Positioning
Positioning is the act of deliberately defining how you are the best at something that a defined market cares a lot about.
If we fail at positioning, we fail at marketing and sales. If we fail at marketing and sales, the entire business fails.
It’s hard to blame the sales process when it takes several meetings for a customer to figure out what your product is, let alone whether or not they want to purchase it. Great positioning supercharges all of your marketing and sales efforts. But positioning has a positioning problem.
The first step to optimizing positioning is to really understand what it is. I like to describe positioning as “context setting” for products.
Often, you’re too close to your product to realize that the market doesn’t think about it the way you do.
The concept of positioning first became a popular marketing construct in 1981 with the publication of Positioning: The Battle for Your Mind by Al Ries and Jack Trout. Clear positioning was important in 1981; we are doomed without it today.
Customers need to be able to easily understand what your product is, why it’s special and why it matters to them.
Weak positioning leaves a trail — the signs are there if you know where to look. Your current customers love you, but new prospects can’t figure out what you’re selling. Your company has long sales cycles and low close rates, and you’re losing out to the competition. You have high customer churn. You’re under price pressure.
Positioning as Context
Context enables people to figure out what’s important. Positioning products is a lot like context setting in the opening of a movie. Context allows us to make thousands of little decisions about what we should pay attention to and what we can simply ignore. Without context to guide us, we would be overwhelmed, maybe even paralyzed by choice.
Most products are exceptional only when we understand them within their best frame of reference.
Product creators often fall into the trap of thinking there is only one way to position an offering, and that we have no ability to shift that contextual frame of reference, especially after we have released it to market.
- Trap 1: You are stuck on the idea of what you intended to build, and you don’t realize that your product has become something else.
- Trap 2: You carefully designed your product for a market, but that market has changed.
You made a set of critical business decisions. These include:
- Target buyers and where you sell.
- Competitive alternatives.
- Pricing and margin.
- Key product features and roadmap.
As product creators, we need to understand that the choices we make in positioning and context can have a massive impact on our businesses — for better or worse.
Sometimes a product that was well positioned in a market suddenly becomes poorly positioned, not because the product itself has changed, but because markets around the product have shifted. For startups and tech companies, this problem is very common. Our markets are complex, overlapping and shifting rapidly.
The common failure in both of these traps is not deliberately positioning the product. We stick with a “default” positioning, even when the product changes or the market changes. We generally fail to consider other — potentially better — ways to position our products because we simply aren’t positioning them deliberately.
Great positioning takes into account all of the following:
- The customer’s point of view on the problem you solve and the alternative ways of solving that problem.
- The ways you are uniquely different from those alternatives and why that’s meaningful for customers.
- The characteristics of a potential customer that really values what you can uniquely deliver.
- The best market context for your product that makes your unique value obvious to those customers who are best suited to your product.
The Five (plus One) Components of Effective Positioning
Why You Should Never Create a Positioning Statement. The positioning statement is widely taught in marketing courses and business schools. It’s been referenced in many popular business books, including Crossing the Chasm, Geoffrey Moore’s book on how to market high-tech products, considered the business book for entrepreneurs in the 1990s.
THE TRADITIONAL POSITIONING STATEMENT:
“FOR target buyers, your offering IS A market category WHICH PROVIDES competitor’s benefits UNLIKE primary competitor WHICH PROVIDES competitor’s benefits.”
The worst part of a positioning statement exercise is that it assumes you know the answers.
The traditional positioning statement fails in several critical ways:
- It assumes you know the best way to fill in the blanks.
- It reinforces the status quo.
- It doesn’t give you any hints about what to do next.
Did marketing refer to it when they created messaging? No. Did the product team use it to inform what features they should build? Nope. Did sales use it to figure out what types of customers they should sell to? Never.
It’s hard to remember.
These are the Five (Plus One) Components of Effective Positioning:
- Competitive alternatives. What customers would do if your solution didn’t exist.
- Unique attributes. The features and capabilities that you have and the alternatives lack.
- Value (and proof). The benefit that those features enable for customers.
- Target market characteristics. The characteristics of a group of buyers that lead them to really care a lot about the value you deliver.
- Market category. The market you describe yourself as being part of, to help customers understand your value.
- (Bonus) Relevant trends. Trends that your target customers understand and / or are interested in that can help make your product more relevant right now.
The competitive alternative is what your target customers would “use” or “do” if your product didn’t exist.
Unique attributes are capabilities or features that your offering has that the competitive alternatives do not have. For service businesses — like consultancies, agencies and custom-development shops — the unique attributes are often related to a combination of expertise and experience.
Value is the benefit you can deliver to customers because of your unique attributes. If unique attributes are your secret sauce, then value is the reason why someone might care about your secret sauce.
Your sales and marketing efforts have to be focused on the customers who are most likely to buy from you. Your positioning needs to clearly identify who those folks are. Your target market is the customers who buy quickly, rarely ask for discounts and tell their friends about your offerings.
Declaring that your product exists in a market category triggers a set of powerful assumptions. Market categories are one way that customers organize products in their minds. Declaring that your product exists in a certain market category will set off a powerful set of assumptions in customers’ minds about who your competitors are, what the functionality of the product should be and what the pricing is like. Your market category can work for you or against you. Market categories help customers use what they know to figure out what they don’t. Market categories help customers understand what your offering is all about and why they should care. Trends help buyers understand why this product is important to them right now.
Trends can help customers understand why a product is important right now. Trends in technology can be applied to multiple market categories.
It’s critical to start with understanding what the customer sees as a competitive alternative, and then working through the rest of the components — attributes, value, characteristics, market category, relevant trends — from there.
Step 1. Understand the Customers Who Love Your Product
Our best market category depends on who our target customers are and what value we can deliver. But the market category also tells customers who our competitors are.
Your best-fit customers hold the key to understanding what your product is.
“There is only one thing stronger than all the armies of the world: and that is an idea whose time has come.” Victor Hugo
We increased our growth by concentrating on our best-fit customers.
The first step in the positioning exercise is to make a short list of your best customers.
We frequently see our competitors much differently than customers see them. Customer-facing positioning must be centered on a customer frame of reference.
Am I positioning my product, my company or both?
Companies that have multiple products in the market need to think about product positioning and company positioning as separate but highly linked things.
Step 2. Form a Positioning Team
A positioning process works best when it’s a team effort, ideally from across different functions within the company.
Positioning is a business strategy exercise — the person who owns the business strategy needs to fully support the positioning, or it’s unlikely to be adopted.
Consider these outputs that all flow from positioning:
- Marketing: messaging, audience targeting and campaign development.
- Sales and business development: target customer segmentation and account strategy.
- Customer success: onboarding and account expansion strategy.
- Product and development: roadmaps and prioritization.
“It’s no use of talking unless people understand what you say.” ZORA NEALE HURSTON
I highly recommend bringing in an experienced facilitator to guide the positioning discussion.
Step 3. Align Your Positioning Vocabulary and Let Go of Your Positioning Baggage
For your team to develop a new position, they need a common understanding of the goal and expected outcomes.
At a minimum, the team needs to be on the same page regarding:
- What positioning means and why it is important.
- Which components make up a position and how we define each of those.
- How market maturity and competitive landscape impact the style of positioning you choose for a product.
The reality is that most products can be many things to many types of buyers.
Market confusion starts with our disconnect between understanding the product as product creators, and understanding the product as customers first perceive it. The positioning team needs to understand the concept of “positioning baggage” before they can attempt to let go of it.
Step 4. List Your True Competitive Alternatives
Customers don’t always see competitors the same way we do, and their opinion is the only one that matters for positioning.
The features of our product and the value they provide are only unique, interesting and valuable when a customer perceives them in relation to alternatives.
Understanding the customer’s problem wasn’t enough — to really understand how they perceived our strengths and weaknesses, we needed to understand the alternatives to which they compared us.
Understand what a customer might replace you with in order to understand how they categorize your solution.
Remain focused on the best – fit customer list and name only what those customers would see as an alternative, and rank the list from most common to least common.
The competitive alternatives often naturally cluster, and if so, it’s helpful to group them. Teams usually end up with a minimum of two and a maximum of five groups of alternatives.
Step 5. Isolate Your Unique Attributes or Features
In this step you need to stay focused on features and capabilities (also called attributes), rather than the value that those features drive for customers. In this step, list all of the capabilities you have that the alternatives do not.
Your opinion of your own strengths is irrelevant without proof.
Third-party validation that your product’s feature is better than the alternative counts as proof.
Concentrate on “consideration” rather than “retention” attributes. Consideration attributes are things that customers care about when they are evaluating whether or not to make a purchase. Retention attributes are features that aren’t as important when a customer is making an initial purchase decision, but are very important when it comes time to renew.
Focus on capturing the broader set without trying to decide what’s really important and what isn’t.
Step 6. Map the Attributes to Value “Themes”
Attributes or features are a starting point, but what customers care about is what those features can do for them. Features enable benefits, which can be translated into value in unique customer terms.
In this step, you’ll capture the value that each of your unique attributes enables for customers.
Moving from “features” to “benefits” and then to “value” often confuses people, particularly folks who come from a technical background.
In your list, you should see a handful of themes start to emerge and the value those features deliver to customers. Now we need to organize the list. To group points of value, you need to take the perspective of a customer. Group attributes that provide similar value so you can get down to a more reasonable number.
It’s not uncommon for this exercise to produce just a single value point.
Step 7. Determine Who Cares a Lot
It’s important to remember that although you have unique attributes that deliver value to customers, not all customers care about that value in exactly the same way.
Marketers call this step a “segmentation” exercise.
Most marketing courses talk about segmentation in a way that only makes sense to large companies who sell to consumers.
An actionable segmentation captures a list of a person’s or company’s easily identifiable characteristics that make them really care about what you do.
In this step, you’ll determine what makes some prospects much more excited about your offerings than others — think of these as your “best-fit prospects.”
Think about the difference between your best-fit customers and your other customers.
Target as narrowly as you can to meet your near-term sales objectives. You can broaden the targets later. Could you hit your targets by focusing on only your best-fit customers? If the answer is no, you need to broaden your definition of “best-fit.”
A segment can be defined by narrowing the set of buyers you are targeting.
In general, the segment needs to meet at least two criteria to be worthy of focus: it needs to be big enough that it’s possible to meet the goals of your business, and it needs to have important, specific, unmet needs that are common to the segment.
Step 8. Find a Market Frame of Reference That Puts Your Strengths at the Center and Determine How to Position in It
Pick a market frame of reference that makes your value obvious to the segments who care the most about that value.
In the context of this exercise, a “market” needs to be something that already exists in the minds of customers, except in the very rare case where you make a conscious decision to create a new market.
We position our offering in a market to trigger a set of assumptions — about competitors, features and pricing — that work to our advantage.
There are different approaches for isolating, targeting and winning a market — and certain styles work better for some than others. Picking a market is like giving customers an answer to the question, What are you?
The “style” of positioning you choose will depend on a set of factors including the competitive landscape and your business goals.
- Head to Head: Positioning to win an existing market.
- Big Fish, Small Pond: Positioning to win a subsegment of an existing market.
- Create a New Game: Positioning to win a market you create.
When to use the Head to Head style If you are already the leader in the market, the status quo suits you. Well-defined markets also have generally accepted purchase criteria. The only case where a company might want to position a new product in a known category is when the category itself is defined and understood by buyers, but a strong leader has not yet been established. The advantage of positioning in an existing market category is that you don’t have to convince people the category needs to exist.
The goal of the Big Fish, Small Pond style of positioning is to carve off a piece of the market where the rules are a little bit different — just enough to give your product an edge over the category leader. A market can be subsegmented by industry (manufacturing vs. retail), by geographic region (North America vs. South America), company size and a myriad of other criteria. You get the advantage of a well-defined category without the stiff competition. Dominating a small piece of the market is generally much easier than attempting to directly take on a larger leader. In my experience, one of the best advantages of this style is that once you begin to get traction with some customers, your advantage in the subsegment tends to accelerate quickly. Word-of-mouth marketing happens most naturally in tight market subsegments. Just because your initial target market is narrow doesn’t mean you will stay narrowly focused forever. When to use the Big Fish, Small Pond style? First, this style requires that the category is well defined and there’s a clear market leader — and you’re not it. Second, there needs to be clearly definable groups of customers with unique needs that are not addressed by the market leader. Last, it has to be possible to demonstrate that this subsegment has a very specific and important unmet need. This positioning style is often useful for smaller startups that are looking for a way to establish themselves in a market with a strong market leader that they can’t take on directly. Ideally your competitive advantage is something that is difficult for the market leader to copy.
When to use the Create a New Game style? Because this style of positioning is so difficult, it should only be used when you have evaluated every possible existing market category and concluded that you cannot position your offering there, because doing so would fail to put the focus on your true differentiators and value. Sometimes new technology or circumstances pave the way for a completely new market. Other times a market can be created by combining one or more existing markets to form one with different buying criteria. You aren’t simply capturing demand that already exists; you have to spark some demand first. This style is usually only possible when there has been a massive change with a big potential impact on what is possible or what is important in a market. These changes can include new technologies, economic changes, political forces or a combination of these. Often a category emerges when an enabling technology, a shift in customer preferences and a supporting ecosystem manage to come together at once. To credibly create a new category, you need a product that is demonstrably, inarguably new and different from what exists in other market categories. Category creation is about selling the market on the problem first, rather than on your solution. This style is very, very difficult to execute, but if you manage to pull it off, the rewards are massive. Unlike the other positioning styles, Create a New Game allows you to create a market that is perfectly tailored to your strengths and weaknesses. Because of the investment and time required, this style is generally best used by more established companies with massive resources to put toward educating the market and establishing a leadership position. If you choose to use the Create a New Game style . . . Follow a long-term plan. “The future isn’t a place we are going to go, it’s a place we get to create.” Nancy Duarte
Step 9. Layer On a Trend (but Be Careful)
Once you have determined your market context, you can start to think about how you can layer a trend on top of your positioning to help potential customers understand why your offering is important to them right now. This step is optional but potentially really powerful — if you go about it carefully.
The use of a relevant trend is not a prerequisite for success, but trends can sometimes give boring products an extra gloss of interest.
Trends can only be used when they have a clear link to your product. Start by making the connection between your product and the market obvious.
Step 10. Capture Your Positioning so It Can Be Shared
Positioning needs to have company buy-in so it can be used to inform branding, marketing campaigns, sales strategy, product decisions and customer-success strategy.
I recommend capturing your positioning in a document with enough detail that it can be used by marketing, sales and product creation. This document should break down each individual component of the position, give enough detail for each to be understood and show how they interact with one another.
Here’s the positioning canvas I use. It includes the product name and a one-line description as well as the market category (and subcategory if needed). It then lets you line up competitive alternatives, attributes, value and customer segments in a way that shows the relationship between them.
After Positioning: What Happens Next?
A positioning exercise on its own is valuable.
The next stage is to make the positioning real across the company. How do you implement a position?
I’ve found that before we tackle messaging, it is more effective to craft what I call a “sales story.” As a group, once you have completed a positioning exercise, you can work through defining a story of how a salesperson would pitch the product.
When selling to businesses, a sales story generally follows a common arc. It starts with a definition of the problem that your solution was designed to solve. The story then moves to describing how customers are attempting to solve the problem today and where the current solutions fall short. The next stage of the story is what I call “the perfect world.” It’s where you describe what the features of a perfect solution would be, knowing what you know about the problem and the limitations of current solutions. The sales story goes on to introduce the product or company and position it in the relevant market category. Next, the story naturally flows into talking about each of the value themes with a bit more detail into how the solution enables that value. The story wraps up with a discussion of whatever you would like the prospect to do next.
The team needs to agree on how to define the problem, current solutions, the gap and the key purchase criteria that a customer should have when looking for a solution in your market.
A messaging document helps you keep a record of the accepted baseline messaging, gives everyone a common starting point for building specific copy for a specific purpose and keeps the language (and the positioning) from evolving too far away from the agreed-upon starting point.
Pricing reflects positioning and might need to be adjusted. There are price expectations in each market category, so getting your pricing in line with those will help reinforce that your product belongs there.
Both products and markets change over time. Companies need to regularly check in on their positioning and adjust it as technology and landscapes evolve.
- A sudden change in the competitive landscape could signal a need to adjust your positioning.
- Other outside forces can also change your market.
- New technology can suddenly change what is possible in a market. Once customers understand it, purchase criteria can shift very quickly.
- The attitudes and preferences of customers can shift over time.
Positioning
- Any product can be positioned in multiple markets.
- Great positioning rarely comes by default.
- Understanding what your best customers see as true alternatives to your solution will lead you to your differentiators.
- Position yourself in a market that makes your strengths obvious to the folks you want to sell to.
- Use trends to make your product more interesting to customers right now, but be very cautious.
