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It’s human nature to reflexively categorize and sort the information we encounter in our daily lives. To influence the way prospective customers understand your brand, you must present it in a way that helps them decide how to think about your brand.

This process is called positioning, and it’s the single most important (and least understood) component of your brand book. Positioning is the message that’s received, not the one that’s delivered. It’s not simply what you say, it’s how that information is arranged in a customer’s mind. Essentially, where does it land? What space does it ultimately wind up occupying?

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Positioning is about, well, taking a position. It’s a stake you plant in the minds of your prospective customers about what your brand can uniquely claim and defend. A positioning statement is a crisp, comprehensive way to guide someone on how to think about your company.

It defines and frames your brand, making it the central organizing structure of your brand’s messaging and strategy. To construct your positioning statement, you first have to do some work in surfacing its component parts.

Here’s how:

Since positioning is about the space you occupy in the mind of your customer, you can’t figure out how to position your brand until you know exactly who that customer is. There’s an order of operations in developing your brand, and developing your target personas comes before positioning. It’s also useful to have your brand’s ethos fully developed before attempting to determine your positioning. Understanding who you are and who you’re serving are vital first inputs.

After the target customer is established, it’s time to figure out your frame of reference — the context in which consumers view your brand. By providing consumers with a frame of reference, you’re equipping them with the information they require to categorize, contextualize and then compare your brand with what’s already familiar to them.

This is important, because potential customers need to consider points of parity (that is, what your brand is like) before they can consider points of differentiation (what makes your brand unique). Competitive frames of reference tend to be specific to reduce the number of brands competing for that prospect’s attention.

The specificity of a frame of reference signals to the customer where to place it in their minds, and the smaller the category, the better your chances of owning it (or at least, standing out).

Exercise: Write down the top five brands in your category. If you’re not No. 1 in that category, brainstorm other categories your brand is first or best in.

Some inspiration:

Panera Bread is not the No.1 fast-food chain, but it is the No. 1 fast-casual bakery cafe. Their frame of reference doesn’t try to compete with entrenched giants like McDonald’s or Starbucks. Instead, it puts Panera in a more specific, more ownable category.

White Claw isn’t the top canned alcoholic beverage, but it IS the No. 1 seltzer that gets you drunk. That makes “hard seltzer” an effective frame of reference for a brand that would rather lead a category than compete with beer, malt beverages and wine coolers.