Definition
Market positioning is the deliberate act of defining how your product is perceived relative to alternatives in the minds of your target customers. It answers three questions simultaneously: who is this for, what does it replace, and why is it better for that audience? Positioning is not a tagline or a marketing exercise -- it is a strategic decision that shapes product roadmap, pricing, sales motion, and brand.
Al Ries and Jack Trout popularized the concept in their 1981 book "Positioning: The Battle for Your Mind." April Dunford modernized it for tech products in "Obviously Awesome" (2019), arguing that most products fail not because they are bad but because customers cannot figure out what they are or why they should care. Positioning solves that problem.
Why It Matters for Product Managers
Positioning failures are invisible because they look like other problems. When win rates drop, teams blame features. When trial-to-paid conversion stalls, teams blame pricing. When sales cycles lengthen, teams blame the sales team. Often, the real problem is positioning: customers do not understand what the product is, who it is for, or why it is better than what they are already using.
Linear positioned itself as "the issue tracker built for software teams that care about speed." That positioning decision shaped everything: the product prioritizes keyboard shortcuts and performance over customization, the marketing targets engineering-led teams, and the pricing reflects a premium tool. If Linear had positioned as "project management for everyone," they would have built a different product and competed head-to-head with Monday and Asana -- a much harder fight.
For PMs, positioning also determines what not to build. Basecamp's positioning as "the simple project management tool for small teams" means they intentionally exclude enterprise features like Gantt charts, resource planning, and granular permissions. That is not a gap -- it is a positioning choice that keeps the product coherent for its target audience.
How It Works in Practice
Identify competitive alternatives -- List what your target customer would use if your product did not exist. This is not always a direct competitor. For Slack, the alternative was not another chat app -- it was email, meetings, and walking to someone's desk. The competitive alternative frames the comparison in the customer's mind.
List your unique attributes -- What capabilities, features, or characteristics do you have that the alternatives lack? Be specific and honest. "Better UX" is too vague. "Loads in under 200ms, keyboard-navigable, auto-saves every keystroke" is specific.
Map attributes to customer value -- Each unique attribute enables a benefit. Fast load times enable "you never wait for the tool to catch up with your thinking." Auto-save enables "you never lose work." Translate technical features into customer outcomes.
Define your best-fit customer -- Who cares most about the value you deliver? Be as specific as possible. "Teams of 5-20 engineers at Series A-C startups who ship weekly" is better than "software teams." The tighter the target, the stronger the positioning.
Choose the market category -- The category sets customer expectations. Calling your product a "CRM" triggers expectations of contact management, deal pipelines, and forecasting. Calling it a "revenue platform" triggers different expectations. Pick the category where your strengths are most obvious. HubSpot started as an "inbound marketing platform" before expanding to "CRM" once they had the features to compete.
Common Pitfalls
Positioning too broadly -- "A platform for teams" could be anything. Broad positioning makes you invisible because customers cannot figure out if the product is for them. Notion succeeded by initially positioning for personal productivity before expanding to teams.
Positioning against the market leader on their terms -- If you position as "Salesforce but cheaper," you have already conceded that Salesforce is the standard. Position where you are strong, not where the incumbent is strong. Pipedrive positioned as "the CRM built by salespeople, for salespeople" -- deliberately contrasting with Salesforce's admin-heavy configuration.
Confusing positioning with messaging -- Positioning is the strategic decision about where you compete and for whom. Messaging is the words you use to express it. You can change messaging weekly through A/B testing. Changing positioning is a strategic shift that affects product, sales, and marketing.
Letting positioning happen by accident -- If you do not deliberately position your product, the market will position it for you -- usually as a weaker version of whatever established category you vaguely resemble. Take control of the narrative.
Related Concepts
Positioning covers the general concept and communication layer. Product differentiation defines what makes you different -- positioning determines how you frame that difference for a specific audience. Understanding your persona is essential because positioning is always relative to a specific customer's frame of reference and alternatives.
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