Product positioning: Definition, components, and examples

According to the 2020 edition of the Marketing Technology Landscape, there are 8,000 marketing technology solutions in the market today. And that’s only for marketing technology.

In comparison, Crunchbase data in August 2020 reveals that there are 15,749 SaaS companies in the world. So if you’re trying to develop a SaaS product in almost any niche right now, stiff competition awaits you. However, the proper positioning can help you stand out from this sea of sameness. But first, let’s see what product positioning is and is not.

Definition of product positioning

Product positioning means determining your product’s niche, how it compares to the competition, and the best way to present your product to different target audiences.

A product positioning statement is not your value proposition. According to Investopedia, a value proposition means the value a company promises to deliver to customers should they choose to buy their product. That value will differ depending on your target audience. Therefore, the average value proposition is a combination of several positioning statements.

Your product’s positioning statement is also not just a slogan or catchphrase. For example, Nike’s “Just Do It” is a slogan. Gillette’s “The Best a Man Can Get” is also a slogan. Here are two examples of positioning statements.

“WordPress Unleashed. The Most Popular WordPress Themes in The World and The Ultimate Visual Page Builder.” That’s a positioning statement.

“Easy automation for busy people. Zapier moves info between your web apps automatically, so you can focus on your most important work.” That’s another positioning statement.

Now that we’re clear on what product positioning is, let’s consider why it is important.

Why product positioning is important

It helps you attract your ideal customers: Sure, some customers will always be impulse buyers, and depending on your product, they might be the right customers. But when your positioning is right, your product will often attract customers who know exactly what they want in your product, why they want it, and how they want it.

It boosts customer loyalty: Your ideal customers will more likely use your product for the long haul. Ensure that your product matches your customers’ expectations, and the customers’ overall experience will be pleasant.

It gives you a competitive advantage over rival products: Proper positioning ensures that even after considering your competitors, your customers will still choose you because your offer speaks to them and their circumstances.

It enhances product launches and market penetration: Your positioning during a product launch can help you establish trust with your target prospects. Additionally, the right positioning highlights what your product brings to the market and how it surpasses the competition, and influences how your customers understand your product. These factors will guide their purchase decisions later.

It inspires your sales and marketing strategies: Strong positioning amplifies the efforts of the marketing and sales teams. The marketing team can easily decide the right types of content to create for prospects, and the sales team can close prospects faster, without the need for countless meetings.

Components of successful product positioning

Product positioning has come a long way since Al Ries and Jack Trout popularized the concept in the 1960s. Regardless, some businesses still use positioning templates to craft their product’s positioning, and that, in my opinion, is limiting. Because I like to think of successful product positioning as the right combination of several components. Let’s look at each of them separately.

Price

Price’s effect on product positioning swings in several ways. Luxury products typically cost more, and many products with extensive features or applications also cost more. In contrast, some products offer the same or more features than the competition but at lower prices.

For example, most of the top SEO tools start from $99 a month and offer two months for free if you’re paying for an annual plan. That’s about $990 per year for their basic plan. Enter Link Assistant’s SEO PowerSuite.

“Competitive pricing.” That tells you all you need to know about the cost of the product.

The $699 one-year license for its most advanced plan is a far cry from other tools like Ahrefs, which costs $9,990 a year at the same level.

Klipfolio is another example. One of the positioning statements on its homepage is “powerful analytics at a fraction of the cost.”

Despite the positioning statement, Klipfolio isn’t the cheapest analytics tool out there. But their ideal customers may consider it based on some features it has which other analytics tools do not have.

Many business books and gurus frown at competing on price. However, considering the competition for some products, providing the same features or more than the competition is offering at a lower price is a valid positioning strategy.

Before setting lower prices, though, ensure that it makes financial sense for your business in the long run. And always remember that you can A/B test your prices to determine what aligns with your financial needs and the customers' expectations. Even if you just plan to sell at the cheapest price possible, there's a market for your product.

Product application/use

Positioning products by use case is practical in some situations. For example, a company can have two video-calling applications—one for formal calls and one for informal calls. In this case, the positioning will be different. Consider this example.

Google Meet is for professional video conferences and video meetings for up to 250 participants. You can use a free plan depending on your needs, but a paid plan starts from only $10 a month.

It says “premium video meetings.” That’s already an announcement that it is not a free product (it’s currently free through September 30 because of the pandemic). The product screenshot portrays a more professional setting than the one used for Google Duo.

Google Duo is mainly suitable for mobile video calls and casual conversations. It allows you to make video calls with up to 12 participants, and it is completely free. Here’s the About page to show this in action:

From the screenshots, it’s evident that “be together in the moment” isn’t referring to togetherness at work. Both screenshots depict family settings—kids talking to their grandparents.

Positioning your product by use case entails using contextual clues to guide prospects in making a decision. For Google, since it’s not easy to tell the differences between the two from their names, the screenshots give some insight into the product.

Think about Freshbooks. To some small businesses, it’s just an invoicing and accounting software.

For others, it is an all-in-one business management software because it offers time tracking, project management, and proposal creation in addition to invoicing and accounting.

The success of positioning your product by its use cases (like other components) depends on your target customers. Freshbooks says its product is useful for teams, entrepreneurs (I think they mean self-employed professionals), and accountants. Each target demographic will use different features of the product. For example, an accountant may not need the time-tracking or proposal features it offers, whereas these would be quite valuable to the self-employed pro, and so on.

When you nail your target customers, you can successfully decide what features of your product will appeal to them, and how it can make their lives easier. Speaking about target customers...

Target customers

No component of your product positioning strategy will work if you don’t know your target customers. For example, if the target customers for a product are rich, that can inform positioning by price, and in this case a higher price point.

If a product targets the VPs of Sales, VPs of Marketing, and Content Marketing Managers, the positioning will also be different. This difference in positioning will ultimately influence the marketing strategies used to reach these people.

Consider this example. There are legions of writing software out there that try to do everything. You know this to be true if you do any kind of writing. But Airstory is different.

Airstory is probably the only writing software made specifically for copywriters. While writers are a target market on their own, Airstory is laser-focused on a subset of that target market—copywriters.

Pagely is just one among hundreds of businesses offering hosting services for WordPress. But they’re not a one-size-fits-all solution.

Pagely helps big brands. From that positioning statement, the average mom-and-pop business understands that Pagely’s solution isn’t for them. And by extension, “big brands” will mean “big money.”

In contrast, Notion is an all-in-one workspace for every team. Their target customers are potentially all departments in an organization. Check it out below.

While others will gain traction with targeting a subset of a wider audience like Airstory and Pagely, Notion’s example shows that you can also succeed by trying to be everything to everyone.

Research and decide who your target customers are, and you’ll craft a positioning statement that attracts them to your product and turns them into buyers.

Competitive advantages

If you’re on some SaaS websites longer than one minute, you may find a section like this:

A page comparing the product whose site you’re on, to its competitors. It can be a table, a chart, or any other type of graphic that conveys their message.

Those pages often highlight why the product is better than its competitor. Maybe it has more features at a lower price, maybe it’s more aesthetically pleasing, maybe it has better tools, or maybe it’s faster—the list is endless. The comparison page lauds the competitive advantages of the product.

Scoro KPI Dashboard software makes reference to a competitor, or group of competitors, as part of its positioning:

What product does “tired of shuffling between spreadsheets” remind you of? That’s right. They’re positioning themselves as Excel (or any other spreadsheet) on steroids. So their positioning statement highlights why Scoro works better than spreadsheets.

Ghost positions itself as a WordPress alternative. On this page, as you scroll, you can see firsthand why you may prefer Ghost to WordPress if you’re looking for a WordPress alternative.

This page answers the question: “If Ghost didn’t exist, what would their customers or prospects use?” Scroll further and you’ll see a chart comparing both products.

If you look back at the Airstory example, you’ll notice that they also mention direct competitors Microsoft Word and Google Docs.

Ethical values/policies

The internet makes it easy for companies to track you and bombard you with ads for products or services you may or may not need. Sometimes they gain access to our data from our mindlessly clicking the “privacy policy” on a website without reading it. Other times it can involve companies who sell your personal information to other companies without your knowledge. While some people do not mind, these practices are unethical.

Then there are products where the owners promise that a certain amount of whatever they make goes to certain charities or causes. Nine in 10 millennials say they would switch brands to one associated with a cause they support.

Products with ethical themes attract certain buyers who would gladly support them by becoming paying customers.

DuckDuckGo has long called itself “Google without the tracking.” Their homepage has carried several iterations of what you’ll find just below the search box at the time of this writing.

“Tired of being tracked online? We can help.” It’s indirectly saying: “Use our search engine, we won’t track you.”

For people who value their privacy or just want to opt-out of Google’s ecosystem, DuckDuckGo is a refreshing alternative. And for them, it doesn’t matter that their search capabilities or products are not yet as advanced as Google’s. This shows the power of positioning your product based on your ethical values, or even those of your prospects.

SnackNation donates a meal or two for every snack box a customer buys, depending on the package.

For customers who are concerned about giving back to society in one way or another, this type of positioning works.

Are you donating a portion of the revenue from your product to charity? Are you offering your product free to certain customers because you support their cause? Or is your product a solution to behavior some people view as unethical? If so, you have the foundation for creating a strong positioning statement.

How to choose the right product positioning strategy

Speak to your ideal customers

Analyze your happiest customers. What do they like about your product? Are there any patterns you notice with these customers’ usage of your product? If your product didn’t exist, what products would they use? What marketing activities turned them into customers? What type of content did they devour on their path to becoming customers?

The Appcues platform allows you to create surveys in-app and gather feedback from your customers based on their behavior while using your product. That way, your survey can target your best-fit customers and you’ll discover patterns that can help you choose your best positioning strategies.

If you don’t have a large pool of customers to survey, intensify your marketing efforts so you’ll reach a wider audience. Then test your positioning statements on this audience long enough, and eventually you’ll see enough behavioral patterns to justify choosing iron-clad positioning statements in the future.

Research the competition

Asking your customers what products they would consider if yours did not exist is a great way to determine who your true competitors are. Because understanding your true competitors allows you to hone in on your competitive advantages. You can mention them in your positioning if you wish, and it wouldn't sound awkward to prospects.

On the other hand, you may create a revolutionary product, one so special that your audience probably didn’t know they needed it. In that case, if you’re stuck thinking of other products in your industry, you may not even realize that you do not have any competition.

Sometimes, if your app or service automates tasks, you’ll find your competition includes just doing the task manually. For example, if your product is a drawing app, your competition will include a simple sketchpad and pencil along with other drawing apps in the market. Add everything to your research at this stage.

Determine the unique features and value of your product

Outline any features of your product that your competitors do not have. Include positive and negative features. For example, if your competitors’ products work offline and yours doesn’t, that’s a negative feature for some audiences. But your ideal customers may see it as a positive feature.

For someone like me who uses a Chromebook, I don’t mind buying software that works solely online because the alternatives might be worse. And that includes installing additional software that may not be compatible with Chrome OS when I can easily use a web app from my web browser instead.

Avoid the trap of praising your own product’s features; after all, who doesn’t think their product can improve or simplify their prospects’ lives? Use customer reviews or testimonials instead. Look at this example from Appcues’ homepage.

Customer quotes boost your product’s credibility. Several studies have shown that prospects are more likely to believe such bragging from your customers. Map each feature of your product to a customer testimonial validating its usefulness.

Choose your market category

On paper, this sounds easy, but it isn’t. In the examples below, the messaging app Drift evolved through different positioning statements and niches until it nailed one. This one is from 2015.

In the screenshot above, I’d easily have classified it as yet another marketing automation tool. But they wanted something different. And so they created a new market category.

When you ask your customers what your market category is, they’ll likely try to position you in a market similar to their job role or a market closely related to the one you’re serving. The problem with “marketing automation,” or any other niche Drift could have chosen, would be that it doesn’t amplify the strengths of their product.

They created “conversational marketing” as a market category. The term is so popular now that software review sites have a section for “conversational marketing software.” And new conversational marketing software is springing up daily in addition to other existing software providers who are now repositioning their offering.

Choosing a market category doesn’t necessarily mean creating a new one. You can choose an already existing market category as long as it strengthens the value of your product to customers already in that category. And always remember that you can change your market category as your product changes over time.

Decide your final positioning

“Final positioning” is a bit deceptive. Because your positioning will always undergo testing and refinement over time as we’ve mentioned already. Play around on the Wayback Machine and you’ll notice that evolution for many products that now seem like they have their positioning all figured out.

If you already have a lot of customers for customer research, by following these steps, you’ll choose the right positioning for your product. But if you don’t have enough customers yet, position your product flexibly until you have enough data to choose a winning positioning strategy.

Let’s discover where the right positioning can take your product

Let’s face it. Your product will not grow overnight. And the right positioning will still not fix all your marketing or sales woes. But it’s an effective and sometimes overlooked component—especially in this age where the competition is overwhelming.