Every business is known for something, whether or not it chose it. Customers file businesses away in their minds as “the cheap one”, “the reliable one”, “the one that always answers the phone”, “the premium one” or simply “one of many”. That mental position shapes what customers expect, what they will pay and whether they think of you when a need arises.
Positioning is the deliberate choice of what you want to be known for, by whom. It answers questions such as: What do we stand for? Why should customers remember us? Why should they choose us over the alternatives? Good positioning makes marketing easier, pricing more defensible and decisions clearer. Poor or confused positioning leaves a business competing on price by default.
This article explains how to choose a value position, the four main types of customer value, how positioning relates to price and quality, why a business sometimes needs a separate brand to reposition, and, most importantly, how every department must change to deliver the chosen position.
Positioning follows the customer and the problem
A common mistake is to decide positioning by looking at competitors: “they are premium, so we will be cheaper”, or “they are cheap, so we will be premium”. That approach starts in the wrong place. A sound sequence is:
- Perfect customer: who exactly are you serving?
- Problem: what burning problem do they need solved?
- Product: what solves it, and how?
- Positioning: what value will you be known for in delivering it?
If you do not know your ideal customer, your positioning will try to appeal to everyone and convince no one. Marketing aimed at “everyone” wastes most of its budget on people who will never buy. That is one reason businesses have shifted from mass advertising to targeted digital campaigns and partnerships focused on clearly defined customers.
Define your perfect customer, and your imperfect one
Not every customer is a good customer for you. Some will never value what you do best. Others cost more to serve than they are worth. Write a clear description of your ideal customer:
- For business customers: industry, size, location, typical problems, decision-makers, buying process and what they value most, such as price, reliability, speed, innovation or support.
- For consumers: demographics (age, income, location), psychographics (values, lifestyle, interests, aspirations) and buying behaviour, such as whether they are bargain hunters, careful researchers, impulse buyers or loyal repeat buyers.
Also describe the customers you do not want, those whose needs or behaviour do not fit. Knowing who to say no to is as useful as knowing who to pursue.
Four kinds of customer value
Customers buy for different kinds of value. Four broad value positions cover most businesses.
1. Performance value
The product or service is simply better: more reliable, more durable, more capable, more precise or more innovative. Customers choose it because it works best and lasts longest. Some vehicle models have dominated their categories for years on reliability and durability, so that competitors trying to enter the same space have struggled to dislodge them.
Performance positioning requires sustained investment in engineering, quality and innovation.
2. Relational value
The business wins through the relationship: customisation, responsiveness, flexibility, service and support. Customers choose it because it understands their needs, adapts to them and is easy to work with. Many specialist manufacturers, engineering firms and business service providers compete here. Their products may be similar to others, but their speed, customisation and support are not.
Relational positioning requires people, processes and systems built around customer responsiveness.
3. Emotional value
Customers buy because of how the brand makes them feel: aspiration, status, belonging, identity, security or pride. Luxury cars, premium technology and fashion brands are classic examples. The product must be good, but the brand story and experience carry much of the value.
Emotional positioning requires consistent brand investment, design and customer experience.
4. Financial value
The business wins on price: low prices, discounts, deals and affordability. Many small businesses default to this position, often without choosing it. It can work, but only with a structurally lower cost base. Without that, competing on price is a race to the bottom.
Combining values
Businesses can combine value types, for example offering good performance at an affordable price, which is the essence of value-for-money brands. Some mass-market car makers combine affordability with low running costs and strong resale values. But most successful businesses lead with one primary value and support it with others. Trying to lead on all four usually leads to mediocrity in each.
There is a close parallel in management research. Michael Treacy and Fred Wiersema’s book The Discipline of Market Leaders (1995) argued that market leaders excel at one of three disciplines: operational excellence (best total cost), product leadership (best product) or customer intimacy (best total solution for specific customers), while meeting acceptable standards in the other two.
The price–quality map
Positioning also places you on a map of price and quality:
| Lower quality | Higher quality | |
|---|---|---|
| Higher price | Opportunistic | Premium |
| Lower price | Cheap and basic | Value for money |
- Premium: high quality, high price. Supported by performance or emotional value.
- Value for money: good quality, lower price. Supported by performance and financial value, and requires excellent cost control.
- Cheap and basic: low price, low quality. Pure financial value with thin margins.
- Opportunistic: high price, ordinary quality. Survives only where customers lack alternatives, and is vulnerable once they have them.
You can operate in more than one quadrant with different product lines, but focus on one as your core.
Why repositioning often needs a new brand
Once customers have positioned a brand in their minds, it is very hard to move it. A brand known for affordable products struggles to sell an expensive model under the same name, because customers do not believe the brand stands for premium quality. Conversely, a premium brand risks damaging its image by launching cheap products under its name.
That is why companies often create separate brands for different positions. Toyota launched Lexus in 1989 to compete in the luxury market rather than selling luxury cars as Toyotas. Many consumer goods companies run several brands at different price points, sometimes owned by the same group but positioned completely differently. Footwear, electronics and car makers have all used separate brands to reach premium or budget segments without confusing their core brand.
For a small business, the lesson is to be careful about stretching a brand into a contradictory position. If you want to enter a very different market segment, consider a distinct product line name or sub-brand.
Positioning changes the whole business
The most overlooked part of positioning is that it is not just a marketing decision. A position is a promise, and every department has to help keep it. Choosing a position therefore means deciding what changes across the organisation.
If you choose financial value (low price)
You must have a lower cost base than competitors, or you will lose money. Organisational priorities become:
- Cost reduction and optimisation across the business.
- Waste elimination: if 5–10% of stock is wasted, that much margin disappears.
- Right first time: no rework, because there is no margin to pay for it.
- Efficient use of time and people.
- Low-cost training and systems.
Departmental implications:
| Department | What changes |
|---|---|
| Finance | Tight cost control and margin monitoring |
| Marketing | Efficient, low-cost channels and price-focused messages |
| Sales | Lean distribution with controlled channel margins |
| Production | Error-free, efficient production at minimum cost |
| Quality | Prevention-focused, so no money is wasted on rework |
| HR | Lean staffing and efficient training |
| Purchasing | Relentless focus on input costs |
| IT | Automation and digital processes to cut administrative cost |
If you choose performance value
Organisational priorities become innovation, quality, reliability and durability. Departmental implications:
| Department | What changes |
|---|---|
| Marketing and sales | Sell on quality, longevity and total cost of ownership |
| Engineering and production | Design and build for performance and consistency |
| Quality | Rigorous checks aiming for zero defects |
| HR | Training that protects quality and builds technical skill |
| Purchasing | High-quality materials and capable suppliers |
| IT | Systems to monitor, control and trace quality |
If you choose relational value
Organisational priorities become customisation, speed, service and support, and keeping customers for life. Departmental implications:
| Department | What changes |
|---|---|
| Sales | Consultative selling and account management |
| Operations | Flexible processes that handle variation and short lead times |
| Customer service | Fast, knowledgeable and empowered to solve problems |
| HR | Hiring for service attitude and problem-solving |
| IT | CRM and communication tools that give everyone the customer’s history |
| Finance | Pricing that values service and flexibility appropriately |
If you choose emotional value
Organisational priorities become brand, design and experience. Every customer touchpoint, from packaging to website to showroom to after-sales, must reinforce the brand story.
Signs your positioning is unclear
- Customers describe you in different, inconsistent ways, or cannot describe you at all.
- You win work mainly when you are cheapest.
- Your marketing claims to be the best at everything: quality, price, speed and service.
- Staff give different answers when asked why customers should choose you.
- You chase every enquiry, including customers who do not value what you do.
- Prices vary widely between similar jobs because there is no clear basis for them.
Testing your positioning
Positioning is a hypothesis until customers confirm it. Practical tests include:
- Ask customers why they chose you and what they would miss if you disappeared. Their words often reveal your real position.
- Ask lost prospects why they chose someone else.
- Check win rates and margins by customer segment. Your true position is usually where you win most often at the best margins.
- Review complaints and praise. Both show what customers expect from you.
- Watch where enquiries come from. Referrals and repeat customers tend to come from the segment that values your real strengths most.
- Try a one-sentence statement: “For [customer] who [problem], we provide [solution] that [key value], unlike [alternatives].” If you cannot complete it convincingly, your positioning needs work.
A four-step positioning framework
- Who is your perfect customer, and who is not? Write a specific description.
- What is your current position, and what should it be? Choose a primary value type, such as performance, relational, emotional or financial, and a place on the price–quality map, based on your customer’s problem and your genuine strengths.
- What organisational changes are needed? List the strategic changes, such as cost reduction, quality investment, service capability or brand building.
- What changes in each department? Translate the strategy into specific changes for finance, marketing, sales, production, quality, HR, purchasing and IT, and communicate them clearly.
A worked example
A precision sheet-metal business has competed on price for years, mainly winning jobs by quoting lower than competitors. Margins have shrunk, staff are stretched and customers switch suppliers for small savings.
The owner analyses the customer base and finds that the most profitable, loyal customers are medical and laboratory equipment manufacturers who value accuracy, finish, documentation and on-time delivery more than price. The business decides to reposition from financial value to performance and relational value for this segment.
The changes ripple across the business. Marketing materials are rewritten around precision, traceability and reliability, with case examples. Sales targets equipment manufacturers rather than all comers. Production invests in inspection equipment and first-article reports. Quality introduces documented inspection and traceability. HR adds training in measurement and documentation. Purchasing qualifies certified material suppliers. Prices rise for the target segment, and the business politely stops chasing low-margin, price-only work.
Within eighteen months, revenue is similar but gross margin has risen significantly, customer churn has fallen and the business is known for something specific.
Summary
Positioning is the deliberate choice of what your business will be known for, and by whom. Start from your perfect customer and their problem, not from competitors. Choose a primary value, performance, relational, emotional or financial, and a coherent place on the price–quality map. Be cautious about stretching a brand into a contradictory position. Above all, recognise that positioning is an organisational commitment. Every department must change to deliver the promise, or customers will see the gap between what you say and what you do.
Sources: small-business training notes on product positioning and the business sequence, together with published strategy work including Treacy and Wiersema’s The Discipline of Market Leaders (1995). Examples are illustrations.
