Taking a product to market involves communicating its benefits and the category in which it belongs to prospects and the marketplace. Failing to communicate this is one of the top reasons why startups fail to achieve product-market fit.
People intrinsically want to categorize. Whether explicitly or unconsciously, we categorize different items into different buckets and rank their position within those pools. Best, biggest, cheapest, most aesthetic. Positioning is helping and influencing people in this process. In this vein, it’s not about creating something new. It’s about influencing the prospect’s mind by bridging connections that already exist. It shifts the old equation of tooting one’s own horn or engaging in solely traditional forms of advertising. Positioning helps communicate your product in a way that’s outside-in or customer-centric. And it’s targeted. In contrast with advertising, positioning is focused on a narrow, targeted audience. By not broadcasting a general message indiscriminately, communicating value has more influence in the minds of the prospects who are most relevant to you.
It’s hard to change the mind of someone. With human psychology, it’s easier to go with the grain; that is, it’s much easier to reinforce their existing worldview. In their book Positioning, Al Ries and Jack Trout illustrate the best practices to occupy the minds of your prospective customer, differentiate from others in the marketplace, and ultimately drive more adoption of your product:
- Narrow your market. Start by segmenting the market and focusing on a narrow target market. It’s a tall order to launch a new, generic product and expect leadership or even enough sales in the broad category of data security, for example. If your solution particularly helps data scientists in large enterprises well with their security needs, then focus on this segment.
- Focus on perception, not product. Positioning shouldn’t come from what you think is the essence of your product. Positioning theory says look outward. If your prospects and customers perceive your data security product to be the least-complex product to manage, it’s more conducive to reinforce that perception than to focus on what you saw the product as.
- Simplify messaging, then simplify it some more. It’s a noisy world. According to Jay Walker-Smith, president of the marketing firm Yankelovich, Americans are exposed to more than 5,000 advertisements a day. With hundreds of competing messages vying attention from your prospects, it’s more important than ever to have an unambiguous and simple message. To accomplish this, start with a consistent message, remove ambiguities, and extraneous words that don’t contribute to your positioning strategy. What you’re left with is the essence.
- Be first, even if it means creating your own race. Ries and Trout emphasize the importance of being first in a given category. Being first in the mind of a prospect is powerful, reinforcing an image of your product in the minds of people. That said, if you’re late to the game, it doesn’t necessarily mean you’ve lost. You can be first by creating a new category, one in which you can be number one. This can involve finding a niche and dominating it. If it’s untenable to achieve dominance in the anti-ransomware product category, then be the number one product in a category you created—the simplest ransomware defense solution for data scientists.
The common thread between these lessons revolves around understanding perceptions of your product and finding the right position in the minds of your prospects. As a result, how your product is perceived happens in the context of other elements in their worldview—including the products of your competitors.
Competitive context is a key part of positioning and can help quickly cement a position in the minds of prospects. Consider the human mind as a hierarchical three-drawer chest or cabinet. It’s difficult for an individual to determine which drawer to place your product if the products in other drawers are not even referenced. By talking about your product relative to alternatives and the competition, it becomes easier to position yourself in the mind of the prospect and you can reap broader appeal from current users of the alternatives. Positioning a new sugar-free energy drink as coffee without the downsides establishes the drink as a coffee alternative to a broad audience: anyone that currently drinks coffee.
Creating a Positioning Statement
Top-line positioning is at the intersection of three areas: your customer needs, your product’s unique capabilities, and an unfilled gap in the market. By taking this perspective in creating positioning, you simplify the process of drilling deeper into the true value you provide.
A positioning statement is simple. It talks about who the product is for, what it does and why that’s valuable for the customer, and why it’s different from other products in the market.
In his book Crossing the Chasm, Geoffrey Moore offers the following template for a positioning statement:
For (target customer) who (statement of the need or opportunity), (product name) is a (product category) that (statement of key benefit—that is, the compelling reason to buy). Unlike (primary competitive alternative), our product (statement of primary differentiation).
Moore calls for the need to position within context, not in a vacuum. Defining your position in the market is a key factor in ensuring greater product-market fit. The goal: cementing the idea that your product is the superior choice in your category. Rather than let your prospective customer start from scratch in making that evaluation, Moore suggests giving your prospect two reference points—the competition and the alternative. He calls for defining the market alternative, the solution your customers have been using for years, and the product alternative, a new solution that has disrupted a niche similar to yours but not quite the best solution for the specific problem you’re solving. With the market and product alternative defined, you can make a claim that you’re the optimal choice by showing that you are the most suited for solving the specific problem of this niche.
Here’s a simple framework for creating effective positioning statements:
|For||Your target customer||For business analysts at enterprises|
|Who||Your customer’s problem||Who must provide reports frequently to executives, but forced to wait long times to be provisioned an organization’s data|
|Provides||The solution your product provides||[Our product] provides a self-service option for analysts to search for and retrieve data|
|Unlike||Alternative or existing solutions||Unlike legacy business intelligence tools that take XX% longer to obtain data|
|Only||Elements that make your product unique||[Our product is] the only solution that indexes metadata and can provide data in real-time|
A large part of this exercise revolves around the notion of uniqueness. Once a target customer has been identified, an important next step is positioning the product in their mind that this product solves their needs in a more compelling way compared to competitive offerings.
Positioning is especially critical when it comes to both your short-term and long-term ability to sell. Consider the prototypical product launch today: the smartphone. In the highly competitive smartphone market, manufacturers often tier their offerings to address the desires of different consumer segments. Not everyone thinks a $1000 phone is necessary. At the same time, not everyone is willing to forgo the chance to have the latest technology—or the most envy-inducing product—at their fingertips.
With this in mind, smartphone companies make sure to position their offerings appropriately and categorize them in a particular area of a consumer’s mindshare. Pricing and messaging are then derived from the positioning statement or the statement of how a company wants to be known for that offering.
Keep in mind, however, that the ability to position a product is not just a simple decision around a choice of words. If a maker of a particular smartphone wants their product to be known as the top smartphone for listening to music but customers find the camera functionality to be the real highlight of the device, the market will likely perceive the smartphone’s position to be in the category of phenomenal smartphones for photography—not music.