The Power of Positioning

Positioning can be simply described as what your customers and industry influencers think about your product and company. Understanding your position and influencing your position can be one of the most powerful tools entrepreneurs have to establish the trust necessary to make sales.

This is Post 13 in our Lean Innovation series. Click here to access all of the posts in this series.

In this phase we’ll use all the results from previous tests and our experiences with customers to develop two positioning statements: one for the product and one for the company. If you are an existing company adding a new product, you’ll verify or update you current company positioning.

In Phase 1 of customer validation, we created an initial positioning statement. Now, we have enough data and experience to remove most of the guesswork that went into that initial positioning statement.

There are 5 steps to this process. We’ll cover each as quickly and thoroughly as possible.

1 – The Positioning Audit – As usual, we are not using outside experts (like PR agencies) to accomplish our positioning. This work is best done by internal leadership who have been in the trenches. The first step is to determine what your customers and industry influencers think about your product and company today. We will use the positioning audit to gather the brutal facts about what others think about you and your product. The external audit asks questions to determine facts such as: Do they know and respect your product, reputation and leadership? Do they think your company is a credible, trustworthy provider of the product or service its selling? Where do they feel your product fits in the competitive set?

The 2nd half of this step is the internal audit in which you will direct the same questions to your internal team. You will be amazed at the disconnects you’ll find. Make sure you ask these questions independently (not in a group setting) to get each individual’s perceptions. You must fix any internal discrepancies to ensure your internal team is sending a consistent message to the marketplace.

2 – Product Positioning – The result of this step is a half-page positioning brief that explains what your product does. In phase 1, we developed an initial product positioning statement. Bring it back out and test against your experience with customers and analysts. Is it valid? Did the marketplace agree with what you thought your product does? Keep this brief simple and bullet point driven. Think of this as an elevator pitch on what your product does, the problem it solves and why customers should buy it.

3 – Match Position to Market Type – Market type dramatically changes the message your company wants to send about itself and its products. There are 4 market types. Your position must be tailored to the type of market your product is entering. Existing Market – Compare your product to competitors. How is it superior? New Market – Describe the problem your product will solve and the benefits customers will receive from using the product. Resegmented Market – Segmentation means you’ve picked a clear and distinct spot in your customers’ minds that is unique and understandable. You’ll be shooting for a low cost (Southwest) or niche segment (Walmart & small towns). Clone Market – In a clone market you are taking an idea from another marketplace or country that does not exist in your market. You know how the product is positioned and sold in the founding marketplace and can position your clone accordingly in your market. For instance the TV show American Idol was based on the very similar British show titled Pop Idol.

4 – Company Positioning – Product positioning focused on product features while company positioning answers the questions “What does this company do for me?”; “Why do I want to do business with them?” and “Why does this company exist and how is it different?” For example, Zappos positioning statement is as follows: “We’ve aligned the entire organization around one mission: to provide the best customer service possible. Internally, we call this our WOW philosophy.” Remember that unsubstantiated terms like easiest, best and greatest are meaningless. Demonstrable, provable claims like fastest and cheapest are stronger.

5 – Validate Positioning – Industry experts and influencers deliver the credibility that every new product or service needs. Even if you are not in a technology industry followed by the likes of Forester & Gartner, there are influencers in your industry who are opinion shapers. These people write in industry magazines and are on stage at industry conferences. Now that you have the customer feedback needed to verify your product’s viability and position you can take it to these influencers. Develop your presentation with the focus on influencing these expert’s thinking, not to sell them. Gather their feedback. Will they sing the same tune you are pitching to them? If not, adjust your positioning accordingly.

We’ve now worked through the first three phases of the customer validation process. We’ve prepared to sell, we’ve gotten out of the building and sold, and we’ve now established our product and company positions.

The next and last step is the most critical and gut-wrenching phase of customer validation. In the next phase, we will review the brutal facts of all of our work to date and determine if we have a scalable and profitable business model that is worth pursuing.

As always, I’ve done my best to summarize the main principles in this blog but pick up a copy of “The Startup Owner’s Manual” by Steve Blank and Bob Dorf to dive deeper.

Thank you for being a part of our values driven community!

Image courtesy of http://timeandnavigation.si.edu/satellite-navigation/challenges-of-satellite-navigation.

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