Positioning and customer insight

Back in Feb 2004 I was host to a hoppin' debate about positioning. In the past couple days, the conversation was revived again by Greg with the question, "How can I simplify the concept of positioning for new business owners?" I thought it was a great question and one to bring forward in a new post.

I answered Greg with this comment:

'What can you do better than anyone else that meets an unmet need in the market?' That's your position. To arrive there, you need a pretty good understanding of your customer and your competition.

Greg replied:

Part of me wonders how possible that really is... i.e. unmet need. Is there really anything new under the sun? Or have we not looked in the right places?

I answer:

There are unmet needs everywhere! You simply need to talk to customers to learn what they really care about.

And this ties into my most recent post on innovation: Find out what customers want, and then deliver on it. This does not mean we let them tell us how to do our jobs. But I think most companies would be amazed to learn what customers really think.

There are two different kinds of "talking to customers." The first is direct company/customer dialog; this method is terrific for making customers feel heard, identifying areas for product/service improvement, and finding out what they like best about the products/services. Jonathan Dampier offers a great example: 

We recently invited 10 key, multi-million dollar accounts to a no-holds barred customer advisory/user group meeting. What's the big deal? Some LOVED us and consistently sang our praises while others would likely be calling our competitors come contract renewal time. Yet we encouraged open and honest feedback on what we were doing right as well as how we were screwing up. We also exposed our R&D concepts and asked their opinions...

Bringing together clients with various feelings about our company was a risk. Yet, we saved large amounts of money and other resources killing projects deemed to be turkeys. And we'll generate more future revenue by bolstering the burgeoning product lines we now know will sell.

However, this method of talking directly with customers is not the best for a positioning exercise. Drawbacks are twofold:

• Blind spots. You're talking with a non-representative sample of your customer/prospect population.
• Bias and lack of complete information. Customers will often refuse to share perceptions of the company's competitors. Or, they'll play down (or up) competitor's strengths and weaknesses.

For positioning, we need an unbiased view from a representative sample of customers, prospects and trialers. This requires third-party involvement to coordinate 'blind' studies that explore:

• Perceptions of the category
• Awareness and perceptions of all the players in the category
• Likes/dislikes about the current available options
• 'Ideal world' and how it differs from current options

There are many other areas for exploration, but I find that these basic questions will  unveil the obvious issues related to brand/product positioning. From this exercise, you should be able to draw 3 circles that (ideally) overlap in one spot; that one spot is your positioning.

• Company strengths
• Competitive difference
• Customer needs

But many times they don't overlap. You might have a competitive strength and point of difference in an area that no one cares about. Or you identify the perfect unmet customer need, but your company can't deliver on it. And I've also had a situation where all the circles overlapped, but the company wasn't using the most relevant words to communicate that core benefit and customers were rejecting the message. (Actually, all these options would make for good follow-up blog posts!)

This is a great, multifaceted discussion topic. If you have questions or comments related to positioning, I'd love to hear them.

Comments

[lyn]

Concerning the importance of BRANDING.

A number of companies, including home
depot, walmart, and target, offer
chance cash awards, or sweepstakes for their paying customers, which are printed on the bottom of their receipts. Chances to win are extended to those willing to fill out a "customer survey" online, and a numeric code is provided on the receipts, which must be used to access the surveys and participate in the drawings.

I have not noticed if the receipts tell how often the winners are chosen, or if the winners are chosen at random, but I wonder if such firms garner any real, useful information from such concepts. My current opinion is that this popular "take this survey and you could win" concept is really just a cheap way to garner email addresses from customers in order to further market products and services, instead of making any real changes in the way they do business and the idea does little to nothing to create brand loyalty or enhance sales (I received a barrage of unwanted emails after filling out such a survey over the course of ONE HOUR and no changes were made by my local Walmart; my complaints being the same as everybody else's in the neighborhood). I'm uninspired by such offers.

However, on one occasion, I was astounded (by McDonald's corporate), and did feel respected, if only briefly (by Walmart corporate), when a representative from each firm actually telephoned me to follow up after I lodged detailed complaints about their businesses in our locality. In the case of McDonald's, the proprietor also followed up with a call to me. This was unexpected. She was very upset that I had not contacted her "first", before emailing McDonald's corporate and I could hear her struggling to be democratic on a couple of points I made.

All of the reps were polite and listened well, but did any improvements come about afterward? YES, but only by McDonald's. These WERE significant and materialized immediately (a couple of weeks), however, I'm still not brand loyal to McDonald's by any stretch of the imagination as a result.

As for Walmart, I am just as frustrated, and occasionally furious, with shopping there as before, and so are many other consumers I speak with while waiting in their lines (from the Northeast to the Southeast. I'm a travelling sales girl).

Walmart's strength is not their staff's product knowledge, salesmanship, customer service, or availability (virtually non-existent in most of its stores), but its "LOW, LOW PRICES". I don't know why I continue to forget this reality and the root meaning of their tagline, despite how many times I shop there and their never-ending TV advertising boasting same, but I think many other Americans struggle with this as well.

Walmart has a very big problem, and I believe its very aware of it. The trouble is that the giant has become so large and pervasive in our society that there is a growing disparity between what the company CAN and CANNOT deliver, and what its customers, particularly its American customers, EXPECT Walmart to deliver, regardless of the former.

I am observing that customer expectations of the firm are growing, and that a game of touche is developing throughout its cache of wealthy and budget-conscious customers alike. Millions of shoppers, across a wide spectrum, are being challenged to accept the chain's limitations, and many do not even enjoy shopping there. While WallyWorld does offer SOMETHING for everyone, it is definitely not everything to every one. They are not very nice places to shop at, despite their lower prices, as Walmart IS a DO IT YOURSELF, FIND IT YOURSELF, HIGH VOLUME WAREHOUSE. As time goes on, I believe the sustainability of the company's success will peak and quite possibly dive, unless they increase, train and upgrade staff, and/or they change their price structure.

A positive Walmart "shopping experience" is possible, but this depends sole on WHAT you want to purchase, the AMOUNT OF TIME you have to purchase it, and how much you're willing to pay for it. I believe that's the TRUE order of shopping for most American consumers, not the other way around, as Walmart would have you believe. You only have to shop there one or two times to expertly come to know this, as, for example, when you just want to run in and grab a matching towel set for grandma's birthday, only to discover that there's no price tag on the box, or that one towel is missing, or that the one you want is located on the top shelf, (and of course there are no sales people around to help you reach it), etc. If you're lucky, you'll end up spending only 45 minutes to pay and get out of the line, so unless you shop at Walmart very early in the morning or late at night, there's no such thing as convenience, and especially if you're interested in purchasing something you know little about (because their sales staff doesn't know anything about it either). My ambivalence between being attracted to their lower prices and the challenges I KNOW I'm going to encounter if I shop there can be a tough call for me. This is a busy world, and the local, more expensive boutiques that carry grandma's towel set are fast disappearing. In Wally World, you are COMPLETELY on your own, wandering around in a big box. Walmart's tagline should read, "Our Low, low, prices, with your low to no expectations...hey, no worries!"

On a side note: Did you read the teeny weeny New York Times article last year containing Walmart statistics? Here's a snippet: Walmart sales make up 11% of our GNP, their annual sales are over 26 BILLION dollars, they own and operate several Chinese harbor PORTS, not shared docks like other national chains, and 70%, that's right, AT LEAST 70% of their products are Made in China. Walmart-Chinese Manufacturing "partnerships" annually hatch new millionaires in that country at a pace never before seen in history. And by the way, Walmart prefers to PURCHASE the land their stores sit on, not LEASE. Know why? Because then they have a voice (a really BIG voice) at all of your local zoning, town hall, or environmental meetings. I shouldn't have to tell you why any of this is ominous.

Many of Walmart's customers, including regular customers, are disatisfied and frustrated, if not downright angry while shopping there. The giant continues to boast lower prices, broad variety of merchandise, and ample locations, but in reality it does very little to address it's impersonal shopping venue, aforementioned lack of staff and their little to zero product knowlege for its "loyal" customers. It simply can't do that and still be WALMART. In this mix, there are those who will NEVER be loyal to Walmart, as they'd rather make an appointment to speak with a knowlegeable sale associate about the camera they've had their eye on, pay more for it, drive farther to get to the specialty store, and interact with a cashier who actually speaks English and who says "Thank you" and "Have a nice day", actually looking you in the eye when they do. As for me, I see saw, somewhere in between these two worlds.

Meanwhile, every day, many times a day, another Walmart shopper is muttering under their breath, or shaking their head in frustration, tossing their intended Walmart purchases on the counter, or abandoning their cart filled with goods and walking out of the store while vowing to themselves that they'll never shop there again, yet KNOWING they surely will. And soon.

Like a t-shirt boldly emblazoned with the phrase (tagline?): "I DID IT IN THE MIDDLE OF THE ROAD!", Walmart's current TV ad says everything anyone could need to know about who and what they are as a jaunty little tune is accompanied by the happy visual of a bouncy, yellow smiley face in a cowboy hat that jumps from one price tag to another (designed for even the Barney-aged viewer).

Perhaps I have come along some in my journey of accepting Walmart and the other giants. After several years of shopping at various stores in many states, I know now, that if I need a VIDEO CAMERA, CAMPING EQUIPMENT, COMPUTER, JEWELRY, OR AUTO SUPPLIES, for example, I'm armed in advance with knowledge about these products BEFORE I shop for them at Walmart. Otherwise, I shop elsewhere to get them, also armed in advance with the the knowledge that shopping at every Walmart SUCKS (and I've been to nearly 30 of them).

Rather than companies to be concerned with catchy taglines, just the "right" name, image, aesthetics and gimmicks like chance cash drawings and sweepstakes, etc., my opinion is that the best way for retail corporations to gauge true customer preferences and satisfaction is by in-store video, which is ultimately, the only indisputable gauge of true customer satisfaction.

Walmart has extensive (and incredibly expensive) live video systems throughout their stores, so they KNOW exactly what is going on EVERY SECOND, around the world. Their cameras can zoom in on the serial numbers of dollar bills being transacted at the registers, so never be fooled into thinking Wally doesn't know, intimately, all that their customers are feeling, saying and paying - ALL THE TIME.

An increasing number of businesses are installing live video recordings, and I DESPISE it. My entire being, my private moments are being filmed and recorded here in America (including those of my family and friends in the company parking lots), but many retail companies now run 24 hour AUDIO TAPE as well, at their customer service counters (Walmart). What to do? It's all in the name of increasing that bottom line...so who cares about tag lines? Let's get real. Unless you've got a million bucks or more, it's hard to brand anything beyond your local neighborhood, even with cable advertising (you might work your tail off and get a reputation throughout your COUNTY). The bottom line to me as an entrepreneur is that if you don't have what it takes to source and then routinely satisfy your customers, you're not going to make it, even if you had NO NAME at all!

Comments welcome, all. Lyn

[Steve Portigal]

Tom, talking with customers doesn't simply mean asking a question and taking it at face value. The skill of an interviewer (or ethnographer, if we want to throw terms around) is to surface the things that can't be easily expressed, that people do not express easily. And to do a great deal of inference from watching what they do, participant-observation, asking people to show you things, what was said, what wasn't said, how things were said, and how what was said didn't always line up with what you observed. It's a highly interpreted activity and isn't founded on taking everything you are told literally. That's what we have surveys for :)

[Tom Asacker]

Great post Jennifer. And I have to agree and disagree. Here's where I agree:

"There are unmet needs everywhere!"

And here's where I disagree:

"You simply need to talk to customers to learn what they really care about."

In most cases, customers have no idea how to articulate their "ideal world." Also, they may say they care about something, and do the opposite.

In addition, a discussion of the company, the category, and the competition can make things muddier, not clearer.

In my experience, the key is to have a broadbased and visceral understanding of the marketplace; including trends - and possibilities - in technology, the media, corporate pressures, societal trends, end customer frustrations, etc.

Being immersed in "it" will lead to innovations that no one has ever considered, let alone articulated.

P.S. What happened to your "naming" post?

[Arun Sadhashivan]

Hi Jennifer,

Your positioning "3 circles" method, is a really good start at a model. But how does it fit in a market where you have players offering all kinds of services, but the customer only needs a few core needs; possibly because of "service feature fatigue", and all major players satisfy those features?

This is especially problematic in intangible features of lifestyle services like hospitality, catering, conference centres etc.

I've tried to develop a "value estimation model" for these different types of "service features". I've stuck it in a whitepaper at this location http://www.arunconsulting.com/docs/optimal_pricing.pdf.

Do let me know what you think!

- Arun

[David Foster]

A few thoughts. First, it's really important for companies not to kid themselves in the area of "company strengths." For instance, companies often think they can sell product "X" to a particular set of companies because they are already selling product "Y" to the same companies--but fail to realize that the sale is to different organizations and individuals, even if in the same companies, and their existing relationships are worth a heck of a lot less than they think.

Also, the positioning issue becomes especially complex when a company is in several very different markets.