Choosing a Differentiation and Positioning Strategy

Last Updated on Mon, 27 Mar 2023 | Customer Relationships

Some firms find it easy to choose a differentiation and positioning strategy. For example, a firm well known for quality in certain segments will go for this position in a new segment if there are enough buyers seeking quality. But in many cases, two or more firms will go after the same position. Then, each will have to find other ways to set itself apart. Each firm must differentiate its offer by building a unique bundle of benefits that appeals to a substantial group within the segment.

Above all else, a brand's positioning must serve the needs and preferences of well-defined target markets. For example, although both Coffee Republic and Starbucks are coffee shops, they offer very different product assortments and store atmospheres. Yet each succeeds because it creates just the right value proposition for its unique mix of customers.

The differentiation and positioning task consists of three steps: identifying a set of differentiating competitive advantages upon which to build a position, choosing the right competitive advantages, and selecting an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market.

Competitive advantage

An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices.

Identifying Possible Value Differences and Competitive Advantages

To build profitable relationships with target customers, marketers must understand customer needs better than competitors do and deliver more customer value. To the extent that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage.

Positioning Map: Large Luxury SUVs

Continue reading here: Communicating and Delivering the Chosen Position

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Readers' Questions

  • Ernesta
    How companies go about choosing a differentiation and positioning strategy?
    10 months ago
    • When choosing a differentiation and positioning strategy, companies want to determine what message they want to communicate to their target markets, what the unique value propositions are, and how they are going to position themselves. Companies need to identify how they are different from their competitors and how they can stand out in the market. They also need to assess their target markets and determine what their needs and preferences are. When choosing a strategy, companies need to consider the following steps:
    1. Understand the competitive landscape. Companies should first take a deep dive into the competitive landscape and analyze the industry positioning, market dynamics, and customer needs. This will allow companies to identify opportunities to differentiate themselves from competitors.
    2. Identify unique value propositions. Companies should identify unique value propositions that will help them stand out from competitors. This could include a specific product offering, quality of service, price, or other factors.
    3. Create customer personas. Companies should create customer personas that will help them understand their target market and their needs. This will give companies insights into the motivations and preferences of their customer base.
    4. Design a positioning statement. Companies should then create a positioning statement that clearly defines the company’s target market, sets out the unique value propositions, and communicates the company’s competitive advantage.
    5. Establish a brand identity. Companies need to establish a brand identity that communicates their differentiation and positioning, and sets them apart from competitors. This will help them to create customer loyalty and long-term relationships.
    6. Monitor and measure performance. Companies need to monitor their performance to ensure that their differentiation and positioning strategy is effective. This will allow them to make any necessary adjustments and continue to deliver an exceptional experience to customers.
    • nancy
      What is the third step in the differentiation and positioning task?
      1 year ago
      • 3. Develop an implementation plan and tactics to communicate your positioning to key stakeholders. This includes deciding on a mix of channels such as advertising, public relations, content marketing, and social media, along with budget allocations. Additionally, you may need to create collateral, such as brochures and website copy, to communicate your differentiation and positioning value proposition.
      • CORNELIA
        How would you choose differentiation and positioning strategy?
        1 year ago
        • First, you should evaluate the competitive landscape of your industry and identify your competitive advantages and opportunities. You should then consider your target audience’s needs and wants, as well as their buying habits. Researching how your competitors are currently positioning themselves and their products will also provide valuable insight. Once you have an understanding of the competitive landscape and your target audience, you can create a differentiation strategy. This could include emphasizing features where your product outperforms your competitors, offering unique services that others don't, or setting a lower price point. Once your differentiation strategy is in place, you can begin crafting your positioning strategy. This strategy should be tailored to your target audience and should include an overarching message that resonates with them. You should also consider any traditional branding techniques like advertising and promotional campaigns to ensure your message is delivered in a consistent manner across all of your marketing channels.