Product Positioning Strategies

by Laura Acevedo; Updated September 26, 2017
Woman taking orders on telephone in shop

Product positioning is a marketing strategy that helps place a product perceptually in the minds of consumers. Positioning typically requires creating differences between your products or services and your competitors' offerings, but can be extended to your own products if they are marketed under different brands. Successful product positioning strategies help gain market dominance and increase sales and profits for your company.

First-Mover Strategy

Position your product by being first to market. This first-mover strategy allows you to quickly gain market share. Typically, customers view the first product on the market as the leader. Once you have positioned yourself as the market leader, you must deliver a quality product that supports your market-leading status. If you are first to market, but your product obtains a reputation for bad quality, you risk tarnishing your brand image, which can have a long-term negative impact on sales for all products you offer.

Consider the first-mover positioning strategy if it helps build a positive company image or allows access to limited resources or distribution channels. For example, if you need a raw material that is in short supply to manufacture your new product, you can contract the materials before your competitors know they need the material. You can also consider a first-movers strategy if customers are loyal or stick to their first purchase, and there are built-in change barriers like contracts or installation requirements.

Multi-brand Strategy

A multi-branding strategy can help you create the market positioning of similar products. For a multi-branding strategy, you create multiple products you market under different brand names. In effect, you are creating your own competition with your own products and disallowing space for competitors to easily enter the market. You can differentiate the products by price, features or quality differences. This positioning strategy can allow you to dominate the market by offering options for customers at all price points and feature requirements, while obtaining economies of scale for your business.

Consider using a multi-brand strategy if there are low barriers for entering your market, or if customers like to experiment with different products or features. This strategy works best for a product that is purchased on a frequent basis. For example, a multi-brand strategy could be used for a new line of hair care products based on natural earth minerals. You could introduce the high-end, heavily marketed product under a luxury brand name and introduce a low-cost option under a brand name that is barely marketed. The marketing effort you exert for the high-end product will translate into purchases for both products. By offering a high-end and a low-cost product, you leave little room for competitors to find a market niche to introduce a third product.

Demographics Strategy

Position your products by targeting your products to different demographic groups than your competitors. You can differentiate based on age, income, education, gender, home ownership status or other demographic distinction. For example, if your competitor offers a generic deodorant product, consider positioning your deodorant as a deodorant for women. Support your positioning strategy through advertising and packaging. Consider using a demographic positioning strategy if you are introducing your product after market leadership has been established, or if a niche market could command a premium price.

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