Product Positioning

April Dunford, the author of the best-selling book Obviously Awesome, provides invaluable insights into product positioning.

For product leaders seeking to expand into new regions, launch new products, or resolve market positioning uncertainties, Obviously Awesome is an essential resource that can significantly enhance your product’s market presence.

Weak positioning leaves a trail. The signs are there if you know where to look.

  1. Your current customers love you, but new prospects can’t figure out what you’re selling

Do you spend more time explaining what you’re selling rather than closing deals?  If your prospects can’t figure out what you do they will invent a position for you.

Potentially hides your key strengths or misrepresents your value.

Your happy customers and prospects should think similarly about your product. Otherwise, you likely have a positioning problem.

2. Your company has long sales cycles and low close rates, and you’re losing out to the competition

Effective positioning makes your sales efforts more efficient by attracting customers who are a great fit and who move through a buying process quickly.

Otherwise, poor-fit prospects consume your busy sales team’s valuable time, energy and attention- only to choose a competitor that was a better fit for them all along.

3.You have high customer churn

Do you have high customer churn shortly after purchase and new customers constantly asking for features you have no plan to deliver?

Customers who misunderstood your value chose you for the wrong reasons, and now they’re trying to recover sunk costs by turning your product into what they thought they were getting.

4. You’re under price pressure

Do customers complain that your prices are too high?

You can’t charge a premium for a product that seems exactly like everything else on the market, and weakly positioned products are seen to offer little beyond their competitors.

Clear positioning helps prospects understand that you are a market segment leader and offer considerable value.

What is Positioning?

Positioning defines how your product uniquely addresses the needs of a specific customer segment.

  • What is it?
  • Who is it for?
  • Why should they care?

Additionally, positioning encompasses:

  • Messaging
  • Pricing
  • Features
  • Branding
  • Partners
  • Customers

The Context Experiment

A famous context experiment by the Washington Post illustrates the importance of positioning. Joshua Bell, a renowned violinist whose concert tickets sell for $300, performed in a subway station for 45 minutes. Out of 1070 passersby, only 27 gave him money, and just 7 stopped to listen, earning him $32.17. This experiment highlights how even a world-class product can fail without proper positioning.

Positioning Story

At a database startup, despite having superior features, they struggled with positioning. Potential customers resisted adopting a new database, and investors doubted their ability to compete in a mature market. However, when they re-positioned their product as a data warehouse with superior analysis capabilities, they found success. This story demonstrates the importance of identifying a unique benefit that sets you apart from competitors.

Great Positioning

Great positioning considers:

  • The customer’s point of view on the problem you solve and the alternative ways of solving that problem.
  • The ways you are uniquely different from those alternatives and why that’s meaningful for customers.
  • The characteristics of a potential customer that really values what you can uniquely deliver.
  • The best market context for your product that makes your unique value obvious to those customers who are best suited to your product.

Components of Effective Positioning

  1. Competitive Alternatives:
  • What customers would do if your solution didn’t exist.

2. Unique Attributes:

  • Features and capabilities that differentiate you from alternatives.

3. Value (and Proof):

  • The benefits those features provide to customers.

4. Target Market Characteristics:

  • Attributes of buyers who value your offering.

5. Market Category:

  • The market you belong to, aiding customer understanding of your value.

6. Relevant Trends:

  • Trends that resonate with your target customers and enhance your product’s relevance.

Positioning Strategies

  1. Head to Head: Positioning to win an existing market
  2. Big Fish, Small Pond: Positioning to win a subsegment of an existing market
  3. Create a New Game: Positioning to win a market you create
  1. Head to Head: Positioning to win an existing market

You are competing directly against other established players in a well- defined market.

You are aiming to be the leader in a market category that already exists in the minds of customers. If there is an established leader, your goal is to beat them at their own game by convincing customers that you are the best at delivering the solution.

Market

Well- defined market, Customers are well educated

Advantages

Market change

Regulation

Economic factors

2. Big Fish, Small Pond: Positioning to win a subsegment of an existing market

Goal is not to take on the overall market leaders directly, but to win in a well-defined segment of the market.

Smaller subsegments are easier to reach and target, and gaining traction in a market

Market

Initial target market is narrow

When to use the Big Fish style;

1. This style requires that the category is well defined and there’s a clear market leader

2. Needs to be clearly definable groups of customers with unique needs that are not addressed by the market leader

3. Demonstrate that this subsegment has a very specific and important unmet need

3. Create a New Game: Positioning to win a market you create

Sometimes, new technology or circumstances pave the way for a new market.

Market

This style is usually only possible when a massive change has a big potential impact on what is possible or what is essential in a market. These changes can include new technologies, economic changes, political forces or a combination of these.

This style is the most difficult because it dramatically shifts how customers think, and shifting customer thinking takes a strong, consistent, long-term effort. That means you need a certain amount of money and time to convince the market to make this shift. Because of the investment and time required, this style is generally best used by more established companies with massive resources to educate the market and establish a leadership position.

In conclusion, effective product positioning is crucial for differentiating your offering in a competitive market. By clearly defining what your product is, who it is for, and why it matters, you can attract the right customers and streamline your sales process. Drawing on insights from April Dunford’s Obviously Awesome, product leaders can navigate the challenges of positioning, ensuring their product’s unique value is evident to their target market. Whether competing head-to-head, targeting a niche, or creating a new market, strong positioning lays the foundation for sustained success and growth.