Positioning, Differentiation and Value Proposition in Marketing

Most likely safety, which for decades was the key positioning of the Volvo brand.

How about this one:

probably something about performance.

And this one?

Maybe a little harder, the Toyota Prius. But probably you came up with some words around “green” or “efficient” or “Earth-friendly”, or something like that.

Marketers use a tool called positioning or perceptual map to show in two dimensions the desired place they like their product or service to occupy in the marketplace relative of the competition and in the minds of the target customer.

The positioning map consists of two axes: vertical and horizontal. It is the job of the marketer to figure out the most important attributes or labels for each axe.

Let’s look at an example for the automobile industry to see the above concept in action. I have labelled the vertical axis eco-friendly at the top and traditional at the bottom the horizontal axis on the left safety and performance on the right.

We can now place the brands on this positioning to show the space they occupy in the market and the mind of the target customer.

In the lower left we have Volvo, in the lower right BMW but where should Prius go?
I struggled a bit with this. I ended up putting it in the middle-left of the horizontal axis and then, of course, toward the eco-friendly label.

This map is a handy tool for positioning discussions.

What about differentiation?

Differentiation is a closely related topic to positioning.
It’s designing your product offering so that it has one or more unique qualities that are:

1. valued by your customers
2. consistent with your chosen positioning

Marketers, companies, organisations have many tools to differentiate their product.
Indeed, one is the features that you build in into your product or service.
Think about vitamin water. It starts out like water, we suppose, then colour flavour and vitamins are added.

Or think about Starbucks. They differentiate in many essential ways. One of them is training. They devote a lot of energy and time and money to training their employees, so when you go into a Starbucks, you receive excellent service, no matter where you are in the world.

Another way to differentiate is through ‘channel of distribution‘. Are you surprised to see this on the list?
Think about chainsaws, in particular, the Stihl brand of chainsaws.
You can only buy them through authorised Stihl dealers who are specially trained to offer excellent service and support to help you pick the right chainsaw, and they’ll help you figure out how to use it. Furthermore, they provide any after-sale service that you might need.

Finally, of course, you can differentiate through image.
Think about Coca-Cola a pretty obvious example, but it’s remarkable what they have accomplished with their image.
With their visuals, the promises us happiness, a more vibrant life if we buy and drink Coca-Cola.

Quantifying differentiation

But how much differentiation, how much uniqueness do we need in a product or service?
We don’t need to be better in every single category that matters to customers.
In some categories we are going to be at parity, we call these points of parity or PoP.

These are the features of our product or service that approximately match what the competition is offering.

Then we are going to need points of differentiation, one or more critical features of our product or service that give us a clear competitive advantage over the competition.

Indeed, we can certainly beat the competition by giving our customers more, but other situations in which fewer features can be better. Can you think of any?

There have been some best selling books which argue that the answer is yes:

• the book ‘Different: Escaping the Competitive Herd‘ by Youngme Moon
• Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by Kim and Mauborgne
• The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business by Clayton Christensen

All talk about the importance of finding customers who will value a unique offering which might be simpler and more convenient than what they have been able to get in the past. By the way, I highly recommend all three of these books.

Here’s the idea in action.
Marketers need to look for opportunities to eliminate one or two traditional product attributes while adding new unexpected ones.

One of the examples, Youngme Moon, talks about in her book is IKEA. They removed furniture assembly which is pretty incredible and then added in things like childcare in their stores and even a cafe.

Value Proposition

Our last topic is the value proposition.
A value proposition is a short, compelling statement that articulates for specific benefits a company is offering to its target market.
It is the acid test marketers use to make sure they have something which customers are going to want to buy.

In other words, a value proposition is merely an answer to the question why should the customer buy your product or service.

There are many different ways to create a value proposition. It can be as simple as a list of key benefits.

Another way to approach it is to use a template like this one:

• when our customers buy and use [our product or service]
• instead of [a competitor’s solution]
• than they will receive [what key benefits, not features but benefits]
• because [of the differentiation what unique capability backs up those benefits]

Here’s an example, let’s pick a merino wool t-shirt:
When our customers buy and use our 100% merino wool t-shirt instead of a traditional cotton t-shirt then they will receive warmth comfort and a snug fit because of the insulation and softness provided by 100% merino wool and our unique fitted design.

I have a question for you; what is the value proposition for a key product or service offered by your organisation?
If you’re a full-time student, you can think about the value proposition for one of the programs you’re University offers.

Let’s put it all together

This post is mostly a transcription of a video I have found on Youtube recorded by Brian K. McCarthy. And that’s because I couldn’t find a better and simpler way to write about positioning, differentiation and value proposition.

Certainly, I will cover much more about these topics, but for now, I hope you found this post useful.

So, to recap:

Positioning is determining the distinctive place you want your product to occupy.

Differentiation is designing your product offering so that it has one or more unique qualities valued by the customer.

A value proposition is any answer to the question of why should the customer buy your product.

See you on social media!

Cheers,

Pat