Most marketers know that the process of positioning a product or service in the market is the key to driving profitable growth. Ever since Al Ries and Jack Trout wrote a series of articles for Advertising Age back in 1972, the discipline has been part of the marketer tool kit. Defined by Wikipedia as "the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization," positioning is even more important today with the explosion in the number and type of products and brands available to customers. However, repeatable and sustainable positioning success has been elusive.
A big part of the problem is that most marketing literature and text books define specific types or categories of positioning. For example, they say that a company can have the lowest prices, the best products, or the best service. Furthermore, conventional wisdom holds that companies can try to do 1 or 2 of these well, but rarely all 3. The problem with this perspective is that it is "inside-out" thinking. The customer does not think in these terms. Companies do.
Customers hire products and services to get specific jobs done. They measure success in getting these jobs done by specific metrics or desired outcomes. To innovate, companies must understand what jobs customers are trying to get done and where they are struggling to achieve the desired outcomes they are seeking. Through this approach, companies can approach innovation systematically.
Marketers can approach positioning in a similar systematic fashion. By uncovering the functional and emotional jobs customers are trying to get done when "hiring" their company's products and learning what is important to them, but not well satisfied, marketers can find the "holes" or opportunities in the market. If their products or services address these needs well (or at least better than the competition), then marketers will be able to develop a unique and valued position for their product or service that successfully resonates with the customer. They will own that position.
This is not limited to 2 or 3 types of positions. Rather, it can be based on the myriad of jobs and desired outcomes customers are trying to achieve.
Positioning is as important as the product in satisfying customer needs. Consider aspirin: Brand name aspirin works better than generics not because the product is different (in fact, they're identical!) but because their positioning leads consumers to expect the brand names to yield more pain relief. Baba Shiv, a neuroeconomist at Stanford, has shown that full priced energy drinks deliver superior "stimulation" than the same drink offered at a discount. Other studies have shown that higher priced wines are perceived to taste better in open taste tests but are judged to taste worst in blind taste tests. Positioning helps to increase our satisfaction as consumers. It's a point worth repeating: Positioning helps to increase our satisfaction as consumers. Positioning is just as important as functions and features in satisfying customer needs in helping companies and products to grow.
ReplyDeleteThe power of positioning goes further. James March, a management professor at Stanford, suggests that consumers make choices in one of two ways: either by a rational weighing of criteria or by an identity play. Positioning helps ensure that the right features connect with the right benefits in the first case - very useful for products with high functional complexity like medical devices and consumer electronics. But what about products that are functionally simple but emotional complex like clothing, or goods that are both functionally and emotionally complex like mobile phones? Here consumers are more apt make a choice by identity. "Am I the type of person who has an iPhone, Nexus One, or Blackberry?" In this case the degree of alignment between the positioned identity of the product and the actual or desired identity of the consumer becomes a powerful force in purchase decision making, even if the underlying functionality of the products is largely the same. Nothing kills a luxury brand like a sale precisely due to the damage it does to identity.
Its affirming that innovation opportunities (and thus growth) can be addressed with better positioning. Instead of three possible positions (low cost, best product, best service) there may be as many as 30 or more. And to have the possibility to be able to claim one or more of these dimensions and grow without the the expense and lead time it takes to change features and functions is particularly exciting.
Thanks for the great post Zac, keep it up!