Simply, positioning is how your target market defines you in relation to your competitors. 
A good position is: 

• What makes you unique? 
• Your product is considered a benefit by your target market. 

Both of these situations are needed for a good positioning. 
Positioning is important because you are competing with all like businesses competing for your potential customers’ attention.  If you can stand out with a unique benefit, you have a chance at getting their attention. 
It is important to understand your product from the customers’ point of view relative to the competition. 
In order to begin positioning a product, two questions need to be answered: 

1. What is our marketing environment? 
2. What is our competitive advantage? 

The marketing environment is the external environment.

Things to consider: 

• How is the market currently satisfying the need that your product will satisfy?
• What is the cost impact for the consumer to switch to your product?
• How is your current competition positioned?

What do you have that gives you advantage over your competitors. 

Things to consider: 

• Is your company small and flexible?
• Do you offer low cost and high quality?
• Does your product offer unique benefits?
• Are you the first on the market with this product?

Positioning Strategies 
There are several positioning strategies that should be pursued: 
Product Attributes:

• What is your specific product attributes? 

Benefits:

• What are the benefits to the customers? 

Usage Occasions:

• When / how can your product be used? 

Consumer:

• Identify a class of consumer. 

Against a Competitor:

• Positioned directly against a competitor. 

Away from a Competitor:

• Positioned away from competitor. 

Product Classes:

• Compared to different classes of products. 

Segmentation 
There are three types of segmentation: 

Mass Marketing:

• Go after the whole market with one offer and focus on common needs rather than differences.

Product-variety Marketing:

• Target several market segments and design separate offers for each. 

Target Marketing:

• Large share of one or a few sub-markets. Good when company’s resources are limited 

Positioning Differences 
The promoted product differences must be: 
Important:

• The difference delivers a highly valued benefit to the target consumers 

Distinctive:

• Competitors do not offer the difference, or the company can offer it in a more unique way 

Superior:

• The difference is superior to other ways that the customer might obtain the same benefit 

Communicable:

• The difference can be explained and communicated to the target consumers. 

Preventive:

• Competitors cannot easily copy the difference 

Affordable:

• Consumers can afford to pay the difference