In the classification of new products, product repositioning is considered to be a new product task. There are a numerous challenges and benefits associated with product repositioning as discussed in the following article. Please refer to a separate article for the benefits of repositioning, as well as an example of repositioning.
What is product repositioning?
Product repositioning is changing the overall positioning (that is, key product benefits, product use or competitive advantages) or changing the target market for the product. In some cases the product repositioning may coexist with a product improvement, or other times an existing product without change (except for packaging perhaps), will have a new image or target market constructed for it.
Challenges of product repositioning
- Development costs
- Significant cost of re-educating the market
- Loss of existing sales
- Confused positioning
- Decision of repositioning versus a new offering
- Competitive actions
- Brand risk
Repositioning is a challenging exercise. In some cases, it is primarily a communications exercise, but that still requires the investment in advertising and communications production costs, usually repackaging expenditure, changing of any other communications, such as websites, and so on.
And if the product repositioning is supported by various product improvements, then the upfront development costs associated with the product repositioning will be even greater.
Significant cost of re-educating the market
Probably hardest challenge of a product repositioning is re-educating the marketplace. The target market, most likely has an established perception of the brand already. Therefore, one of the communication goals of the repositioning is to give consumers to “unlearn" their existing knowledge of the brand and then learn an array of new features and benefits.
In reality, this is equivalent to two marketing communication campaigns – the first to erase the existing positioning and the second to construct the new positioning. Obviously, this can be very expensive exercise, particularly for a well understood existing brand.
Loss of existing sales
Another concern with product repositioning is that the product is moving away from its existing benefits that are likely to appeal to some consumers. This will mean that the product in its new form and market position may no longer meet the needs of its existing customer base. Obviously, the overall goal is to achieve greater sales from its new position and generate new customers, with the expectation that sales to current customers are likely to decline.
If the repositioning exercise is poorly executed or not supported sufficiently over time, then the end result is likely to be quite confused positioning. The target market will have been mix of confusing messages and understandings about the product that had been accumulated over time.
As a result, there is likely to be difficult transition period the brand and it is likely that is will take several years for the brand to be truly understood in this new proposed competitive position.
Decision of repositioning versus a new offering
Inside the company there will be discussion of the most appropriate strategic approach. Because of the challenges listed above, an alternative approach would be to launch a new product/brand into the desired positioning, rather than trying to reinvent an existing product.
This option is attractive and may split management support for repositioning, which may have resource implications over time – as repositioning needs to be a long-term commitment.
Competitors may take the opportunity of highlighting the consistency of their offerings, or potentially repositioning themselves as a counter strategy. Over time a company should get a sense of what its competitors are likely to do, but this will remain a risk for unpredictable competition and new market entrants.
Typically a repositioning is a major exercise and carries the risk of damaging the brand’s integrity and perceived quality in the market. This risk is amplified by the potential for confused positioning, which is discussed above.
As you can see, repositioning a product has major challenges and is often considered to be a last resort to revive a declining product.