Business and marketing professionals will frequently throw around the term “Positioning” during meetings, pitches, and branding sessions. However if pressed for a definition, many of these same people would draw a blank. If you can come up with a satisfactory explanation for what positioning is and how it works in your head right now then feel free to skip this article, but if you want to build a strong foundation for understanding how positioning really works (in just four simple steps) then read on:

The term “positioning” became popular in the early 1980s when Al Ries and Jack Trout published a book with that title. At the time it was a fairly revolutionary idea, and it spread rapidly up the ranks of many successful businesses. Then roughly a decade later, they published another book that refined their concept of positioning even further called The 22 Immutable Laws of Marketing. These two books are like the old and new testament for brand positioning, and these four principles are like the first four commandments:

  1. The battle for brand position occurs in the consumer’s mind.Ries and trout write: “There is no objective reality. There are no facts. All that exists in the world of marketing are perceptions in the mind of the customer or prospect.” This is the foundation upon which all other rules and strategies for positioning are built. It doesn’t matter if you can scientifically prove your product is faster, stronger, or more durable than your competition — if that’s not what is in the consumer’s mind, then that’s not reality.

    The consumer’s mind is divided up into categories for each type of product or service they use, so there is a category for beer, toothpaste, cars, airlines, etc. The concepts of “benchmarking” and then trying to outperform the leader in your field in key areas is not effective positioning, because that company already owns your category in the consumer’s mind and humans have biases that make them highly unlikely that they will ever change their outlook in the future. Which brings us to point number two…

  2. The company that owns a particular category in the consumer’s mind first wins.This means it’s better to be first to the customer’s mind than to the marketplace. Think about the story of the iPod. It was definitely not the first mp3 player in the market, but it became the leading mp3 player when it was able to take the top spot in the mp3 player category in the minds of a majority of the consumers in the marketplace. After the iPod took over the mp3 player category for most people, the chances were extremely slim someone else would be able to come in and unseat them — again because humans are extremely bad at changing their minds once they are made up. Case in point: Microsoft’s miserable failure with the Zune. (Just in case you’ve never heard of it — which wouldn’t be surprising, and just make the point even stronger — it was their attempt at making an mp3 player like the iPod).

    So what do you do if someone else already has first place in the consumers mind? That’s where point number three comes in…

  3. If you can’t be first in a category, make up a new category you can be first in.During the personal computer revolution, if you were selling computers IBM was the leader in the category. There’s no way you would have been able to take first place from IBM in computers. So what did competitors like Tandem do to build multi-billion dollar companies? They created a new category that they could own. Tandem became first in fault-tolerant computers and was worth almost $2 billion. Cray Research built the first supercomputer, and was worth $800 million. If any of them tried to takedown IBM, they would probably have gone out of business, but by creating a new (smaller) category that they could be first in they thrived.

    There’s still a possibility for success as the number two or three company in a given category, but the margins will be smaller than being the leader. Here’s what you do if you find yourself playing the role of number two…

  4. Categories are set up like ladders in the consumer’s mind, and your position determines your strategy.You can think of categories like ladders in the mind of the customer. The first place company is on top, followed by the second, and the third, and so on. If you create a new category, you are building a new ladder in the mind of the customer that you can then take the top spot on. But if you find yourself below the leader on the ladder for your category, and you can’t make a new ladder, then in order to be successful you have to create your positioning in response to the leader. The number one company on a ladder has the luxury of choosing any position they like, because they are the leader. The number two company then has to choose their position in reaction to the one chosen by the leader. As item number 2 noted, you can’t go head-to-head with the leader and try to win, you will just wind up like the Zune. Instead you have to choose a position that polarizes you from the leader.

    For example, let’s consider the fast-food market. McDonald’s is the leader, and they are clearly positioning themselves to appeal to kids with their happy meals and the “play place” jungle gyms in their restaurants. They figure that if kids want to go, then their parents will feel pressured to take them there and wind up eating as well. This means if you are Burger King, the number two company, trying to go after the kid market as well would be futile. If McDonald’s chooses to position themselves for kids, Burger King must then go after adults. Running a campaign around the theme “Grow Up” would be a good approach. Not only would you capture the adult market, but you would also capture all of the kids and teenagers who want to seem more sophisticated and mature. By clearly separating their position from McDonald’s like this they could then tap into a different, but still substantial, piece of the market and run a thriving and successful business.

Now that you have a solid understanding of the basics of positioning, let us know what your company’s position is in the comments!