Competitive Positioning

Updated on April 17, 2024
Article byRutan Bhattacharyya
Edited byRutan Bhattacharyya
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Competitive Positioning?

Competitive positioning refers to a strategy that denotes how a business’s marketing team is able to differentiate the organization from its competitors. Its main purpose is to increase sales. Moreover, it can guide a company’s whole business model and marketing strategy in addition to giving its branding purpose.

Competitive Positioning

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This strategy helps organizations communicate to consumers why they should select the business’s offerings instead of its competitors’ products or services. A marketing team takes into account specific elements, like consumers’ requirements, market scenario, organizational performance, etc., to make the business’s position more competitive. If the strategy is effective, it can boost brand awareness, customer retention, and sales.

Key Takeaways

  • Competitive positioning refers to the different ways in which a company sets itself apart from its peers in the market. A business needs to develop such a strategy to improve its profits and gain significant market share. 
  • Some key elements of this concept are the performance of the business, the market for the product, product value, and potential customers’ requirements.
  • Businesses can utilize cost leadership, customer relationship, and product leadership strategies to improve their position in the market.  
  • Competitive positioning in marketing improves sales and profits, besides improving customer loyalty.

Competitive Positioning Explained

Competitive positioning refers to how any organization distinguishes its offerings from competitors’ products and services. By developing such a strategy, a business aims to strengthen the top line and bottom line. It involves targeting the main demographics and establishing a brand. A company’s position relies on how the value its products and services provide compares to the value offered by similar products and services available in the market.

To get a clear idea about competitive positioning in marketing better, one must learn about the elements of this concept. Let us look at them in detail.

  • Organizational Performance: Note that business performance can impact marketing campaigns’ success. Hence, organizations must assess their performance using different techniques, for example, SWOT analysis.
  • Audience Requirements: Businesses need to find the specific requirements of the target audience before using this strategy. They can do this via social media and analytics. Businesses can make product-related improvements and design marketing campaigns based on accumulated information.
  • The Market: Determine every aspect related to the market where the product and organization fit. Businesses can increase their chances of success by considering certain things like the market’s size, the stage of growth the market is currently in, and the total number of competitors in that space.
  • Product Value: This is the value a business’s products and services offer to customers. Organizations can determine it by checking whether the price points match the products’ capabilities. If they match, organizations may have a better competitive position than their peers, who charge a higher amount for products that are less beneficial.

When it is clear in a market that a business’s offerings differ from its competitors, that organization finds it easy to win market share. Without brand differentiation, more budget and time are necessary to entice customers and improve customer retention.

How To Create A Competitive Positioning Strategy?

Marketing teams can follow the steps below to create an effective competitive positioning strategy:

  1. Identify Goals: Determining the long-term and short-term goals helps businesses understand the best way to execute a strategy. Typically, the management and marketing teams help identify such goals.
  2. Know The Market Well: Conduct thorough market research to determine what strategy to execute and the right competitive position. In this regard, understanding the roles of the business’ audience and team can certainly help. Also, find out what consumers prefer the most and check their feedback to know what the existing products and services are missing.
  3. Analyze Competitors: After identifying the competitors, a business must analyze them to identify the areas within the organization that require improvement. This will allow them to remain relevant, innovative, and up-to-date.
  4. Examine The Price Against The Benefit: In this step, business owners must understand the price or cost versus the benefits associated with competitor’s products. This will help determine whether the competitors’ offerings offer value to their customers. Then, with the help of this information, the business owners can find out if their company can make adjustments to the price of the product or the product itself to provide more value to the customers.
  5. Set Deadlines: The next step involves setting deadlines for each task, goal, and marketing campaign to monitor the progress efficiently. Ensure to create a timeline and stick to the schedule. In this way, businesses can know when they can reach goals within the set timeframe.
  6. Define The Perfect Niche: When businesses are in the right niche, they can provide potential customers with unique items that other organizations might not offer. Such unique offerings help the business improve its position.

Examples

Let us look at a few competitive positioning examples to understand the concept better.

Example #1

Suppose Company ABC has a restaurant chain around the world. As part of the competitive positioning strategy, the organization markets itself as the best restaurant chain that offers only fresh and healthy food. Per the chief executive officer (CEO) of the company, individuals must eat well to live a healthy life. That is why the restaurant chain does not sell food prepared with harmful ingredients or colors. Moreover, the restaurant chain does not use preservatives or artificial sweeteners.

Example #2

According to a recent analysis conducted by Sea-Intelligence, schedule reliability is an essential factor in determining shipping lines’ competitive positioning. It suggests that although people often consider the shipping industry a commodity market, a significant differentiation level exists in the reliability performance concerning shipping lines. That said, this differentiation is subject to fluctuations based on market conditions.

Also, per the analysis, shippers wanting an extensive range of service offerings should not be hopeful of a market with very low freight costs because this could result in a reversal to the 2016-17 period when the difference concerning reliability performance between the least and most dependable top-ten shipping line was 5% only.

How To Improve?

Some of the ways to improve a business’s competitive position are as follows:

  • A marketing team can utilize operational excellence to improve its organization’s competitive value. This involves determining how the business can offer a high product volume at a low price while ensuring quality levels remain satisfactory. The company’s management needs to focus on efficiently producing more goods that they can sell fast to achieve the objective.
  • Marketing teams can utilize product leadership to set the business apart from the rest of the organizations. This involves marketing it’s products’ quality and uniqueness to enhance reputation and increase purchases. For this, businesses can consider carrying out market research to identify gaps left by the competitors.
  • Organizations can take advantage of good customer relationships at the time of creating competitive value as loyal customers are likely to be more willing to buy new offerings and improve product visibility on different social media platforms. Note that marketing with the help of customer relationships requires businesses to be personable and active on social media. Besides these, organizations must consider the feedback given by customers to make improvements.

Moreover, organizations can consider these tips to create competitive value:

  • Rethink the manufacturing model.
  • Improve customer relationship systems.
  • Invest in product development and employee training.
  • Improve the processes to reduce the delivery lead time.

Importance

One can look at the following points to understand the importance of this competitive positioning in marketing:

  • It allows organizations to market to a specific audience that has an interest in their products and services.
  • Having a competitive position is vital to lessen the competition.
  • This concept is vital for businesses to boost sales and profits, build brand awareness, and enhance their reputation in the market.
  • As noted above, it gives a company’s branding purpose and guides its marketing strategy.
  • It helps get better customer response as businesses understand their customers and their requirements.
  • Once a business gains a competitive advantage, it provides the organization with certainty and clarity.
  • Strong competitive positioning builds brand loyalty, thus improving customer retention.

Competitive Positioning vs Competitive Advantage

There are some clear differences between competitive advantage and competitive positioning. One must know them to avoid confusion. So, let us take a look at the distinct characteristics.

Competitive PositioningCompetitive Advantage
The creation of a positioning statement is a key part of this concept. Creating a positioning statement is not an integral part of this concept. Businesses may do it to get a certain type of competitive advantage.
This term denotes how a business’s offerings differ from the competition.It refers to anything that gives an organization an edge over its competitors. 

Frequently Asked Questions (FAQs)

1. How competitive advantage is related to positioning?

A business must successfully implement a competitive positioning strategy, focusing on spotting a technique for value delivery to gain a competitive edge in a market. Showing customers that the organization can provide them with a unique product or service with added value helps them select its product instead of competitors’ offerings. This enables the business to retain customers for the long term.

2. What is a weakness in a company’s competitive position?

Weaknesses can be any of the following:
– Internal functions of a business that require improvement
– Anything that puts an organization at a disadvantage
– Negative aspects that do not allow a business to compete against its peers

3. What is a SWOT analysis for competitive positioning?

Businesses can utilize this analysis to improve their competitive position. SWOT stands for strengths, opportunities, weaknesses, opportunities, and threats. It is a framework that allows businesses to assess a competitive position and work on strategic planning. Moreover, it involves evaluating external and internal factors besides the future and current potential.

This article has been a guide to what is Competitive Positioning. We explain its examples, importance, and comparison with competitive advantage. You may also find some useful articles here –

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