Understanding how a product is viewed in relation to competitors is vital for crafting effective marketing strategies and standing out in a competitive market.
What is Market Positioning?
Market positioning refers to how a business wants consumers to perceive its product or brand relative to competing products. It is not simply about where a product is placed in a shop or on a website — it’s about the mental position a product holds in the customer’s mind.
A product’s positioning reflects the combination of characteristics that customers associate with it. These might include:
Price
Quality
Customer service
Brand image
Product performance
Innovation or design
Reliability
Ethical credentials
Positioning influences a customer’s buying decision. If a product is clearly positioned as the best for a particular need, customers are more likely to choose it.
Key Characteristics of Effective Positioning
Clarity: The message must be simple and clear to the target market.
Consistency: Across all marketing channels, the message should not vary.
Credibility: The claimed position must match reality — customers must believe it.
Competitiveness: The position should differentiate the product from rivals.
Example:
Tesla’s electric vehicles are positioned as high-performance, innovative, and premium. This positioning helps differentiate it from budget EVs or traditional luxury cars.
How Businesses Decide on Positioning
To effectively position a product, a business needs to understand both the target customers and the competitive landscape. The process is highly strategic and typically involves:
1. Understanding Customer Perceptions
Before positioning a product, businesses must understand what customers think about existing offerings. They do this through:
Market research surveys – asking people how they perceive different brands.
Focus groups – gathering qualitative insights into consumer attitudes.
Online reviews and feedback – using customer-generated content to uncover trends.
This research helps businesses answer:
What do customers value most — price, performance, image?
What do they associate with specific brands?
Are there any unmet needs or pain points?
The insights gained here allow businesses to tailor their positioning to highlight features or benefits that customers truly care about.
Example:
If research shows that customers in a particular segment prioritise durability, a smartphone brand may position itself as the most reliable in the market.
2. Leveraging Competitive Advantage
Positioning must also highlight a business’s strengths compared to competitors — this is the essence of a Unique Selling Point (USP). A USP is a clear, distinctive benefit that only your product offers or does better than others.
To find a strong USP, businesses evaluate:
What are we better at than others?
What do we offer that is unique?
Can this be sustained over time?
A strong USP can relate to:
Product design (e.g. Apple’s sleek aesthetics)
Customer service (e.g. John Lewis’s aftercare policies)
Technology (e.g. Dyson’s engineering innovation)
Ethics (e.g. The Body Shop’s cruelty-free products)
Important: Competitive advantage must be defendable. If competitors can easily imitate the positioning, it won’t be effective in the long term.
Market Mapping (Perceptual Mapping)
What is a Market Map?
A market map, also known as a perceptual map, is a diagram that visually displays how consumers perceive brands or products in a market based on specific attributes.
Each brand is plotted on a graph using two chosen variables.
It gives a snapshot of the market landscape from a consumer’s perspective.
The map shows how crowded certain positions are and where there may be gaps or opportunities.
Note: These maps are based on perceptions, not necessarily factual performance. What matters is how consumers see things.
Common Variables Used
Price vs Quality
Luxury vs Value
Healthy vs Tasty
Innovative vs Traditional
Customer service vs Speed of delivery
The two dimensions chosen depend on the market and consumer priorities.
Example:
In the coffee shop market, a map might use:
X-axis: Price (low to high)
Y-axis: Atmosphere (functional to luxurious)
How to Construct a Market Map
The process of building a market map includes the following steps:
Step 1: Select Two Key Variables
These should be the most important factors for the target audience.
Ideally, the variables must be independent of each other — price and quality often work well together.
Step 2: Research Consumer Perceptions
Use market research to find out how customers rate each brand or product along the two dimensions.
This can be done using customer surveys or expert opinions.
Step 3: Plot Brands on the Graph
Each product or brand is plotted as a point based on its perceived position on the chosen variables.
The axes can be numerical (e.g. 1 to 10) or descriptive (e.g. low to high).
Step 4: Analyse the Market Map
Identify where the product currently sits and how it compares to competitors.
Check for clusters where many competitors are concentrated.
Look for gaps — unoccupied areas that may indicate market opportunities.
Example:
In the fast-food market, a perceptual map using “healthiness” and “price” might show McDonald’s as low health, low price, and Pret A Manger as high health, higher price.
Benefits of Market Mapping
Clear Visualisation: Helps managers see the competitive landscape at a glance.
Informed Strategy: Supports decisions on pricing, promotion, product development.
Spotting Gaps: Identifies areas of the market that are underserved.
Customer Focused: Based on real perceptions, not just internal assumptions.
However, perceptual maps have limitations. They typically only use two variables, which may oversimplify a complex market. Also, customer perceptions can change, meaning maps must be updated regularly.
Identifying Gaps in the Market
Gaps on a market map show places where no competitors are currently positioned. This might indicate an opportunity for a new product or a repositioned brand.
Why Gaps Matter
Gaps can represent unmet customer needs.
They may reveal innovation opportunities.
Businesses can use gaps to find a unique market position, avoiding direct competition.
Types of Gaps
Untapped niche: e.g. luxury pet food in a market full of economy options.
Emerging trends: e.g. plant-based snacks before they became mainstream.
Demographic needs: e.g. products for older customers overlooked by youth-oriented brands.
Analysing Gaps
Before launching into a gap, businesses must carefully analyse:
Is there demand? A gap may exist because there’s little or no interest.
Is it profitable? Even if demand exists, the market might be too small or too expensive to serve.
Are there barriers? Regulatory, technological, or reputational issues may block entry.
Can we deliver value? A brand must still meet expectations and deliver on its promise.
Example:
A market map for the chocolate bar industry might show a gap for “very healthy and low sugar but affordable” — but producing such a product might compromise taste or cost too much.
The Risks of Repositioning
Sometimes, a business may find that its current market position is no longer effective. It may choose to reposition to access new segments, stay competitive, or align with changing customer preferences.
What is Repositioning?
Repositioning involves changing the way a product is perceived by altering the marketing mix — product features, pricing, promotion, or branding.
It does not always mean a completely new product — rather, it is about changing the perception or appeal.
Reasons for Repositioning
Declining sales due to changing tastes
New competitors entering the market
Technological innovation making current positioning outdated
Rebranding for broader appeal
Entering a new market segment
Example:
Lucozade was originally marketed as a drink for recovering from illness. It was repositioned in the 1980s as an energy drink for active people, increasing its relevance and sales.
Risks of Repositioning
While repositioning can be beneficial, it carries several potential dangers:
1. Alienating Current Customers
Existing loyal customers may not relate to the new message.
There is a risk of losing the original base while failing to attract new ones.
2. Confusion in the Market
If the repositioning is unclear or inconsistent, customers may not understand the brand.
Mixed messages can dilute the brand’s identity.
3. High Implementation Costs
Repositioning often requires rebranding, new packaging, updated websites, and advertising campaigns.
These can be expensive and time-consuming.
4. Lack of Credibility
If the new position conflicts with the business’s image or experience, customers may not believe it.
Trust and authenticity are hard to build and easy to lose.
5. Competitive Response
Entering a new segment may provoke an aggressive response from established players.
The business must be ready to face price wars, increased advertising by rivals, or loyalty schemes.
How to Manage Repositioning Successfully
To minimise the risks, businesses should:
Base decisions on solid research, not assumptions.
Pilot test new messaging with small segments before a full launch.
Communicate clearly and consistently across all marketing channels.
Align repositioning with long-term strategy, not just short-term trends.
Monitor the results and be willing to adapt further.
Example:
McDonald's repositioned itself over the years to be seen as more health-conscious by introducing salads, fruit, and calorie information — while maintaining its traditional appeal for burgers and fries. This balanced repositioning avoided alienating its core customer base.
FAQ
Market positioning significantly affects whether a product gains traction after launch. If a product is positioned clearly and accurately in line with consumer expectations and market gaps, it is more likely to attract early adopters and generate positive word of mouth. A well-thought-out position helps define the marketing message, branding, and price point, ensuring consistency across channels. Poor positioning, on the other hand, can cause confusion, reduce appeal, and lead to low initial sales, making the product struggle to establish itself competitively.
Yes, many businesses operate with a multi-brand or product line strategy where each product holds a unique market position. For example, a company may sell a value brand targeting price-sensitive customers and a premium product appealing to affluent segments. To do this successfully, the business must clearly differentiate each product’s branding, pricing, and messaging to avoid internal competition or customer confusion. This approach allows businesses to cover a broader market, but it requires careful management of brand identity and marketing communication.
Customer loyalty is both a consequence and a reinforcement of strong market positioning. A product that is clearly positioned and consistently delivers on its promises is more likely to build trust and repeat purchases. Loyal customers contribute to the product’s identity in the market and often act as brand advocates, shaping perception among potential customers. Businesses with high customer loyalty can defend their position more easily against competitors, but if loyalty weakens, the product may lose its distinct position and market relevance.
Businesses use a combination of quantitative and qualitative methods to assess the effectiveness of their market position. Sales performance, market share, customer satisfaction scores, and brand recall surveys are commonly used indicators. Firms may also use focus groups and perceptual mapping to determine whether customer perceptions align with their intended position. If data suggests declining relevance or confusion among customers, it may indicate a need to reposition. Regular market audits and competitor benchmarking are essential for staying responsive to market changes.
External factors such as economic shifts, technological advancements, social trends, and new regulations can all disrupt a product’s market position. For instance, a business positioned around low-cost manufacturing may be affected by rising labour costs or tariffs, weakening its competitive advantage. Similarly, changing consumer preferences — like increased demand for sustainability — can make an existing position less appealing. To remain effective, businesses must monitor external conditions and be ready to adjust their positioning strategy to maintain relevance and competitive strength.
Practice Questions
Analyse the potential benefits for a business of using a market map when positioning a new product. (6 marks)
Using a market map helps a business visually identify where competitors are positioned based on key factors like price and quality. This enables the business to identify gaps in the market and avoid overcrowded areas, allowing for a more strategic entry point. By understanding customer perceptions, the firm can align its product features and promotional messages more accurately with consumer expectations. This reduces the risk of poor product-market fit and improves chances of success. Additionally, market maps help inform pricing and branding decisions by illustrating how other brands are perceived, which can create a clear competitive advantage.
Explain one risk to a business of repositioning a product. (4 marks)
One key risk of repositioning is alienating existing customers who are loyal to the original brand image. If the new positioning is too different or inconsistent, customers may feel confused or disconnected, leading to a decline in repeat purchases. For example, if a brand known for affordability suddenly positions itself as premium, its customer base may reject the change. This could reduce sales and damage brand equity. Without clear communication and a strong rationale for the shift, the business risks losing market share and failing to attract new customers, making the repositioning effort ineffective and costly.
