Positioning Strategies Help Reap Strong ROI

Download PDF version

In recent years, hundreds of high-tech companies with "can't miss" products have failed. But, how many of them have positioned their products advantageously? Have they truly answered these fundamental positioning questions: Who is your target customer? What is the compelling reason to buy your product? How are you different from the competition? No amount of hype or advertising can overcome a product that lacks compelling value for a real customer. The key is identifying the target market that needs your product today. (If none exists, you need more than positioning help—perhaps, a different product.)

Silicon Valley is like a hyperkinetic kid. It can't stay still. Few companies want to take the time to develop a strong positioning strategy before leaping into action. It's part of the culture. But, what is the cost of not looking before leaping? It often means that your product flounders amid market confusion, which eventually forces you to take the time to develop a strategy. The question is: Will the market give you a second chance?

Articulate a Positioning Statement

One of the most valuable actions a company can take is articulating a positioning statement-a concise statement of your market strategy and positioning goal-that the entire company can rally behind. Imagine the synergy when marketing, sales, engineering and business management are all working toward the same strategic goal. When your company has a strong positioning statement, you not only empower your employees but all the external organizations that work with you, such as ad agencies, PR consultants, partners, distributors and market analysts. The result is you get to market faster and increase the probability that the market will embrace your product.

The positioning statement should identify the following:

• Who is your target customer or market segment?
• What is the target customer's need or what is the market opportunity?
• What is your product (and its product category)?
• What is the compelling reason for the target customer to buy your product?
• Who is your primary competitor?
• What is the most meaningful difference (from the customer's viewpoint) between your product and your competitor's product?

These questions for the positioning statement look deceptively simple. In truth, these are tough questions that require a company to make some difficult decisions about what it wants to be versus what it realistically can achieve given limited resources and the competitive environment.

An Iterative Process

The process of developing a positioning statement is an iterative one. When you clearly articulate your product's value proposition and the competition, you may discover that your product is not that different or compelling from entrenched competitors. Does it make sense to launch a "me-too" product with little hope of success? Can a better target customer be found in a market segment without a dominant competitor? Can a new segment be created that you can lead? Being open to explore alternatives can mean the difference between product success or failure. Often choosing a smaller segment that you can dominate will provide an opportunity to become the market leader in a position that could be leveraged into other related segments.

Importance of Market Leadership

Is market leadership that important? For companies with fast-growth dreams, it is critical. Entrepreneurs often lament that they can't understand why it is so difficult to dislodge the market leader when their technology is so much better than what the leader offers. In technology markets, technology is important. But the market also wants the stability and market growth associated with de facto standards that third parties support. If you're a market leader, you can charge premium prices, attract the best partners, get the press to write about you, get the most favorable distribution terms and recruit the most talented employees. Customers will seek you out, which will lower sales costs, and you'll get first peek at new technologies because other companies will want to work with you. Adobe, Cisco, Intel, Microsoft, Oracle and Google are great examples of how the market works hard to keep leaders on top. For customers, choosing the market leader lowers purchase risk. For third-party hardware or software vendors that support de facto standards, keeping the leader on top expands their market. Therefore, segment the market to limit competition and position yourself advantageously as the market leader. The rewards will be great.