30/07/2021
Product positioning formula

Product Positioning Formula step by step with Case Study

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In this blog, explains how you can position your product in the market. Understanding Product Positioning Formula is very essentail for brand building

In business, you should know about the following things:
• What do you stand for?
• What should you be known for?
• What should be your company or product known or recognised for?
• Why should your company or product be remembered for?
• What is your positioning?
Positioning is very important for a business.

For example:

• Xiaomi mobile is a well-known brand in the price range of Rs. 10,000-15,000.
• If they launch a mobile phone of Rs. 35000 or 1 Lakh with the same brand name, then people will not buy it.
• However, people easily buy an Apple mobile phone of Rs. 1 lakh.
• This Is just because of the positioning of these brands.

If you want to use a new positioning for a new product, then you have to change the name of your product.

For example:

• Maruti Suzuki is positioned as a low-priced brand. Thus, when they wanted to come up with high-priced products, they had to come up with a new brand named, NEXA.
• Similarly, when Relaxo, a low-priced brand, wanted to sell some high-priced products, they had to create a new brand named, Sparx.
• Oppo, Vivo and OnePlus are the products of the same company but they have very different positionings. Thus, they have different brand names.

Before deciding how you will position your product or what will be the price of your product, you need to understand the business sequence, which has 7Ps of business.

#1 Business Sequence

For making a problem-solving product ( Product Positioning Formula ) , you need to decide the first 3Ps of business, which are:

1.Perfect Customer
2. Problem
3. Product
If you don’t know who is your perfect customer and you are selling a product to an imperfect customer, then all your efforts will go in vain.

On the other hand, if you know who are your actual customers, then you will not focus your positioning on the entire universe but you will focus your position only on your actual customers. Thus, the effort and cost you invest in bringing extra customers will decrease as you are focusing only on your perfect customer.

if you do advertisements all around the country, then the result will be less because only the actual customer will buy it and the rest of your efforts and money will be wasted.

Therefore, nowadays, companies do not advertise on Tv and newspapers rather they use focused digital advertisements or they focus on cross promotion partnerships.

#2 Framework


1. who is your perfect customer and imperfect customer?

• People try to sell their products to everyone. However, they need to understand that every customer is not your perfect customer. You should not try to enter every market.

• You need to understand your perfect customers’ psychographic, demographic, income bracket, age, need, interest, concern, expectation and aspiration. You need to understand whether your customer is a bargainer, buyer, negotiator or an impulsive buyer.

• write down some lines about your perfect customer. You need to write about the psychographic, demographic, personality, persona, age, gender, geography, region, and ethnographic of your perfect customer

2. what is your value proposition and positioning ?

write about your current positioning, which can be of the following types:
a. Performance value
Performance value positioning is product-focused. A product-focused positioning means you provide a super-solid and long-lasting product.

For example:

• Toyota Innova is known for its performance, innovative features, quality, reliability, and durability. It Is the leader in its category.

• Mahindra has tried to bring some of its products in this category but Toyota Innova has captured the entire market. In this focused area, Toyota Innova has the highest share.

• Maruti has brought Maruti Suzuki Ertiga, kept it below the Toyota Innova, and did not tried to enter the Toyota Innova section.

• When Honda has entered the market of Maruti Suzuki Ertiga with Honda Mobilio, it was not able to sustain because Maruti Suzuki Ertiga has captured the market completely.

b. Relational Value         

Relational value positioning means you customize your product as per the customer’s requirements. The features of relational value positioning are:
• Customisation
• Timelines
• Rapid response
• Service

c. Emotional value

Emotional value positioning means to position your brand on customer’s emotions, which means customers buy your product due to the emotions associated with it.

For example:

Apple, Mercedes, and BMW have positioned their products on aspiration, which is an emotion. ( Product Positioning Formula )

d. Financial Value

Most of the entrepreneurs position their product on financial value. They sell their products on:
• Discounts
• Best Price
• Low-cost
• Policy-Scheme
Atter understanding your current value proposition or positioning, you need to determine your new value proposition or positioning. It means you need to determine where you want to go.

Determine your new positioning based on the follwing two questions:
Who is your customer ?
What is your customer’s problem ?

You should not decide your positioning based on the positioning used by your competitors or your nearby shopkeepers.

You need to first identify your perfect customer and his problems and after that, you decide your product and its positionlng. Thus, the sequence of Ps will be:
1. Perfect Customer
2. Problem
3. Product
4. Positioning
So, you need to decide whether your new positioning will be on performance value, relational value, emotional value, or financial value.

Based on this, you will be able to decide in which of the following market/quadrant you want to position your product:

a.Opportunistic market: In this market, prices of the products are high but their quality is low.
b. Chinese goods market: In this market, both price and quality of products are low.
c. Value for money market: In this market, companies sell good quality products at a low price. Such products are value for money.
Examples: Maruti Suzuki and Relaxo.
d. Premium market: In this market, both price and quality of product are high. Examples:
Versace, Louis Vuitton, Gucci, Mercedes, BMW, and Volvo.

It is not necessary that you are successful in all four markets. You can use the combination of 2-3 markets. But, it is better to focus more on one market.
You may try to use the combination of financial value, and performance value to position your product.

For example:

Maruti Suzuki has used the combination of financial value and performance value. As it is not costly, so, it is using financial value. At the same time, it is offering a long-lasting car with a good resale value, so, it has performance value as well.
You need to decide in which market you will position your product. This will be based on your customers and their burning problems.

3. what changes are you going to make in your strategies ?

 • If you have selected financial value to position your product, then you need to reduce your sales price.
• For reducing the sales price, you need to reduce the cost price so that you have good margins. If you do not have good margins, then your business will collapse.

• So, you need to decide the changes you will bring in your departments to reduce the cost price and sales price.

For reducing the cost price and sales price, you need to bring the following organisational level changes:
1. cost cutting
2. Cost optimisation
3. waste elimination (if your 5-10% stock is wasted, then your 5-10% margin is automatically reduced.)
4. Manpower — Time Management
5. Training — Low Cost

For cost cutting, you need to:
• Reduce your resources, money, product, and defects.
• Make sure that you don’t have to do the rework.
• Control mistakes in the first time.
• Do the things right in the first time.

This will help you to reduce your cost and provide your product at financial value in the market.

It is necessary because if you are not able to control your cost and you made the product at a higher cost while your competitor is able to make the product at a lower cost, then you will not be able to sustain in the market.

Once you have decided the changes you want to bring, then you need to decide the changes that will be required in all the departments.

4. what changes are you going to make in your departments?

You need to bring changes in all your departments, whether it is Finance, Marketing, Sales, Production, Quality, HR, Purchase, or IT.

You need to make every department understand what changes will be required in their respective department.

For example:

If you want to reduce the cost price and sales price, then the departmental changes will be as follows:

Finance: They need to plan in a manner that the cost remains low.
Marketing: They need to sell products at a low cost.
Sales: They need to give less margins to the distribution channel.
Production: They need to make an error-free product at low cost in the first time as there is no scope of making mistakes.
Quality: They need to keep the quality very high so that there is no chance of rework.

HR: They need to hire manpower at low cost.
Purchase: They need to buy the raw materials at low cost.
IT: They need to keep the technology so strong and efficient that all the work can be done digitally.
Let us take an example wherein you want to position your product at performance value.
In this case, you need to bring the following changes at the strategic or organisational level:
1. Innovative features
2. Quality
3. Reliability
4. Durability

After that, you need to decide what changes you will make in departments so that they become:
• Quality centric
• Quality conscious
• Improve quality checks
• Advertising
The departmental changes you have to bring are as follows:
Marketing and sales: They need to sell 1he product on quality, i.e. product is long-lasting.
Production: They need to keep the quality of the product good.

• Quality: They need to make their quality checks so efficient that the product does not have a single defect.
HR: They need to train the employees in a manner that there is no impact on quality.
Purchase: They need to buy raw materials of high quality.
IT: They need to build systems to check, control, and monitor the quality of the product.

Let us understand what changes are required if you want to position your product at relational value.
In this case, the changes made at strategic or organ isational level are as follows:
1. Customisation
2. Speed
3. Service
4. Customer support
5. Fanatical support

So, in relational value positioning, you need to ensure that you retain your customers for a lifetime. Thus, you need to orient all your departments in a manner that you will able to build a good relationship with your customers.

In this manner, you should follow the framework and position your product to get the best results.

What is Product Positioning?

Product positioning is a form of marketing that presents the benefits of your product to a particular target audience.

What are some example of Product Positioning?

Demographics.
Performance.
Efficiency.
Reliability.
Quality.

What is Nike’s brand positioning?

Nike.com “For serious athletes, Nike gives confidence that provides the perfect shoe for every sport”. 

What is Apple brand positioning?

This is what Apple stood by all these years and defined its positioning around three core tenets: Simplicity, Creativity, and Humanity.

What is positioning statement?

positioning statement is a concise description of your target market as well as a compelling picture of how you want that market to perceive your brand.


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