September 21, 2021

Positioning in crowded markets: How to lay the foundation

Market positioning is critical - but not many people understand what it means. And why it should be the foundation of every company.
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I've helped scores of businesses thrive and succeed by turning the art of positioning into an achievable process.    

And today, I'm giving you the best insights that can work for your own company positioning.

But first...

What is market positioning?

Market positioning is critical - but not many people understand what it means. So when describing positioning, it's worth defining what it’s not.

  • Positioning is not branding. 
  • Positioning is not messaging. 
  • Positioning is not storytelling.  
  • Positioning is not a tagline. 
  • Positioning is not your point of view.
  • Positioning is not your vision. 
  • Positioning is not your strategy. 

It is the foundation of marketing

Imagine that everything you do in marketing and sales is like building a house.

In this analogy, positioning is the foundation upon which that house is built. 

Or, imagine you’re watching the opening scene of a movie.

Here, the director quickly has to orient the audience to understand where you are and what’s happening in order to properly immerse you into the story. 

In essence

Positioning defines how your offering is the best in the world at providing some value that a well-defined set of customers cares a lot about. 

Positioning is made up of many different things. It defines questions like:  

  • Who do you compete with? 
  • What are your unique capabilities?
  • How do those capabilities translate into value for your customers? 
  • Who are your target customers?
  • What’s the market category that you intend to win? 

Market positioning sets the context for products

You can think of positioning as context setting for products.

And it's important because the markets that we operate in are intensely crowded, making differentiation key

Scott Brinker's marketing technology landscape contains thousands of software products geared towards marketing people.

It narrows the field

As a customer, it’s very hard to know what to pay attention to. And the ways customers figure this out is market categories. 

Positioning won’t just define your market category and narrow the competitive field.

Done well, it also sets off a really powerful set of assumptions in the minds of customers about what your product is all about. 

It sets off a series of assumptions  

Imagine competing on a product pitch television show like Shark Tank or Dragon’s Den.

Now, imagine that when you walk in front of the judges, you can only share your market category...and nothing else. 

You walk on stage and say: “Hello! I’m here to pitch my revolutionary customer relationship management.” 

From this market category, the show’s judges can assume a number of things about your product.

They can assume:

  1. You compete with Salesforce.
  2. Your features include tracking account details through a CRM pipeline.
  3. You typically pitch your product to the VP of Sales. 
  4. Your product must cost less than Salesforce in order to compete with it.

Even though you didn't explain your product at all, you positioned it in the market.

This led your audience to make an awful lot of assumptions about what your product was all about. 

It makes selling easier

When you do a good job with positioning, the things your customers assume about your product will be true.

When you do a poor job with positioning, your customers will have a mistaken concept of what you do.

This is important because when you position yourself properly, half your sales work is done for you. Your customers’ minds jump to the proper assumptions.

On the flip side, poor positioning means your marketing and sales team has to undo the damage that your positioning has caused.

Changing positioning does not mean changing your product 

It’s incredible how a simple repositioning can transform the success of your product or company.

Sometimes this means tweaking the product itself, but more often it’s a matter of perfecting positioning. 

What you actually need to do is position deliberately.

Example story:

A Canadian company once created a sophisticated robot could deliver things inside a manufacturing plant.

But every time they mentioned “robot” in meetings, they got the cold shoulder. It would often take five meetings before clients could understand the incredible value. 

Eventually the company says, you know what, maybe ‘robot’ isn't doing us any favors. Maybe we need to reposition this thing.

After taking a step back, they realized that they had actually created a self-driving car. 

The product didn’t change. The positioning did. And that’s what made all the difference. 

Bad positioning input = bad marketing output

Marketers often feel helpless when it comes to positioning.

They assume that the CEO sets the course, and they just steer the ship.

I disagree.

When I had my first couple of senior jobs, I thought I was a pretty hot-shot marketer.

And I thought my job was to just take that stuff that the founder or the CEO, or my boss gave me and just apply my marketing genius to it.

I'm out there running campaigns, and I'm doing beautiful storytelling. And I got genius email stuff's going on. And I'm applying all my marketing genius to it.

But the reality is the stuff coming in was poor. And so the stuff coming out was kind of just slightly more sparkling.

I soon realized that when the inputs are bad, the outputs are always going to be lackluster.

I didn't sign up to be a poop-polisher.

You're going to have to say no. No, actually I can't build these campaigns.

I can't do this stuff. I can't break messaging. I can't do any of this until we get the positioning tight.

The elements of a positioning statement

In marketing school at Northwestern University, I was introduced to the idea of assembling a positioning statement like a game of mad libs.

The blanks that need to be filled in are:

  1. Competitive alternatives
  2. Unique capabilities
  3. Value 
  4. Target customers 
  5. Market category

But figuring these things out in isolation didn’t make sense to me.

Was I supposed to just pick a potential marketing category out of the air? Was I supposed to just make it up as I went along?

So I put on my engineering hat and began to look at the elements of positioning as an inter-connected system. 

The first thing you notice is that each of those component pieces has a relationship to the others. They do not exist in isolation.

My best fit customer is the customer that cares the most about the value that I can deliver.

So those two things are related. And then the last bit is the market category.

This is a bit more esoteric, but the best market category is the context I position my product in such that the value that I deliver is obvious to the people I'm trying to communicate that to.

What value are you delivering?

In other words, you need to figure out the value provided to your target customer before you can solidify your market category. 

Once you realize that each piece is connected, you start to understand your product positioning journey as a sort of Venn diagram.

Ultimately, you want to pick the answer that speaks best to all five elements of the positioning statement.

Market positioning starts with a competitive analysis

You can choose to embark on positioning as a game of trial and error, trying one test after another and abandoning what doesn’t seem to work.

Or, you can start with analyzing the competition.

Positioning sounds really good in the office, but it doesn't win out in the market because it doesn't differentiate.

First, I’ve got to look at who do I actually compete with. Once I understand that, then I can say all right, here's my competition. What have I got that they don't have capabilities wise?

How are we different?

Early in my career, I worked for a CRM company.

This was pre-Salesforce, and the biggest player was a company called CBO. 

In every way, they were better than us.

They had a 2 billion revenue. We were doing like 1.8 million revenue. They had 8,000 employees. I think I was employee 22. They had 400 customers. We had five or six.

But we did have two things that we thought were really differentiating. One was this feature that we had.

They didn't have it.

We could model a relationship in a different way than they did.

Go to the field

While they knew they had something special, they didn’t know how to verbalize the value. 

One day, they scored a meeting with the head of investment banking at Goldman Sachs. After the demo, the banking exec was excited.

He's like, wait, wait, are you telling me that if two people don't work at the same company together, but they used to, you can model that? And I'm like, yeah, we can.

And he's like, but wait, if they sit on a board together, you can model that? And we're like, yeah, you can.

Narrow down

They realized that their product was valuable to investment bankers.

Once they repositioned as a CRM for investment banks, it was a game-changer.

In the end, their company was acquired by CBO — their main competitor — for $1.3 billion. 

To summarize, positioning should never be an afterthought. It should be the foundation of your entire business. 

If you position deliberately, stick to a defined process, and make sure you have great inputs, chances are you’ll be on the road to success. 

Out now: Watch our free B2B messaging course and learn all the techniques (from basic to advanced) to create messaging that resonates with your target customers.

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