Published in Entrepreneurship Articles category by MBA Skool Team, Published on September 10, 2016
One of the many technical terms that we hear a lot in the marketing world is ‘Positioning’. Everybody knows what positioning means to an established business. If a company wants to launch a new product in the market, it has to undertake the sacrosanct series of steps of segmenting and targeting followed by positioning. However, when a new company comes into existence, the third and the final task of positioning becomes even more important.
Positioning is nothing but an art of communicating to the customers the attributes of a product or a business, based on the needs of the customer and through proper channels and carefully crafted messages. Positioning of a product decides how the customer perception is formed about the product. Once the market has been segmented based on one of the demographic, psychographic, geographic factors etc. depending on the company’s choice and once the target market has been decided, the next task is to let the target market know how the product suits their requirements. This is what positioning is all about- projecting one’s product with respect to the needs of the target segment.
In case of an established company, one of the largest factors that back the positioning of the company is the brand of the company. The brand of the company acts as the platform which in most of the cases acts as a base for the positioning of a new product that is launched by the company. Needless to say, it acts as a support system for the positioning of the new product. For example, Colgate Palmolive has recently launched a new product, the Colgate salt-neem toothpaste. Colgate, as we all know, is the market leader in the Indian toothpaste industry. Backed by people’s ‘TOMA’, it becomes very easy for Colgate to position this product in the market. However, a new company does not enjoy the benefits of this support system.
When a new company enters a market, it has two choices. Either entering a market that already exists and the need is already known to the customers or entering an entirely new market which has not been explored earlier. Positioning is required by the company in both these markets. Let’s talk about a new company entering an existing market. In an existing market a large number of competitors already exist, each one of them having a distinct position for themselves in the minds of their customers. It is all about perception. If a new player wants to survive in the race, what option does it have? Can it do so by eating the share off the existing players’ plates by coming in an offering the exact same product to exactly the same customer? The answer is definitely a big ‘No’. This is because, the existing players in the market have a defined target market backed by their brand name and successful positioning and they enjoy the loyalty of their customers. This is where and why positioning becomes very important for a new company.
A very classic example from the Indian context is ‘Fogg Deodorants’. Vini cosmetics being a relatively new company entered the deodorant market in the year 2011 when the market was dominated by Hindustan Unilever Limited’s Axe deodorant. However, within three years the deodorant took over Axe and turned out to be the market leader. The major factor that can be attributed to the success of Fogg deodorant is the positioning. The product successfully segmented the market and realized that the mindset of the Indian customer. They came up with a liquid deodorant and positioned themselves as a deodorant that had a longer life. Taglines like ‘Deodorant without gas’ and ‘800 sprays guaranteed’ spun the market. This example shows how effectively a new company was able to carve out a niche for itself in a market dominated by a big brand like HUL just because it had an affective positioning strategy for itself.
The other type of market that a new company can enter is a new market that has not been explored before at all. Now a question might be asked. What is the need for positioning in a market that does not have competitors at all? The answer lies in the definition of positioning itself. The idea behind positioning is letting the customers know why they need a product and so new companies entering a new market require positioning their product as much as those entering an existing market. So how does it make positioning a critical function for them or a part of their business strategy? Well, if it is a one horse race today, it doesn’t mean it is going to stay like this forever. In the long run, when competitors begin to enter the market, the company would require a definite positioning for it to ensure that its customers know why they should stick to the company and not choose the new ones.
So, how is positioning done after all? How do we decide the apt positioning strategy for a product? We have various tools which can be used to decide this. For example, Perceptual Mapping is one such tool. In this, various companies which exist in the market are plotted on a 2 dimensional graph against any two selected parameters on the basis of how the target market perceives them. These two factors could be any two factors that the company deems will act as a factorial for its product. Once the mapping has been done, the next task is to look for unmapped spaces in the graph. These are the spaces which have not yet been targeted by any existing company and hence, give an opportunity to our company to position itself accordingly.
The fundamentals of positioning remain the same regardless of whether a company is new or well established. However, with such a large number of companies getting set up every day, carving out a niche for oneself becomes very important. Because in the end it is all about how the customer perceives a company.
This article has been authored by Kavisha Agarwal from IIM Raipur