Positioning for Product Managers

Positioning, while classically considered part of the marketing world, is absolutely essential for every product manager to understand. Positioning refers to the place that a brand occupies in the minds of customers and its perceived differentiation from its competitors. Positioning ultimately dictates the frame of reference that your customers leverage when evaluating your product. Positioning is in reality a business strategy exercise and thus product managers need to be deeply involved as effective positioning ultimately defines critical elements of your entire product strategy.

The most classic literature on positioning comes from Jack Trout's book, Differentiate or Die. Jack Trout clearly conveys why positioning is so important in a world continuously filed with more and more product options in every category and less and less attention available from customers to spend time deeply understanding your individual product offering. As a way to cope with this reality, customers quickly develop a position for your product and make their product decisions based on it. Given this, it is incredibly important for brands to strive for their desired position to be created in the minds of their customers. While back in the day you could get away with simply using brand advertising as the primary way you conveyed your product positioning, today every touch point your customer has with your brand has become a critical element of conveying your positioning, including your marketing website, customer service experience, and what your existing customers are saying about you across the web.

While Differentiate or Die spoke at length on why positioning is important, it never really went into detail on how to actually go about developing your product's positioning. The traditional approach is to develop a positioning statement. While useful as an output to your positioning process, it really doesn't describe the process one could use to come up with such a positioning statement. That's why I was excited to read April Dunford's new book entitled Obviously Awesome, which is an in-depth tactical guide on how to go about actually developing your product's positioning.

The reality when it comes to positioning is that most companies end up with default positioning. This is simply leveraging the positioning that the original folks who came up with the product concept thought about when they conceptualized the product offering. But what's important is to be deliberate about your product's positioning because a great product could end up failing due to poor positioning alone.

April's advice is to replace the positioning statement with a deeper 5-part positioning framework which defines the following for your product:
  • Competitive alternatives - Define what your customers would use if your product didn't exist. This can include direct competitors as well as substitutes and alternatives. Oftentimes they are not products per se, but include things like hire an intern, use a spreadsheet, etc.
  • Unique attributes - Define all the feature/capabilities that your product offers that your alternatives do not. Beyond product features, this can also include elements like your unique business model and distribution model.
  • Value (and proof) - Value is the benefit you can deliver to customers because of your unique attributes. If unique attributes are your secret sauce, then value is the reason why someone might care about your secret sauce.
  • Target market characteristics - Who cares most about the unique attributes and value that you deliver? These are the customers who buy quickly, rarely ask for discounts, and tell their friends about your offering.
  • Market category - Think of the market category as a frame of reference for your target customers, which helps them understand your unique value. Market categories serve as a convenient shorthand that customers use to group similar products together.
So the question then becomes, how do you go about defining each of these elements for your positioning? The very first step is identifying your best-fit customers. These are the customers that already absolutely love your product and are already recommending it to their colleagues and friends. Engagement metrics, NPS surveys, and existing customer testimonials are great ways for identifying your best-fit customers. While you may ultimately aspire to serve a broader segment of customers, by focusing your positioning on your best-fit customers, you are actually significantly improving the odds that the right customers find you. So make sure to define each of these dimensions narrowly based on your best-fit customers.

Once you've identified your best-fit customers, you can conduct customer interviews to validate your own hypotheses on what are the unique attributes and value that you provide over competitors as well as whether the best-fit customers resonate strongly with those attributes and value.

The final step comes down to defining your market category. It's important to realize that there are 3 different positions you can take with your market category and it's important to assess what's the best fit for your product:
  • Head to head: positioning to win an existing market - In this case, you are competing directly against other established players in a well-defined market. Here you are saying your unique value applies to most customers in the market. The advantage of positioning in this category is you don't need to spend time establishing the need for your product. However, fighting directly against incumbents in the category can be an uphill battle.
  • Big fish, small pond: positioning to win a subsegment of an existing market - The goal here is to carve off a piece of the market where the rules are a little bit different - just enough to give your product an edge over the category leader. This is far easier to do than competing head to head and also gives you the advantage of establishing word of mouth in a tight market subsegment.
  • Create a new game: positioning to win a market you create - When you are truly building something new, you'll need to create a new market. While this may mean less direct competition, the biggest challenge with this is that you need to build the demand for the product you are creating, which creates nontrivial additional effort.
I found April Dunford's Obviously Awesome a fantastic tactical guide to developing positioning for your product and would encourage anyone attacking positioning to check it out.
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