Positioning is a composite of the first two principles – market segmentation and differential advantage. Positioning is the image you are trying to create in the eyes of your customers. It helps in your market segmentation as your positioning will determine what market you are in (ie low, medium or high end).

Positioning focuses on the target market segment the business seeks to serve and the differential advantage with which it will compete with rivals in that segment. For example, Ferrari is positioned in the prestige segment of the car market with a differential advantage based on high performance and exclusivity.

The positioning strategy is critical to defining the marketing mix.  It will dictate:

• what type of product will be brought to market (ie high quality, low quality)
• where it will be sold
• how much it will cost
• how you will reach its target audience.

Businesses that fail to clearly understand their positioning may have a disjointed marketing approach and fail to reach their target segment

The positioning strategy must be clearly defined in the marketing plan and will have an important impact on the marketing mix.

Visit the marketing module of the Small Business Tool Kit for further information, quizzes, case studies and interactive market planning tools.