How to develop product positioning?

Developing a solid product positioning strategy involves several key steps. Here’s a detailed guide to help you navigate this process effectively.

1. Conduct market research to build user personas

Conducting thorough market research sets the stage for you to position your product or service with the right message, audience, and strategy.

That said, building detailed user personas can help you visualize your customers’ needs, preferences, and behaviors—allowing you to position your product in a more compelling angle.

For this, you must gather high-quality data to make sure that your personas are accurate (and not based on assumptions). There are multiple ways to collect data:

• Focus Groups: Organize sessions with small groups of potential customers to gather qualitative insights on their needs and preferences.
• Surveys: Send online surveys to a broader audience to collect quantitative data on user behaviors, preferences, and pain points.

• Interviews: Conduct one-on-one interviews with a selection of users to delve deeper into their specific challenges and requirements.
• Experiments: Implement A/B testing or other experimental methods to observe user interactions and preferences in real time.

With this data, you can start building data-driven user personas that include not only their needs and pain points but also their responsibilities, JTBDs, main goals, and preferences.

2. Analyze your competitors

Once you determine who you’ll position your product to, you must understand who you’ll position your product against.

Understanding your competition is crucial for positioning your product effectively. This is the only way to identify where your product fits and how it can stand out among the other players in your niche.

To perform competitive analysis:

• Identify your main competitors. Study their product offerings, pricing strategies, and market positioning.
• Look at your competitor’s marketing materials, websites, and customer reviews to gather insights.
• Evaluate competitors’ market share and customer loyalty.
• Perform a SWOT Analysis to identify your product’s strengths, weaknesses, opportunities, and threats. Then, compare these with those of your competitors to find areas where you can differentiate.
• Uncover a market segment that your product can fill.

3. Determine your product positioning strategy

After understanding your target customers and your competitors, it’s time to design an effective positioning strategy that’s going to make your product stand out.

For this, you need to identify your Unique Selling Proposition (USP), which is what makes your product unique and valuable to customers, setting it apart from the competition.

With a clear USP, you can start framing your positioning strategy based on one of the following types:

• Price-Based Positioning: Position your product as the most cost-effective option. Emphasize value for money and competitive pricing.
• Competitor-Based Positioning: Directly compare your product with a competitor to highlight superior features or benefits.
• Quality-Based Positioning: Highlight premium materials, superior craftsmanship, or exceptional performance.
• Feature-Based Positioning: Focus on unique features that set your product apart, where you showcase innovative functionalities or advanced technology.
• Benefit-Based Positioning: Highlight the key benefits that users will gain from your product. It can include improved efficiency, productivity, or convenience.

For example, Coda follows a competitor-based positioning strategy with a customer testimonial that states, “More powerful than Google Docs and more flexible than Airtable or Notion.”

This market position shows Coda’s superior features and flexibility compared to well-known competitors, effectively positioning it as a robust alternative in the productivity tool market.

4. Craft your product positioning statement

Finally, you need to create a product positioning statement you can use to promote your business. This statement should be clear, concise, and compelling, encapsulating the essence of your product’s unique value and its place in the market.

Here are the key elements of a positioning statement:

• Definition: A concise summary of your product’s offer in the market.
• Target Customer: Who your product is for.
• Key Benefit: The primary benefit users will receive.
• Category: The niche category your product competes in
• Competitive Advantage: Why your product is better than the competition.
• Differentiation: The one thing that makes your product unique.

Examples of product positioning strategies in SaaS

Here are some real-world examples of effective product positioning strategies in the SaaS industry. Each example illustrates the challenges faced by the company, the positioning strategy they adopted as their brand identity, and the results they achieved.

Slack: The collaboration hub (not just chat)

In the early 2010s, internal communication within organizations was fragmented and inefficient. Existing solutions were either too simplistic or overly complicated, leading to poor adoption and usage.

Slack identified this gap and positioned itself not just as another chat app, but as “the collaboration hub.” This positioning strategy involved centralizing communication by providing a single platform for quick chats, project discussions, and file sharing.

Slack created integrated channels for different projects and teams, streamlining communication and improving productivity. Additionally, Slack integrated with popular tools like Google Drive, Trello, and GitHub, allowing for seamless information flow and reducing the need to switch between apps.

As a result, Slack’s positioning as a central communication hub resonated with teams looking for a more organized and collaborative way to work. The platform quickly became a dominant player in the workplace communication space, achieving rapid growth and widespread adoption across various industries.

Monday: The work OS

In the mid-2010s, project management tools were often rigid and didn’t adapt well to different workflows. It was difficult for teams to tailor the tools to their specific needs.

Monday.com addressed this challenge by positioning itself as a “Work OS,” emphasizing its high level of customization. Users could create custom boards, views, and automation to suit their unique workflow—making it adaptable to various industries and departments.

The platform also offered colorful, intuitive visuals that made tracking progress easier, with dashboards providing a clear overview of project status and team activities. Plus, it supported seamless data import from other tools, creating a cohesive work operating system.

This adaptability and visual clarity made Monday.com appealing to a wide range of users (not just dev teams). As a result, Monday.com attracted a diverse user base across industries and departments, achieving significant market penetration and user satisfaction.

Zoom: Video meeting made easy

In the early 2010s, online meetings were often difficult to set up, had cluttered interfaces, and lacked essential features for professional meetings. Plus, existing solutions were expensive and offered limited features for free users.

Zoom identified these pain points and positioned itself as a user-friendly and reliable video conferencing platform. Zoom prioritized ease of use with one-click meeting joins and intuitive interfaces, minimizing technical barriers for users.

The platform included background customization, joining codes, breakout rooms, screen sharing, live notes, and side chats to enhance meeting productivity. Moreover, Zoom offered a generous free tier that allowed users to experience almost all paid features with only time constraints.

As a result, the COVID-19 pandemic further accelerated Zoom’s growth, making it a household name in video conferencing.

Conclusion

Product positioning is essential for SaaS companies to attract and retain customers.

And with a well-informed and clever positioning strategy, your business can stand out even in the most crowded markets.

So, are you a product manager who needs to leverage your company’s positioning to engage and retain more users? You can book a Userpilot demo to see how you can research users and apply your positioning strategies.

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