In today’s fast-paced tech world, the success of a product hinges not just on its features or technological prowess, but significantly on how it’s positioned in the market. This truth, often overshadowed by the allure of innovation and design, is the linchpin in determining whether a product soars in popularity or dwindles into obscurity.
Enter product positioning — a concept that, despite its importance, remains enigmatic to many tech leaders. It’s an art and science that April Dunford, Author of Obviously Awesome and Sales Pitch (and one of the attendee favorites over the years at INDUSTRY: The Product Conference), has mastered and championed. Dunford’s insights and methodologies have illuminated the path for countless tech companies, guiding them to position their products effectively in an ever-competitive market.
But why is positioning so crucial, especially in tech? It’s simple: in a sea of seemingly similar products, how your product is perceived can make or break its market performance. Proper positioning ensures that a product is not just seen but is understood — its unique value, its distinct advantages, and its relevance to the target audience. It’s about carving a niche in the customer’s mind, creating a space where your product isn’t just one among many, but the preferred choice.
In this deep-dive, we’ll highlight the essence of product positioning – exploring its core components, pointing out successful case studies, and providing practical strategies for product people to implement. Whether you’re a seasoned product manager, Product Leader, or a budding tech entrepreneur, understanding and mastering product positioning is a skill that can elevate your product from being just another option to being the obvious choice.
Much of this essay is information that I learned personally from April during her talk at INDUSTRY: The Product Conference and in our INDUSTRY Interview virtual fireside chat. While I try to highlight the key pieces I learned from April in this essay, I certainly encourage you to go back and watch those sessions in full detail (as well as read April’s book, Obviously Awesome… because it really is awesome. Obviously!)
Demystifying Product Positioning
Product positioning (especially for tech products) is about strategically defining how your product fits into the competitive landscape. It’s about articulating the unique value your product brings to a well-defined audience. April Dunford eloquently defines it as the process that “describes how you are uniquely qualified to be a leader in something that an identified market segment cares a lot about.”
A classic example of effective positioning in tech is the transformation of Slack from a gaming platform to a communication tool. Originally designed as an internal tool for a gaming company, Slack repositioned itself as a communication platform for teams, emphasizing its ease of use, integration capabilities, and the way it transformed workplace conversations. This pivot wasn’t just a change in features or market; it was a strategic repositioning that aligned the product with a new set of values and expectations in the minds of potential users.
Positioning vs. Branding and Messaging
While positioning is often conflated with branding and messaging, they are distinct concepts. Branding is about the identity of your company — the visual and emotional impression you leave in the minds of your customers. Messaging, on the other hand, is the specific language and communication used to convey your brand and product’s value.
Positioning sets the stage for both of these. It’s the strategic foundation that informs what your brand should represent and how your messaging should be framed. For instance, when IBM positioned itself as a provider of solutions for a “Smarter Planet”, it wasn’t just a branding exercise. This positioning guided their messaging to focus on innovation, intelligence, and the integration of complex systems, creating a narrative that differentiated IBM in a crowded tech market.
Other Real-World Examples
- Dropbox: Initially, Dropbox faced the challenge of being perceived as just another storage solution. By positioning itself as a simple, user-friendly tool for accessing files from anywhere, Dropbox managed to stand out in a market crowded with complex, enterprise-focused solutions. This clear positioning helped them attract a broader consumer base who valued simplicity and convenience.
- Tesla: Tesla’s positioning goes beyond just being an electric car manufacturer. By positioning itself at the intersection of sustainable energy and innovative technology, Tesla has carved out a unique space in the automobile industry. This positioning informs their branding as a forward-thinking, environmentally conscious company and shapes their messaging around innovation and a better future.
Understanding and leveraging the power of positioning is essential for tech products. It’s not just about what your product does — it’s about how it’s perceived in the hearts and minds of your customers. As we move forward, we’ll explore the key components of positioning and how you can apply them to your product strategy.
Key Components of Product Positioning
Product positioning of tech products is a multifaceted process, built on several key components. Understanding and effectively leveraging these elements can significantly enhance the market resonance of your product.
- Identifying Competitive Alternatives: The first step in positioning is recognizing what your customers would consider as alternatives to your product. These alternatives are not just direct competitors but can also include indirect competitors and even non-consumption. For instance, in the early stages of cloud storage, companies like Dropbox weren’t just competing with other cloud services, but also with traditional storage methods like USB drives and external hard drives.
- Defining Unique Features or Capabilities: This involves pinpointing what sets your product apart from these alternatives. The focus here is on features or capabilities that are not just unique but also meaningful to your target market. Take the case of Zoom; its ease of use and reliable video quality set it apart in a crowded market of online communication tools.
- Articulating the Value for Customers: This is where you connect the dots between your unique features and the tangible benefits they bring to users. It’s about translating technical advantages into real-world value. An example is how Shopify positions itself not just as an e-commerce platform, but as a tool empowering businesses to create their online presence easily and efficiently.
- Target Customer Segmentation: Understanding who your product is for is crucial. This involves defining the characteristics of your ideal customer – their needs, behaviors, and preferences. Adobe, for example, segments its customers into creative professionals, students, and businesses, offering tailored solutions for each group.
- Choosing the Right Market Category: This is about deciding the space where your product fits best. It’s a strategic choice that can influence customer perception significantly. For instance, if a product is positioned as a luxury good rather than a mass-market item, this positioning will shape every aspect of marketing and sales strategies.
Another great example of these components coming together is seen in the positioning of the Tesla Model 3. Tesla identified its competitive alternatives not just as other electric cars but gas-powered vehicles as well. The unique features of the Model 3, including its electric powertrain, autopilot capabilities, and minimalistic design, were highlighted. The value articulated was not just about owning an electric car but being part of an eco-friendly, technologically advanced movement. The target customers were defined as environmentally conscious consumers seeking a blend of luxury and sustainability. Ultimately, Tesla positioned the Model 3 not just as a car but as a key player in the movement towards sustainable transportation.
Understanding Customer Insights for Effective Positioning
A deep understanding of your customer base is crucial for successful positioning. This involves more than just identifying who your customers are; it requires a detailed grasp of their unique challenges, preferences, and how they interact with your product.
Successful tech companies often prioritize extensive customer research to shape their positioning. Through methods like customer interviews, surveys, user testing, and market analysis, these companies gain a comprehensive understanding of what their customers truly need and expect.
For instance, Slack’s rise as a communication platform wasn’t just due to its features. The company deeply understood the communication challenges and workflow interruptions faced by teams. By focusing on these pain points, Slack positioned itself not just as a messaging app, but as a solution that improved team collaboration and productivity.
Similarly, Netflix’s positioning evolved significantly as it transitioned from a DVD rental service to a streaming giant. This change was driven by recognizing and adapting to shifts in consumer viewing habits and preferences. Their deep understanding of these evolving trends enabled them to successfully reposition themselves in the entertainment market.
Both examples underscore the importance of aligning your product’s positioning with genuine customer insights. This alignment ensures that your product not only meets the market’s needs but also resonates strongly with your intended audience.
Positioning as the Market Evolves
Market evolution is inevitable, making the continual reassessment of product positioning not just beneficial but essential. April Dunford stresses the importance of adaptability and responsiveness to market shifts. As consumer preferences, technological advancements, and competitive landscapes evolve, so too should the positioning of products to maintain relevance and competitiveness.
Of course, adaptability requires a keen eye on market trends, consumer behavior, and technological advancements. Companies must be ready to pivot their positioning strategies in response to these changes. This adaptability can manifest in various forms, such as rebranding, redefining target markets, or even overhauling product features.
Microsoft’s Shift to Cloud Computing
A classic example of successful adaptation is Microsoft’s transition from traditional software products to a focus on cloud-based services. With the advent of cloud computing, Microsoft recognized the shifting market dynamics and repositioned its product offerings to emphasize cloud services like Azure and Office 365. This strategic move was not just about staying current with technological trends; it was a complete transformation of Microsoft’s market identity, aligning it with the new market paradigm and rejuvenating its brand.
Adobe’s Evolution to Subscription-Based Services
Similarly, Adobe’s shift from selling traditional packaged software to a subscription-based model exemplifies responsiveness to market evolution. As the software industry trended towards Software as a Service (SaaS) models, Adobe adapted by introducing the Creative Cloud suite. This transition catered to a growing customer base that preferred continuous updates and cloud-based services over one-time software purchases. Adobe’s repositioning not only aligned with market preferences but also introduced a more sustainable revenue model.
The Role of Customer Feedback and Market Research
In adapting positioning strategies, customer feedback and market research play pivotal roles. They provide insights into changing customer needs, preferences, and perceptions. Actively engaging with customers through surveys, feedback forms, and social media can uncover invaluable information that informs positioning strategies. Moreover, comprehensive market research helps identify emerging trends, new competitors, and potential market opportunities.
Positioning and Competitive Analysis: A Deeper Dive
Understanding the competitive landscape is a pivotal aspect of product positioning. This process involves more than just identifying direct competitors. It’s about gaining a comprehensive perspective of the market, including indirect competitors and potential future threats.
The first step of competitive analysis is to recognize your direct competitors – those offering products or services similar to yours. Effective positioning involves clearly articulating how your product stands out. This differentiation might be in features, user experience, pricing, or even customer service – or perhaps more importantly, the overall value your product brings. For instance, a project management tool may not only compete with other similar tools but also with basic organizational tools like email and spreadsheets. This broader understanding of competition helps in identifying unique positioning angles.
Another critical element is anticipating future competition. The tech industry is known for its rapid evolution, and today’s minor player can quickly become tomorrow’s major competitor. Keeping an eye on technological advancements and emerging trends is crucial. This forward-thinking approach allows for proactive adjustments in positioning, ensuring that your product remains relevant and competitive.
Incorporating these insights into your positioning strategy is where the real work begins. This strategy should highlight your product’s unique features or benefits, emphasizing what sets it apart. Whether it’s an innovative approach, superior technology, or unmatched customer support, these differentiators should be the core of your positioning narrative.
Consider Slack’s rise in the communication tools market. Facing competition from established players like email services and Microsoft Teams, Slack positioned itself as a more user-friendly, agile, and integrative solution for team collaboration. This focus on its unique selling propositions helped Slack to secure a significant market share, despite the intense competition.
Common Positioning Mistakes and How to Avoid Them
Positioning is a critical strategy that can make or break a product’s success – but even the most seasoned professionals can fall prey to common mistakes. By understanding these pitfalls and learning from real-world examples, we can better navigate the complexities of positioning.
Mistake 1: Misunderstanding the Market Needs
One of the most common errors in positioning is a misalignment with market needs. Companies often assume they understand their target audience but fail to validate these assumptions with actual data or customer feedback. This misalignment leads to a product that doesn’t resonate with its intended audience.
Google Glass initially missed its mark by not fully understanding consumer needs and concerns, particularly around privacy and practicality. The product was positioned as a futuristic, everyday gadget but faced resistance due to privacy fears and the lack of clear, practical applications for the average consumer. Google then repositioned Glass for specialized industrial and professional use, finding some success – but ultimately, not enough to continue producing the product.
Mistake 2: Overlooking the Competition
Ignoring or underestimating the competition is another positioning blunder. Companies might think their product is unique, but customers often compare it to existing solutions. Failure to recognize and position against these alternatives can lead to a weak market presence.
In the early days of personal computing, many companies underestimated the emerging competition from Microsoft and Apple. They failed to position their products effectively against these giants, leading to a loss of market share.
Mistake 3: Inconsistent Messaging Across Channels
Inconsistent messaging across different marketing channels and customer touchpoints can dilute a product’s positioning. Consistency in how a product is presented is crucial for building a strong, recognizable brand.
While outside of tech, Pepsi released a controversial ad in 2017 featuring Kendall Jenner that was widely criticized for inconsistent messaging across channels. The ad depicted a protest scene where Jenner handed a police officer a can of Pepsi, seemingly resolving a tense situation. The message attempted to convey unity and harmony through the product. However, the ad created confusion and even controversy by using social issues for its gain.
Mistake 4: Over-Complicating the Value Proposition
A complex or unclear value proposition can leave potential customers confused about what the product offers and why it matters to them. Simplicity and clarity are key.
Juicero, a company that aimed to revolutionize juicing, developed a high-tech juicer that required users to purchase proprietary juice packs to use with the machine. The value proposition was centered around the idea of convenience and freshness, with the machine squeezing juice from the packs. However, the product was expensive, and it turned out that users could achieve similar results by squeezing the juice packs by hand, rendering the high-tech juicer unnecessary. This over-complication led to a lack of clarity about the product’s true benefits, and the company faced criticism and ultimately failed in the market.
Mistake 5: Ignoring Feedback and Market Changes
Ignoring customer feedback and market trends can lead to a stagnant positioning strategy. Markets evolve, and so should the positioning of a product.
BlackBerry, once a leader in the smartphone market, failed to adapt its positioning in response to the changing market dynamics and consumer preferences. This lack of adaptation contributed to its decline in the face of competitors like Apple and Samsung, who continuously evolved their products and positioning.
There are a few ideas on how to avoid each of these common mistakes
- Conduct thorough market research to understand customer needs and preferences.
- Keep a close eye on competitors and position your product to highlight its unique advantages.
- Maintain consistent messaging across all marketing channels.
- Simplify your value proposition to make it easily understandable.
- Regularly seek customer feedback and stay attuned to market trends to adjust your positioning strategy accordingly.
By learning from these examples and tips, product managers and marketers can develop more effective positioning strategies that resonate with their target audiences and withstand the challenges of a dynamic market.
Developing a Positioning Strategy: A Step-by-Step Approach
Creating an effective positioning strategy for a product can be a complex process, yet it’s essential for distinguishing your product in the market. Drawing inspiration from April Dunford’s methodology, let’s explore a structured approach to developing your positioning strategy, adaptable to various stages of a product or company’s lifecycle.
Step 1: Understand Your Competitive Alternatives
Begin by identifying what your customers would use if your product didn’t exist. This step goes beyond direct competitors to include all potential alternatives, including in-house solutions or even doing nothing. Understanding these alternatives sets a foundation for highlighting your product’s unique advantages.
Step 2: Identify Your Unique Attributes
List down the features or aspects of your product that differentiate it from the competition. These could be technological innovations, unique service models, pricing structures, or customer experience enhancements. It’s crucial to focus on features that are not just different but also valuable to your target audience.
Step 3: Define the Value for Customers
Translate your product’s unique attributes into tangible benefits for the customer. This step requires an understanding of your customer’s pain points and how your product’s unique features can address them. Value propositions should be clear, compelling, and directly linked to customer needs.
Step 4: Determine Your Target Customer Segments
Who will benefit the most from your product? Define your target customer segments by considering factors such as industry, company size, technological maturity, or specific challenges they face. This segmentation will help tailor your positioning to resonate strongly with the most receptive audiences.
Step 5: Choose Your Market Category
Decide on the market category in which you want your product to compete. This could be an existing category where you can establish a unique niche or a new category you aim to create and lead. Your choice should align with your unique value proposition and target customer segments.
Step 6: Craft Your Positioning Statement
Synthesize the insights from the previous steps into a concise positioning statement. This statement should encapsulate what your product is, who it’s for, what unique value it offers, and how it differs from alternatives. It serves as a guiding beacon for all your marketing and sales efforts.
Step 7: Validate and Iterate
Test your positioning with real-world feedback. Use customer interviews, surveys, and market testing to gauge reactions and understand if your positioning resonates. Be prepared to iterate based on feedback, especially in the early stages of your product’s lifecycle.
Adapting the Strategy Across the Product/Company Lifecycle
- Early-Stage Products: For new products, keep your positioning somewhat flexible. Gather extensive customer feedback and be ready to pivot as you learn more about your market.
- Growth Stage: As your product gains traction, refine your positioning based on customer data and market response. Focus on solidifying your place in the chosen market category.
- Mature Products: For established products, regularly revisit and update your positioning to ensure it stays relevant in an evolving market. Look for opportunities to expand into new segments or refresh your value proposition.
- Declining Stage: If your product is in decline, consider repositioning to tap into new customer segments or adapt to changing market conditions. Sometimes, repositioning can breathe new life into an aging product.
By following these steps and adapting your approach based on your product’s stage in the lifecycle, you can develop a robust positioning strategy that effectively differentiates your product and resonates with your target market.
The Role of Product Managers in Positioning
Product managers are often the bridge between the technical aspects of a product and the market’s needs. They possess a deep understanding of the product’s functionalities and are uniquely positioned to align these features with market demands. This alignment is crucial for identifying the unique selling propositions (USPs) that set a product apart in a crowded market.
Product managers should actively drive the positioning strategy. Their role involves:
- Gathering Customer Insights: Regular interactions with customers provide product managers with firsthand knowledge of customer challenges, expectations, and perceptions. These insights are vital in developing a positioning strategy that resonates with the target audience.
- Market Analysis: Product managers must stay abreast of market trends and competitor movements. This knowledge helps in accurately positioning the product against competitors and adapting to shifts in the market landscape.
- Feature Prioritization: Understanding what features to highlight in the positioning narrative is a key responsibility. Product managers must discern which product capabilities offer the most value to customers and differentiate the product in the market.
Of course, positioning work doesn’t only involve Product Managers. Effective positioning is a cross-functional effort, requiring close collaboration between product, marketing, and sales teams. Product managers should foster this collaboration by:
- Aligning with Marketing: Ensure that the marketing team understands the product’s capabilities and value proposition. Product managers should provide the necessary technical information and customer insights to help marketing craft compelling messages.
- Supporting Sales Efforts: Sales teams rely on accurate and compelling positioning to close deals. Product managers should equip sales representatives with the necessary knowledge and tools to communicate the product’s value effectively.
- Create a Feedback Loop: Product managers should establish a feedback loop with marketing and sales teams. This loop helps in refining the positioning strategy based on real-world experiences and customer feedback.
Summing it all up
It’s clear that the way a product is positioned in the market can significantly influence its success or failure – especially for tech and software products. Positioning is far more than a marketing tactic; it’s a strategic imperative. It influences how a product is perceived in the marketplace, shapes customer expectations, and determines the competitive landscape. A well-crafted positioning strategy can elevate a product from being just another option to becoming the preferred choice in its category.
Mastering product positioning is an essential skill for Product Managers and Product Leaders. It requires a blend of market insight, customer understanding, and strategic thinking. By embracing the principles and practices outlined in this post, professionals can effectively position their products for success, creating a lasting impact in the market and forging a strong connection with their target audience.
(Want to learn directly from April live? She’ll be speaking at the upcoming New York Product Conference on April 18th – check out the details here!)