Everything you need to know about market positioning

Price

Price is the easiest factor for people to recognize when they first begin working with the idea of market positioning. As a business owner, you most likely already have a good grasp on your pricing strategy compared to your competitors. You may have even performed a competitor analysis when coming up with pricing for your products or services.

As you probably already guessed, the price spectrum ranges anywhere from budget options to high-end luxury brands.

While price point is one of the most important factors people use when deciding whether to make a purchase, it’s important to keep in mind that being the cheapest isn’t always the best move – after all, if people were only interested in finding the lowest prices, Rolex wouldn’t be able to sell $100k watches or Lamborghini cars for $200-500k.

There are a range of ways that price affects a buyer’s opinions about a brand – also remember that price is only one factor when it comes to buying decisions. Adding other factors explains why some wines cost $10 a bottle and others cost $1,000, depending on what else they offer a customer.

Quality

Quality refers to the level of service or the materials used to make the product you purchased. The quality spectrum ranges from the most basic to ultra high end.

A good example when thinking about quality is restaurants:

• Some people don’t care much about the environment in which they eat – they just want a tasty, reasonably priced meal.
• Others want more than a meal – they want an experience, whether it’s an ambient dining environment or premium Wagyu filet steaks. Many patrons are willing to pay much more for a meal if it’s a night to remember (or something they can brag to friends about later).

Neither end of the spectrum is better than the other; it’s just a matter of knowing which end you’re on and marketing to an audience that’s looking for just that. As with the other factors, it’s also important to do a competitor analysis to see where your competition is in relation to your brand.

Speed

Speed is always going to be relative to your competitors, but it can be an extremely important factor for many buyers. As with the two factors discussed above, being on one end of the speed spectrum or the other is equally fine, just as long as you’re honest with yourself and your audience about it.

For some buyers, speed is king; even the promise of a faster delivery speed for these folks is enough to convince many of them to make a purchase, thereby increasing companies’ sales and profits. Amazon’s a perfect example – think about how they took over the e-commerce space once they started providing two-day shipping for all Amazon Prime members. At the time it seemed like an impossible promise, as 3-5 business days was the standard – now customers don’t even have to pay extra to get items in two days.

Other buyers are less concerned about speed as long as things are handled correctly – these people are perfectly happy to do business with a brand that’s further over to the “meticulous” side of the scale. SaaS tools like CRM systems prove this – these monster systems can take a long time to properly integrate with a business’ process, but being methodical initially will ensure the job is done right the first time and save the business time and stress in the long run.

Convenience

Convenience is exactly what it sounds like – how easy it is for a customer to work with your business. Convenience can be applied to many operational practices, but a couple of the places you’ll most commonly see it is in regards to proximity and payment.

Starbucks, for instance, has a reputation of there being “one on every street corner,” so wherever you are, it’s easy to get to a Starbucks, whether you’re in Nashville or Nantucket. (Dollar General has a similar model).

Venmo, meanwhile, has taken over as one of the top self-payment providers in the United States because it makes it incredibly easy to attach your bank account and begin to split payments with friends. Once you get started, it’s extremely simple and convenient to use.

Many video games have also moved to this model with micro-transactions. Once you’ve entered your credit card information, it’s very easy to buy new character outfits and upgrades in the moment.

In some cases, convenience isn’t at the top of a buyer’s mind, such as going out of their way to try something a little different. For example, a seaside bed and breakfast off the beaten path might take some effort to get to and might not have the most up-to-date point-of-sale system, but the sense of relaxation it provides might be worth it to certain travelers.

Specialization

Specialization refers to the scope of customers you work with; for example, the industry, demographics, or interests of the people with which you do business.

If you did a competitor analysis on large grocery chains like Walmart, Target, and Kroger, it would be clear that they do not land in the “hyper-specialized”  range. These businesses want to have the widest possible appeal because they operate with a low profit margin, so they need a lot of customers in order to make significant profits. That’s why they sell everything from groceries and clothing, to power tools and children’s toys.

Other businesses, especially most small or independently owned businesses, have better luck winning business by turning towards specialization. One way they do this is by narrowing their focus to a specific industry.

For instance, Needles is a widely used case management software that operates much like a CRM system but is set up specifically to work in a law firm environment. Accordingly, it provides the features that lawyers care about most, like time-tracking systems. Tracking time is extremely important for attorneys, so they want to make sure that the software company they buy from knows what they’re doing rather than trusting it to a Jack-of-all-trades.

Disruption

For some consumers, the most important factor in making a purchase is whether a solution is the most innovative or unique on the market. Some companies that disrupt the market’s status quo can be a flash in the pan, but other times they can be a catalyst to change an inequality within a current market.

Take AirBnB – hotel pricing was starting to become outrageous for the everyday American citizen. Hotel rooms in most major cities would be a minimum of $150 a night for a simple room with a bathroom, bed, and TV. Americans wanted more, so AirBnB sought to change the game by offering a way for people to rent their properties as travel accommodation. It was a bit of a tough sell initially, but their detailed review system gave users a sense of comfort. Now thanks to them, people have been able to get affordable travel accommodation while also getting a unique staying experience.

As is the case for all the other spectrums, being one thing or the other isn’t necessarily better. While some consumers aren’t happy unless they’re first in line for the newest thing, others are turned off by the unfamiliar. Many consumers avoid change at all costs, and they prefer a middle-of-the-road solution that feels like something they’ve had before.

Reach

Reach is how widely recognized your business is. Reach can play a bigger or smaller factor depending on the specific buying decision.

People associate brands that have a wide reach with safety and predictability. The greater your reach, or brand awareness your business has, the more consumers feel like you’re the safer buying option. That’s why 71% of people prefer buying from brands they recognize.

A prime example of this is McDonalds, which brags about having over 10 billion customers served. Many people who find themselves in a foreign airport will gravitate towards buying a Big Mac over any local cuisine because they know what to expect from it.

Of course, other buyers aren’t interested in mainstream appeal – they care more about finding the diamond in the rough.

Think about your local dive bars and coffee shops. When you find “your spot” it can be a great feeling. Oftentimes a narrower reach can correlate with deeper customer care because they need to fight harder to keep every customer happy to stay in business.