What is Market Position? Definition of Market Position, Market Position Meaning and Concept
Market position is the place that a certain product occupies in a market. For its measurement, in contrast to the competitors that are within said category.
The market position, therefore, is the place that a certain product occupies in a defined market. In this, the company competes with a series of competitors with which it must be measured and contrasted. To do this, ratios such as market share, the percentage of sales over the total, among others, are used. And it is that, the market position, unlike other concepts, is a concept that tries to accurately measure the place that a certain company occupies in a certain market.
Based on the ratios, we can define the position of the company in the market.
Differences between market position and market positioning
These concepts, although they tend to represent the same thing in practice, present differences that we should qualify.
In this sense, we are talking about two very different concepts and now we will see why.
On the one hand, the market position is the place that a certain product occupies in a market. However, as we said, ratios are used in its measurement that offer an objective view of said position. Well, this is set based on the indicators and the results obtained.
An example would be the Apple company, with a market share, for example, of 78%, which would place it as the main telephone seller of the year.
On the other hand, market positioning is, like market position, the place that a certain product occupies in a market. However, its measurement is made based on subjective opinions and criteria. That is, ratios are not used to determine if the positioning is real.
An example of this, also with the company Apple, is its vision with the iPhone. Without being the best-selling mobile of the year, it could be the most valued by the market. That is, the most desired.
Therefore, it is convenient to point out this difference, just as we could point out that, in the same way, it is not the same as web positioning.
Types of market position
When we talk about the market position, we must know, in the same way, the types of position in which a company that wants to know its position within a market can find itself.
To do this, we must know that, usually, four positions are usually set:
Leader, follower, challenger and specialized.
Now, let's learn about the four types of position:
- Leader : As its name suggests, it is the position occupied by a company that has the largest market share and leads sales. This will be the company that dominates the market, so it usually sets the trends.
An example in the computer sector could be Microsoft and Apple.
- Challenger : It is the name given to the company that occupies the second position, but that aspires to compete with the first, the first position.
An example could be Apple and Microsoft, too, in their dispute to be the leader.
- Follower : This position is occupied by companies that, knowing that they will not occupy the first position, manage to occupy their position in the market, achieving sales that derive from these companies that lead the market.
In the example above, such a company could be Google, in the world of computers and computer equipment.
- Specialized : Finally, this position is occupied by those companies that, without being leaders or followers, focus on a specialized client, for which they occupy the leading position.
An example of this is IBM. Without being a leader or a follower, it has found its niche, specializing and focusing on a segmented market.
Market position and positioning analysis
In market positioning, the best tool to define your position is the market positioning matrix. However, taking into account the differences, we must know that the methodology used in the market position is different from the one used to measure the positioning.
To measure the market position, as we have mentioned before, we must base ourselves on objective, measurable and verifiable data.
In this sense, I am referring to data such as billing, profitability, sales, market share, customer service, the degree of customer satisfaction, as well as another series of ratios that allow the objective measurement of the results of the company.
Market Position Example
Since these are objective criteria, the measurement of the market position must be based on ratios that measure said position.
To do this, let's imagine Apple, which accounts for 50% of all mobile phone sales on the planet. While, on the other hand, Samsung, or another company, present sales that are equivalent to 35% of total sales. In turn, we have Blackberry, which focuses on the 5% of customers who only want Blackberry for its operating system, which works perfectly in the company. And finally, we have Alcatel, another technology company that, having 5%, offers the same as Apple and Samsung, but with lower quality.
In the following example, the different companies would be classified as follows:
- Apple = Leader.
- Samsung = Challenger.
- Alcatel = Follower.
- Blackberry = Specialized.
In the example, Apple is the leader, occupying the first position, which is at odds with Samsung in second position, as the main challenger.
On the other hand, we have Alcatel, as a small company, which keeps a small part of the business, offering what Apple and Samsung do, but of lower quality.
While, lastly, we have Blackberry as a specialized competitor, providing its users with the tools they prefer and where the company's ability to grow is referred to these users.