What Is Strategic Positioning | 4 mins read

What is Strategic Positioning and How Does it Impact Businesses?

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Hanh Truong

By Hanh Truong

What is Strategic Positioning?

New technology tools and demand trends change every second, making hard it for business owners to maintain a stable stance in the market. Being strategically positioned can help a company stay strong between the waves of market fluctuations. Strategic positioning refers to when a business is both profitable and competitive in the industry. According to market experts, entrepreneurs need to differentiate themselves through their products or low cost to have a strategic position.

Understanding Strategic Positioning

Strategic positioning is important for businesses because it reflects a product or services' value in the market. It determines how well a company is able to target their consumer base and how effective they are in staying ahead of their competitors. Organizations that have a strategic position in the market generally receive high earnings. This is because they are able to command high prices or generate a consistent level of demand from customers.

The building blocks of strategic positioning include effective processes, key resources, and - most importantly - branding and marketing. With marketing, companies can communicate their uniqueness and identity to customers. They can build a loyal consumer base by targeting their advertisements and branding to specific markets. Some of the most common strategies businesses will use to enhance their strategic positioning include the following.

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Product Characteristics

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Companies will often market their product's characteristics and its benefits to customers. Technology, automobile, and make-up companies typically use this marketing tactic for their product positioning. For instance, smartphone brands will advertise their latest devices' modern or sleek designs. A skincare company may highlight its unique ingredients that will make users look younger in their adverts.

Competitive Pricing

Some organizations will position their goods based on their competitive pricing. Generally, this means marketing how affordable a product or service is. The supermarket store Grocery Outlet is known for this type of strategic positioning, in which its adverts focus on the brand's low prices. This marketing strategy is also popular among fast-food chains and discount stores. Entrepreneurs should be diligent when it comes to positioning with pricing. If the cost of production, distribution, and logistics are high, brands risk their profitability. Before establishing a position in the market, business teams should assess their pricing strategies.

Quality or Luxury Features

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There are consumers in the market who believe that the quality of a product justifies its high price. Oftentimes, however, when positioning a product or service using quality, brands do not emphasize its price point. The company, instead, markets how luxurious or desirable the item's feature is. A jeweler, for instance, may highlight a ring's ethically sourced diamond and 18K white gold band, rather than its $1,800 price tag. The focus on quality makes a product look attractive, resulting in customers wanting the item regardless of its cost.

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Usage or Effectiveness

Brands will also identify a product's usage or effectiveness as a focal point of their market positioning. For instance, a protein bar brand will market its goods as a supplement that will help consumers perform better in the gym or when playing a sport. The same company may also advertise another one of their protein bars as a convenient snack for on-the-go moms or workers who do not have time to sit down and eat a meal.

Differentiation from Competition

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Another strategy that companies will use for positioning is differentiating their products or services from the competition. They will typically emphasize key differences that their goods provide. A candle company, for example, may highlight its use of essential oils and soy wax. This helps make them appear more favorable and unique, compared to other options in the market. Some companies will take this strategy to the next level and use their competitors as a point of reference. By doing this, the brand is able to convert another company's customers. For example, the marketing team at Wingstop may respond to social media posts made by customers of Buffalo Wild Wings.

Key Takeaways to Strategic Positioning

  • Strategic positioning is a company's value, profitability, and competitiveness in the market.
  • Having a strong strategic position in the market is important for businesses because it ensures they are targeting consumers effectively and generating revenue.
  • A positioning strategy also helps companies withstand market fluctuations.
  • Some strategies brands will use to position themselves in the market are highlighting product characteristics, quality, usage, and pricing.

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