Positioning

Positioning is what you do and say to differentiate yourself from the competition. …what you do to create the perception of value and difference by the appearance of the product (design) and the words you use (framing) to describe it.

Design: The Gift That Keeps on Giving
A lot of companies believe that when something doesn’t sell, you lower price to increase the perception of value. The problem is that lowering price actually has just the opposite effect. It lowers perceived value. By lowering price, you not only reduce value, but reduce your margins and increase your cost of acquisition by at least the amount of the cost reduction. Not a very good way to reduce acquisition cost and increase perceived value.

Often, the reason you have to lower price is because people don’t think your offering is valuable in the first place. So, what’s the easiest way to increase perceived value? By focusing on the thing that helps people perceive value: the way it looks and feels. Design is the process of defining the appearance and attributes of an offering that creates a high perceived value relative to cost. It uses visual cues that communicates value and meaning. Sometimes it’s the form of a product, the aroma, the color or the type style. Design deals with the emotional component of perception…what makes something desirable. No matter how much your product or service ‘does,’ if the design doesn’t convey value on an emotional or sensory level, you’ve lost your first line of attack: perception.

Framing: Littlearth Case
An example is Littlearth, a company that manufacturers fashion accessories and purses made from recycled products like old license plates and bottlecaps. It turned out that when they framed their message as selling “recycled” products, people thought they shouldn’t cost a lot, because the word “recycled” was the connotation of being low priced. The result was that they had a hard time raising their price and conveying a high level of value for their products.

So they picked another word to frame their value: “collectibles.” By calling their products “collectibles,” they conveyed a higher perceived value. Now, each purse comes with a certificate of authenticity, representing the uniqueness of each purse. By reframing, they increased the perceived value and were able, with hardly any additional cost, to raise their prices by 30-50% and increase unit sales as well. So using the right words, framing your message, is an important lever.

The Real Value of Design and Framing.
Because design and words you use don’t cost anything after you’ve developed them, they are truly gifts that keep on giving in the sense that there is no incremental cost for use. That not only increases the perceived value, but through continued use, actually decreases your acquisition cost.