Back in the mid 80s there were two kinds of desktop printers for PCs: impact printers (sold by any number of companies), and Hewlett Packard’s laser printer.  The former were inexpensive, noisy and produced low quality output…but they did the job.  The laser printer, in contrast, produced high-quality documents, was very quiet, but was quite expensive ($5,000 at the time).  There was nothing in between.

In 1988 HP introduced its first mass-market inkjet printer, as did Canon a year or so later.  Though more expensive than the impact printers of their day, they were significantly less expensive than laser printers.  Each company took a different approach in positioning its product.

Canon’s positioning: A quiet replacement for the impact printer

HP’s positioning: Laser quality without the laser price

Now for sure, office workers were keen to get rid of their distracting impact printers so that ‘quiet’ appeared to be a great position for a new market entrant.   However, the majority of those who relied on impact printers suffered from ‘image quality envy’.  That is, what they REALLY wanted was a printer that produced great looking documents, just like a laser printer, but at a significantly lower cost.

What happened?  HP captured the market.

Why does this story demonstrate the importance of positioning?  Well you see, in essence they were the same product.  They were equally quiet.  And, they produced essentially the same quality output.  Did potential buyers know that from the advertising?  No.  How could they.  They relied on the vendors to tell them what was so great about these new devices.   Canon hit a hot button.  HP, however, hit the hottest button!

And the one who hits the hottest buttons win!

Positioning: The Battle for your Mind, Al Ries and Jack Trout

Positioning is not solely established by what you say about your product.  It’s not that simple.  It is strongly influenced by how you price, package and offer it to the market.  Positioning comes from what the prospect ‘concludes’ about your product from everything you say and imply about it.

Here is a great example of how positioning can make or break a product’s success.

In the early 70s Volvo introduced the 262C, a much sportier car than their existing boxy (and very safe) sedans, the 242 and 244.  It was described as a new, sportier offering from the company and was priced somewhat above those standard models. The 262C was available in only silver or black to help establish its uniqueness.

It sat like a rock in dealers’ showrooms.

At some point they realized changes were needed.

So what did they do?  First, they decided that if they wanted it to be perceived as a special, very different offering from their other vehicles, they needed to price it accordingly.  So the selling price was dramatically increased.  Next, they strongly promoted the fact that it was designed by a well-known Italian sports car designer, Bertoni.  Finally, rather than saying it’s a Volvo with a sporty flair, it was described as a SPORTS CAR, but designed with Volvo’s legendary emphasis on safety.

The result: they couldn’t make them fast enough to meet demand.

Remember, they didn’t change the product.  It was the same car.  That bears repeating.

It was the SAME car.

Poor positioning can cost you a bundle.  Make sure you know what is most compelling to your prospects and that all aspects of your positioning are pulling in the same direction.

Clearly, this last statement is true for all communications tools: print advertising, direct mail, e-mail newsletters, TV and radio advertising, event sponsorships, trade show attendance, speaking engagements, etc.  What makes answering this question for social media so acute today is the massive hard-sell going on among the ever growing list of social media vendors.

People buy using the same model they have always used.  What was important to buyers 30 or 50 years ago is still important.  What has changed is the variety of information and communication sources that exist and the ease with which they can be accessed.

For my money, social media can make major contributions to answering a number of buyer questions.  Specifically, which vendors:

• Have the offerings and capabilities that meet my specific needs?
• Are credible?
  • Have a track record?
  • Have customers?
  • Are experts about the industry issues and problems they purport to solve?
  • Can be trusted to deliver on their promises and stand behind their products?
  • Have a vision for and commitment to future product improvements?
  • Have customers who are happy to be their customers?

Social media affords you the potential of getting your answers to these questions in front of your prospects.  I say ‘potential’ because what has to be true is that your prospective buyers have to first be engaged in using social media for this to happen.  If you’re talking in places where they’re not listening, you’re wasting your money.

So the first step in your social media activities is to first uncover if and how your customers are using social media to stay informed about the industry in which you operate and the solutions and capabilities you offer.  How do you do that?  Well, as simple as it sounds, you ask them.  This will provide you with the information you need to direct your social media efforts and bear fruit from your investment of time and money.  Once found, then you need to decide what combination of awareness, credibility, trust, etc. needs form the majority of your social media content.

If collecting information from your customers and prospects about their use of social media is not the first step proposed by a prospective social media supplier, be very suspicious.  And if they don’t ask what communication goals YOU want to accomplish with social media, start looking for a new vendor.

An interior architectural design firm hired John’s DM agency to help market their company’s office design services to commercial real estate developers and brokers in the Chicago area.  John first collected the brochures of competitive firms to see how they were going about attracting new clients.  All the brochures looked the same, talking about the education and experience of their architects, showing images of their most impressive projects (marble foyers, etc.) and generally bragging about just what wonderful companies they were.

John decided to take a different approach (smart guy that he is).  He asked the question, “Why is one architectural firm chosen for a project over all others?” That is, what are the compelling differentiators among design firms?

Instead of holding a brainstorming session with his client to conjecture and pontificate on what those attributes were, John reasoned that the most credible source of this information would be the customers themselves (you know, the people who actually choose the design firm and sign the deal).

So he held face-to-face meetings with a sample of this group and discussed their use of interior design firms, their experiences, what worked well, what didn’t, etc. using standard market research interviewing techniques.

So what did John find to be the most important characteristic?  Skills?  Experience?  Previous projects?

No, no and no.  It was much more fundamental, much more ‘down and dirty’ than that.

Real estate developers and brokers viewed architectural skills to be a commodity—all firms with any depth of experience provided essentially the same high quality work.  No meaningful differentiation here.

What these firms did seek out, quoting from the interviewees themselves, was “a company that would not screw up the deals” they were putting together for prospective buyers.  Not a very sophisticated or technical need, but it was a compelling business consideration in their selection processes.

There were two ways ‘screwing up’ typically happened:

1. The design firm got far too ‘artsy’ and created a concept that went way over the buyer’s budget, causing them to look for another developer (who used a different design firm), or
2. In a side conversation, the design firm would tell the prospective buyer, “this building won’t work as well for you as another one I know of that’s nearby”.  And that building was NOT in the portfolio of the presenting developer or broker

The people John spoke with were both adamant and uniformly consistent about this costly issue.  It was not what design firms did that was most attractively differentiating, it was what they didn’t do.

How did John use what he learned from his research?  He mailed a three-paragraph letter, personalized to each of the 600+ targeted recipients that began with this sentence:

“If you want to work with an interior design firm that won’t screw up your deals, then you should call [his client].”

He went on to elaborate about how his client is keenly aware of the threat of these deal-killing actions and that they were savvy and experienced enough to never create such situations.

Before he executed his campaign, John was told by people who had marketed to developers and brokers that they were a ‘hard core’ crowd (described as ‘land sharks’ by those in the know) who didn’t go for being marketed to and would never open any ‘advertising’ that fell on their desks.  That was not John’s experience.

Instead of an anticipated low, single-digit response rate from the mailing, John’s client received responses from 22% of the recipients!  That is nothing short of miraculous (and awe inspiring).  In the subsequent 3 years, this kind of insight helped John’s client to go from 2-5 employees to a professional staff of 25 architects.  When you know what’s really important to your current and future customers, it’s amazing what you can do. Growth anyone?

The insight that drove this kind of result (what NOT to do) could only have been uncovered by deliberately engaging with customers and prospects about what’s important to them—that is, ‘listening to the market’.

Regardless of how smart you may be about your customers, often there are key insights that are not picked up in typical customer meetings or sales encounters because they are not the subject or purpose of those conversations.  This is, however, the kind of core issue that is often uncovered in market research.

Do you know YOUR market’s FUNDAMENTALS?  You should, because there is a lot riding on it.

So how do I equate a $672 million cost with the acronym ROI?  I do so because in this example it means Risk of Ignoring.

You see neither the Department of Homeland Security nor the engineers at prime contractor Boeing bothered to ask the people who would actually be using the surveillance system what they wanted or how they wanted the system to work.  They ignored the very people who would best know the environmental and operational demands the system would have to meet in order to be up to the job.  Had they asked, they would have known that the standard, off-the-shelf surveillance equipment they selected would not be able to handle the heat, high winds, dust and vast distances of the southern Arizona border.  They set out to meet a need they simply did not understand.

So not knowing their market cost you and I the better part of a BILLION dollars (so far).  And I’ll bet that by and large the designers were very smart people and felt they had made sound assumptions about system’s requirements.  They may have been smart, but not smart enough.  They were obviously way too self-assured to think that they needed to speak with the ultimate users of the system.  They didn’t want to hear that their preconceived ideas might be wrong—“I know what I want to do so don’t challenge me with the facts”.

Unfortunately, the avoidance of real customer input is not atypical for many companies.  They create a set of ‘educated’ assumptions about their targeted customers, maybe bounce some ideas off a few colleagues in allied fields (but who look nothing like the target and would never be buyers) and then go design the product.  When they finally bring it to market it becomes painfully clear that they missed a key product feature, or erred in the way it’s delivered, or even that they chose the wrong user types to target.  They not only wasted money, they lost time and credibility by not meeting the revenue time line on which their business case depended.

Don’t be one of those companies.  Know your market first.

Here is the link to the 60 Minutes report on the virtual fence project: http://www.cbsnews.com/video/watch/?id=6078904n&tag=related;photovideo

If you don’t want to watch it in its entirety, the relevant portion falls between 4:45 and 8:00 minutes into the program.  You can skip ahead, but when you do so, you have to first sit through a 60-second commercial.  After that you can move around at will.