In business, positioning is crucial. Does that seem hard to believe? Let me illustrate my example, with a bottle of water.
A loved one and I recently engaged in a funny activity. The game consisted into finding scenarios where one would sell a bottle of water. The aim was to sell it as expensive as possible, and justify the price.
Long story short: I managed to sell a bottle as high as $2,000, to everyone’s shock, bafflement and laughter ;-). Coming to think of it, the experience still makes me smile 😉 How did I proceed ?
My method
First, I listed the areas where it would be common to find bottles of water for sales. Then I tried to remember how much they would usually cost. And here are the results.
- In a supermarket: $0.5
- At the vending machine: $1
- At a hotel: $3
- And in a commercial aircraft: $4
In essence: same water, different value.
My next move was to imagine a scenario where a bottle of water would be priceless. And I came up with someone hiking Mount Everest in summer.
In other words, if you were to climb Mount Everest in summer, it is not far-fetched to believe you would be thirsty up there. You would do anything to have a bottle of water.
Now in case you would not have a bottle of water, you would find me there. Selling bottles… And guess what? At $2,000 each.
Now whether it is ethical or not was not the scope of the activity. But that was the reasoning behind my selling point. Same water, different value. Why? It brings us to my next point.
Positioning is crucial
Yes, position is important. The positioning of a product or service plays a crucial role in determining its perceived value and the price it can command in the market.
Product positioning is the process of creating an image or identity for a product or service in the minds of the target audience.
It involves identifying the unique selling proposition (USP) of the product and communicating it effectively to the target market.
The position of a product can be determined by various factors such as its quality, features, price, packaging, brand identity, and distribution channels, etc.
Positioning is crucial for a product because it helps differentiate it from its competitors and create a unique identity in the minds of the consumers.
A well-positioned product can command a premium price, generate customer loyalty, and increase sales. On the other hand, a poorly positioned product may struggle to find its target market and fail to generate revenue.
Going back to my bottle of water
I checked the competitors and their sales environment. Then I went on to think of other environments in which I could find my customers and position myself.
Now for the sake of the game, the ethics and values where out of scope. So I did not bother thinking of that aspect. In real life business, an entrepreneur would.
My pricing was determined not only by my positioning, but also to the market I was targeting. For the purpose of the game, I had to make a lot of assumptions. Assumptions like:
- I would not have any competitors next to my position
- My target client would not risk getting back down the mountain thirsty
- My client would have the means to afford a $2,000 bottle of water.
Regardless. In business, knowing the market trends will help you weather the assumptions around the sales of your product / service. As a matter of fact, it is capital to know the wants and the need of your target audience, but also the environment of your business.
In essence…
Product positioning is a critical component of a successful marketing strategy. It can help businesses differentiate their products from their competitors, create a unique identity in the minds of the consumers, and command a premium price.
Pricing is one of the most important factors in product positioning, as it can significantly affect the perceived value of the product.
Therefore, businesses must carefully consider their product positioning strategy and price their products accordingly to maximize their revenue and profitability.