Every small business needs something that makes it different from competitors. The process of establishing this difference, called positioning, enables a business to target a particular segment of the market. 7-UP’s Uncola campaign serves as a particularly blunt and effective example of positioning, as it capitalizes on the obvious, non-cola nature of 7-UP. While most businesses cannot position themselves this easily, they can employ any one of a number of strategies to set themselves apart.
The low-cost positioning strategy sets the business up in customer minds as the affordable choice. This approach appeals to fixed- and low-income market segments, as well as to those who place a premium on savings. Smaller businesses cannot sustain this positioning strategy, as they cannot compete with the economies-of-scale of major chains, such as Walmart. Even where smaller businesses do not compete with large chains, low-cost strategies often lead to pricing wars with competitors that erode profit margins.
The quality positioning strategy communicates that the business provides some form of specialty service or high-end products. Jewelry stores, clothing boutiques and fine dining restaurants tend to employ this strategy. The business makes a trade-off between volume of customers for customers that value durability, expensive materials and expert preparation over price point. This approach targets consumers with higher levels of disposable income, such as the upper-middle class.
Some businesses choose to focus in on providing a product or service to a particular demographic, rather than a particular income level. The Telemundo TV network, for example, provides Spanish language programming, which positions it to reach Hispanic and Latino customers at every income level. Some hair salons focus exclusively on providing cutting and styling services to African-American customers. This strategy works best when the demographic has a particular and pressing need or access-barrier, such as language, but it comes at the cost of excluding the majority of customers outside the demographic.
In some cases, the competition in a given industry is diverse enough that positioning strategies like cost, quality and demographics will not work. Some businesses focus on a service strategy when faced with that situation. The service strategy establishes the business as the place to go when the customer needs a custom solution to a problem. This strategy works best when the business offers a very specific service or product and will take the time to understand the particular needs of its customers. For example, financial advisors can make use of this strategy. By spending a little additional time with clients, the advisor can discern the client’s values and goals, which positions the advisor to offer very specific, customer-centric feedback.
