Know-How Exchange : Student Questions

The two terms are closely related and often used (in error) interchangeably. The way I think of them is this:

POSITIONING focuses on the benefits (and end-benefits) and the reasons someone should buy the product/service. "Buy this product and you will look and feel younger."

VALUE PROPOSITION compares those benefits to the price/cost and "makes a deal" with the customer: You pay $250 and spend three months using my product, and you'll lose 20 pounds."

The POSITIONING is entirely in the customer's mind. It's the mental image they have of your brand. The VALUE PROPOSITION is both what you promise and what they think you've promised as your deal with the customer.

In the ideal world, you promise them your positioning benefits for a stated price, and they understand the deal exactly as you presented it. Unfortunately, it's usually not an ideal world, and there are differences. For example, the retailer might charge a premium or discount the product and change your value proposition.

The brand positioning statement speaks to where you are relative to your competitors. It's how you want your customers to think of you that distinguishes you from your competition. Your customers will position you on the basis of the experience you provide at every single touch point. The Apple iProducts are positioned as premium products that are innovative and stylish. Even though there may be similar products offered by competing brands, Apple iProducts are perceived as being uniquely superior to the alternatives, some of which may offer the same basic service at lower prices.

The value proposition is that clear point of difference that you have which is usually expressed by your brand promise. Apple is able to command premium pricing and occupy a prominent position in the consumer's mind because they consistently deliver on innovation and style at all their touchpoints (e.g., their products, product packaging, the Apple Stores, their rebate processes, their customer service)

The original authors of market positioning strategy proposed to differentiate their theories from benefit strategy theories, such as the “unique selling proposition” or USP as defined by Rosser Reeves. Their contention was that positioning is about “place”. A place in the consumers mind that is tied to what the consumer already believes or perceives. For example, a horseless carriage was the first name for what became an automobile. Today’s example could be a wireless computer. And while there are benefits to a wireless computer, the first strategic step is too simply differentiate it from a wired computer as a base strategy to build benefit messages from over the long haul.

In the web era of marketing practice these distinctions have become blurred. However, I think it is still worth understanding the inherent difference between a place-based strategy and a benefit-based strategy. Too further understand these sometime subtle differences, I suggest you read the early writings of the pioneers in this area - Jack Trout and Al Ries.

“In marketing, Positioning is the technique by which marketers try to create an image or identity for a product, brand, or organisation. It is the 'place' a product occupies in a given market as perceived by the target market. Positioning is something that is done in the minds of the target market. A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. The term was coined in 1969 by Jack Trout in his paper, ""Positioning" is a game people play in today’s me-too market place" in the publication, Industrial Marketing. Traditionally, [marketing] has been a term applied to the process or act of bringing together buyers and sellers.”

source: openmindedsolutions.co.uk