Back to Basics: The Lost Art (and Science) of Positioning

What is your position? Do you have a position? Understanding the concept of strategic positioning is a critical but often overlooked aspect of successful marketing. It is a result of communicated perceptions about a product or brand that is different from image. A position is a distinct place in the mind of your customer, a point that is usually set in relation to the competition. Closely related to brand distinction, a well defined positioning strategy can be used to create differentiation and quickly communicate the uniqueness of a product or service.

Your position is what you stand for in the mind of the customer. Are you known as an exclusive, high priced option or as having the best service in your industry? Adopting a position that is owned by your competition is a common mistake. If a competitor is well known for reliability, it is ill advised to try and adapt reliability as your positioning. The idea is to be relevant to the customer and to find an attribute that makes you unique.

For example, who do you think of when it comes to cola drinks? Most people say “Coca-Cola”. Coca-Cola rules the category of cola drinks. Think of a category as a ladder. On each rung is a position. On the top rung of the cola ladder sits Coke. This translates to larger market share and staying power. On the second rung sits Pepsi. One the third rung, RC Cola. On the fourth rung - who cares? They are not in the game.

It is very difficult to unseat the top rung position. In fact, in the early cola wars, a group of smart people decided to compete with Coca-Cola. These wise folks knew that competing with Coke head-on would be suicide. Instead, they decided to create a refreshing, carbonated drink that would take the position as the antithesis of Coke. Instead of a brown liquid, it was clear. Named, 7-Up, this product was perfectly positioned as “The UnCola” - thus creating a new category (lemon/lime carbonated drinks), taking the top position and taking massive market share from the leader in the industry, Coca-Cola.

Developing a positioning strategy is highly dependent on the techniques of marketing research. I have used the following seven steps to help industrial and other business to business companies identify the most profitable position.

1. Know what your customer wants. Start with listing all the possible wants and needs that your product or service may satisfy.

2. Identify the competitors.
Primary competitors are those that compete to satisfy the core need and usually are very similar to your offerings. Secondary competitors are indirect competitors, those that do not come immediately to mind.

3. Understand how your customers evaluate their options.
The standards people use to choose from similar options are the foundation upon which a position is built. You must understand these options and how the buyer weights them. Avoid a position that is low on the customers list of standards.

4. Understand how your competitors are perceived.
Positioning is always in relation to competitors. Research how each primary and secondary competitor positions itself. In many markets, competitors may have no position or a weak position making it easier to identify the most beneficial position.

5. Watch for gaps.
Upon analysis you may identify a category that is not being served by the competition. If other factors indicated that the category is viable, being the first to offer a product or service is an advantageous position.

6. Plan and carry out the strategy.
Once the target market has been selected and the desired position determined, you must design a program that ensures that every piece of information about the product or service will create the intended perception. This is where a succinct positioning statement and well thought out brand strategy become important.

7. Monitor the position.
Markets and categories shift over time. It is important to make sure that the intended position is the one actually achieved by the product or brand. A position may need to be slightly adjusted over time according to changes in the market place.

Value Perception: Secret Weapon of the World's Most Successful Companies

This article is available in a Podcast >Click Here< In the marketing industry, perhaps more than any other industry, buzz words have become as common as black, collar-less shirts and funny-looking, yellow-tinted glasses. This trend of overusing certain terms is unfortunate because it corrupts perfectly good words, turning them into meaningless jargon. Like the word “synergy” and the term “paradigm,” the concept of “value” has been misused and hammered into a meaningless pulp of broken promises and worthless schemes. The real trouble is that the concept of VALUE is the only thing that matters when it comes to winning in a competitive sales and marketing situation.

Why do customers buy one product over another?
The answer is simple. People choose one product or service over another because they perceive a higher level of value. It doesn’t matter whether the purchase is a bottle of cough syrup at the drug store or a multi-million-dollar industrial deal, the perception of value is ultimately what drives the decision. Making this happen, of course, is not so simple.

Quality = Value
Harley Davidson has become the world’s best-known and one of the best-selling brands of motorcycles. Is a Harley Davidson motorcycle a better value or a higher quality product than a Honda or BMW motorcycle? Does quality have anything to do with Harley’s success? Probably not. Do buyers believe that a Harley Davidson motorcycle is a better value? Many thousands of customers do. Do they base their perceptions on hard science? Probably less than you think. Motorcycle buyers have made Harley successful because they believe they receive a product that delivers more value than competing brands. These intangibles add up to a superior value perception. Harley Davidson was smart to realize that there was much more to its customers’ value perception than engineering excellence.

Value can be defined as “the worth in monetary terms of the economic, technical service and social benefits a customer receives in exchange for the price it pays for the market offering” (Anderson, Jain & Chintagunta, 1993). In other words, value is the sum total of the functional and emotional perceptions of a product or service. This includes the perception of the brand and a myriad of other subjective inputs that come together to tell a customer which choice will be most advantageous to him or her.

Marketing communications and perceived value
Of course, you may have the best, highest-quality product on the planet, but if nobody knows about it, the point is moot.

For most businesses, the majority of input the customer evaluates comes from the seller or from sources the seller can control. This is why it is critical to manage value perception with all aspects of external communication including advertising, publicity, trade shows, sales materials, web sites, tech documents, corporate identity, etc. In short, everything a potential customer sees or uses to evaluate your offerings must communicate a high level of value according to the prospect’s expectations and relative to competitor offerings.

Communicating quality in marketing communications can be a complex endeavor. While most marketing professionals are familiar with the basics, it is easy to get caught up in a myriad of other issues that ultimately drive the communications, reducing their ability to build superior perceived value. In simple terms, a consistent execution (one that is on strategy and visually systematic with appropriate production values) creates the perception of high quality and, ultimately, high value.

A strong, well-managed brand identity is essential to maximizing perceived value in the market-place. Simply knowing what the brand stands for, its promises to customers and the association it has within the market-place can contribute greatly to creating a positive value perception by creating a platform for a consistent execution.

Summary
Managing perceived value is critical to achieving a leadership position. In fact, studies using the PIMS database (which tracks the quality efforts and financial performance of 2,746 companies) shows that companies that have achieved a superior quality position (read: higher value perception) earned prices 8 percent higher than business that are perceived to have lower quality. Furthermore, businesses with superior quality average about 30 percent return on investment as opposed to businesses with inferior quality, which average about 10 percent ROI.

So what is the secret weapon that Harley Davidson, Apple Computer, Dell and other leading companies employ to keep them on top of their respective markets? These companies manage perceived value from product development to point of sale. They do this by:

• Developing a fact-based understanding of the market’s overall
value perceptions
• Using customer data to refine product design and offerings
• Building value propositions based on what customers
really want
• Investing and maintaining a strong, relevant brand
• Implementing consistent marketing communications and
advertising with appropriate production values
• Managing all points of contact with customers to reinforce
value perceptions
• Investing in ongoing customer research to stay ahead of
developing trends
• Continually reevaluating how products deliver value and how
quality perceptions are changing
• Continuing to align and realign business units and practices to
leverage value.

Thus, achieving superior value perception is the result of understanding the customer’s true requirements and implementing communications and advertising strategies based on a sound process. Achieve superior value and quality perception and you will realize higher profits and increased customer loyalty.