I was recently asked to name the biggest product positioning mistake a startup could make. My answer was that most companies don’t position their products at all, at least not actively. Worse than that, they let customers position their products for them.
Your product is positioned, even if you didn’t do it on purpose
If a company does not deliberately position their product in a market, one of 2 things will happen:
- The team will collectively use a “default” or assumed market position.
- Customers will decide what you are, using the clues they can most easily assemble.
In either case, there is a chance that the resulting positioning works, and it makes your product’s value easy to understand. However, there is also a good chance that the positioning will pigeonhole your product into a category that makes your strengths seem irrelevant and your entire product seem like a loser.
Most products have capabilities that overlap market categories
Customers use market categories to mentally classify solutions and give them context. Telling me your product is “email”, makes me assume it’s similar to other email solutions. I will expect your competitors to be GMail or Outlook and your pricing will be similar. I will expect it to have an inbox and a way to filter spam. On the other hand, if you tell me your product is “chat” I will make completely different assumptions and I will expect your competitors, pricing, and features to be different. From a purely product perspective, chat and email have many overlapping capabilities: both send and receive messages to one or more people, both let you manage a list of contacts, both indicate read and unread messages, etc. However, each has critical capabilities that are vastly different. Those capabilities enable different uses. The business models are very different. Despite the overlap, “Chat” and “Email” are utterly different market categories in the minds of customers.
A winner in one category is a loser in another
Our choice of product category will have a massive impact on how customers evaluate our product. If you describe your product as “email”, you’ll have to do all the basic email things. No calendar integration? Sorry, your email sucks! If you say the product is “chat” on the other hand, I don’t care at all about calendars. I will however expect instant message delivery and the ability to make phone calls. Oh you don’t do that? Your chat app sucks! Companies need to select their market category carefully. The best category makes the strengths of the product both obvious and relevant. A poor choice can make your best capabilities invisible.
“Default” product positioning is common (and dangerous)
Now imagine you run a startup and you’ve decided GMail sucks and you are going to build a better email system. Your app can show you when a person is online or offline. The product allows you to send a message to a person using a phone number or an email address. It automatically shows if someone has read your message and it also allows you to share files. So what are you? Some of this sounds like chat. Some of this sounds like email. You could easily make a choice to position your product as either one.
Most companies won’t even realize there is a choice to be made. If they set out to build email, they will simply categorize the product as email regardless of where their roadmap ended up taking them.
Customers can (and will!) position your product if you don’t. That doesn’t mean they’re good at it
Can we let customers answer this question? Why not throw the product out there and let the customers decide what it is? The answer is that customers will happily position your product for you if you don’t explicitly do it for them. The bad news is that doesn’t mean they will choose your best position.
Customers are experts on their own needs and pain. Customers are not experts on YOUR product. They will naturally try to quickly match your product’s most obvious features with a market category they already understand. If your best features are difficult to wrap their minds around, they will ignore them and focus on the easy to understand stuff. The result often places a really innovative product in a category it can never win.
For example, suppose I built a new app that could be positioned as email, chat or “team collaboration”. The best differentiated feature is “context aware file sharing” (I’m making this up ok, don’t ask me what this is). I also have instant message delivery. If I introduce the product to a customer, without attempting to position it myself, they might easily conclude I’m a chat app. That is likely the first thing they will think of when they see that feature. That would be OK, except nobody cares about file sharing when they are looking for a good chat app. Instead I could have positioned the product as “team collaboration” and suddenly my innovative file sharing stuff is not only obviously relevant, it’s cool.
Find out what you are, and do it on purpose
Great positioning can provide just enough context to stop a customer from making poor assumptions about your product. That context can make the difference between a winning product and a loser.
Deliberately positioning our products gives us the best chance of putting our best capabilities at the centre of how customers think about us. To do that, we have to know our product strengths, evaluate possible market categories and pick the best match. If we are successful, the awesomeness of our products becomes obvious.