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The Importance of Market Positioning

The Importance of Market Positioning

By Tim Berry, Guest Blogger
Published: July 20, 2017 Updated: July 28, 2017

It’s been several decades now since I first ran into the mental magic of marketing positioning. The diagram here shows it as presented by Philip Kotler in his text Marketing Management, which has been used in business schools for decades. It shows positioning related to breakfast:

4 Quadrant chat comparing different breakfast foods

As you can see in the diagram above, breakfasts don’t compete against each other in one uniform market. Instead, they compete in any number of smaller markets based on factors or conditions. And the diagram sets up two useful factors, the relative speed and relative price, and uses them to break the competition into segments related to positioning on the map.

Positioning for your market

Can you see how this technique can help you understand the competition in your own business? It implies that cold cereals don’t compete against pancakes or bacon and eggs, but they do compete against each other, and against instant breakfast that comes in an envelope. Even although this doesn’t show on Kotler’s diagram, the cold cereals compete against packaged, cold yogurt, which is also quick and inexpensive.

You can easily draw your own market positioning chart by identifying two important factors and positioning product offerings around them. For another example, I’ve drawn my own version of an automobile market, using generic types of autos to avoid calling out specific makes and models. This one divides the market between practical and fun, on the horizontal; and economical and expensive, on the vertical. 

4 quadrant marketing chart comparing categories of cars

Using positioning in your business

What you see here, with market positioning, is a technique that falls under the general category strategic mapping.  All strategic mapping is supposed to help us visualize business concepts as if they existed in real space. Through my decades of work with business planning, I’ve found this kind of market mapping a useful tool for understanding positioning. With diagrams like these, tailored to your business, it’s easier for you to see the key elements of your market competition; and to position your product offerings to optimize their potential.

The goal is not visualizing or even understanding just for its own sake. The goal is to use this tool to help set plans for distribution, pricing, marketing messages, and overall marketing mix.

The specifics depend on your business and the positioning you choose. Are there possible channels that favor your product positioning or, perhaps, work against it? Does your pricing match your positioning? Are you developing your marketing messages to optimize your positioning relative to the competition? Use this simple, conceptual tool to help you answer those questions.

(Illustrations: The first is my drawing of a positioning concept included in Marketing Management, by Philip Kotler. The second is my drawing of a hypothetical market map.) 

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .