1.1.12 Positioning - The Place Your Organisation Occupies In Your Customers' Minds
Vision and Mission statements, goals and objectives, competitive strategy and competitive advantage - terms that we see over and over again but for which there are no standardised and accepted definitions.
So it is with positioning. Is it the same as a competitive strategy or is it just another word for a Unique Selling Proposition or USP?
Let me give you the definition that I use.
“Positioning is the place that the company or product occupies in the mind of the customer relative to competing companies or products.”
So a company or a product’s positioning is a set of beliefs and perceptions that customers hold for that product or company that distinguishes it from its competitors. With the exception of fast moving consumer goods where positioning is often brand specific, positioning is more likely to apply to a company and its complete range of products.
There are a small number of fundamentally different positioning strategies. My experience is that the strategies most relevant to SME’s are those that relate to all a company’s products and thus to the company as a whole.
The toughest positioning strategy to successfully implement is one where you position your company against a competitor. The customer perception that you are looking to inculcate with this strategy is that “we are the same but better.”
Avis adopted one of the classic - and successful - examples of this positioning strategy in their aim to unseat Hertz as the largest car rental company in the United States. “We’re Number two, so we try harder” was an appeal for consumers to support the underdog on the basis that being in this position would result in Avis offering customer service superior to its dominant competitor.
A more common positioning strategy is to position oneself away from a competitor. In this instance the message is that “we are different and better”. So when Bob Ansett launched Budget in Australia, both the name and the slogan - “drives your dollar further” were designed to expand the market for hire cars by bringing prices within the reach of the non-business market.
However, it is dangerous to formulate a positioning strategy that is founded exclusively on the premise of cheaper prices and so Ansett enriched his company’s positioning by projecting the image of anti-establishment and youthful vigour delivering superior and more flexible customer service. Virgin Blue adopted a very similar positioning strategy when the airline was launched in competition to the established duopoly of Ansett and Qantas.
Likewise, John Symond struck an empathetic chord with the Australian homebuyer when he launched Aussie Home Loans in 1992. One suspects that much of Budget’s, Virgin Blue’s and Aussie Home Loans’ success is - or was - due to the larger than life characters of Bob Ansett, Richard Branson and John Symond. Australians have an enduring love affair with the larrikin who sticks it up the establishment, even if he is a Pom and among the world’s wealthiest people!
The most successful positioning strategies take up permanent residence in the minds of their target audience to the extent that competitors are effectively denied entry.
For many years now, Woolworths/Safeway has projected its positioning as the “fresh food people”. It is not hard to deduce the rationale behind the development of this approach. It is going to be extremely hard to convince a consumer that SPC baked beans or Cold Power washing powder can be differentiated by the retail outlet on any other attribute but price but it might well be possible to do this with meat, fish, fruit and vegetables.
And if one buys fresh produce from Woolworths or Safeway, why not do the rest of your shopping there as well? Surely one of the reasons for Coles’ longer term malaise is that they have never come up with a positioning strategy that has enabled them to take exclusive possession of a piece of their customers’ minds?
In their on-going battle with McDonald’s, Hungry Jacks have been much more successful. Rather than compete against McDonald’s, Hungry Jacks have resolutely stuck with the proposition that “the burgers are better at Hungry Jacks”. Now I seem to recall that the calorific value of a Hungry Jacks burger puts a Big Mac to shame and yet it’s McDonald’s that cops the calorific heat.
When deciding on a positioning strategy, it’s vital that you view the options from the perspective of the customer’s mind. Recently, I was discussing the positioning of the three major hardware brands - Bunnings, Mitre 10 and Home Timber & Hardware.
My observation as a consumer is that Mitre 10 and Home have tried to project themselves as smaller versions of Bunnings - the “same but better” approach. My colleague’s response was to cite a number of fundamental differences in the way in which these three brands retail hardware. Most are not apparent to the consumer but the contrast in the layout of a Bunnings store in comparison with that of the other two is obvious to any customer. Of the three, Bunnings is the only one to make extensive use of warehouse style racking.
However, my contention is that few, if any, consumers give the display style any thought. Depth and breadth of product range, prices and customer service are likely to be far more important. Judging by the latest TV ads from Mitre 10 and Home, their research has also told them that many consumers find the physical size of a Bunnings store, the almost bewildering choice and the difficulty in locating sales staff to be negatives that Mitre 10 and Home can exploit.
Thus, at both Home and Mitre 10, there appears to be a strategic re-think in progress. Having accepted that Bunnings now occupies a particular place in the consumer’s mind, both brands are now being positioned away from Bunnings.
I’m conscious of the fact that the examples that I have chosen to illustrate different positioning strategies are either in retail or are mass service providers. This is partly because these companies are well-known and hence readers will have first hand experience of dealing with them and partly because positioning is particularly important when it is not possible to communicate directly with all your potential customers.
This raises the question of whether positioning is important to smaller businesses where the customer base might number less than one hundred. I believe it is. Because if there’s a blank space in your customers’ minds that your company should occupy, that space will either be taken by one of your competitors or, if it remains vacant, you will find yourself competing as just another supplier on the basis of price.
I’ll finish by stating the obvious. There is no value in developing a positioning strategy unless you constantly reinforce it by backing words with actions. You don’t own the space in your customer’s mind – you only rent it. But if you’re a good tenant you might be able to take out a 99-year lease.