How to Position Your Product in Your Target Market

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It's a simple truth that a free, globalised market is heavily skewed in favour of consumers. This is evident in the wide availability of choice alone; there are far more brands and products now than at any point ever in the past. However, when consumers have freedom of choice, this isn't necessarily good news for you as a vendor. It means that you have more work on your hands to attract and retain their attention.

This is where the importance of positioning your product within the wider marketplace becomes crucial. It doesn't matter if you are running a small business or a large corporation, either: without an effective product positioning strategy, you will be staring at failure in the long term. 

Why Is Product Positioning Important?

Product positioning is important because it helps your business establish an identity and a defined position in the marketplace; indeed, any successful marketing strategy begins with effective product positioning. After all, when the market is teeming with competing products from your rivals, how do you differentiate yourself from the rest?

A properly positioned product has one or several target demographics – groups of consumers who would benefit most from buying the product. Your marketing team can then use this information to craft the most effective strategies to attract said customers.

Everything else flows from this. With proper marketing, you increase your brand's visibility, which leads to more consumer awareness. Increase in sales depends on this, which also impacts your profit margins positively. Therefore, the importance of product positioning as a root element of your entire business model cannot be overstated.

How to Position Your Product

Regardless of the nature of your business and its products or services, an effective positioning strategy should answer several core questions, as seen below: 

Why does your product exist?

All businesses have (or should have) a mission statement, and this should represent the entire reasoning behind why you do what you do. In the context of product positioning, ask yourself: what is the wider purpose of your product? What kind of positive impact do you hope to bring by creating and selling it?

Which market will you be selling your product in?

If you have a uniquely innovative product, you could end up creating an entirely new niche or segment with unlimited potential. But if you are improving on an existing design – as is often the case – you will be entering into an existing market. Either way, identifying and understanding your market category will define your playing field and your place within it.

Does your product solve specific problems for your customers?

All customers have pain points – issues they hope to solve by buying a particular product from the marketplace. Which specific pain points can your new product solve? Can it solve multiple problems in one package? This is a very crucial aspect of any product positioning strategy. 

How is your product different from the competition?

In highly saturated and competitive markets, this is the million-dollar question. Unless you have a wholly innovative product, you will face challenges in clearly defining your product as better than the competition. Your USP could concern any number of factors, such as the strength of your branding, your supply chain strategy, or the effectiveness of your promotional campaigns.

Understanding the Angles

To find answers to these questions, you need to approach them from different perspectives. You will need knowledge and insight from three specific areas in particular: 

The Customer

You cannot sell a product to an entire market; instead, a product is often targeted at specific groups of consumers. They could be consumers in certain age groups, locations, income groups, or people who share certain interests or behavioural traits. You must learn more about their needs, interests, preferences, and expectations regarding your product.

The Competition

You cannot effectively position your product without competitor analysis. Understand how your rivals try to fulfil the needs of your customers (this process should cover both direct and indirect competitors in the marketplace).

The Product

While the other two aspects are external in nature, this last one is entirely internal. Use frameworks such as SWOT analysis to better understand the advantages and weaknesses of your product.

To achieve all this, businesses and marketing teams can use a popular framework known as the STP process. 

The STP Process

A modern product positioning process involves three main steps as laid out in the STP process - segmentation, targeting, and positioning. It combines insights from each of the three core areas explained in the previous section. Yet while the product and the competition are important, the overwhelming focus of the STP process is on your customers. 

Step One: Segmentation

This is where you look at the market and try to divide your potential customers into various demographics, or "segments". The people in these clearly defined groups should have shared traits or characteristics, and similar behavioural patterns. Above all, they should have similar pain points which can be addressed by your product.

To effectively segment your customers, you need data. Unfortunately, there is no single source for all the data you need; businesses obtain data for segmentation from multiple sources. These can include customer surveys, internal data on customers (CRM), feedback from existing customers, interviews, focus groups, and digital sources of data such as Google Analytics. 

Step Two: Targeting

In step one, you will have identified several different customer segments for your product. Now it is time to decide which group (or set of groups, if your product is diverse in nature) would be most interested in buying it, thus maximising your chances of a better ROI.

This process is called targeting, and it is where you try to figure out which segment is most valuable from a commercial perspective. To do this, you have to evaluate each segment based on certain criteria, including the following factors: 

  • Size - Is the segment big enough to make a difference?
  • Homogeneity - How easy is it to create effective marketing strategies that resonate with this segment?
  • Accessibility - How easy is it for your business to reach this segment for marketing and sales? 
  • Responsiveness - How much more responsive are the segments to your marketing campaigns, when compared to the market as a whole? 

After analysing the segments based on these criteria, you can pick the most promising ones and move on to the next part of the STP process. 

Step Three: Positioning

This is where you create improved synergy between your product and the targeted segment. To do this, you need to understand the particular needs and expectations of the segment and how your product fulfils those needs.

This involves both consumer research and competitor research. Use surveys and focus groups from your targeted segments to get feedback about your product. Compare your product with its rivals based on the insights you receive from customers.

If there are features in your product that hold an edge over the competition, highlight them. If there are significant flaws or weaknesses, see if there are ways to iron them out. The end goal is to be able to enter the market in as strong a position as possible.


As you can see, positioning can be a quite complex endeavour involving a lot of research and hard work.

Ultimately, though, these steps will enable you to devise a product positioning strategy that resonates with your customers, and help your brand stand out and survive in the marketplace.

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