The previous article (i.e., market segmentation vs target marketing), explains how companies segment market and how they target one or more segments to sell their output. After segmentation and targeting, the next step that comes in place is the differentiation and positioning through which companies decide how they would be serving their customers falling in their selected or targeted segment(s). Companies first go for differentiating their products from other available products and then strive to achieve a distinct position in the minds of consumers as well as in the market through positioning.

The article differentiation vs positioning elucidates the meanings of and the differences between the two terms – differentiation and positioning.

Definitions and meanings


Differentiation refers to the marketing strategy that a company adopts to make its product or service distinct from all other products or services available in the market. Through differentiation, the products stand out from all other competing products, such that they offer unique value and become attractive to the customers.

When perceived and valued by customers, product differentiation can bring brand loyalty and competitive advantage for companies by making their product or service superior to others in the eyes of customers. The objective of differentiation is not just to make the product stand out of competitors’ products but to stand above them.

Differentiation can be achieved through adding or modifying one or more of numerous attributes like price, quality, performance, design, features, order processing, availability, timing, location, distribution and after sale services and support.

Differentiation does not require companies to start a product from scratch. A company can ad some important or appealing feature to its one or more of its existing products or services at any stage. For example, customer support is extremely important for a webhosting business. A web hosting company like Bluehost may focus on providing supports to its customers better than ever. A cosmetic company may add to its website a tool for finding the most appropriate foundation shades. A food restaurant may launch an android/iOS app and a website to receive online orders and start a home delivery service in particular area.

Differentiation must be thought and carried out from buyers’ perspective and not from company’s own perspective, which means the buyer must be able to realize and understand the value added to the product through differentiation. Merely a change made to a product or service that don’t create a sense of value among consumers can’t be regarded as differentiation.

For successful and result oriented differentiating, companies must consider the following important points:

  • The differentiation should result in added value. It requires a detailed market research and outlining the existing market gaps in terms of unfulfilled needs, issues and challenges faced by the customers in targeted market and comprehending how the effective solutions can be offered.
  • The customer should be able to perceive the value added through differentiation. If the customers are unable to understand the value, it means either the differentiation actually has not added any value to the product or the company has failed to communicate the same to customer.
  • The differentiation should be such that the competitors are not able to easily copy it, i.e., the added value should be exclusive to the organization for a long time.
  • The value introduced through differentiation should be affordable which means the customers are agree and are financially able to pay for the additional features or attributes added to the products.


Product positioning is the outcome of many previous marketing efforts and activities like market segmentation, target marketing and product differentiation. If a company has successfully performed in these steps, it would certainly position itself successfully. Product positioning (or just positioning, for short) refers to the place occupied by a product in the minds of the customers in relation to other competing products in the targeted market or segment. It basically signifies how the company would like the product to be considered by its customers. It includes feelings, perceptions and impressions that actual as well as potential customers should have about the products being offered by the company.

Positioning should make the customers think that the product or service is capable of providing greater value than any other. To achieve this, companies or marketers need to determine why customers should buy their products rather than an alternative or another similar product offered by someone else.

To develop a distinct identity of the product in the minds of the customers targeted segment, the marketers highlight relevant and appealing aspects while striving for product promotion. These include product category, product attributes, pricing strategies, unique selling propositions, brand image, quality of both product and after sale service etc.

A company’s overall marketing efforts need to be consistent with its positioning strategy. The marketers should be capable of communicating and delivering product value that is unique from that offered by their competitors.

Difference between differentiation and positioning

The four points of difference between differentiation and positioning are given below:

1. Meaning

  • Differentiation is the strategy by which one or more important, unique and appealing differences, in terms of design or actual usage, are added to the product to make it stand out of same like products.
  • Positioning is the strategy that companies use to create a specific position for the product in the minds of consumers, both actual an potential

2. Objective

  • The objective of differentiation is to attract customers and compel them to choose your product over another in the market on the basis of additional or unique features that it offers.
  • Positioning, on the other hand, has the objective of obtaining a specific place in the minds of consumers. It aims to define the way people think about your products and is achieved through making the people realize that the offered product has some rich and unique capabilities in terms of design, look or actual usage.

3. Specific to

  • Differentiation is more product-specific in that it pertains to the product or service being sold.
  • Positioning is specific to the audience in that it seeks to influence the perception of customers regarding a given product or service. It is more pertinent to the customers that are being targeted by the marketers.

4. Based on

  • Differentiation can be based on product features, performance, attributes, quality, benefits offered or uniqueness.
  • Positioning is based on promotional aspects of the product and is carried out by advertising products as being better than other similar products available in the market.

Differentiation vs positioning – tabular comparison

A comparison of differentiation and positioning in tabular form is presented below:

Differentiation vs Positioning
Strategy used to identify the features of the products that are distinct from other competing products in the market Strategy used to create a specific image of the product in the minds of the consumers
Attract customers to choose your products over other competing products Determine how people think about your products and engage with it
Specific to
Specific to the product or service Specific to the customers and to influence their perceptions
Based on
Features, quality, benefits or uniqueness of the product Promotional aspects of the product

Conclusion – differentiation vs positioning

Differentiation and positioning are two consecutive and highly related elements that occupy a prime importance in a company’s marketing strategy. Despite the differences between them, they both have the same objective and are closely related to each other because product or service is positioned on the basis of its distinct features or qualities. Differentiation is considered effective only when it creates enough position for the product offered for sale within the target market.

The concept of differentiation and positioning is applicable to all industries but is of special importance in a market with heavy competition. The purpose is to make the customers aware and realize what we can deliver that others can’t and how and why the unique capability of our product has value for them. To know whether the product is differentiated and well positioned, keep an eye on sales numbers and customers’ engagement with your product. Finally, if the numbers are not satisfactory, doing a little bit more research and changing or adding one or more new features might work.