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Marketing

Published October 18th 2016

A Complete Guide to Product Positioning

Product positioning improves marketing by targeting specific groups, ensuring a clear identity that highlights the benefits to a specific set of consumers.

Smart, the shoebox-sized car that can hold two crushed humans, is made by Mercedes Benz. That’s not really common knowledge, because the car is marketed at a different group to the usual Mercedes customer. The two brands are worlds apart in our minds.

The idea for the car came from an executive who believed that the automotive industry was ignoring a segment of potential customers. He thought that consumers wanted a city car that was practical in its small size, but still stylish.

While still in the same product category, and targeting people who need to travel from A to B at speed, the two cars have completely different product positioning strategies.

Segmentation: separating a similar group into distinct subsets, like smart and mercedes

The product positioning process

In order to successfully sell to the various market segments that will make up any consumer base, a product must have an explicit and distinct place in the minds of all potential customers.

In the age of the customer, where consumers have vastly increased information and choice, a product must be marketed to specific groups, with a clear identity that highlights the benefits to the consumer.

Product positioning is most successful after an analysis of the market and the different sections your product can appeal to. Called the segmentation, targeting and positioning model (or STP process), this framework allows more directed marketing. By highlighting particular benefits that different consumers will receive, the proposition is more attractive to each group.

The STP process is particularly important in crowded, competitive markets, as brands need to have a very clear differentiation from their competitors in the minds of consumers.

Segmentation

The product positioning process starts with identifying distinct subsets within your consumer base and target market. Without segmentation, your only choice is to try to be all things to all people.

Segmentation involves clustering groups of consumers together with similar product preferences and behavioral traits. Consumers can be segmented according to various criteria, and how you chose to categorize them will depend on what makes the most sense in your space.

Some of the most common ways of segmenting the audience are:

  • Demographic segmentation
  • Psychographic segmentation
  • Geographic segmentation
  • Behavioral segmentation
  • Product benefits segmentation
  • Cohort analysis
  • Cluster analysis

How to segment your customers and prospects

There are a variety of data sources that will help you to segment your customers. As the majority of business have not developed a single customer view, it is likely that a combination of data will have to be used.

CRM data, business intelligence systems, customer feedback, employee stories, interviews, focus groups, customer advisory councils, social intelligence and website data can all be used to understand your customers more fully.

Scattered jigsaw representing STP process

The flexibility of social intelligence means it is able to assist in the segmentation process. Categorizing by demographics, psychographics and location are all done automatically by the platform.

For more information read our post on intelligent market segmentation.

Targeting

Targeting is the process of evaluating the commercial attractiveness and potential of each segment you have identified, and ensuring they are a group worth developing specific marketing for.

The market segments can be evaluated on the following criteria:

  • Size: The segment must be large enough to justify the cost of marketing to.
  • Homogeneous: The consumers within each segment should be similar to each other in some way.
  • Heterogeneous: The consumers of each group should be different to consumers in other segments.
  • Substantial: The size of the segment must be such that the projected profits exceed the costs of additional marketing.
  • Accessible: Each segment must be accessible to your marketing and distribution.
  • Different benefits: Different segments must need different benefits.
  • Responsive: Each segment should respond to the marketing aimed at their segment better than to general marketing.
Targeting different but similar groups is an important part of product positioning

Once you have identified the segments and verified they are commercially attractive, you can move onto how best to market to them.

Product positioning

Product positioning is the part of the strategy concerned with how you are going to market to your segments. It identifies the benefits that each segment will receive from your product. You need to understand where you can reach these groups, and communicate the benefits in a targeted way that appeals to what you have learned about them.

Understand the customer segment

Developing detailed buyer personas can be a useful way of fleshing out your understanding of these segments. This can assist in understanding the group on a more rounded level.

For example, what else are they interested in apart from your product category? What other brands do they buy? What do they like to do? This will help you understand the group and their motivations.

Product positioning requires targeted understanding of the audience

Depending on how you are segmenting your audience, it will either be a simple process or require a more thoughtful methodology.

For demographics, location, interests and psychographics, Brandwatch Analytics and Brandwatch Audiences automatically categorize mentions this way. You can search for mentions of your product category (rather than just your brand, as you want to find your prospects too), and look at the makeup of the audience.

For more complex segmentation methods, you may have to develop a more detailed methodology. By first searching for people who have expressed a frustration that your product solves, or who have identified as a certain group that you wish to target (university student, parent, runner, etc), you can create an ‘audience’ containing that group. This allows you to study that group in more detail, over time.

Discover the best channels for each segment

If you are going to engage in targeted marketing, you need to understand where those groups are reachable. On social media, surveys that reveal the demographics of each site can be useful, although they are generalized.

If you have created a group in a social intelligence tool, you can monitor the top sites they post content to. This is particularly useful for niche groups that might discuss their topic on forums or blogs, rather than the usual suspects of Facebook and Twitter.

Colourful umbrellas - the same but different

Discover what the target segment thinks of your product

Searching for mentions of your product will reveal sentiment, common issues and frustrations, and praise. A manual reading of a sample of mentions can highlight frustrations and anger, surfacing areas for improvement. Knowing how people think about the product can help in product development as well as marketing.

Understand the competitive landscape

Searching for discussions of your product category, rather than your product, can reveal frustrations and benefits with competing products that you can bring into your strategy.

Use competitor analysis to identify the brands already selling to those segments in order to develop a differentiation strategy. How is your product better than the competition? Are you marketing to different groups? However you differ from your rivals, you need to understand what they are offering in order to stay ahead of them.

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