Developing a positioning strategy requires that management identifies key competitors, relevant attributes, competitor positions, and analyses the market segments; i.e., the groups of customers. The position decision also involves selection of the desired position, its implementation, and monitoring. Some firms find it easy to choose their positioning strategy in a new segment, especially when they have already established their quality reputation in certain segments.

However, in many cases, two or more firms will go after the same position, say, Quality. Then, each will have to find other ways to set itself apart from its competitor, such as by promising “high quality with after sale technical service” or “high quality for a lower price.” Thus, each firm has to differentiate its offer by building a unique, unmatched bundle of competitive advantages that appeals to a substantial group of consumers in the segment.

Positioning strategy consists of three steps as follows:

1. Identifying a set of possible competitive advantages upon which to build a position.

2. Choosing the right competitive advantages.

3. Selecting an overall positioning strategy.

Step # 1. Identification of Possible Competitive Advantages:

Consumers often choose or go for those products or services which give them the greatest value and satisfaction. Hence, the key to win over a large part of the consumers and make them permanent clientele, is to understand their needs, wants, requirements, and buying behaviour better than the competitors do, and then to deliver more value than the competitors do.

Thus positioning begins with actually differentiating the firm’s marketing offer so that it will give consumer more value than competitors’ offer do. It has to be noted that solid positions cannot be built on hollow promises. Differentiation can be made only on the basis of some extra potential-advantages.

A company can differentiate its market offer on various bases, such as product; product performance; product style and design; product’s consistency, durability, reliability, or repairability; best quality; lower costs; services-widespread distribution centres, free after-sale service, easy and timely delivery, free installation, repairing services, etc.

Step # 2. Choosing the Right Competitive Advantages:

When a company discovers several potential competitive advantages, then it must choose those advantages upon which it will build its positioning strategy.

At this stage, the company has to decide on two important issues:

(a) How many differences in advantages to promote—on what attributes the company is number one in the market, or what is its unique selling proposition. The major propositions may be: best quality, best service, lowest price, best value, most advanced technology, easy purchase finances, etc.

(b) Which differences in advantages to promote—all brand differences are not always meaningful or worthwhile. Hence the company must carefully select the ways in which it will distinguish itself from competitors.

A meaningful difference satisfies the following criteria – It is:

(i) Important – delivers a high valued benefit to the target buyers.

(ii) Distinctive – competitors do not offer such difference, or the company offers it in a more distinctive way.

(iii) Superior – superior to other ways which customers might obtain the same benefit.

(iv) Preemptive – competitors cannot easily copy the difference.

(v) Affordable – buyers can afford to pay for the difference.

(vi) Profitable – the company can introduce the difference profitably.

(vii) Communicable – the difference is communicable and visible to buyers.

Step # 3. Selecting an Overall Positioning Strategy:

The overall positioning of a brand is called the brand’s value proposition. It conveys the full mix of benefits (e.g., quality, safety, styling, warranty, free maintenance, etc.) upon which the brand is differentiated and positioned. It would answer the customer’s question, “Why should I buy this brand?” For example, Tata Indica offers ‘more car per car’, i.e., more space, better fuel economy at a comparatively lower price whereas Volvo’s value proposition hinges on safety, roominess, reliability and styling, all for a price that is higher than average but seems fair for the said mix of benefits.

Developing a Positioning Statement:

Positioning statement is a statement that highlights company or brand positioning. It clarifies the need of the target segment that the brand would satisfy and how the firm’s offering would be different from those of its competitors.

Communicating and Delivering the Chosen Position to the Market:

After a company has chosen its position, it must take appropriate measures to deliver and communicate the desired position to the target market. The positioning strategy must be supported by company’s marketing-mix efforts. For example, if a company positions its product on “high quality,” then it must produce high quality products, charge comparatively high price, distribute its products through high quality dealers, and advertise in high quality media.

It must provide better after-sale service. It must attend quickly and efficiently to the complaints of the customers, if any. This is the only way to build a high quality position and image. Mere selection of a good positioning strategy is not sufficient, but it must be properly implemented also.