Competitive Positioning for Small Business: Beyond “Better and Cheaper”
If you vanished tomorrow, would a specific group of customers genuinely miss you? Or would they just shrug and click on the next Google result?
That’s the difference between being a landmark and a lamp post.
A landmark is a destination. It’s memorable. It has a meaning, an identity. People seek it out. Think of the local butcher everyone raves about, the graphic designer who only does album art for metal bands, the accountant who specialises in independent breweries. They own a piece of ground.
A lamp post is just… there. It’s functional. It’s necessary. It’s utterly interchangeable with a thousand others just like it. It competes on presence and price, and nothing else.
This isn’t about some fluffy marketing theory. This is about survival. Your competitive positioning answers the most critical question in business: “Why should I choose you?”
If your answer is weak, you’re just a lamp post waiting for a brighter bulb.
- Being a landmark means having a unique identity that customers seek out, unlike a lamp post, which is easily replaceable.
- Competitive positioning should focus on specific niches, contrarian angles, or creating new categories, rather than being cheaper or just “better.”
- Your brand's visual identity and messaging must align with your positioning to build trust and credibility with customers.
Most “Competitive Positioning” Is Just Wishful Thinking
Most conversations I have with business owners about their positioning are painful. They’re filled with delusions and lazy thinking. They usually fall into one of three traps.
The “We're Like Them, But Cheaper” Trap
This is the most common and the most dangerous position. It’s the default setting for a lack of imagination.
You see a market leader doing well and think, “I can do that, but for 10% less.”
Congratulations. You’ve just entered a race to the bottom and cannot win. Someone else will always be willing to be cheaper. This strategy drains your profit, attracts the worst kind of customers, and makes your brand completely forgettable. It’s a slow-motion liquidation.
I once watched a new coffee shop open across the street from an established, beloved local spot. Their big idea? Their coffee was 20p cheaper. They lasted six months. They didn't sell coffee; they sold a discount. Nobody builds loyalty to a discount.
The “Quality and Service” Delusion
“What makes you different?” I'll ask.
“We focus on high-quality products and great customer service,” they say, beaming, as if they’ve revealed a profound secret.
That’s not a position. That’s the price of entry.
It's what's expected. Claiming “quality” as a differentiator is like a restaurant bragging that its food is edible. It’s the absolute minimum requirement to be in the game. When everyone claims it, the words become meaningless noise. They are the strategic equivalent of beige.
A study by the Corporate Executive Board found that of the customers who said they were “loyal” to a brand, 68% of them couldn't see a fundamental difference between that brand and its competitors [source]. They were loyal out of habit, not conviction. That’s a fragile position.
Jargon as a Smokescreen
This is my personal favourite. Businesses with no genuine point of difference hide behind a wall of corporate jargon.
They offer “synergistic, client-centric solutions.” They “leverage cutting-edge paradigms to drive innovation.”
It’s utter nonsense. It’s a linguistic fog designed to obscure the fact that they don’t know what they stand for. They think sounding complicated makes them sound smart. It just makes them sound hollow.
You don't have one if you can't explain your position in simple, human terms.
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- Ries, Al (Author)
- English (Publication Language)
The Only Thing That Matters: Owning a Word in Your Customer’s Mind
Forget your mission statement. Forget what you think your brand is about. The only thing that counts is the single idea—the mental real estate—you own inside your customer's head.
What is “Mental Real Estate”?
It’s the immediate, gut-level association a customer has with your name.
What brand comes to mind when you think “safety” in cars? Volvo. When you think “search,” what do you think of? Google. When you want “fast, cheap furniture you build yourself,” you think of IKEA.
These brands have staked a claim on a specific piece of mental territory. They don't try to be everything. Volvo doesn't scream about being the sportiest. IKEA doesn't pretend to be heirloom quality. They know their word, and every single thing they do reinforces it. That’s powerful positioning.
How to Find Your Position (Hint: It’s Not in Your Office)
Here's the brutal truth: You don’t get to decide your position. The market does. Your job is to listen to the market and then act decisively to shape its perception.
You can't do this from a boardroom. You need to get out and listen.
- Talk to your best customers. Ask them, “Why did you choose us over everyone else?” And then shut up and listen. Don't lead the witness. You're looking for their words, not yours.
- Talk to people who chose your competitor. This takes guts, but it's invaluable. “What was it about them that sealed the deal?”
- Read your reviews. All of them. The good, the bad, the unhinged. What patterns emerge? What words do people use to describe you?
- Read your competitors' reviews. What are their customers complaining about? That gap, that consistent frustration, is the territory you can claim.
Your position isn't buried in a spreadsheet. It's hidden in the plain language of your customers.
The Three Levers of Powerful Positioning (And How to Pull Them)
You can begin the real work once you've stopped deluding yourself and started listening. There are three main levers you can pull to carve out a space that is truly yours.
Lever 1: The Unignorable Niche
You cannot be everything to everyone. Trying to do so makes you nothing to anyone. The greatest fortunes in small business are built on tight, focused niches.
Stop thinking about the total available market. Start thinking about the minimum viable audience you can delight.
I knew a commercial photographer who was struggling. He did everything: weddings, corporate headshots, product shots. He was a lamp post. Then he made a decision. He decided to only shoot black and white portraits of authors for their book jackets.
Suddenly, he was a landmark. Publishers knew who to call. Agents recommended him. He tripled his prices because he wasn't “a photographer”; he was the author photographer.
You can define a niche by:
- Audience: Who do you serve? (e.g., dentists, rock climbers, new parents)
- Problem: What specific pain do you solve? (e.g., making accounting painless for freelancers)
- Style: What is your unique aesthetic or method? (e.g., minimalist web design, fermentation-focused cooking)
Being niche isn't about thinking small. It’s about being a big fish in a small, profitable pond.
Lever 2: The Contrarian Angle
Look at what all your competitors are doing. Observe the industry's “best practices.”
Now, consider doing the exact opposite.
If everyone in your market competes on features and complexity, your position could be radical simplicity. If everyone is shouting about being fast and disposable, your position could be about being slow, meticulous, and built to last.
Think about the craft beer explosion. For decades, the beer market was a race to be the lightest, most inoffensive, and most widely distributed lager. Then, small brewers came in with the opposite approach: bold, challenging, flavourful beers with limited availability. They took a contrarian position and built an entire industry on it.
Ask yourself: “What is the unspoken rule in my industry?” Then ask, “What happens if I break it?”
Lever 3: The Category Creator
This is the boldest move of all. It’s not about competing better in an existing market; it’s about creating an entirely new one.
Dyson didn't try to build a vacuum with a slightly better bag. He created a new category: bagless cyclonic vacuums. GoPro didn't make a better point-and-shoot camera. It created the “action camera” category.
Most small businesses will not, and should not, attempt this. It’s incredibly high-risk and capital-intensive. But understanding this lever is crucial because it forces you to think beyond just beating the competition. It asks, “Can I change the game entirely?” Creating a new sub-category (like the author photographer did) is sometimes enough to win.
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- Miller, Donald (Author)
- English (Publication Language)
The Brutal Work of Translating Position into Reality
A clever positioning statement is useless if it's not reflected in reality. A position is a promise. Every part of your business is either keeping that promise or breaking it.
Your Brand Identity is Your Uniform
Your competitive position is the strategy. Your brand identity is the uniform you wear to battle. It’s the collection of signals that proves your promise is true.
Nobody will believe you if you claim to be a premium, high-end service, but your logo looks like a clipart relic from 1998, and your website is a mess. Your signals are crossed. You've lost before you've even started.
According to research, it takes about 50 milliseconds (0.05 seconds) for users to form an opinion about your website that determines whether they’ll stay or leave [source]. Your visual identity makes an instant, subconscious impression. It has to align with the position you claim to own.
This is why a professional brand identity design isn't a cost; it's an investment in being believed. The visual handshake says, “Yes, we are who we say we are.”
Price Isn't a Number; It's a Signal
Price is one of your most powerful positioning tools; most businesses get it wrong. They see it as a simple financial calculation, not a strategic signal.
A high price signals exclusivity, expertise, and quality. A low price signals accessibility, value, and mass-market appeal. A middle-of-the-road price signals… nothing. It’s the price of a lamp post.
Discounting undermines that position entirely if you position yourself as the premium choice. It tells the world you don't rely on your value. Conversely, if your position is to be the accessible, no-frills option, a high price is just confusing. Your price must reinforce your story.
Every Single Touchpoint Screams Your Position
Consistency is everything. Your position must be evident in:
- The copy on your website.
- The way you answer the phone.
- Your packaging.
- Your social media posts.
- Your invoices.
- The email signature of every employee.
I once considered hiring a high-end business consultant. He talked a great game about premium strategy and commanding top dollar. But his website was built on a cheap template, riddled with typos, and used cheesy stock photos of people in suits high-fiving. He had made a dog's dinner of it.
The signals were a complete mismatch. My trust evaporated instantly. His positioning was a fantasy because the reality of his brand didn't back it up.
A Simple Framework for Auditing Your Positioning
Feeling uncomfortable? Good. That means you’re being honest. Here’s a quick, no-nonsense way to audit your current position.
The Five-Second Test
This is brutally effective.
- Grab a stranger, or at least someone who doesn't know your business inside and out.
- Show them the homepage of your website for exactly five seconds—no more.
- Close the laptop and ask them three questions:
- What does this company sell?
- Who is it for?
- What makes it different from the alternatives?
If they stare back at you with a blank look, your positioning is mud. You're not communicating anything of value.
Perceptual Mapping: A Fancy Term for a Simple Sketch
You don't need an MBA for this. Grab a piece of paper and a pen.
- Draw two axes. Label the ends with the key spectrums in your market. For example: Price (Low to High) on the vertical axis, and Style (Traditional to Modern) on the horizontal axis. Other options could be Convenience vs. Specialisation, or Simplicity vs. Features.
- Now, plot your main competitors on this map. Be honest about where they sit in the customer's mind.
- Finally, plot yourself. Where are you?
Are you all clustered together in one corner? That's a red ocean of competition. Is there a space on the map? That could be your opportunity. Is that space empty because nobody has claimed it, or is it empty because nobody wants what's there? That’s the critical follow-up question.
The “Only We” Statement
This is a simple sentence that forces clarity. Try to complete it for your business:
We are the only [your category] that [your unique differentiator].
Examples:
- “We are the only accounting firm in Manchester that specialises exclusively in tax for creative agencies.”
- “We are the only meal delivery service that uses 100% locally sourced, organic ingredients and provides compostable packaging.”
- “We are the only web designers guaranteeing a finished site in 7 days.”
You are not competitive if you can't finish that sentence with something authentic and meaningful to a specific customer. You have a job description.
Stop Competing. Start Owning.
The entire point of competitive positioning is to make the competition irrelevant.
It’s not about being slightly better than the lamp post beside you. It’s about rewiring the map so that customers see you as the only logical destination for what they need. It's about becoming a landmark.
This requires courage. The courage to say “no” to specific customers. The courage to be different, not just better. The courage to charge what you're worth. The courage to stand for something specific, even if it alienates others.
So, ask yourself that question again.
Are you building a landmark, or are you just another lamp post?
We spend our days observing what makes brands memorable and what makes them fade away. If you want more direct thoughts like this, browse our other blog posts. If you've realised your brand's signals are all wrong and you need to fix the fundamentals, that’s what our brand identity design services are for. We can help you build the landmark you want to be. You can request a quote here.
Frequently Asked Questions (FAQs)
What is competitive positioning?
Competitive positioning is the strategic process of establishing a unique identity for your brand in the minds of your target customers. How you differentiate yourself from competitors in a meaningful way motivates customers to choose you.
Isn't competitive positioning the same as a USP?
They are related but different. A Unique Selling Proposition (USP) is a specific feature or benefit that a competitor cannot or does not offer (e.g., “The only pizza delivered in 30 minutes or it's free”). Competitive positioning is the broader strategic space you want to own in the customer's mind (e.g., being known as the “fastest” pizza option overall).
How can a small business compete with huge companies?
By not playing their game. Large companies often have to appeal to a broad market, which makes them slow and generic. A small business can win by targeting a particular niche, offering a contrarian viewpoint, or providing a level of specialised service that a large corporation can't match.
Can my position be “the cheapest”?
It can be, but it's a challenging and often unsustainable position. It requires massive volume and operational efficiency. For most small businesses, competing on price is a race to the bottom that destroys profit margins and brand value.
How often should I review my competitive positioning?
You should be aware of it constantly. However, a formal review or audit is wise at least once a year or whenever a significant market shift (like a new major competitor entering the scene or a change in customer behaviour) occurs.
What is the difference between branding and positioning?
Positioning is the strategy—the piece of mental real estate you want to own. Branding (including your logo, colours, and messaging) is the set of tactics and tools you use to capture and hold that real estate. Positioning is the plan; branding is the execution.
My market is too saturated. How do I find a unique position?
Saturation often creates opportunity. Look for the gaps. What are all the competitors' customers complaining about? What's the one thing nobody is doing well? You can also create a niche within the saturated market by focusing on a hyper-specific audience (e.g., instead of a “life coach,” be a “life coach for newly retired executives”).
How do I know if my positioning is working?
The ultimate test is whether it drives business from the right customers. Other signs include: customers using your desired positioning words in their reviews, clear brand recall in your target market, and the ability to command a price premium without resistance.
Can I have more than one competitive position?
No. This leads to a confused and weak brand. You must stand for one primary thing in the customer's mind. You can have multiple features or benefits, but they should reinforce your single, clear position.
What is a positioning statement?
A positioning statement is a concise internal document that articulates your brand's unique value. A standard format is: “For [target customer], who [statement of need or opportunity], [product name] is a [product category] that [statement of key benefit]. Unlike [primary competitive alternative], our product [statement of primary differentiation].” It’s a tool for internal clarity, not a marketing slogan.
Is “quality” ever a good differentiator?
Only if your definition of “quality” is precise and provable, and the rest of the market is demonstrably low-quality. For example, proving your materials are ethically sourced and last 10 times longer than any competitor's is a tangible position. Simply saying “we sell high-quality stuff” is meaningless.
My business is already established with a weak position. Is it too late to change?
No, but it requires a deliberate and consistent effort. This is called repositioning. It involves clearly defining your new desired position and systematically updating all your brand signals—messaging, visual identity, pricing, service—to reflect the new strategy. It can take time to shift customer perceptions.
Last update on 2025-07-21 / Affiliate links / Images from Amazon Product Advertising API
