Positioning means creating a clear value proposition for an offer such as products and services. An offer is typically of value to customers when the subjective benefits of the offer exceed its costs. Costs might include the price of the offer, time and effort necessary to obtain it, time and effort necessary to learn how to use it, or simply the forgone benefits of an unchosen, competitive offer. In general, value equals benefits minus costs. Thus, the clear identification and communication of benefits of offers to target customers is key to the process of positioning products and services.
Positioning is a strategic process that can culminate in a value proposition, which typically includes several components: a statement about the intended target market, a mention of the offering (brand), a list of the main competitive substitutes for the offer, a list of benefits and documentation of support for the benefits (features). For example, When business travelers (target) take an Amtrak train (offering) instead of an airplane (main competitive substitute), they will be more comfortable, experience better treatment, and feel more valuable as a customer (benefits), because Amtrak provides wider seats, more leg room, better service, and the freedom to move around the compartment (features) (adapted from the advertising agency DDB Needham New York, a member of the Omnicom Group).
The example shows that benefits exist relative to some competitive substitute (airplanes) for the target customer (business traveler). The features (for example, more leg room) support (make credible) the benefits (to be more comfortable). In general, many marketers comment that people buy benefits, not features. If a feature is the focus of a product or service, that focus usually suggests an obvious benefit of the feature. For example, when Steve Jobs introduced the iPhone in 2007, the scrolling function immediately suggested the benefits of ease of use or flexibility. Thus, benefits tend to be abstract and psychological—perceptions or feelings—and features tend to be concrete to make the benefits believable.
An important distinction in a discussion of benefits is between points of parity and points of differentiation. Usually, marketers highlight points of difference, because they are relatively unique to the offer and represent a competitive advantage (if one exists). The competitive substitute (a competitor's offerings) can generally be another way of accomplishing a consumer goal. For example, using a pencil and paper can be a competitive substitute for home-bookkeeping software, such as Quicken. Even though marketers usually optimize points of differentiation, points of parity are also important, because they show how an offer matches benefits of other offers. Put differently, points of parity demonstrate that a company is a player in the larger field of offerings. For example, it may not make sense to open a restaurant by focusing on dining chairs and tables, plates, knives, forks, wine glasses, and servers who will bring food to tables, because most restaurants offer them all—they are points of parity. But if a restaurant were not to have these points of parity, many customers would reject the offer. Occasionally, an entrepreneur can develop a new business model by deliberately eliminating points of parity: A restaurant where people sit on the floor instead of on chairs can be a stimulating source of differentiation and provide for a new dining experience.
Below are examples of brand positions from a VALS perspective:
- Nutella Hazelnut Spread: https://youtu.be/ThIrw_LpuRA
- Target: Achievers—busy mothers who struggle to get the kids out the door in the morning yet want to provide nutritious food
- Offer: Nutella hazelnut spread
- Main competitive substitute: Any other type of breakfast food; proximally, other bread spreads, such as jam
- Benefits: convenient, nutritious, and kids love it!
- Features: quality ingredients, easy to spread, tasty
- GoPro Hero HD Camera: https://youtu.be/IyTv_SR2uUo
- Target: Experiencers—spontaneous, energetic consumers seeking adventure, a heightened sense of visual stimulation, and to have an impact
- Offer: GoPro Hero Suite of Cameras
- Main competitive substitute: regular digital cameras
- Benefits: feeling like an action hero
- Features: high-definition video (up to 4K resolution) that is portable and mountable and versatile
Value-proposition statements are largely guides to strategy, not necessarily statements for publication on websites or verbatim communication to consumers. Value propositions contain a clear statement of what the brand is good at and why, along with a definition of targets and substitutes. Once created, such statements may then serve to craft strategic messages and advertising campaigns to support the brand. Finally, value propositions remind strategic marketers that their brands do not need to be all things to all people. They need to be some things to some people.