Stand Out from the Competition by Stepping Back

Now that you have successfully developed an innovative new product or service, how do you stimulate market demand? Your customers are overwhelmed with the number of product and service choices that exist in the market today and the volume of marketing messages that bombard them. It is estimated that the average American is exposed to hundreds of advertisements a day and this number is only growing. The only way to stand out from the competition is to step back and establish a clear and credible point of distinction.

Most marketers know that the process of uniquely positioning an offering is the key to driving profitable growth. However, positioning is not about what you do to your company’s products or services, but what you do in the mind of the customer.[1] To effectively position an offering, you must begin by understanding how your company’s brand is currently perceived by the customer and what windows of opportunity exist that your brand can fill. One of the primary challenges to doing this correctly is discerning what metrics should be used to measure the brand’s current position as well as those of competitor brands. Another difficulty that causes problems in positioning is that most companies do not know what customer needs they should use to create differentiated value propositions.

So, what is the best way to do this? Fortunately, we know that customers hire products and services to get jobs done and that they measure success in getting these jobs done by specific metrics or desired outcomes. By uncovering the functional and emotional jobs customers are trying to get done and learning which desired outcomes are 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 offering that successfully resonates with the customer. They will own that position.

Microsoft's release of its new Windows Phone 7 operating system is an interesting case study in positioning. They are clearly trying to reverse market share losses sustained over the past few years by establishing their new offering as the “always delightful” solution that helps users get tasks done quickly and get “back to life.” If these are unmet desired outcomes customers have when using their phone, then this is a solid foundation upon which to spend more than $100 million on a new advertising campaign to make that position known.

Will customers buy in to this claim and help Microsoft climb back as a mobile technology leader? The problem is that Microsoft's reputation is not in congruence with creating products that are quick and delightful to use. In fact, they are often derided for how complicated and technology-focused their products are compared to their more user design-focused competitors. So, customers will have doubts Microsoft can deliver on their promise given their current positioning. I believe this will be a hard bridge for them to cross. As a result, I don't think they will have much success winning back the market share they lost to Apple and Google in the smartphone war.

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[1] Ries, Al and Trout, Jack, Positioning: The Battle for Your Mind,McGraw-Hill, 2001, page 2.

Is Xerox Wasting Their Money?

The Wall Street Journal announced last week that Xerox Corp. is launching its most expensive advertising campaign in two decades with the hope of repositioning the company away from being just a copier maker and expanding into business services.  In fact, Xerox has already purchased outsourcer Affiliated Computer Services to help it do just that.  It now faces the tough task of changing the perception customers hold of Xerox.

This announcement begs a question to be asked.  Why do some companies, such as Apple and IBM, have such great success reinvigorating growth through market repositioning while others like Xerox, Polaroid, and Kodak struggle?

All of these companies have a few things in common.  They have all had success selling their products and, as a result, are known for something.  Once their growth rate slowed, each of them invested in launching new products and services.  Some, like Kodak, have even won awards for them.  However, the market has not rewarded all of their efforts equally. 

We all know how Apple has transformed from a computer company to a mobile device and entertainment company with their slick iPod, iPhone, iPad, and iTunes products.  As a result, they are now the most valued technology concern on the planet.  Similarly, IBM moved from being predominantly a hardware/mainframe business in the 1990s to being one of the largest IT integrators/outsourcers.  Their reputation for being technology experts has given them the right to do this in the minds of their customers.  In contrast, Xerox has tried for years to move from being a manufacturer of photocopiers to a document management services company.  They have had marginal success.

I believe the answer lies within how these companies repositioned themselves.  Both Apple and IBM found an important problem the customer was struggling to get done, developed a superior and sustainable solution, and then provided clear and credible points of distinction to help build their “story” in the minds of their customers.  They connected who they are to how they can help customers get other jobs done.

On the other hand, Polaroid and Kodak, both known for early innovations in photography, have failed to carve out a valued position in the digital world.  They have struggled to develop new products AND tell the world why their products are superior to other solutions already on the market.  To customers, there was no clear link between what they were known for and the new solutions they had launched.

Now, Xerox is planning to launch a very expensive ad campaigns to do just that – tell the world why they should consider Xerox for help with mundane business processes.  Will they be successful?  Have they “earned the right” to do this from the customer’s perspective?  This depends on whether or not they help customers see how a copier manufacturer can be much more than that.  If they don’t, then they are just wasting their money.

Why Apple's iPad is a Success

A few months ago, I predicted that Apple’s iPad would not be a success.  To summarize the reason I made this prediction, it appeared at launch that Apple was simply going to position the iPad as a device that sits between the mobile smart phone and the laptop.  As I stated at the time, I did not believe that consumers would want to purchase yet another hand-held device.

In hindsight, I was wrong.  The iPad has been a runaway success and has compelled others to create new tablet devices.  However, even though I was wrong in my prediction, Apple was also wrong in how they saw the iPad being positioned in the minds of customers.  The iPad is not perceived by consumers simply as a device in the middle-of-the-size continuum.



Despite it’s form factor, consumers judge products based on the jobs it helps them get done.  As a result, the iPad is being grouped in the minds of consumers with other portable electronic reading devices like the Amazon Kindle and the Sony Reader.  What all these devices have in common is that they enable people to read books and keep up with information while on the go.

My theory about why the iPad is selling so well has to do with this grouping.  When we begin to seek out a solution to a job we are trying to get done, it is because we want to get that job done.  However, when we make decisions about what product or service to purchase, we do so by comparing one option against alternative options.  We then base our purchase decision based on how well we believe the solution will allow us to get the job done.  This includes everything from making the purchase to learning how to use it to maintaining it and, ultimately, disposing of it. 

As a result of the iPad being grouped with these other devices, consumers are choosing to purchase the iPad because of it’s perceived superiority in how it gets the job of reading books and keeping up with information done.  It’s intuitive user interface, numerous apps that seamlessly sync desired content, and high resolution color screen are all often given as examples of why it is a desirable solution over the Kindle and Reader.

From Apple’s advertising and marketing campaigns, I do not believe they intended to have consumers pair their new device with these other e-readers.  Rather, consumers have done this on their own based on the job they are hiring these solutions to get done.  As a result, Apple has a product consumers are choosing to buy more often than not.  The only question that remains in my mind is whether or not Apple could have even more success with the iPad if they purposely positioned it in this way.

Repositioning Financial Services?

An interesting article in the WSJ today talked about whether financial services are headed to a new venue.  That is, the supermarket.  The article speculates what might be a sign of things to come based on a recent deal by Sam’s Club to offer small-business loans up to $25k in stores through a partner lender.

What’s interesting is that this idea is not new.  Sears bought Dean Witter back in the 1980s to combine retailing and financial services.  Also, banks have had branches and ATMs in supermarkets for years and H&R Block has offices in strip malls throughout the country.

The idea goes something like this.  Consumers shop in retail stores.  Consumers need financial products like checking accounts, mutual funds, and loans.  So, put these together and we have an “innovative” approach to selling financial services.

The question that needs to be asked is, “Are these really related in the mind of the consumer?”  In other words, do consumers really see financial services as part of their weekly grocery shopping experience?  It is understood that having them physically located in the same place makes sense from a convenience perspective.  That’s not really what I am talking about.  Rather, in the mind of the consumer, does Sam’s Club “have the right” to offer financial products.  Is the Sam’s Club brand connected to financial services?

Many companies try to make this leap by extending their brand to other product categories.  Some are quite successful, like Virgin Group extending from record labels to transportation (airline, trains) and video/game stores, while others fail miserably diluting their brand value by confusing their customers.



In financial services, the WSJ article reasons that it makes sense to combine products that have largely become commodities (like mutual funds) with either trusted retailers or financial information-providers, such as Microsoft and Yahoo, who have built up goodwill and a brand name with their financial websites.  However, if I were an executive in one of these companies, I would really want to know how the brands are connected in the minds of the target customer before I spent billions acquiring companies hoping to extend into financial services.  What do you think?