What it means
Customers have limited attention, so they sort brands into mental boxes such as cheap, premium, reliable or innovative. Brand positioning is the plan for putting the brand into the box that serves the business best.
The position must be both different from rivals and believable. A positioning statement usually answers four questions.
Who is the target customer, what category does the brand compete in, what is the main benefit it promises, and what proof supports that promise. Writing these down forces a company to make choices.
For finance teams, positioning shapes the economics of the business. A premium position supports higher prices and margins but needs spending on quality and service.
A low-cost position relies on volume and tight cost control, with thin margins on each sale. Positioning also guides where money goes.
Marketing budgets, product features, store locations and even staff training should support the chosen position. Spending that does not fit the position is a candidate for cutting.
It is not a one-off exercise. Markets change, competitors copy ideas and customers' tastes move, so brands review their position regularly.
Repositioning can be costly and slow, because customers need time to change their view. A common failure is trying to be everything to everyone.
A brand that claims to be the cheapest, the best quality and the most exclusive at the same time ends up believable on none of them.
In practice
Real-world examples
Example 1
A budget airline positions itself as the lowest-priced way to fly short routes. It removes free meals, uses one aircraft type and charges for extras. Its cost base fits the position, so it can still earn a margin on low fares. A rival that copied the low prices without the low costs would lose money on every seat, which is why a position must be backed by the cost structure.
Example 2
A skincare company positions its range as clinically tested and premium. It prices products at a high level, funds laboratory studies and sells through pharmacies rather than discount shops. Customers accept the price because the proof supports the claim. The finance team can show that the laboratory spend pays for itself through higher margins.
Example 3
A regional accounting firm positions itself as the adviser for family-owned manufacturers. It trains staff in that sector, sponsors industry events and turns down unrelated work. Referrals rise because the firm is known for one thing. Fees can be set higher than those of general practices, since clients see a specialist.
Think of it
Brand positioning is how you want customers to think of you compared to alternatives.
Case study
Seen in the real world
Harbour Table is a fictional restaurant group with five venues. Its menu and prices were mixed, with some venues aiming at business lunches and others at families, and customers were unclear what the group stood for. Profit per venue varied widely.
Management chose a single position: relaxed, locally sourced seafood at fair prices. Menus, staff uniforms and advertising were aligned, and two venues that did not fit were converted.
Within a year the illustrative group reported steadier sales and lower waste, since menus were simpler and ingredients were bought in larger, more predictable quantities. The finance director noted that marketing spend per cover fell, because the message was now consistent and every venue repeated it. The change was not painless, since the two converted venues were closed for refits and lost some regular customers who preferred the old menu. The group accepted that cost because the position gave it a clear basis for future decisions. Each new menu item, supplier and advert was tested against a simple question about whether it fitted the position.
Watch out
Common mistakes
- Confusing positioning with a slogan. The slogan is just one expression of a position that must be reflected in product, price and service.
- Trying to appeal to everyone. A vague position is rarely believable and gives customers no reason to choose the brand. A claim that customers do not trust is worse than no claim at all.
- Setting the position and never reviewing it. Competitors and customers change, so the position needs regular checking, usually through customer surveys and a review of rivals' offers each year.
Questions
People also ask
How is positioning different from branding?
Branding is the whole identity of a business, while positioning is the specific place the brand aims to occupy compared with rivals.
How does positioning affect pricing?
A premium position supports higher prices, while a value position depends on low prices and tight costs. The finance team should check that the price level and the cost base both match the chosen position.
Can a company reposition?
Yes, but it takes time and money, and customers may not believe the change unless the product truly changes too. Many firms reposition gradually by changing the range and the service first.
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