Play to Your Strengths – Strategies For Product Positioning

The past few months have had me thinking a lot about product positioning. Several projects that I’ve had, and more than a few business plans I’ve reviewed recently, struggle with the concept of their product’s strengths. This can apply to companies as well as a positioning message of what they offer over competitors. Product positioning is all around us, whether you notice or it or not.

The goal of product (or service or company) positioning is to keep you in the customer’s mind at the time they are looking to purchase. A positioning strategy feeds into the marketing message in terms of how you talk about the product. The strongest brands and products you know about have succinct positioning statement.

But how do you get there? Define, then refine.
Much, if not all, of the data we’re going to look at below can be used for other product areas – price forecasting, operational improvements and marketing messaging around the product; but for today, we’re looking at positioning.

Define as much as possible about the product:
Product attributes and market segmentation: is it a luxury item, a mid-tier market, or economy based? Obvious examples of this are hotels: the Ritz Carlton (luxury), the Hilton (mid) and Comfort Inn (economy); each are positioned within a market segment.

  • Benefits to the customer: what will the customer gain from your product or service? The affluent traveler looking for an experience (Ritz Carlton). Ideal for ease of business travel – cookie cutter accommodations/amenities (Hilton). Inexpensive, and won’t break the bank for quick trips or family vacations (Comfort Inn).
  • Characteristics of the customer: define a couple of scenarios of ideal customers, including demographic information. What target features are they looking for? Where would your product ideally reach them? What would drive them to purchase from you?
  • Characteristics and strengths of competitors: conduct analysis using publicly available data; company annual reports, industry news and blog posts. Create an evaluation of their strengths and weaknesses to determine your competitive advantage. Opportunities for competitive pricing, improved distribution and product refresh cycles can be derived from analyzing your competitors.
  • Analyze gaps between your product and your competitors. Understanding these gaps will help you determine where your product positioning strengths stand out. These are areas which your product (or service offering) can easily target (to become)? market leaders.

Note, in some market segments the product gap could be very small, in which case your product might be competing with an established brand if it’s new to the market. Incumbents to a marketplace could be entering a profit-limiting segment.

To arrive at a product positioning statement, refine the ideas from the analysis narrow it down. Identify the top 10 items/concepts from the exercise. Then hone to the top 5, then finally the most important 3. Those 3 should be distillable into 3 words. You’ve arrived at the product positioning and the basis for your product/service/company’s marketing message.

Put it out there on all the channels used to connect to customers.
Do the concepts resonate with customers? Are you getting more sales or inquiries?

Market positioning for products change over time. Changes,whether economic or innovative, are constant in marketplaces and customers’ needs. Assessing your product positioning at regular intervals allows for retaining the competitive edge of customer needs in your market area.

Is your product playing to its strengths?

Getting Illustrative – Determining Your Company’s Value Proposition

I’ve been talking (and asking) about creating a value propositions for small businesses. What is a value proposition you might ask? A brief statement of benefit that summarizes why a customer should purchase a product or service. Basically, it explains the customer what will they will get exchange for their dollar(s) and your company’s unique identifiers from the competition.

I thought it would be interesting to represent questions that should be considered when creating your company’s value proposition in a handy graphic this week.

value proposition

What’s in the box? Your company’s value proposition should answer as many of these as possible.

It can be a bit of a challenge (almost like a mad-lib) to distill the answers down into a couple of sentences. White board, Trello board, or even traditional post-its can be useful in defining the concepts and arranging their order.

Once you’ve put the sentences together, which may take some time and revision to polish up, test them out. Try your value proposition out on various social media channels, email it around to you advisory groups and create some discussion around if you’re headed in a good direction with your proposition. Tor has some helpful (and humorous) advice for testing.

As your company moves forward and the product evolves in the marketplace, it makes sense to revisit your value proposition in scheduled intervals as it should reflect your product’s strengths.

I’m searching for great examples of value propositions that are out there today. Can be in any vertical. Seen any recently that have caught your eye? Post them below!

Product Pricing – How to Approach the Art and Science Behind your Model

Pricing is the valuation of your product or service. Arriving at one is a healthy combination of art and science. There are over 10 different methods you can assign to figuring out your product pricing model, however, without looking at the variables that go into creating your product, you run the risk of creating problems for your product in the future.

Know your costs
Whether you’re creating the latest and greatest time saver app, manufacturing tools or harvesting produce to sell at a farmer’s market, costs have been incurred in the process. Fixed and variable costs such rent, labor, any debt or loans on equipment and distribution/delivery costs are the basis for knowing what you need to recoup. Create a list, meet with your accountants (or accounting department) to develop an understanding of the costs needed to recoup. What mix of margin percentage and customer acquisition volume is needed to get to profit?

Assess Market Size
Who are your customers and how will you reach them? Creating a list of basic demographics of your product’s customer will help drive estimates of sales, as well as where you’ll need to focus marketing/accquistion efforts.

Competition
Look at your competition’s price points. Identify where their strengths and weaknesses are in the marketplace. Run your own scenarios based on their price point. It’s too hard to reverse engineer a pricing model. Identify where your product or service wins and loses based on comparisons with other products out there.

Know your product’s differential points
This is where your products perceived value will come from. When customers recognize the value, it will drive customer acquisition.

Look at what the market will bear
After looking at your competition in the space, where is your product landing? Are you positioning to be a premium brand in the market, or on the value end? Depending on where you want the product to land, is the value proposition to the customer enough to drive a higher price than the competition – or lower to undersell it?

Listen to your customers
Maybe you’ve done a beta period with your product, or if you’ve been operating for a while. Create a customer advisory group. Offer these customers something for their time and feedback. Encourage open conversations about how they’re using your product and value vs. cost to them. Be prepared for the good, the bad and the ugly. By offering to participate however, these customers have taken an interest in your product’s success, so take time to analyze their feedback.

Try Tiered Pricing
Tiered pricing will give you a sense of where the largest interest lies for your product. If you’re not sure you want to offer everything at one price, a test of a tiered scenario could quickly allow you to see what value customers are willing to pay at what price point.

Reassess 
Pricing changes over time due to supply and demand, other emerging products and technology, or market conditions. Your business is an ever changing entity, and innovation and growth come from being proactive (as opposed to reactive) in your marketplace.

Here are some pricing strategies people love. (I found it a better read than listen).

What are your best tips for creating a pricing model?

Open Sourcing vs. Crowd Sourcing Products | Do You Know The Difference?

One of my observations from attending ProductCamp PDX was that there was a very vague understanding of the differences between open source and crowd sourcing. 

I sat through one discussion at ProductCamp PDX about ways to launch products to an audience, and there was some consensus/agreement that it was acceptable practice to “get the MVP (minimum viable product) out to the public and (or with?) “open source” feature ideas and ongoing development.”

Me, attempting not to jump up on chair at that point, said “I think you mean crowd source.”  Blank stares ensued.

Both take some time in building a community of users interested in your product and willing helping out with it. One is not exclusive of the other; open source products are crowd sourced, and crowd sourced projects can be open source.

The difference is…

Who’s benefiting?

If a company is opening up a product for public input, then taking the feedback and incorporating it into their next product release for sale, it’s crowd sourcing. It’s crowd sourcing because the company is capitalizing on the feedback. Yes, a public contributor may get some incentive or cash for having their idea adopted; regardless, the end product remains under the company control.

Should you release a product into the community, solicit help to improve it, then allow the public to use and modify the product for everyone’s benefit, then it’s open source. Some features or improvements may be crowd sourced amongst the community, however, the end results in improvements that everyone can have access to.

Chris Grams has his opinions about why one trumps the other.

In the discussion I described above, most of the attendees were employed by corporations and had been struggling with how to improve upon and gain traction with their products. Anything the public contributed would be fed back into supporting the profitability of the product, thusly crowd sourcing.

I believe building communities is important regardless of your product approach. It’s a beneficial way to tap into the user base to discover how your product is being used and perceived, as well as to encourage users to talk about it among their personal networks. Those types of interactions can’t be bought. Just be aware of under what guise you’re asking the community to participate.

Have you ever tried crowd sourcing a product? Has your community grown, shrunk or stalled?

Should you build a product without a channel? If you build it, will they come?

It’s a rare few these days who would take the risk based on the Field of Dreams riff “if you build it, they will come”. Most of us spend at least some time looking at market opportunities, niches or areas where products/services could be made better/faster/cheaper. 

What would incite you to take the risk? I asked this around my network and received a few ideas back:

  • Belief that the market or technology would evolve
  • Large marketing budget  
  • A strategy for intersecting of two industries creating a new customer pool

Certainly all worthy considerations. I also think it depends on how much risk vs overhead is involved in producing the idea to get out the door. 

However, as Allison Bradley notes, you could also run the risk of devaluing your current brand in the process.

Since I don’t assume to have all the answers, I’ll leave you with a recent real world tale:

A friend of mine works for a company manufacturing high end consumer home products. Hard goods. You would spend close to 5 figures on one of their products. They’re a small company, and they’ve been spending resources to understand where their market opportunities lie at that price point, creating relationships with resellers and retailers, all things to ready for a larger distribution jump.

A few months ago the CEO walks into my friend’s office and says “I’ve commissioned 5,000 lower cost units to begin assembly next week for to sell at 1/4 of what we’d retail our main product line. We (you) need to figure out how to get them into the marketplace and sold”. 

Whoa, right? The effort and market positioning to date has been focused on a much higher end.Cross selling can be tough, Ian Smith offers some practical actions. 

I’ll post updates as events transpire.

What steps would you take to get this product out of the warehouse? 

5 Observations from ProductCamp PDX

A friend of mine sent me the link over Product Camp Portland suggesting we go see what it’s about. There was no cost to attend, so sure, why not? My friend was sick on the day of the event, and since a room full of strangers should be seen as an opportunity, not a reason to hide under the couch, I braved it alone. 

I wasn’t looking for “how to be a better product manager” or debate why Scrum is the methodology of choice right now, but I am working on taking some developer toolsets my company has been coding and creating them into products, and thought there would be some good take aways from the day. Below are a few things that resonated.

Agile is a dangerous buzz word

Who wouldn’t want to be more agile? Would you ever want your company described as rigid and static? Agile is one of terms being tossed around by many but understood by few in the corporate world. It’s a good guess from the group discussion I sat through, many of them are feeling the pain of “being an Agile organization”.

Perceptions of Open Source

As soon as this came up as a topic of discussion, I was in undivided listening mode (I happen to be running an open source based company). My overall perception was the participants thought open source was a good way to release a young product so others could jump in and help improve it. While I recognize many of these people did not come out of a technology background, I think they’d all benefit from taking a look at some successful open source projects to better understand what the opportunities and challenges are. I asked a product manager sitting behind me in the session what qualified the product he was working on as “open source”. He couldn’t give me a good explanation.

Products Escape!

I laughed out loud when I heard this. Many products escape, as opposed to being launched. Somehow the word about your product has gotten out to your customer base prior to whatever the launch plan was. Viral was what you wanted? That’s ok if it won’t impact your current product sales (ie; customers are holding off buying until “the new release” comes out) and/or the sales team has been updated. A noticeable dip in sales prior to a pending launch doesn’t help anyone.

The Concept of Corporate Mentoring is Lacking

The last session of the day I sat through could’ve been subtitled “You and Your Skills”. There are a lot of you out there who are looking to grow skills and job titles within your corporations, but have no idea how. It’s time for companies to step uo or develop their mentoring programs. Sure this was a small slice of attendees, but it was easy to see they were all in some degree frustrated. Here’s a whole group of people interested in challenging themselves in thinking about how to improve/extend your product and brand, why wouldn’t you help them? 

Many Product Managers have ideas for their own products

I tried to make a point of talking to as many people as possible in and out of the sessions. A lot of you told me you had your own ideas for products and the term “if I was going to launch my own product” was bandied about more than once. Perhaps next year there should be a separate product start-up/incubator track allowing attendees interested to explore what it would take to turn their ideas into reality. 

Overall I thought it was a worthwhile day, and have been trying to connect with people I met via LinkedIn. I would return next year maybe even with a session suggestion.

Oh, and the high school where the event was held, still looks and smells, like high school. I would never use the term “bright and airy” to describe my own high school; (“dented and graffiti filled” would suit better). However take away the computers on teacher’s desk and it could be the 1980’s all over again.

Where you there? What did you think of the day?