Product positioning is a key part of modern marketing. While it is generally important in most industries, it is typically more important in FMCG (fast-moving consumer goods) industries. Product positioning is more import in FMCG’s because there are often multiple competing brands, often with similar offerings, sitting side-by-side on a supermarket shelf. Therefore, by constructing an appropriate positioning that highlights key benefits to the target market consumer, these brands are able to win market share and loyal consumers.
In terms of its formal definition, product positioning refers to how the brand is perceived by the consumer, relative to competitive offerings.
This definition implies that there are key issues that are important to understand about product positioning, namely:
- Product positioning occurs in the mind of the consumer. The marketing team is interested in how the consumer perceives (understands) the brand and its related benefits,
- Product positioning is assessed on a relative basis. Usually the benefits of the brand are understood by the consumer on the basis of how good/poor these benefits and features are in comparison to competitive offerings.
As an example, the Pepsi NEXT product would be perceived as having less sugar than Pepsi, but more sugar than Diet Pepsi. In this case, the goal of PepsiCo is to position Pepsi NEXT between their other two product offerings.
Hopefully, you can see that a key goal of product positioning is to differentiate the product/brand in the mind of the consumer. And by having some points-of-difference, a brand should appeal to some of the target market and gain a loyal following.
Where product positioning fits in?
Positioning is a key component of the overall STP process (that is, segmentation, targeting and positioning), as highlighted in the following diagram.
As suggested by this model, product positioning needs to be based upon meeting the needs of a specific target market. And it is important to note that product positioning is executed through all the marketing mix elements, not just the promotional mix. That is, product positioning needs to be delivered through the product design, pricing and the place mix as well.