Positioning is a key aspect of marketing. The position of a product is the way it is perceived by consumers in terms of the key features they want to get out of the product i.e. those aspects which they see as giving value for money. For example, in purchasing instant coffee, consumers may weigh up value for money in terms of price, the quality and taste of the coffee. An individual business producing coffee needs to decide where it will position itself in the market, for example it could choose position:
high price combined with high quality and taste of coffee - an 'up market' position.
middling price combined with middling quality and taste of coffee - a 'mid market' position.
relatively cheap price combined with low quality and taste of coffee - a 'down market' position.
Organisations identify a range of segments in the markets in which they operate e.g. a younger audience of drinkers who may be trying out coffee for the first time, people who, because of the long-hours they work, need coffee to 'pep them up' at regular intervals during the working day, older more sophisticated drinkers at dinner parties etc. It is important to have a good understanding of these segments and how your product can meet the needs of different segments in the overall market.
Organisations must choose a sector of a particular market in which they want to compete. The sector chosen will depend on: the ability of the producer to make quality products, the extent of competition in different market segments, chances of making profits in different segments and so on. There are dangers in any chosen segment. If you locate your product 'up market,' there may not be sufficient demand for the product. If you locate mid-market, there may be a lot of competition and it may be difficult to differentiate your product from the competition. Down market you can only sell at low prices and your product may be seen as being inferior.