What Is "Positioning?"

"Positioning" is a way of looking at your markets through the eyes of the consumer to determine the strengths and weaknesses of your product or service. While it was first developed as a methodology to guide advertising, it is (or should be) the foundation of any proactive product marketing or business development program. Unfortunately, in my experience, positioning is a marketing concept often talked about, but all too rarely applied.

The concept of positioning is not new. It was first articulated in 1969 by veteran marketers Al Ries and Jack Trout in an article in Industrial Marketing magazine and then, later, became the subject of their first book "Positioning: The Battle for Your Mind." The methodology has been expanded considerably over the years, most notably by MIT's Glen Urban and John Hauser in "Design And Marketing of New Products" published by Prentice Hall.

To understand how positioning works, let's walk though a simplified positioning exercise focused on the marketing of, say, a bicycle that we already have on the market. Our bicycle, the Platinum Zephyr, is a 3-speed, racing-style, bicycle that costs $300, weighs 25 pounds and comes with a tire pump, water bottle, bell, night light, and reflectors. Our bicycle is distributed throughout North America in bike shops and in a few of the larger retail chains.

Market Dimensions
The first task of our positioning exercise is to determine what the decision dimensions are for our market. This involves understanding what criteria are used by the consumer to determine their choice of bicycle. We consider four market segments as follows:

(a) recreational bikers - adults
(b) recreational bikers - children
(c) sport bikers (e.g. mountain bikers)
(d) racers)

In each segment we want to determine what the decision dimensions are for purchasing a bicycle. This will involve some form of market research. To keep it simple, we might interview 10-15 members of each segment. Alternatively, we might use a focus group for each segment although this is more expensive and may or may not yield better data. In these interviews, or focus groups, we will ask participants to identify the reasons they choose a particular bicycle for their use. In the case of the children's market we might interview both parents and children.

What we're likely to find from this research is something like this:

Segment: Recreational Bikers -Adults

• Comfort
• Price
• Safety
• Easy maintenance
• Available accessories

Segment: Recreational Bikers - Children

• Safety
• Price
• Style (is it 'cool'?)

Segment: Sports Bikers

• All-terrain tires
• Weight
• Price
• Speed of Maintenance
• Available accessories

Segment: Racers

• Weight
• Tires
• Reputation among racers
• Price

Note that we might want to have our survey participants rank these factors in order of importance to each segment (We'll assume that order shown is the ranking received).

In examining these various factors we can see that several segments have the same factors mentioned (e.g. price, weight, safety) but we can also see that different segments rank those factors differently.

Competitors
Now we'll set that information aside for a moment and examine our competitors. We can do this by company and/or by product. In the bicycle world we might identify our chief competitors by first talking with bike shop owners or our own salespeople. From them we might learn that General Bike, People's Bicycles, and Acme Biking are the three competitors we face regularly.

But other companies are not the only competitors we face. We might also realize that the competition includes skateboards and scooters! So we'll consider all five sources as competition.

Scoring
Now, with our list of dimensions and our lists of competitors, in each market segment we'll score each competitor - and ourselves -- against the decision dimensions we have learned from our market research. To keep it simple, we'll score using a rating of 1 to 5 where 5 is "goodness" and 1 is "not-goodness."

For the Recreational - Adult market segment, as an example, we will see a matrix that looks like that shown below:

Analysis
If we then examine our "position" on this chart - versus our competitors - it will tell us a lot about where we are in the recreational bicycle market for adults and what we need to do to improve my position. Consider:

What we see from the chart above is that out strong points are our "comfort" and our "available accessories". We have a relative weakness in price (as the price leader) and maintainability. It also shows us that "safety" is not a distinguishable dimension for us at all insofar as all my principal competitors have equal ratings. In all respects, in the adult market, I am perceived as better than skateboards and scooters.

Now, as a responsible product marketer, how do we act on this "position"?

There are several ways we can act:

(1) We focus our marketing communications efforts on "comfort" and our rich "accessories". We tell our creative people to also focus on "value" because the richness of our accessories is so much more valuable than the bikes of our competitors.

(2) Then we focus our product development people on cleaning up our maintainability and looking for a way to distinguish our products in the "safety" category (Maybe we include a helmet as part of our accessorizing).

(3) Lastly, we put pressure on our manufacturing folks and our purchasing department to reduce the cost of our bikes so that eventually we can price lower.

There it is: one "positioning" chart that outlines our market, product, communications, and costing strategies quite succinctly.

Of course, ultimately, we would do this exercise with each market segment we target and we would make sure that each of our advertisements, each brochure, our web site, etc. all echo the basic positioning strengths that we identified above.

Summary
The example we've discussed here illustrates the power of positioning. This technique, working hand-in-hand with market research, allows us to pinpoint how strong or weak we are with respect to the decision dimensions of our prospective buyer. And then it shows us exactly what we have to do to improve our competitive posture.

Yet, too few companies will use this approach. That's their perogative but those that do will always have a decided competitive advantage over those that don't -- they'll know what the landscape looks like while the others are flying blind.

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Click KLynn Business Consultants to link to the KLynn consulting site.

Putting Your Finger on The Market Pulse

Twenty years ago, I had a boss that used to say: "There's only two mistakes you can make as a marketer. The first mistake is not to research your market... the second is not to believe the results."

Yet, in the many years since he offered me that guidance, I have found that very few marketers actually check the pulse of their markets through research. Instead, they believe (erroneously) that "they know the market."

This is rarely, if ever, true. No matter how much experience you think you have in your marketplace, you are not representative of your market! You are therefore prone to miss important dynamics of the marketplace.

How do you check the market's pulse? There are two ways to do this. The first, and simplest, is to arrange interviews with existing customers and existing prospects. I generally try to do at least ten of each. When I'm done with that, then I dig through files and get the names of prospects who decided against my product or service -- sales that were lost. I make a point of talking with them, too!

The second way, the more structured way, is to construct a formal survey and administer it to an appropriate sample of prospective consumers. Many marketers balk at this because they know enough about statistics to be afraid of the math and to avoid the slippery slopes of sampling. But surveys aren't has difficult as they might seem and it doesn't take a particularly large sample size to get useful information.

Most often, what I do is a combination of the two. First, I will talk to customers, prospects and lost sales with a goal of identifying what factors matter in their decision making. Then, if the anticipated product marketing investment warrants, I will apply those factors in a formal survey to determine how meaningful those factors are, and how my competitors fare against those factors.

In a market of 50,000 potential prospects, I might look to survey as few as 25 consumers -- perhaps 5 from 5 different regions of the county. While a sample of 25 seems small, it yields a surprisingly good perspective offering a 95% confidence level (certainty) and a confidence interval of no greater than ±20%. This means that, statistically, 95% of the 50,000 potential prospects would pick an answer within the confidence interval of ±20%.

For example, if the survey reveals that 50% of the participants thought price was the significant decision factor for a product, the sample is big enough to ensure that of the entire 50,000 prospects, at least 30% and as many as 70% would agree. That might seem like a broad spread to some, but when compared to making a shoot-from-the-hip guess, it provides sniper-level accuracy. If it's too broad however, merely increase the sample size. See the tools at http://www.surveysystem.com/sscalc.htm to determine what sample will give you the accuracy and precision you seek.

Administering a survey is also no longer as involved or cumbersome as it once was. Previously it was a major logistical effort involving printing, mailing, and hand tallying. But new, inexpensive, on-line tools like Survey Monkey (www.surveymonkey.com) and Snap Surveys (www.snapsurveys.com) make it quite easy to create and administer high-quality surveys.

Moreover, if you use direct marketing methods like telemarketing, web-based ordering, or direct mail, it's often quite easy to use those activities to get better market data. With telemarketing, either inbound or outbound, it's often just a matter of adding one or two questions at the end of each call. With web-based selling, a pop-up web survey can intercept normal user dialogue and ask for participation. Lastly, with direct mail, split testing can be a very effective means of surveying. For example, if I'm researching price sensitivity, I might send 5,000 mail pieces with a price of $85 and another 5,000 with a price of $100 and compare the results.

With today's technology, there is no excuse to ignore the wisdom offered by my old boss. Surveying your market, formally or informally, is easier than ever. And if you're not putting your finger on the pulse of your market, then you're putting every dollar your company spends on its products and communications at risk.

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Click KLynn Business Consultants to link to the KLynn consulting site.