As a startup marketing exec that has been through a large number of product launches, I believe that how you position your startup in the market is crucial to early startup success. I’ve also seen that very few startups have a firm grasp of what exactly positioning is, why it’s important and how to do it.
A Brief History of Positioning
The concept of positioning was first described by Ries and Trout in their marketing classic “Positioning – The Battle for Your Mind”. First published in 1981 this book still frequently shows up on lists of must-read books for marketers. Their idea was that there were two eras that proceeded “The era of positioning”
1/ The Product Era: First we had the product era where simply having a product was enough to ensure that it would be noticed. When there was only one toaster on the market or one vacuum cleaner or one toothpaste – simply putting the product in front of prospects and clearly explaining the features and functionality of that product was enough to make customers listen.
2/ The Image Era – According to Ries and Trout, that era ended with the “image era”. As more and more competitive “me-too” products flooded into the market, it became harder and harder for customers to tell the difference between providers where there were so many similar products with similar features. Brands discovered that image could be a powerful differentiator, convincing buyers that certain products had “more prestige” than others. This Era is represented by the glory days of TV advertising and Mad Men style agencies that could change the fortunes of companies with a clever tag line, jingle or image.
3/ “The Positioning Era”: Ries and Trout argued that at some point in the early 80’s image started to become as commodity as the products it was supposed to be rescuing. As consumers were flooded with more and more advertising, it became increasingly difficult to get people to take notice of any marketing at all. Inundated with brand messages, consumers became experts at tuning out. Brands had no choice but to focus their messages on the one or two key things that had a hope of breaking through. These messages had to take into consideration not only the key strengths and weaknesses of the offering but also had to effectively place those against the key strengths and weaknesses of the competition. The positioning era was about establishing a leadership position within the mind of the prospect.
Positioning in the Internet Age
Fast-forward 40 years – is the concept of Positioning still relevant? One could argue that it is more relevant than ever before. When Ries and Trout were stating that we were being bombarded with advertising messages, it turned out we were only getting started. Not only were the number of ads used in traditional media ballooning, the internet hadn’t even happened yet. If it was hard to be heard back then, it is almost impossible now.
What exactly is Positioning?
Here’s what it isn’t – it isn’t a tag line, it isn’t messaging, it isn’t your vision statement, it isn’t an elevator pitch. Although all of those things use Positioning as a foundation, positioning is something different. Here’s my definition:
Positioning describes how you are uniquely qualified to be a leader in something that an identified market segment cares a lot about.
The Traditional Positioning Statement They Teach You In Marketing School
So if positioning is so important, how do we do it? Traditionally marketing schools have taught us to capture positioning in a “positioning statement”. This statement usually comes in a form that looks something like this:
For <Target Market> who <Statement of Need>, the <Product Name> is a <Product Category> that <key benefit> unlike <competitive alternatives> our product <primary differentiation>
Here’s an example that’s been used in almost every marketing class I’ve ever taken that touched on Positioning: the positioning statement for Amazon from 2001:
For World Wide Web users who enjoy books, Amazon.com is a retail bookseller that provides instant access to over 1.1 million books. Unlike traditional book retailers, Amazon.com provides a combination of extraordinary convenience, low prices, and comprehensive selection
This tells us a lot about Amazon’s business (back then). The target market was book readers who are on the net, their competition were traditional book sellers, their differentiating feature was the broad selection of books and the value was giving you easy access to that selection at a low price. That’s a load of info about a business in one simple statement.
A Better Positioning Template for Startups
I always felt we could do better than this, especially for technology startups. I appreciate the idea of bringing together a bunch of really important ideas (what market are you in, what is the key benefit you deliver, what makes your offering different, who are your competitors) in as succinct a way as possible. Bringing that all together into one sentence forces you to be really simplify the things that make up your position in the market. On the other hand, forcing this into one pseudo-grammatically correct phrase (or phrases) often results in a statement that is not only awkward to say (let alone memorize) but forces the key elements into a random order that doesn’t necessarily lead to a path of further exploration. In my opinion, the Positioning Statement although short and sweet, is not helping us figure out positioning.
In my opinion a better way to capture positioning would be to bring the elements together into something that I could stick on the wall and refer to often. I’ve usually used a “canvas” – like structure to capture positioning that looks something like this:
The boxes are pretty simple. Here’s what I mean by each one:
What is it? – this is the one sentence description of what you are. The key here is to keep it really short and use plain English words. This isn’t about describing the value (we will get to that) or why it’s different from other things (we will get there too) – the idea is just to answer at the most basic level, “What the heck is it?”
Target Segment – This box is the description of the target customers you are going after right now. The trick here is to focus on who you will sell to over the next 6 months (not the ultimate market which is typically much broader). This market should be the folks that you are most likely to close in the short term. For B2B startups you will have a description of the target company and the target buyer within that company.
Market Category – This is the market category that you compete in. It’s important because often startups have a choice of multiple categories that they could compete in but the one you choose will define what the real competitive alternatives will be.
Competitive Alternatives – What are the solutions that compete with your solution? This should take the customer’s perspective and can include things that aren’t necessarily products such as “hire an intern” or “do nothing”.
Primary Differentiation – This is different from the Key Benefit but often the Key Benefit is derived from this.
Key Benefit – This is the single biggest benefit that your target buyers get from your offering. This is the one thing you would talk to customers about if you could only talk about a single benefit.
Pivoting on Positioning Components
Now here’s where this type of positioning exercise gets interesting. If you lay it out this way you can experiment changing something in one box and then watching how it impacts the other boxes. In my experience, changing something as simple as the definition of the market you are in or the segments you are going after can result in a dramatically stronger positioning.
Here’s an example. I worked for a startup that had a database product. The key differentiator for this product was that it allowed companies to very quickly analyze a large amount of data. The result was that queries that used to take hours could be run in minutes. The target market was essentially any company with a large amount of data that needed to be analyzed.
The main problem with this positioning was the market category. When we opened sales meetings with “We are a database” the prospect would immediately say “Ah, sorry, we’re an Oracle shop, we can’t bring in another database platform.” By positioning ourselves in a very established market category, we had essentially set Oracle as our competition in the minds of our prospects and had to spend the first meeting undoing the perception that we were essentially a crappy Oracle.
But we WERE a database. What else could we be? The answer came from a prospect in the end. At the end of a difficult sales call a prospect said to us “Ah! I finally get what you are!” To which I responded, “Um, like what are we?” He says “You aren’t a database at all you’re a data warehouse!”
At the time this technically didn’t seem to be true. Data Warehouses back then were defined by specific features/structures (e.g. star schemas, cubes) designed to speed up analytic queries. We were already a very fast database for analytic queries. So in terms of the value we brought to customers, we were very much a data warehouse. Better yet, by repositioning ourselves as a warehouse, we completely changed the vendors we were compared to. Our new competitors were less established and our technology was clearly different from theirs. By changing our market frame of reference, we went from weak positioning to strong positioning.
At other startups I have been part of we pivoted on the target customer by either focusing down on a smaller niche segment, by focusing on a vertical or by focusing on a different buyer (for example a line of business buyer rather than a technical buyer).
The point here is that once you have the positioning clearly laid out you can see where the weak points potentially are and then experiment to see if there is a way to position yourself more strongly in a different market or to different buyers.