Overview
Product positioning generally refers to the choice of where a firm chooses to place their product on the value/cost plane. That is, the firm has limited resources and must make choices as to whether they wish to occupy the cost leader position (cheapest product) or providing more value.
In reality, value is not single dimension, but many.
Positioning Optimization
Similar to standard micro-economic reasoning, one can optimize position by asking what the marginal returns are from increasing value by a single unit. That is, for each unit of value, there is a separate set of supply and demands curves. The profit of the firm in each case can be computed and then compared.
- Product Market Fit is the mix of product attributes that appeals to customers. That is, it is the attempt to understand the dynamics of the demand curve for a product as the company alters the features of the product. (including cost!) It is often the first step in developing a product, in order to understand if there is even a market for the product.
- Defensibility
refers to the ability of the company to defend its profitability in the face of competitors.
Often, this will mean having barriers that prevent competitors from effectively entering the market,
a factor which Warren Buffett has often referred to as a moat.
(see also
Porters five forces)
Defensibility considerations are considered to be a core part of business strategy