Product service positioning matrix

The product–service positioning matrix helps a company determine whether its customer offer can support premium pricing. It is especially useful in business-to-business markets, where brand position is shaped not only by communications but by customers’ direct experience of product performance and service. The framework reveals the pricing positions available and the investment needed to reach or defend them. Its two dimensions are product superiority and service superiority.

When to use it

• Position an offer according to customers’ perceptions of product quality and service value.
• Test whether current prices and brand claims are supported by the delivered experience.
• Identify whether product improvement, service improvement or a low-cost position offers the strongest strategic route.
• Explore what could delight customers, using the Kano model where appropriate to distinguish basic, performance and delight attributes.

Origins

Carol-Ann Morgan, a business-to-business market-research consultant, developed the matrix in 2016 while working with suppliers that needed to identify and justify a price premium. It rests on the premise that reputation and brand image emerge from customers’ experience of both the product and the surrounding service. This is particularly important for newer brands that cannot rely on a long heritage.

As new challengers enter established markets and buyers become more informed, every supplier must be clear about the source of its advantage, whether that advantage warrants a premium and what investment is needed to sustain it. The matrix was designed to make those questions explicit. It can combine customer-experience measures, brand attitudes and internal management views; comparing internal beliefs with market perceptions exposes gaps that require strategic action.

What it is

• Product superiority: the extent to which customers consider the product high quality, reliable, durable, innovative, effective and reputable.
• Service superiority: the extent to which customers experience the service team as responsive, knowledgeable, technically capable, proactive, quick to resolve problems and committed to the customer’s interests.

The matrix defines four positions:

1. Premium positioning — high product superiority/high service superiority. A supplier in this position combines market-leading products with market-leading support and may therefore be able to command a premium.
2. Technical leadership — high product superiority/low service superiority. These businesses have strong products but an underdeveloped service offer. Some may be recent entrants whose support capability has not yet caught up with their technical proposition.
3. Service leadership — low product superiority/high service superiority. These businesses compete through exceptional service around products that are not technically distinctive. A distributor, for example, may succeed by making standard imported products easier and safer to buy, use and maintain.
4. Low-cost leadership — low product superiority/low service superiority. These businesses rely primarily on price and serve customers who cannot or will not pay for higher performance or stronger support.

The matrix helps a company decide:

• whether its current prices are justified;
• whether there is room to increase prices;
• whether it risks overcharging relative to the experience delivered;
• whether an unoccupied leadership position matches its capabilities; and
• where investment is required to establish or protect its intended position.

In the strict interpretation of the framework, a genuinely premium position requires superior product and superior service delivered consistently. The matrix should nevertheless be treated as a diagnostic rather than proof that a price increase will succeed: willingness to pay must still be tested.

Developments of the model

The framework has been extended to describe the opportunities and threats associated with each position in more detail:

Although the axes refer to product and service quality, both must be measured as customers perceive them. Brand strength can influence those perceptions, but a desired brand position cannot substitute for the market’s actual experience.