How to Develop Product Positioning and Why It Matters

Ask five people what product positioning means and, you’ll likely get five different answers. Positioning is often used in place of value proposition and vice versa; sometimes, both get confused with messaging. 

There is agreement on one thing: Successful product positioning creates a connection with your potential customers that results in selling more products and services. Done well, it creates awareness, drives qualified leads and shortens the purchasing decision time. Sounds good, right? Here’s how to do product positioning right.

What is a positioning statement?

The term “positioning statement” is a bit misleading. Product positioning is more than a statement. It’s a process—a strategic activity—that will affect business decisions, from the products and services your company builds to the type of culture you want to have and the message you communicate to the market. Thus, a positioning statement is a series of one-page documents that will summarize your product positioning work.

Product positioning is a process that focuses on conveying product value to buyers, resulting in a family of documents that—among other things—will drive all outbound communications. Yet, in recent years, it seems as if positioning has devolved into a document of vague superlatives that convey nothing as they attempt to trick the customer into buying the product. But that’s not the purpose of product positioning, and it isn’t effective.

Rather, the best positioning statements clearly communicate how the product will solve specific customer problems. As an industry, we tend to wallow in technical jargon and assume that the reader can connect the specs to their problems. Or we hope that our salespeople can connect the dots for prospects. But this is unfair to both buyer and seller. Your product positioning statement, and thus the marketing materials and sales tools, should explain the value and use scenarios to support our promises. 

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A positioning statement is a series of one-page documents that will summarize your product positioning work.

Why is positioning important?

Product positioning is all about finding and defining your product’s identity and communicating it internally, so everyone is working from the same playbook. Sound product positioning has two main benefits. The one obvious to marketers is consistency in messaging. Each marketing and sales piece communicates exactly the same message. A less obvious benefit, but perhaps an even more important one, is that the positioning process forces you to identify and spell out clear benefits for each type of buyer. Without a clear message, most products are doomed to failure. 

Here’s how product positioning affects the following teams:

  • Engineering and development. Because they face many choices, the engineering and development team needs context and clarity about what they’re doing to make the right decisions. By clearly articulating what problems need to be solved and for whom, the technical team adds value to the development process. They also have the capacity to prioritize certain activities.
  • Marketing and communications. In charge of writing external messaging, creating web content and producing advertisements, the marketing and communications team needs to understand the problems that the market wants to have solved. This way, they can highlight the product’s distinctive capability and connect with buyers.
  • Sales. If the sales team knows why the product has been built and for whom, explaining to potential buyers how the product solves their problems and meets their needs becomes clearer. This allows the sales team to focus on the important benefits that will attract the technical buyer or the ROI that will appeal to the economic buyer, ultimately ensuring the loyalty of both.

When to consider product positioning

Product positioning should be done much earlier in the process than many companies do it. Many companies will do it just prior to preparing external messaging or product launch activities, or at the end of the process, when they’re getting ready to go to market. 

At Pragmatic, we believe and teach that product positioning needs to happen in the beginning. In fact, we put it right upfront before you even start going through the process to get approval from executives to apply resources to your new product. Think of positioning as your focus statement. How can you develop a product without first getting everyone on the same page about what problem the product should solve and for whom?

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Who is responsible for product positioning?

Product positioning is a key element of product management, and positioning documents will define your product category, the problems it solves and the personas it serves. So it stands to reason that positioning should be the product team’s responsibility, although marketing and others should have a seat at the table as well. We recommend a committee of no more than six people work together on a positioning strategy. But ultimately, the product manager should own the activity. 

Keep in mind that a product’s positioning statement lays out the who and the what and why this product is better than the alternatives. It defines a unique place in the buyer’s mind. It defines the product in the context of the problem.

Marketing can then leverage the foundational document to create messaging from which to create campaigns, sales tools, web pages and so on. In other words, product positioning is what we’ll say, and the messaging is how we’ll say it. In general, marketing owns messaging, while the product leader owns positioning.

What should a product positioning statement look like?

information in a positioning document

Your product positioning documents should contain the overriding problem in the industry and what an ideal solution would be to your buyer. Then provide a short primary message, 25 words (or less) that you want the buyer to remember, followed by a more detailed product description, again in terms of the buyer’s need. Finally, describe the three to five features that are relevant to this buyer profile. 

It takes many different people within an organization to make a purchasing decision for a complex product. Typically, we see a financial buyer, a technical buyer and one or more functional buyers. Each of these has a different primary goal and sees product information through a different lens. The functional buyers want to know how the features will make their daily job different and better. The financial buyer obviously wants to know how the product will save money for the company, while the technical buyer is primarily concerned with how the product will fit into the existing technology environment.

You’ll need different articulations of your message that resonate with each buyer type. For example, a positioning document written for a salesperson should emphasize the features that reduce his paperwork while the document for the sales manager emphasizes the value of centralized territory data and so on.

How to develop a product positioning statement

Product positioning is a strategic activity that requires brain power and leg work. Doing it right will help your organization better understand the purpose of your product and will serve to align everyone’s efforts for moving forward. In other words, don’t rush it. Hashing out your positioning statement documents might take a couple of days or a couple of weeks, depending on how much consecutive time the team is available. Here are the steps:

Define what your product is

Market position is about occupying space in your customers’ minds. It is a way for prospective customers to understand who you are and what you’re all about so they can categorize you, associating what you do with them and why it’s important.

That said, humans only have a finite amount of space in their minds. If any particular space isn’t crowded, you have a good shot at joining that space. But if it’s crowded, you will have to displace another company to find room.

Think of it in terms of a grocery store. You need to decide which aisle and place on the shelf your product will occupy. If you’re doing something new and disruptive, try to connect it to something familiar. Remember, if you aren’t associated with something, you won’t be associated with anything. It’s no accident that the first automobiles were known as horseless carriages.

Evaluating product

Consider your product’s value proposition

Product positioning and value proposition are terms that are often used interchangeably, but they are, in fact, different. Product positioning starts with a product. A value proposition starts with the customer; it is a promise that your product or service will help a customer in a meaningful way. It is defined by customers in a market segment, using language they are familiar with, not your jargon.

Know your target customers

Developing a value proposition starts with a deep understanding of your target customer. What pains are they experiencing? How does that impact them and the company they work for? Your value proposition is to take some or all of those pains away and make life better for them in ways they care about.

You will likely need different value propositions for different target customers in different market segments. And while it may sound like more work, the investment in developing good value propositions will pay lasting dividends.

Develop a message

Once you’ve staked out a market position and developed value propositions, you have to communicate your promise to target customers. The process of messaging involves creating one or more themes that communicate your market position and value propositions to prospective buyers. However, your messaging will be pure guesswork without a market position and value proposition.

In addition to the market position and value propositions, personas and market segments are inputs that will help develop a clear message that conveys your promise to the people you want to help.

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Hashing out your positioning statement documents might take a couple of days or a couple of weeks, depending on how much consecutive time the team is available.

Examples of product positioning

While it can be difficult to understand the process of product positioning, it’s much easier to spot it in the wild. Here are some examples of well-known companies and the market positions they’ve carved out:

  • McDonald’s. The fast-food giant’s market position is quick, tasty food at a low cost. Yes, they have different segments they market to, including young families and older adults, but everything they do revolves around their positioning. You wouldn’t see McDonald’s start serving steak to order because it’s not in line with their positioning.
  • Tesla. Far from the first electric vehicle company, Tesla is now synonymous with luxury electric cars. That’s all they do, and they do it well.
  • Coca-Cola. Everyone knows Coke is the de facto soda brand, but what Coca-Cola also demonstrates is staying true to your product positioning even when your company expands. Coca-Cola executives knew not to mess with a good thing, so they smartly marketed their line of bottled waters under a different name, Dasani. Coca-Cola H2O (or any other brand that included Coca-Cola) would have confused the market and hurt both products.
  • Walmart. The mega-corporation has clearly defined its market position as a low-cost retailer and sticks to it. Could it sell Rolexes? Absolutely. It has the purchasing power to do so. But will it? Absolutely not. It doesn’t align with its market positioning.

Positioning mistakes to avoid

By now, you know the importance of getting product positioning right. But what could derail you? Here are some top product positioning mistakes to avoid:

  • Insincerity. Much of the writing we see in marketing materials seem obscure due to insincerity. Don’t try to fool the reader into thinking your product is more important than it is or that your product solves problems better than the competition when it doesn’t really. If your product is clearly inferior, you cannot fix it with positioning. A product must be adequate for the market need in order to succeed; no amount of marketing can overcome it.
  • Not focusing on the buyer. Remember, you need to tailor your product positioning to each individual customer segment. What resonates with one type of buyer won’t with another. Don’t expect a one-size-fits-all approach to work.
  • Trying to be everything to everyone. Even if Tesla’s customers started asking for the company to release a gas-powered vehicle, they’re not going to. It’s just not what they do. And that’s OK. You’ll never be everything to everyone, so don’t try to be in your positioning.
  • Speaking specs instead of solving problems. In most cases, customers don’t care about specs. They care about what those specs are going to do for them. Even technical audiences are more likely to respond to product positioning that’s aimed at their needs as opposed to the latest and greatest specs. You can always make that information available secondarily

Testing your product positioning statements

Once you’ve created your positioning statements, you’re done, right? Not so fast. Product positioning should be done early—and revisited often to ensure your positioning statements are working.

How do you determine that? By asking your market segments two questions:

  1. When you think of [company/product], what are the first words that come to mind?
  2. What value do you believe [company/product] delivers to you and your organization?

Win/loss interviews with people who considered—or didn’t consider—your product will provide you with those answers. If you have an active win/loss program, simply add those two questions; if you don’t have a win/loss program, now is a good time to start one. Collect the data and evaluate it to confirm that your message resonates with each market segment. If it doesn’t, you need to make some changes.

Learn more about positioning strategy

Defining your market position is one of the most important steps you’ll take in product management. Learn more about how to write rock-solid positioning statements in Pragmatic Institute’s Foundations today.

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