Business Differentiation Strategy

Business Positioning: An Overview and 2 Key Critical First Steps for Strategy Development

Business differentiation strategy, or in marketing speak, “positioning,” is the word(s) or concept your business occupies in the customer’s mind. It is one of the most important steps in marketing strategy development, and often the most overlooked. Without an understanding your objective position in the market, the task of how to differentiate your business from the competition will lead to wasted investments and weak results.

When we ask brands, how they are different from the competition, they almost always respond with….? Yup, you guessed it: great service! Unfortunately, the best market positions are objective, not subjective, although service is not impossible to own (think Nordstrom’s/retail). However, it usually takes about five minutes of an audit to quickly determine there are too many holes to think they have a chance of owning a “service” position. Service to the customer is integrated culturally from the top-down and then systematized. Most businesses lack one or the other (or both).

Business differentiation strategy always starts with the customer. Prospective shoppers use concepts to group brands into categories to simplify the selection process. This is easy to understand: McDonalds=Fast Food Burgers, Head&Shoulders=Dandruff Shampoo, Dollar Shave Club=online subscription razors.

So it’s important to understand, business differentiation starts with positioning. That is why positioning matters to your business.

Local Business Positioning Examples

  • Neighbourhood Fruit Market: This cash only one local fruit market has a small selection. It also operates in a neighbourhood where there are four supermarkets within one mile. How does it stand out? As the owner’s state, “we are open every day.” When customers realize they are out of food on holiday, they know they can go there to stock up.

Lesson From The Fruit Market: How can you deliver your services in a way that is more convenient or ease to use than your competitors? Quiktrip is another obvious example of owning a “convenience” position.

  • O.Noir: Delivering your service in an unusual way is one way to become memorable from other companies. Based in Toronto, O.Noir is a restaurant that serves meals in the dark. Guests are encouraged to turn off their electronic devices and experience dining in a new way.

The lesson from O.Noir: Can you take something away from the “standard” customer experience to make your company memorable?

  • Doctors Making House Calls: Waiting to see a doctor when you feel unwell is a frustrating experience. That is where DMHC comes to play. Based in North Carolina, this practice has over seventy physicians who are equipped to make house calls on patients.

The lesson from DMHC: What do customers in your industry complain about? In health care, waiting for service is a pain point which can be addressed with house calls. Look for patterns in your customer complaints to find positioning ideas.

Two Strategies To Develop Positioning

In my experience, there are two ways to develop a unique market position. First, you can carry out a market study as part of a broader marketing project. That approach reliably delivers excellent results. At the other end of the spectrum, you can simply take an educated guess. An educated guess sometimes yields results if you have enough patience. Let’s consider both strategies in greater depth.

1. Research Driven Positioning

Research is the single best way to develop a unique position in your market. Using a structured process, you ask a series of questions about perceptions, past experiences and buying activities.
It is critical to understand what concepts or attributes your competitors own in the mind, and the importance of those attributes (price, selection, reliability, etc). In my experience, it is best to engage a branding research study as part of a broader marketing project. This approach ensures that you ask good questions and have a process to act on the insights you receive from the study. Alternatively, you can also carry out your research using service like Survey Monkey. If you are inexperienced with surveys, you may not generate actionable insights, or worse, translate the data incorrectly and make a strategic error.

Resource: Survey Monkey’s The ultimate guide on how to conduct market research is a helpful introduction to market research methods, but our preferred partner is Guts Branding.

2. Educated Guess (Trial and Error Positioning)

What positioning can you develop if you lack the resources to carry out a market study? At this point, you are reduced to guessing. That means you have a higher risk of failing to connect with your customers. To improve your odds for success, visit three to five of your major competitors and take note of their strategy.

How do your competitors handle pricing, selection, customer service, and technology? This approach may yield a few possibilities for your positioning. Once you develop a list of ideas, brainstorm which idea looks most promising. Once you have selected the idea, experiment with the new positioning. If customers appear uninterested, you can guess again or switch to a research driven approach.

Further Reading on Positioning

Several authors have developed the positioning marketing strategy over the years. For additional insight on this strategy, I recommend the following resources:

1000 True Fans by Kevin Kelly

Kelly is best known as a founder of WIRED magazine and the author of several technology books. In this classic essay, he illustrates that artists (and arguably, local businesses) only need one thousand true fans to become successful. If you think you need millions of customers to become successful, read this essay.

Positioning: The Battle for Your Mind by Al Ries and Jack Trout

Often considered the “Bible” of positioning, this book lays out some strategies for positioning. While some of the examples are dated, there is a great deal of value in the book. If you are hard pressed for time, read the first few chapters and the case studies at the end.

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