with a great product concept or a service with a useful offering.
However, they might not know who would buy this product, or whether or not there is a need for this product in the market. So, here you have a proposition. What’s missing is the relevant target group that would be willing to pay for this product.
In that case, you’ll need to do market segmentation. You’re facing a very large market, you can’t deal with it all. So, what you’re going to do is split the market into different classes or different customer profiles. These are called segments.
Then, you’re going to prioritise one segment and reach out to this selected segment with market research to validate or quash your assumptions.
The other point of start is the other way around. You have a clear target group that you can address. You know that there is a gap in the market. But you don’t have a value proposition. There is no concept yet. You know that there is a need or a problem to solve for that group, yet you don’t have a solution.
So, in that case, what you need to do is market research. You need to hear from that target group, know more about their behaviour, their needs, their pain points, and come up with a relevant solution to their problems. For instance, left handed high school and college students.
They may be facing some annoying day to day situations that nobody in the market is considering. From these insights, you can come up with a new product with a defined value proposition.
The 4 Steps of Building the Right Brand Positioning
Of course, if you’re reading this guide, you’re probably thinking about how to position your own brand. Lucky for you, there’s a pretty simple framework you can follow to position your brand on the market.
Here are the four steps to a successful brand positioning strategy.
Brand Positioning Step 1: Market Assessment & Market Research
The first step is understanding the market you want to enter. This is quite a difficult task, as you need to get your head around the industry, your consumers and your competitors. This is the key to finding a gap for your brand to fill.
The Five C’s Analysis (CCCCC)
As obvious, market assessment and research are essential parts of positioning. Whether you’re starting with a product concept or with a clear target group, market research is the only way to validate the viability of an idea and this is the basis of positioning.
Your analysis and research can be as deep as you want them to be. Big companies spend a bulk on market research to get as much detailed and correct insights as possible. However, market research doesn’t have to cost an arm and a leg to be workable. You can still do it on a budget.
To move forward with brand positioning, you need to grasp your market from five different aspects. The five C’s analysis covers context, then moves to customers, collaborators and competitors, and finally the assessment of your company itself.
The evolutionary stages of marketing will be immensely helpful when you do a context assessment. You know now that each country or region may be at a different stage and even within the same country, some industries and categories may be ahead of the other.
When marketers talk about ‘context’, they basically refer to the PEST factors. The PEST stands for political, economic, social and technological. These factors have to be very, very specific to your market, as well as your specific product.
PEST factors tackle questions such as:
- What is the political situation in the country where you’re trying to reach out?
- What’s going on in terms of legislation?
- How does it apply to your product?
- What’s going on in terms of growth, unemployment and inflation?
- What is the income distribution across different segments?
- What’s the status of technology?
All these factors are going to condition how you enter into the market, the kind of products you’re going to introduce, and how you’ll sell this product.
The second C stands for customers. They have certain expectations and wishes that your product will tackle its value proposition. The greatest brands in the world, like Amazon and Apple, follow a stern customer-centric strategy.
So, this aspect of market research is of the highest value to them when it comes to product development and research. The big question is who are your customers?
Many mistakenly think that customers are only the end users. However, the first customers one must think of is purchasers. In other words, people that are going to purchase the product no matter if they’re going to use it or not. In this regard, you need to understand the decision making process and recognise very carefully what’s driving behaviour.
For example, someone buying a shampoo, or a director who’s deciding on which printer they’re going to invest in. Those could be purchasers. But the end users are the ones who will use the product, regardless of whether or not they made the buying decision.
That is, other employees in the firm are the ones who end up using the printer, not the purchasing manager.
A third category you must also consider is influencers. These are basically people that have a large amount of sway in which products people buy. A clear example of influencers is when dentists speak to their patients and prescribe a certain toothbrush
On top of that, you must not forget about internal customers – your own employees. These are your first brand advocates, so you must get them on board. They’re going to be critical and they play a vital role in executing your brand positioning strategy and potentially deal with customers.
Finally, distributors, dealers, and anyone responsible for making your products available to the end customer are the nucleus of your business. They’re also customers themselves. Dealers are becoming more and more relevant. This is why quite a few companies in the FMCG industry regard those dealers as the customers and also speak about the end customers as the final users. But they make the distinction.
The third C has to do with collaborators and by collaborators one refers to firms and people that help you sell the product. That covers distribution channels, key opinion leaders, and any third parties will play a role in commercialising the product.
It’s important to analyse the weight and the role that each party will play to have a full grasp of how your logistics and execution processes will go. In the healthcare industry, for example, several parties are involved in the process. This includes dealers, doctors, and insurance companies. They all affect the launching of a new product or brand.
The fourth C is the most common one – competitors. Analysing your competition in the market comes in naturally. Every business does it. Identifying competitors is a tough task. You have to scan and read the market really well and be present. When you identify competitors, you have three types to consider: direct, indirect, and replacement.
- Direct competitors are the businesses that sell a similar product or service in the same category as you. These are the competitors you most often think about. Like McDonald’s and Burger King.
- Indirect competitors are the businesses that sell a product or service in the same category as you, but it’s different enough to act as a substitute for your product or service. Like McDonald’s and Subway.
- Replacement competitors (also called ‘phantom competitors’) are the businesses that sell a product or service that’s both different in category and type than you, but one which your customers could choose to spend their money on instead. Like McDonald’s and brands selling frozen burgers, nuggets and fries.
The last C stands for your own company. It’s not easy to evaluate yourself, though. Usually business owners or marketers tend to either underestimate or overestimate their capabilities. So, what matters most here is being sincere and objective about the analysis. You must answer questions such as:
- What are your company’s resources?
- Where does it stand?
- What is your company especially good at?
- What are your limitations?
- Which kind of run image do you have in the market?
- What’s going on in the markets or with the products you already operate within?
This concludes the five C analysis which is the first phase of the brand positioning process.
Step 2: Segmentation & Finding a Target Group
As we noted before, segmentation is all about breaking your audience down into more manageable chunks. For the vast majority of businesses, you don’t only sell to one type of customer.
For example, toy brands might sell directly to children, as well as their parents, or even collectors. That’s before you even think about their B2B customers, like distributors or corporate customers.
Let’s dig a little deeper into how you can segment your audience.
Segmentation is all about dividing the market. It’s dividing the market according to specific criteria that will eventually deliver homogenous groups in terms of characteristics, needs and behaviours. So, that’s how you end up with segments.
A segment is a pool of customers that share similar characteristics or behave in a similar way. Here are some of the main considerations for segmenting your target audience.
Segments can be as big or small as you want them to be. The starting is always the mass market. Mass marketing occurs when you address a general market without introducing any segmentation. This only makes sense when you deal with a market that has extremely homogeneous preferences. Here, the differences among segments would be pretty small.
Ford’s T model followed the mass marketing strategy. That was basically the same car, same model, same features, and even the same colour for everybody.
In today’s world, this is an exceptional case. Almost all products need segmentation in order to have a brand positioning. However, there are some rare cases where you wouldn’t need to segment. For example, if you’re selling table salt.
It’s a product sold to everyone and consumers have the same preferences and behaviour. So, there’s no room to differentiate and there’s no need to segment in that case.
Segmentation is when you start splitting the mass market into segments with specific needs and preferences according to age, gender, income, or geographic location. What you’re going to do is address them with a value proposition specifically designed for them.
So, the right segment for your product may be married women. This is a big segment. Meanwhile, your relevant segment may be affluent women with more than one child who live in the city and work from 9 to 5. This is a more specific segment.
Your chosen segment must be the one that adds the highest value to your brand or product. So, your service or product may appeal to multiple segments, yet the chosen one is the most willing to pay for the product and the biggest in size. A segment must have weight in order to be valid.
Niche marketing is selecting a small sized segment. In a niche market, you continue to narrow down into a smaller segment so that it sounds like this: 20-25 year olds who listen to the same band.
This is a market niche. To be profitable, niche products or services usually have a premium price tag to substitute for the small number of consumers. Additionally, niche products must be very well crafted and address specific needs that the target segment is really happy to use.
A Segment of One
A segment of one is when a brand or product addresses an individual customer and develops a customised value proposition. Like niche marketing, individual segmentation has to be done in a very selective way and often targets high value customers. A segment of one is common in B2B markets.
Close to this concept is the concept of mass customisation which is a growing trend. Mass customisation is enabling customers to customise their product in the way they like, according to their own preferences.
The classic example of mass customisation could be Dell computers. If you go to Dell website, you will find out you can customise your PC, right? You can decide on the colour, on the stacks, the accessories, the batteries you’re going to get, etc. Another well-known example of mass customisation would be the Nike ‘BY YOU’ proposal where they allow customers to customise their own unique sneakers for a premium price.
How to Segment the Market
You can segment the market based on four main criteria: demographic, geographic, psychographic, and behavioural. While demographic and geographic are the most common and traditionally used, psychographic and behavioural segmentation have revolutionised the way brands view buyers as humans especially in the digital era.
More importantly, segmentation criteria are not exclusive but complementary. Meaning, you can use more than one approach in parallel.
Within the demographic criteria, you can segment according to gender, age, education, income level, etc. Gender is easy to spot. Looking at the market, you can easily spot products that serve the same need but target different segments. Think about how razors are sold to men and women.
The second factor could be age. By nature, every age has specific needs, so every product offering draws a certain age group. Furthermore, education and income level are considered important criteria for segmentation especially when it comes to services like local hotels, cultural magazines, and luxury products.
Demographic segmentation is really popular and used by the biggest brands even though it has serious limitations. Demographic segmentation usually falls trap to false assumptions and stereotypes. You may find out that there are old people addicted to video games when theoretically, if you follow this criteria, video games are meant to be for young people.
Geographic criteria deals with climate, social environment, and culture. Geographic segmentation shares the same limitations as demographic segmentation. You identify segments based on country, regions, cities, towns, or even by postal code.
Social environment and culture play a role in the overall value proposition and its attributes like how it should look like, taste or smell. If you think about red sauce, for example, some regions are used to spicy red sauce while others prefer mild salsas. In that case, culture and environment actually affect your offering directly.
Psychographic segmentation takes into account the psychological traits of individuals. That refers to the values, attitudes, personalities and aspirations of those who will be interested in our product. Psychographic criteria is a more modern segmentation approach than the previous two.
You may even end up with clusters that most likely will divert from those you obtain from demographic segmentation. If you think about Formula One fans from a psychographic point of view, you may speak about extroverted VS introverted customers; innovators VS laggards. These clusters are totally different from what you get from demographic or geographic segmentation.
Behavioural segmentation refers to the purchasing behaviour that each segment adopts. Purchasing behaviour matters because you can tailor the right channel for each customer and guarantee that your brand is present whenever it’s needed. Through this approach, you can distinguish between occasional and regular customers. You can also understand the occasions when your product is purchased.
For instance, it’s not the same when a customer visits a hotel during a honeymoon, holidays, or during a business trip. A hotel would need to present the service differently depending on the occasion. The occasion of purchase affects your distribution channels, display, and pricing.
Luckily, there’re tools to measure behaviour in an objective way. For example, when you take the barcodes of the products purchased and get them associated to the customer, thanks to loyalty cards. Or, using CRM tools, you can understand what the consumer’s wallet serves and the percentage of cash the customer is spending on your brand from the total category. This can help you assess the potential customer value.
From a demographic perspective, Lucy is a woman, 30 to 35 years old. She has two kids, a degree in communication and an annual income of $120,000. If we move to a psychographic perspective, Lucy is going to be an extrovert and innovative.
She votes for the Liberal party and she’s in favour of public transportation. She believes in diversity and equality for all. Now, when you move to a behavioural perspective. Lucy is spending from 500 to $1,000 per month, online. She has an iPod, she has an iPhone, and she has an iMac. She’s also shopping regularly in local super markets.
How to Make Sure that the Target Segment Is on Point
It’s very common that companies come up with sophisticated segmentation approaches. But at the end of the day, the entire project or product launch doesn’t turn out to be profitable. Therefore, a good advice would be that you cannot lose out the perspective that marketing is about providing value to the business.
That’s why you need to make sure that whatever you come up with, it’s something actionable. It’s something you can operate with. In other words, it’s something that is going to deliver business results.
For a target segment to fulfil that role, or at least to be worthy of trial, it must serve specific conditions.
- Number one, the chosen target segment must be measurable. By measurable, one means that you need to be able to get the data for being able to analyse the segment and determine its size and characteristics. For doing this, getting information from public sources such as the National Institute of Statistics could be a good start.
- Number two, this target segment must be accessible. Meaning, you need to be able to reach out and serve this segment in an efficient way. You need to be able to communicate with it through several channels and be present where this segment expects you to be. If your only experience with communication is digital and you’re targeting people who are above 60 years old, it’s going to be tough because you won’t be able to reach out to your segment the way you should.
- Number three, the third criteria that we have to consider is that the segmentation needs to be profitable. Keeping in mind that when you cover a large segment with low margins, that ends up providing the company with a sound total profit, ultimately. Alternatively, going for a smaller segment with higher margins will deliver profits to the business as well. So, you need to consider both the size of the segment and its level of profitability.
- Number four, make sure the segment is differentiable. Differentiable means that the segment will show different responses to different marketing mix combinations, and also to different marketing campaigns. This will give you the flexibility to expand and have several product variations and a big portfolio of services and concepts.
Step 3: Differentiation & Value Proposition
So, you’ve completed the 5C’s analysis and you’ve got your target segment straight. Now, it’s time to come up with an offering that makes sense to that segment. But, what makes a value proposition valid? And, what are the tools that you can use to come up with a differentiated offering?
Definition of Value Proposition
Essentially, a value proposition is an explanation of what makes your product relevant, different, interesting, or generally worth paying for.
A product is a set of tangible attributes such as material, composition and features. All of these physical attributes combined with other intangible ones form the benefits that are going to be perceived by customers. Intangible attributes are the values associated with the brand, like trust, image, quality, etc.
If your decision is to provide a product and service with a pool of attributes and values, the customer must see a clear distinction between your offering and the rest of the options.
Value Proposition Example: Nike
Therefore, the value proposition is not only the differentiated attributes of a brand or a product. The value proposition is also the set of benefits that the company promises to deliver. Why would someone be willing to pay more for this Nike hooded sweatshirt?
First, they find it relevant. It meets their functional and emotional needs. It’s made of durable, breathable material which is suitable for running as well as everyday use. They feel good wearing it and other people perceive it as a great choice.
This is why it’s relevant. Another thing is, it’s easily differentiated through the logo, design, and quality that other competitors may not offer. Additionally, design makes it ‘cool’ and the brand speaks to a value that young people believe in, so it’s interesting. Finally, all the previous emotional and physical attributes make the deal worthy for the target consumer.
Tools to Differentiate & Have a Strong Value Proposition
This is tricky business. To help figure out the strength of your value proposition, here are a few tools and techniques you can use.
Frame of Reference
Identifying your frame of reference is a crucial step and if you haven’t done it in the research phase, you must do it before building your value proposition. The frame of reference is the market you’re going to compete in which includes closely related categories or potential categories.
Think of Starbucks, for instance. What is its frame of reference? The coffee market? The fast food category? Howard Schultz, Starbucks founder, describes Starbucks as ‘the third place’. It’s something between your home and your work.
So, its frame of reference is actually other places where you can relax and enjoy such as bars, restaurants, or cinemas. Therefore, when you do this exercise, your outlook must be broad and not just limited to one category or one industry. You must think of potential. You may even create a mixed frame of reference like Starbucks.
Points of Parity
When comparing your offering against your frame of reference, points of parity are the attributes in a category that are essential to be considered by customers. Of course, these ‘must-haves’ must be essential from the consumer’s perception.
It’s a common mistake, especially in start-ups, to skip the basics and jump straight to the differentiation. This soon turns out to be disastrous. Before jumping into the points of difference, you need to make 100% sure that you’re complying with the basics.
Each industry has its own basic expectations. In the car and auto industry, the centralized locking system, the ABS brakes, the air conditioning, and other characteristics are the basics required to be considered by customers. You can’t skip them, even if your car has a feature that nobody else has, you must first meet the basic features.
Points of Difference
Design, sportiness, comfort or safety? This 30 second commercial by Audi can teach you lessons on differentiation. The first lesson is that each heritage brand the ad refers to in the ad has done a magnificent job carving its edge in the mind of their target segment.
Alfa Romeo for design, BMW for sportiness, Mercedes for comfort, and Volvo for safety. This is another great lesson by Audi itself who differentiated themselves by offering their ‘all in one’ car.
On the other hand, there’s Apple. Surprisingly, Apple’s value proposition is simplicity and therefore they differentiate themselves by offering less! Some time ago, Steve Jobs killed the floppy disks and their innovative AirPods took away the complications of the traditional mobile headphones.
Today, they’re selling their latest iPhone without a charger. Although it may sound crazy, Apple truly believes that less is more. This is their value proposition and their consumers believe in it. Sometimes, brands choose to have a basic as a differentiator. Like fastest delivery or premium customer service, or money back guarantee.
Your differentiator doesn’t really need to be that innovative or that complicated. It can be simple, the most important thing is to be consistent. Remember that your value proposition is a promise, and your business must deliver on that promise every single time.
On the one hand, you can look for differentiation based on the product attributes, characteristics, shape, packaging components, design. Or, through the services associated to it, ease of purchase, delivery, installation, customer support, maintenance.
Even your staff and employees could be a criteria for differentiation. A reputation from your employees’ competencies, courtesy, credibility, communication skills, ability to solve problems. Another criteria could be superior technology and the ability to get an edge in the market, that’s also a source of differentiation.
The objective of this exercise is to find out an attribute or a differential benefit that can set you apart from competition. So, when it comes to that, there is no golden rule. There’s a lot of testing in the process.
It’s a dynamic, on-going exercise that you need to study, validate, execute, and then revise, make changes, and come back with the right offering.
The Three Circles Model
To make things easier, this model is used to define points of parity, points of difference and find out your company’s strengths and weaknesses.
This model was developed by Urbany & Davis and was published inHarvard’s Business Review. The first circle represents the customer. It’s going to cover the target customer’s wishes, needs and expectations. This surely includes the two types of needs: explicit and latent needs.
Explicit needs are those the customers are sharing with you clearly. Meanwhile, latent needs are those which are not explicitly manifested but are actually there. The second circle represents your brand or business.
Specifically, the attributes and characteristics that customers truly value about your offering. In other words, what differentiates you against the other choices; why they choose your brand. The intersection between these two circles are your differentiators or the key strengths of your brand.
Next, you’re going to look at the third circle which represents your competitors. What is their value proposition? The common intersection between the three circles is basically the points of parity. This is what your brand has in common with competition which also satisfies the needs and wishes your customers have.
Points of parity are the minimum you need to comply with in order to be able to compete in the category. Meanwhile, the intersection between the customer’s circle and the competition’s circles refers to what competition is doing better than you in terms of satisfying this customer.
So, the three circle model is a visual way, a screenshot, of understanding where you are in terms of value delivery. It clarifies the minimum you must comply with to compete in the market and the perks you have over competition. This is also a dynamic, on-going exercise that you should do yearly, every six months, or even quarter in some fast moving industries.
Step 4: Positioning
So, this was the starting point of the article. (Remember how this article started from where you should end?) Right now is the time to put the actual phrasing for your positioning statement. You’ve studied and analysed the competition, the environment, and the customer’s needs. You’ve identified your chosen segment and have understood its behaviour.
There Are also useful tools to help you articulate and measure your offering and value proposition in the market against other options, of course from the consumer’s perspective.
Brand Positioning Maps & Tools
Sometimes, the best way to get to grips with your target market, and where your brand fits into it is by using visualisation. With that in mind, here are some of the ways you can represent your brand positioning.
Brand Positioning Perceptual Maps
Perceptual mapping is a visual representation of where a brand, product, or service stands among competitors. It is also known as positional mapping. This type of competitive analysis framework generally consists of two key attributes as a basis. Once you’ve chosen the attributes you want to focus on, the next step is to plot the brands, products, or services to see how they’re positioned among these attributes.
The objective of this exercise is to have a visual reading of where you want to position your brand in the market. Additionally, it’s a great way to find out where opportunities lie in the existing market.
Perceptual maps are based on market research. Therefore, first of all, you need to take a representative sample of the market you want to address. Ideally, you should look for a sample that represents the different market segments.
Once you have that sample, you’ll ask the participants about the most relevant attributes that they consider when making a purchase decision and prioritise them. The result will be a list of attributes ranking in order of importance. The next step will be to take the most relevant attributes you have identified and as the participants to evaluate the different brands available in the market according to those attributes.
The result will be an average value for those key attributes for the brands available in the market. Finally, you’ll ask them to consider those key attributes and explain how important they are to them. This evaluation will be numerical and what you’ll get is a grading of each customer for each attribute.
Now, with information available, you can create different perceptual maps for different combinations of attributes in pairs. Two attributes to compare within each perceptual map and how each brand in the market is perceived when taking those attributes under consideration.
Spider Web Perceptual Maps
Similar to brand positioning perceptual maps, spider web perceptual maps are also a visual representation of where a brand stands and its value proposition in the market. However, spider web maps consider several attributes in one diagram instead of creating several perceptual maps with only two attributes on each.
The process of creating a spider web map is similar to the previous process. You’ll ask your sample of consumers about the attributes they value the most when making a purchase. Then, you’ll have them rate in a numerical scale the available brands in the market on every attribute they mentioned.
Besides, you will give the participants the chance to provide you with qualitative feedback about each attribute. The result will be one positioning map where you will get the relative positioning of each brand for all the different attributes together. You can even use one spider web map to measure the progress of your own brand over the years from the consumer’s perspective.
Reverse positioning consists of taking out some attributes from your value proposition instead of adding them, contrary to what brands usually do. The result will be an adjusted value proposition that sticks to what the customer is looking for and helps the product stand out and be more competitive.
A very clear example could be Ikea. Ikea took out some elements of value propositions that were taken for granted like personalised store support and discreet home delivery. Additionally, they introduced the idea of having the customer assemble the furniture they buy. So as a result, what Ikea did was to take out some elements of their offering that were usual for its competitors.
The result? A remarkably differential positioning and the ability to come up with a competitive offering paired with a very aggressive visual pricing.
Breakaway Positioning (The Blue Ocean Strategy)
In any market, we have a red ocean and a blue ocean. In the red Ocean, for most brands there’s tough competition in a pretty fine industry that counts on a set of rules. Within this red ocean, there are specific assumptions taken for granted by all players. One of the common assumptions is that a higher value goes hand in hand with a higher cost or production and a higher unit price.
On the other hand, the ‘blue ocean’ is referred to a market where there is no competition or much less competition. This blue Ocean strategy revolves around searching for a space in which very few firms operate and where there is no pricing pressure.
In terms of brand positioning, a brand must create a new space on the positioning map. Creating your own blue ocean is done through innovation and differentiation. This is how you set yourself apart from the red ocean. Today, there are several examples in the tech industry like Uber and Netflix. However, an outstanding example of the blue ocean strategy comes from the Canadian entertainment company, Cirque Du Soleil.
Their starting point was the circus category. They understood its business essentials and created additional value from that point onwards. Cirque Du Soleil took the elements of the circus they really thought added value: the tent concept, the clowns, and the artists even if they’re not well-known, and combined those with some other elements from the theatre category such as the refinement and the continuous launching of new performances.
Now if you think about it, do they belong to the circus category or are they placed in the theatre one? The correct answer is that they have created a unique show that does not belong to any of the previous categories. The outcome worked in their advantage as they came up with something of higher perceived value and a much higher price. Furthermore, by taking away the high-cost elements related to the circus, such as animals and their insurance and the celebrity artists, their profits boosted. A true creative offering and a win-win situation!
What Comes After Brand Positioning: The Marketing Mix
Brand positioning is the main inspiration and basis of a marketing plan. So, after nailing down your proposal and brand positioning, you must build the four P’s; product, price, place, and promotion. If your brand positioning is well-defined and done correctly, working on the four P’s is going to be easy. You need to apply common sense and ensure consistency between the four P’s, your market research findings, and the positioning.
Let’s take an example.
You’re offering a packaged bottle of lemonade. You’ve defined your target audience as young adults (18-30) year olds who usually go for a can of Coke but would surely appreciate a healthier alternative that gives the same effect. Your positioning statement could be something like “For those looking for a breath of freshness on their long, long busy days, X-drink is a healthy alternative with low sugar intake and no preservatives.”
So, from the positioning, one deducts that product is not meant to target a niche market. It’s going to target young and middle-aged consumers, which is a big segment and has many consumer personas. When it comes to the product itself, you can get a feel of how it should look like. Bright colours, loud branding communicating freshness.
Moreover, since this is a big segment, pricing doesn’t need to be premium. On the contrary, it needs to be attractive to be able to compete against soft drinks and to encourage buyers to purchase more than one bottle per day or even buy value and family sizes. From this positioning statement, the brand’s placement strategy needs to be aggressive.
A wide coverage across the market is a must to guarantee penetration. Most probably, this is going to be an impulse purchase. Hence, the product must be easily accessible; especially among small retailers and busy places in the city where students and employees spend most of their day.
Finally, this positioning statement makes it way easier to select the channels through which you’ll communicate the brand and how your tone, look, and feel should be like. It will influence the overall personality of the brand, which concerns the fourth P: promotion.
The marketing mix exercise is a long and detailed one. However, it becomes much easier after you’ve identified an accurate brand positioning.
Great Brand Positioning Examples
To apply all of the theory we’ve covered, let’s look at some real world examples of great brand positioning.
Chobani: Plain Inspiring
First up, let’s look at how Chobani found a gap for themselves in the highly competitive yoghurt niche.
This inspiring case study shows how Chobani built its premium positioning and encouraged people to eat more yoghurt through a social media campaign in Australia. Chobani yoghurt was sold at a premium price versus the category average. Another challenge was that the brand had a lower budget compared to previous campaigns. Moreover, given the bulk of Chobani’s growth was coming from flavoured yoghurt variants, other competitors such as Rachel’s, Danone, and Farmers Union, jumped on the chance.
They brought out copycat fruit flavoured yoghurts at a lower price. This turned the category into a battlefield between fierce competition and tough price wars. With all these challenges, Chobani needed to find a way to continue their sales growth trajectory.
Positioning & Strategic Thinking
Chobani’s smartest tactic was homing in on an audience overlooked by the big players. Two insights were cues for Chobani that led them to discover this new audience. First cue was that Chobani’s plain yoghurt had outstanding health credentials: 0% fat, high protein, and only two ingredients (milk and cultures).
This made them realise that buyers of plain yoghurt should be health conscious. The second cue was that Chobani’s plain yoghurt is naturally more versatile and lends itself to new usage occasions. So, they realise that this consumer segment must also be experimental as well as adventurous with their foods. There they have a clear niche segment: health conscious and experimental consumers. All they needed was a unique value proposition.
Next thing they did was a deep analysis of that segment through conducting several focus groups. Chobani understood that this audience was not only passionate about food, they also had a deep-down desire to unleash creativity, gain recognition and belong to a community.
Therefore, the campaign must harness the power of user-generated content and focus primarily on social sharing platforms: Instagram, Facebook and Twitter. Additionally, they found out that 64% of yoghurt consumption took place during breakfast.
Campaign & Results
The brand’s objective was to craft a strategy that would expand its market share by encouraging consumers to think of yoghurt beyond the typical breakfast. Chobani launched the #PlainInspiring campaign to harness the ‘master chef’ inside the consumers by asking them to share their masterpiece and become part of Chobani’s community of chefs around the world.
The campaign switch to focus on plain yoghurt also represented an opportunity for the brand to differentiate itself from competitors and drive new growth by breaking out of breakfast.
By capitalising on a specific target segment and positioning their plain yoghurt in a relevant way for that segment, Chobani gave us a brand positioning lesson. Therefore, the results of the campaign were outstanding.
Chobani exceeded its target of household penetration of plain yoghurt.
This is remarkable for a product that had already been in the market for several years and had never achieved a growth of this magnitude. That year, Chobani also increased total brand awareness with total awareness over double the target. Distribution and share of voice have also grown despite their budget being lower than their previous campaigns.
Denny Fighting Commoditisation with Differentiation
Next up, we have Denny, who primarily operate in the agri-food space.
Denny is a brand that needs no introduction to Irish readers. It’s a massive Irish household brand accounting for 1.1% of all grocery expenditure in the Republic of Ireland and its products were bought by 88% of households. Despite this huge brand equity, Denny was facing a situation where both its volume and consumer perceived value were falling down.
Private label and discounter brands were flourishing, showing consecutive monthly gains in share. In store, Denny shelf space was being squeezed and consumers were increasingly interrogating brand loyalties and price. All resulting in an increasingly commoditised pre-cooked sliced meats market.
Positioning & Strategic Thinking
For Denny, their business issue was that there was a new breed of consumers who bought less, not as often and at a cheaper price. The quality of Denny products was not questionable and consumers really did have an emotional affinity to Denny.
Yet, they didn’t see a rational reason to pay a premium price for Denny. This is when Denny realised they needed to find meaningful differentiation from its competitors.
The good starting point was conducting market research to provide them with consumer behaviour cues. Denny’s target segment is mothers. Therefore, they had focus groups with mothers; particularly loyalists and lapsed users, and what they found out was curious.
First, mothers had become quite sceptical of foods or brands purporting to be natural.
The second insight was that they didn’t assume pre-packed sliced ham was natural. Neither did they consider it terribly unnatural.
They knew it must have preservatives to have a long shelf life. But again, this was not something they really thought about. When prompted, consumers felt the naturalness of all hams were, more or less, the same. The real surprise to participants came when they discovered Denny was “the ONLY pre-packed sliced ham made with 100% natural ingredients” and they immediately associated this with higher quality.
Campaign & Results
From these insights, the creative idea was born. The ad had to challenge the consumer perception of the category ‘you’d expect all hams to be the same”. It had to be challenging to get consumers to question the category.
The campaign’s tagline was ‘Take a Closer Look’. A smart move was using a magnifying glass as the campaign device to signify taking a closer look across all visual media.
A key message here was the word ‘ONLY’ as it truly put Denny in a different category from the rest of the commoditised hams. The challenge for the little girl to find something natural was in fact a message to the buyers to examine the ham they buy and trust Denny as it’s the only natural brand.
The campaign is a great example of how even a huge brand can have something new to say. They crafted a relevant message for a specific target segment that appreciated the message and was willing to buy natural ham for a higher price. Denny Deli Style Ham with 100% natural ingredients showed an immediate response to advertising and for the first time in 3 years, Deli Style was contributing to positive growth in the category.
The sales results in the initial seven weeks showed a 6.3% volume increase versus the same period in 2011 and a 45% increase on the previous 7 weeks. Denny succeeded in curbing the flow of lapsed users to its competitors. In unfavourable economic circumstances, the results show how product innovation could still bring new customers into the category.
Vodafone Egypt: Value Proposition through Making the Small Seem Big
To understand the case with Vodafone Egypt, let’s take a look at the background. Egypt is a poor country, about 30% of its population of 100 million is below poverty level and annual GDP per capita is at 3,020 USD. In that context, the telecoms category is almost exclusively “prepaid” and is extremely price sensitive.
30% of users carry multiple SIM cards to take advantage of the promotions offered by different operators, as they happen. Price promotions and price-based packages are key to capturing this price-conscious customer. Price communication inevitably dominates the category with vast amounts of promotional clutter.
Vodafone has a global brand positioning summed up in the line, ‘Power to You’, and it is one of the leading telecoms operators in Egypt, with 54% market share. Vodafone faces two issues. The first one is a category issue; how to compete on value, not just price.
The second one is a brand issue: Vodafone is clearly recognised as an aspirational International brand, but is still perceived as expensive for many of those low-income consumer groups. This is why Vodafone decided to address these issues by introducing Micro Credit Recharge Cards.
These were a variation of the existing prepaid cards in that they served the same function of holding credit, but were simply for much smaller amounts of money.
At first sight, it seems fairly obvious that these Micro Recharge cards already had a positioning; cheaper versions of the pre-existing prepaid cards. But these cheaper cards had a major weakness.
If they were positioned as just cheaper versions of prepaid cards, it would drag Vodafone into competing on price and they would be drawn into creating more price-led marketing and communication. What could make Micro Recharge cards seem to be about value rather than price? How can they provide ‘Power to You’ when they only cost 7 cents?
To get over this hurdle, Vodafone Egypt had to think out of the box. They immersed themselves in the Egyptian culture and its shopping habits, especially among the streets, backstreets and local markets of Cairo, visiting the places where rich people did not do much shopping. That led them to a discovery of a very common practice that every single Egyptian experiences on a daily basis when shopping.
It is standard behaviour for shopkeepers to substitute small change for low value items such as chewing gum, candy, or a button. In a pharmacy, the shopper might receive a plaster. In a hardware store, they might receive a nail. The practice is so widespread that almost any low item value can act as change. So Vodafone, realised there is more than one currency in the country: Egyptian Pounds and ‘meaningless items’!
Positioning & Strategic Thinking
They came to the realisation that if they shifted the frame of reference and positioned the Micro Recharge cards as relative to small things given as change (nails, biscuits, candy, vegetables, plasters, etc.), it would totally change the perspective of users on these cheaper recharge cards. Such a comparison would immediately make the Micro Recharge cards look high value because these other items are so value-less.
The equation looked something like this:
- Micro Recharge cards VS normal prepaid cards = Price position.
- Micro Recharge cards VS meaningless cheap objects = Value position.
Campaign & Results
To implement this new positioning, Vodafone Egypt had to go through a vigorous execution plan. The naming of these cards had to be relevant and clear to the customers. So, they came up with the name ‘Vodafone Fakka’. ‘Fakka’ is slang for ‘small change’ in Egypt. The most difficult part of this value proposition is its distribution.
These cheaper cards were supposed to become a new ‘currency’. Therefore, it needed to be present everywhere, so the distribution needs to cover an entire nation. This was a new distribution system untapped previously by Vodafone, or any other telecom service provider.
They would now be extending beyond designated outlets to all those micro-neighbourhood stores and markets across the country. In doing so, Vodafone gained 46,000 new outlets and was able to get Fakka into the hands of thousands of Egyptians during their routine shopping activities.
Creating a new distribution system was in itself a huge result for Vodafone, and so inevitably sales and usage of Fakka has been impressive. Average revenue per Vodafone user has increased by 7%, and there has been a steady 10% increase in distribution of Fakka across the country.
This example from Vodafone Egypt is an example of what happens when planning influences marketing strategy and not just communications strategy. A new currency was created, not just a series of TV commercials; it was a real currency.
It’s also a reminder of the importance of planning looking outside the category in which the brand operates to create new associations and possibilities. Most of all, this case is about what happens when you seek to change the perspective, alter the reference point and shift the context.
Denny’s Coming to Terms with Its Own Brand Essence
Denny’s is an American table service diner-style restaurant chain. It operates over 1,700 restaurants in the United States alone. Denny’s has been operating for sixty years and it has survived because people have an incredible affection for it. However, by mid-2010 Denny’s brand was on the verge of death.
Between 2007 and 2008, Denny’s store sales dropped by 3.7% and they kept dropping by another 4.8% in a free-fall-like state all the way through the second quarter of 2010. Denny’s luck wasn’t in their favour. They were amidst a recession and they realised they needed to understand why they kept losing customers and how to make the brand relevant once more.
This eye-opening research process started with metrics. Denny’s has traditionally measured its business with two simple tools: how many people come into a restaurant and how much they spend when they get there.
Of course, there’s a codependency between these numbers: without steady increases in the first figure, the only way to grow the second is to increase prices. And that’s exactly what had happened.
As the number of customers continued to drop off – as they had done for 19 of the past 20 years – the chain had increased the cost of its food. And with those hikes, the restaurants’ heritage of value had disappeared.
Positioning & Strategic Thinking
Segmentation: On Denny’s quest for re-positioning and uplifting the brand’s relevancy especially with a new generation of customers joining the game, they had to a segmentation exercise to understand the criteria of consumers that Denny’s attracts. Denny’s “listening tour” began with 100 in-depth interviews among both heavy customers and lapsed diners who no longer came into its restaurants.
The first discovery for Denny’s was that their core consumer didn’t slide neatly into a single demographic profile. They’re all ages, all life stages and all ethnicities. What they shared was a common set of values. They’re working class and, by that, they’re everything from dental hygienists to construction workers. More specifically, they were hardworking, down-to-earth people, who were optimistic about life, even in the middle of a recession. They knew they would get through it.
They also shared a family orientation that Americans tend to think of as “solid Midwestern” values, and took a non-judgmental “live-and-let-live” approach. This was a clear segmentation exercise where demographic segmentation wouldn’t work. It was a situation where Denny needed behavioural segmentation.
Value Proposition: When Denny’s actually went all ears with their customers, they realised that they have been denying what their brand stands for, for so long. They had been constantly trying to be something they weren’t. They were looking at all the competition and they tried to look like all these other restaurants and be like all these different restaurants. But in fact, that’s how they lost their brand essence.
Denny’s is a diner. And as it turned out, their customers believed that’s a great place to be! In the interviews, Denny’s customers said that it’s a place that they can feel comfortable enough – they don’t have to put on airs and graces, they don’t have to put a tie on … They really can be themselves.
They can connect with their family and friends – the people they care about. And it’s really a place that’s always there for them. In short, according to them, it’s a diner.
Embracing this core truth offered a way forward for Denny’s.
Campaign & Results
What truly differentiates this campaign is that it wasn’t a ‘marketing’ or ‘communication’ campaign. It was a complete revamp of the business strategy; a brand strategy. Denny’s action plan included steps like these:
- #1: Defining the core values of the brand to the employees. They are the brand’s first ambassadors after all. By putting the guest right at the center of everything they do while being proud of their heritage and embracing openness and agility.
- #2: Re-training managers to embrace the guest-first service code.
- #3: Improving the quality of coffee. They worked for two years against some very heavy benchmarks to come up with a coffee that was worthy or being served in the nation’s diner.
- #4: To bring Denny’s to the new generation, they needed to build connectivity into Denny’s look by upgrading the physical experience. They hired James Wines, a restaurant designer, who came up with a style that’s aspirational but accessible.
- #5: To make Denny’s relevant, it needed to come back to pop culture. Denny’s marketing team wanted to capture the friendly and conversational nature of a chatty, relaxed food outing. So, it contracted with a production service owned by comedians Will Arnett and Jason Bateman to produce a series of diner-focused webisodes featuring Dave Koechner, one of the stars of the American version of “The Office”.
- #6: To stick to their original ‘value’ claim, a new ‘value’ menu offered 16 different dishes at four price points: $2, $4, $6 and $8. And it also allowed the Denny’s kitchen to seamlessly introduce new dishes and resonate with a new generation of millennial customers.
As a result of this genuine and well-studied business strategy, Denny’s now has what every marketer would kill for: 97% awareness. 95% trial. And people feel very fond of the brand.”
Brand Positioning – Summing Up
Hopefully this intensive guide has given you a clear and comprehensive outlook on how to approach brand positioning. With this four step code: Analyse & research, segment, differentiate, and finally come up with a positioning statement, one can never go wrong.
It’s simple, yet it requires dedication and accuracy to reach the correct brand positioning. Finally, remember that this exercise is not something that you do once and for all. You’ll need to keep innovating and refine your brand positioning as long as you maintain the business, so keep this guide in a safe place.