How to nail your product positioning: the ultimate guide

Product positioning is about placing your product in your customers’ minds by highlighting a unique element that sets your product apart from others in the market. 

If you want your product to stand out from the crowd and become the customer's go-to choice, you need to nail your product positioning. Keep reading to find out how.

What is product positioning? 

Product positioning is the process of defining where your product fits in the market and why it's the best solution for your customers. It helps you manage customer perceptions and communicate how you want users to think and feel about your product.

Your product positioning highlights your product's value and sets the context for understanding why customers should care—so it’s best to take a user-led approach for positioning your product to create a solid image in your customers' minds. 

But first, let's understand why product teams should pay attention to product positioning in the first place:

Why is product positioning integral to product performance?

Good product positioning is the difference between a thriving product loved by customers and one that offers excellent features but struggles to make an impact. Without this distinction, it'll be challenging to present a product story and brand message that your customers can relate to. 

Here are a few more reasons product positioning is so important:

Stand out in a competitive market

Strong product positioning is unique, and it highlights the problems your product solves and why it's the best solution in the market. This differentiates your product from similar ones in the market and helps customers make the right decision—and purchase your product.

Create a unique product image in the customers' minds

Positioning your product the right way influences how customers think and feel about it and ensures they understand it’s the perfect solution to address their needs.

Put your brand front of mind

Good product positioning is not just about telling customers why your product is great; it’s about making sure your product is the first thing they think of while thinking about your product category. 

For example, what do you think when someone says, "soft drink?" If it's Coca-Cola, that's because their positioning has put them at the forefront of consumers’ minds within that industry. 

Your product might not have the history and marketing budget of Coca-Cola, but that doesn’t mean you can’t occupy that sort of position within your niche.

Ensure consistency in brand messaging

You can’t position your product as 'affordable' through one marketing channel and 'premium' through another. Customers will understand your brand and believe in it only when you're consistent with your messaging across all channels—online, offline, word-of-mouth, etc. 

Strong product positioning gives customers no doubt what your product is all about. Clear messaging also helps people within your business understand the brand identity and keep it in mind whenever they communicate about the product.

Now that you understand the key role product positioning plays in product and business success, let's look at some product positioning strategies you can use for achieving it.

5 product positioning strategies

Like any other marketing and product activity, you need a solid strategy to introduce your product to your target market and position it the right way.

But you don’t have to reinvent the wheel: there are many strategies for positioning your product, whether you decide to build it around the types of users you’re aiming to attract or around specific product features that set you apart in your market.

Let’s look at five strategies for positioning your product in the market:

1. Features and characteristics

Every product team gets excited about introducing the next cool feature to customers. But customers don’t care about your features: they care about the benefits of the features and how they solve problems.

With this in mind, one of the most popular product positioning strategies is picking a significant and unique product feature or characteristic and using its benefit as the positioning differentiator for the product. 

For example, L'Oreal positions itself as an ethical and natural choice for beauty and self-care. They mention key features, like ammonia-free hair-coloring products, but these features work in service towards creating the impression of a critical benefit: with L’Oreal products, you don’t need to worry about a chemical that might damage your hair.

2. Product user

The product-user strategy associates the product with a user or a spokesperson who represents how the target customers want to see themselves. This type of positioning is aspirational: your customer wants to be the type of person who uses your product. 

Nike’s Air Jordans have traded on the iconography, reputation, and cultural associations of Michael Jordan to become the company’s most profitable product, generating $4.5 billion in revenue in 2020 alone. 

Nike understands that the key demographic for Air Jordans—sneaker-buying men aged 15–45—see Jordan as an aspirational figure: an individual who reached the pinnacle of success in his sport through hard work and determination. Not only is this a desirable message for the target market—but it’s also entirely consistent with the company’s overall messaging.

Associating a brand with a particular user—whether that’s an iconic celebrity, a popular influencer, or just a representative idea of the target demographic—can say a lot about your product without even having to delve into features and benefits. 

3. Quality and pricing

Most customers want quality products in exchange for their hard-earned cash. So one strategy is to position your product as representing superior quality, with the expectation that this quality comes at a high price point. Luxury brands like Prada and Gucci are great examples of this.

Alternatively, other brands position their products as affordable with less emphasis on quality. The low-cost supermarket chain Aldi is a good example of a company that’s found widespread success pursuing this positioning strategy.

4. Product use and application

This might sound similar to the feature and characteristic positioning method, but here you’d focus on use rather than the features and benefits, making the product a popular choice for a well-defined use case. 

For example, a particular brand of protein powder is used to increase performance at the gym and has sufficient protein intake. With a feature-based positioning strategy, the brand could position the product around the lack of preservatives (a feature) and its associated health benefits. 

But, it’s unlikely anybody will use something as specific as protein powder outside of its intended use case—muscle-building activities at the gym as part of a particular lifestyle. So, it makes more sense to talk about the context of how it’s used and the reason people are using it. This way they’re signaling to target consumers that this protein powder will meet their specific needs.

5. Competitors

Sad as it may be, making a better product than your competitors is usually not enough to generate sales. Your customers need to believe you're a better choice.

So, in competitive markets, you can also position your product as a better alternative to a significant competitor by highlighting how different your product is and why it should be your customer's first choice. 

For example, Amazon Prime and Netflix are streaming services for movies and TV series, but Amazon offers Prime Music and Prime 2-day delivery. This way, Amazon Prime has positioned itself differently from Netflix through add-on benefits its competitor can’t offer.

6-step framework for effective product positioning

You can’t nail product positioning in one go and then forget about it.

Product positioning is an ongoing and evolving process that needs to adapt in response to changes in your industry and your customers' needs.

Let's look at a six-step framework you can follow to achieve the right positioning for your product.

1. Understand why your target audience uses your product 

Your customers are using your product over your competitors for a reason.

If you can identify why that is and investigate what exactly makes them use and stick to your product, you can use that insight as the basis for positioning your product.

The why could be factors like pricing, a specific feature, customer service, associations with the product, or ease of use. The better you understand why customers use your product, the more customer-led your positioning can be to make your place in the market more prominent. Here are a few ways to perform this research:

• Use on-site surveys on high-traffic product pages. Ask questions like "Why do you use this product?", "How would you rate this product on a scale of 1–10?", "Which feature or product element do you use the most?", and "How would you feel if you couldn't use this product anymore?" Answers to these questions will give you authentic feedback and insight into what your customers think and feel about your product as existing users.

• Study product reviews by past and current customers to identify what they like about the product. Feedback can be sourced from video reviews, product demos, customer interview recordings, and customer service chats.

• Ask your customer service executives to ask a "what do you like most about the product" question at the end of every ticket. You can also implement this on a live chat feature or feedback widget on your product's website.

2. Analyze your competitors

Once you understand your audience, you want to position your product as a better solution than your competitors. But you can't do that unless you know the competitor's product and how they're positioning it.

Conduct market research to analyze your competitors' new and old products to understand how they're helping customers, which features they have, and what benefits they offer. 

Identify whether you have any distinct features that can set you apart. If not, iterate on your product and focus on being more customer-centric than your competitors, so you have something that sets you apart in the market.

3. Identify your unique selling proposition

Once you understand what gaps you can fill in the market to meet customer needs, it’s time to identify your unique selling proposition (USP). 

Your USP is the one thing that sets you apart from your competitors and acts as a big draw for your product. Find a unique product angle, a unique feature, or any purpose, use, application, or factor that sets you apart from your competitors. 

For example, Gilette and Dollar Shave Club are both popular grooming companies. But Gilette entered the market with their razors first and became a recognized brand. Soon, Dollar Shave Club came up with a similar product but positioned it as affordable by using pricing as their USP. 

4. Communicate your product positioning internally

More than conveying your product positioning to your users, you need to ensure your team members are crystal clear about it. 

Everyone from employees to stakeholders needs to understand the product positioning you want to achieve, how it will look, how the product messaging will change, and what it means for their day-to-day product-related activities.

Here are a few tips for doing this:

Create a product positioning document

Your product positioning statement is just one aspect of how you want to place yourself in front of your customers; other values, benefits, and features define what your product stands for. 

A product positioning document helps communicate how your organization should look at your product, and how exactly they should convey it to your customers to create a solid product image in their minds. 

The document defines everything around messaging, including what words should be used to talk about your product and to communicate the value of its various features with customers. 

The more detailed this document is, the better your existing and new colleagues and team members will understand how your product should be represented to ensure consistency in messaging and perception.

Establish a cross-functional collaboration workflow

Product positioning is not a one-person job. 

The product management team understands the customer, ideates the product, and recognizes what customers love about it. But they work with the entire company to develop the desired product positioning, then the marketing and communication teams relay this positioning to the customers. 

Working towards a shared goal and vision requires a cross-functional collaboration workflow, which will ultimately help you nail product positioning and provide customer delight. 

5. Establish and implement a positioning strategy

With your organization onboard with your positioning vision, you need an air-tight positioning strategy to take you from how your customers currently feel about your product to how you want them to feel about it.

For this, you need to create and put an effective product positioning strategy into action. Here's what you should do:

Define your product positioning statement

This short description says what your product is, who it’s for, and why exactly customers should care about it. Here, you can use the research done in the first three steps of the framework to develop a statement for your product. Use this formula: 

(Product name) is a (product category) that helps (target customers) achieve (differentiating benefit your product offers) to avoid or solve (users' needs).

Example: Slack is the collaboration hub that brings the right people, information, and tools together to get work done.

Prepare a marketing strategy to communicate your revised product positioning

You need to communicate your product positioning to your audience and potential customers through every channel—ads, social media, emails, customer interaction, calls, etc. This can be as subtle as a plug for your product in your blog posts to tell users how your product helps solve a problem, or as explicit as a sticky promotional banner across the entire site.

Remember to tailor and align your messaging and communication with your product positioning to see positive results. 

6. Keep your product positioning up to date

Your product will evolve as you grow, and customer behavior and buying trends will change with time. So, can you sustain your business on product positioning you decided based on past customer needs and last year’s market research? Probably not.

Iterate on your product positioning to ensure it stays relevant and differentiates your product in the market.

Regularly ask yourself these questions to ensure you're leading with the right product positioning:

• Is your current product positioning statement still relevant for your customers and market?

• Have you introduced any new product features or new products altogether which offer a new benefit to your customers?

• Are there any new products in the market similar to yours? Are they doing something differently?

• Have the market demand or customer needs changed?

• Is there a better way to communicate your product positioning?

• Are you getting good results with your current strategy? Compare your past and present metrics like sales, customer retention, conversion rate, referrals, social media engagement, and signups to get data-driven insights.

The answers to the above questions will tell you if you need to revisit your product positioning strategy and make it more relevant for customers. 

The idea is to tell the customers what they need to know about your product so they'll believe in it and purchase it.

4 ways Hotjar can help with product positioning

Product positioning is a crucial factor for product success, and achieving it means getting closer to product-market fit—and getting more sales. However, gathering customer data for analysis and ensuring your product messaging is consistent—and that every step you take validates your positioning statement—can be tiresome.

This is where tools like Hotjar can help make the process more efficient, accurate, and seamless. Here's how:

1. Use Surveys to get feedback on your positioning statement

You've taken all the steps to establish your product positioning statement, and your entire company is on board with it. But are your customers? 

Use Hotjar Surveys to gather feedback on your product positioning statement, and understand if your customers relate to it by reading their point of view and suggestions. You can include open-ended and closed-ended questions or rating polls to know what they think about your product positioning. Ask questions like:

• How do you rate our positioning statement on the homepage on a scale of 1–10?

• Do you think our positioning statement aligns with how we’re presenting our products?

• What do you think makes our product different from others in the market?

You can then use this feedback to position your product more precisely and make it more relatable and effective for your future customers.

2. Use Heatmaps and Session Recordings to identify customer pain points

Product positioning places your product in the right place, in front of the right users, with the information they need to convert into customers. But if they convert and aren't satisfied when they use your product, they will leave.

This is why product iteration and improvements are necessary to ensure you're addressing your customers' needs and are truly building the product they were promised through your positioning.

Heatmaps are visual representations of how users—in aggregate—view elements on your website pages. They show you which features might work (or not work) for your customers and can help you plan your product positioning based on how users move on the page.

Session Recordings show you how customers interact with your product by showing you a replay of where they click, how they navigate, what they scroll past, and any blockers or pain points they encounter. Watching recordings helps you understand the product experience from the customer's point of view. 

Analyzing heatmaps and recordings will help you identify what customers are struggling with in your product, and will highlight opportunities for improvement. You can also determine which product elements are most useful to your customers so you can prioritize and focus on them while positioning your product.

3. Use the Incoming Feedback widget to capture feedback in the wild

How about letting the Voice of the Customer (VOC) guide you through the product and tell you which elements they like and don’t?

Hotjar's Incoming Feedback widget places a suggestion box on your product pages to get feedback from your customers in context as they use your site. It doesn’t disturb their product experience and brings valuable insights to understand your customers better.

These insights come directly from customers while your product is freshest in their mind—as they’re experiencing it—and can help you make data-driven, customer-led product decisions to strengthen your positioning and create a distinct place for your products in the minds of customers.

Use the Hotjar-Slack integration to communicate and improve positioning internally

Product positioning is an integral part of how your product is perceived by the market and determines what your customers think about it. Buy-in from stakeholders is necessary at every step to ensure you're on the same page and able to handle any concerns or misalignments.

Use the Hotjar and Slack integration to communicate with your stakeholders and collaborate on customer feedback as soon as you receive it. 

This will help you get instant approval or give you the time to manage opposition in the best way to deal with the customer feedback in alignment with your product positioning. 

In the end, this integration will help you communicate with customers more consistently and better position your products in the market.

Final thoughts

Nailing your product positioning and communicating what makes you different from other similar products is challenging—but not impossible.

A good way to nail your product positioning is by thinking about your customer more than your product or brand. This will help you position your product based on what your customers love and make customer-led decisions to improve your product.

Through good product positioning, you can create awareness about your brand with the values you stand for, and the product features, benefits, use case, or personalities you want to be known for. This will eventually help you manage customer perceptions and create a stellar product image in the customers’ minds. 

But remember, positioning your product is never 100% complete. You need to constantly iterate on your product and evaluate your positioning to ensure it's relevant with changing times.