Ask five people what positioning means and you’ll likely get five different answers. Positioning is often used in place of value proposition and vice versa; sometimes both get confused with messaging.
There is agreement on one thing: Successful positioning should create a connection with potential customers that results in selling more products and services. You hope it creates more awareness, helps drive qualified leads and shortens the purchasing decision. But too often, it doesn’t support any of those desired outcomes.
What Positioning Isn’t
Positioning isn’t a tagline, a slogan or something built around product features. Instead, think of it as a process that has inputs, activities and outputs. Positioning is a strategic activity that impacts business decisions, from the products and services your company builds to the type of culture you want to have, and the message you communicate to the market.
Stake out a Market Position
Our brains categorize all kinds of information and group similar things that we can easily retrieve when needed. We try to group new information with familiar knowledge or experience, and when we can’t, we freak out a little because we want to filter out the unfamiliar.
The average American grocery store has more than 40,000 products and is organized to recognize the way people categorize information in a hierarchical fashion. Aisles are stocked with similar types of products to make it easier for you to find things and each aisle includes sections of specific product categories. For example, the baking aisle features product categories like flour, sugar, baking soda and yeast. Within each product category, there are different brands (individual products).
When you shop, you think of a category first, then a brand. It’s why it may be hard to find a specialty item, like a gluten-free (GF) product. Is GF an aisle, a category or an attribute of a category? I shop for GF products for my daughter and it annoys me because I can’t easily find what I’m looking for. I think “bread,” and then I think “gluten-free,” not the other way around.
Occupy Space in the Minds of Your Customers
Market position is about occupying space in your customers’ minds. It is a way for prospective customers to understand who you are and what you’re all about, so they can categorize you, associating what you do with them and why it’s important. Market position puts a stake in the ground and is the most strategic decision you’ll make in your positioning journey.
That said, humans only have a finite space in their minds. If the space isn’t crowded, you have a good shot at joining that space. But if it’s crowded, you will have to displace another company to find room.
You need to decide which aisle and place on the shelf you will occupy. If you’re doing something new and disruptive, try to connect it to something familiar. Remember, if you aren’t associated with something, you won’t be associated with anything. It’s no accident that the first automobiles were known as horseless carriages.
Once you define your market position, it will become an overarching element of everything your organization does. Customers would experience a disconnect if Telsa created a gas-powered, high-performance car or Red Bull created a drink to help you relax at the end of a tough day. Even if each company found an overwhelming business opportunity to do those things, they couldn’t do so without severely damaging their market position.
Now imagine if Telsa announced an electric airplane or Red Bull announced a line of snowboards. These products might work within their respective market positions.
These hypothetical examples also demonstrate why it was smart for Honda to create Acura, for Toyota to create Lexus, and for Hyundai to create Genesis. Each is a different brand with different market positions.
The Value Proposition
Product positioning and value proposition are terms that are often used interchangeably, though I’m not sure why. Product positioning starts with a product. A value proposition starts with a customer; itis a promise that your product or service will help a customer in a meaningful way. It is defined by customers in a market segment, using language they are familiar with, not by you.
When you use the Pragmatic Institute technique of the marketecture process, you take an understanding of your customers and their needs and make a promise that your product will satisfy their needs. A positioning document is the output of the marketecture process.
Know Your Target Customers
Developing a value proposition starts with a deep understanding of your target customer. What pains are they experiencing? How does that impact them and the company they work for? Your value proposition is to take some or all of those pains away and make life better for them in ways they care about.
You will likely need different value propositions for different target customers in different market segments. And while it may sound like more work, the investment in developing good value propositions will pay lasting dividends.
McDonald’s (family friendly, low cost) recognizes that they serve different market segments. McDonald’s has different products, services and messages for each market segment (watch some of their TV ads and you’ll spot it). For families with small children, they have one value proposition; for seniors, they have a different value proposition.
Develop a Message
Once you’ve staked out a market position and developed value propositions, you have to communicate your promise to target customers.
The process of messaging enables you to create one or more messages that communicate your market position and value propositions to prospective buyers. However, without a market position and value proposition, your messaging will be pure guesswork.
In addition to the market position and value propositions, personas and market segments are inputs that will help develop a clear message that conveys your promise to the people you want to help.
Measure the Impact
If you’re like me, you want to know how positioning has a positive impact on your business, and until you have that evidence, you might be reluctant to change your approach.
The only way to know that your positioning efforts are working is to ask two questions to people in the market segments you serve:
- When you think of [company/ product], what are the first words that come to mind?
- What value do you believe [company/product] delivers to you and your organization?
Win/loss interviews with people who considered—or didn’t consider—your product will provide you with those answers. If you have an active win/loss program, simply add those two questions; if you don’t have a win/loss program, now is a good time to start one. Collect the data and evaluate it to confirm whether your message resonates with each market segment.
Positioning is a strategic activity that—when done correctly—will help you describe your product by its ability to solve market problems and create internal positioning documents to develop external messages that focus on each key buyer or persona. Ultimately, you’ll establish a meaningful connection with customers that allows you to sell more products and services.
Ready to learn more about positioning and how it can change your business? Register for a Pragmatic training session today.