Archive for the ‘differentiation’ Category

I’ve just uploaded the first draft of my latest Cloud Computing REPAMA Segment Analysis Study.

This time I’ve looked at a couple of vendors in the Cloud Software / Cloud Management / Application Services Management segment (using the Lustratus REPAMA Cloud Computing market taxonomy / segmentation model). Specifically I’ve reverse-engineered the key go-to-market strategies of 3Tera and Appistry. I will add another couple of vendors to the study as time goes on but for the moment I thought these would be two good candidates to start with. They are very different companies with very different product approaches to solving similar, if not quite the same problems. I wanted to spend a little time here highliting some of the interesting findings.

Differentiation

I’ve already blogged on my concern that Cloud Computing vendors/ providers are currently differentiating themselves against previous paradigms as opposed to creating differentiation strategies versus their real competitors – i.e. other cloud computing solutions. So it’s no surprise to see that this trend continues in this study with 3Tera. Looking at where 3Tera fires its competitive differentiation fire power in the UNLIKE element of the positioning statement we can see that the focus is:

traditional dedicated infrastructure

To be honest this is an implied competitor/alternative because whilst 3Tera is very clear on its value proposition and target audience, it doesn’t appear to engage in traditional competitive differentiation. Nowhere does 3Tera clearly define what type of solution they feel they are a better alternative to. There is an obvious implied competitor / alternative which is the traditional ways of doing things. But this is never called out explicitly by 3Tera.

Appistry is clearer on its competitive situation. It believes that its competitive differentiation lies versus:

infrastructure approaches to cloud computing

The implication here is that Appistry focuses on the application and not the infrastructure which they believe yields many benefits.

Existing Applications

One area of strong correlation between the vendors in this study is that they both stress their ability to work with existing applications. This correlation suggests that this is a key customer requirement in this particular market segment. As shown in the chart below:

As you can see from the dashed pink line on the chart above (which represents the market mean – the average marketing strategy for this segment) there is strong support for existing applications in addition to the somewhat obvious “table stakes” feature of automated application deployment and management.

Value Proposition

Another strong area of correlation is in the value proposition. The first chart below shows the raw claims made by each vendor for the value they ascribe to their product offer.

Much of these categories of benefit/value are fairly generic and are all very similar to the the value propositions I would expect to see for a cloud computing product. When these value propositions are interpreted against our MITICOR value proposition classification, we can see a very strong correlation between the products of the different vendors as the chart below shows.

The value proposition for both of these products boils down to operational improvement and cost saving which again is very much as I would expect for a cloud computing technology in this segment.

Positioning Statements

I’m not completely 100% happy with either of these positioning statements as both of these companies appear to aim everywhere and focus nowhere. This lack of focus is important to note in itself as it is common in immature markets, but it does make nailing down a semi-accurate reverse-engineered positioning statement a little tricky. But here they are:

3Tera AppLogic Positioning Statement

FOR organisations looking to deploy successful online services to millions of users WHO are struggling to manage the complexity of the infrastructure required to serve online services to online users OUR AppLogic IS A grid operating system for web applications THAT PROVIDES the ability to assemble existing software into portable applications that run on any grid and scale from a fraction of a server to hundreds of servers with a single command UNLIKE traditional dedicated infrastructure OUR PRODUCT makes it extremely easy to deploy scalable web applications without dedicated IT resources and personnel

Appistry CloudIQ Platform Positioning Statement

FOR enterprises seeking to take advantage of cloud computing WHO need to migrate existing applications to the cloud and virtualized environments OUR CloudIQ Platform IS A Cloud application platform THAT PROVIDES enterprises with the ability to move multiple existing applications to the cloud and manage them across multiple cloud environments UNLIKE infrastructure-focussed approaches to cloud computing OUR PRODUCT allows existing applications to be packaged and deployed to a cloud without re-architecture

Both statements are weak in the target customer and their respective pain, need or desire reflecting the lack of clarity in their outbound marketing.

Slides

I’ve placed a slide deck which expands upon this research on Slideshare.net and this is embedded below. If you’d like more information on this study or a copy of the slides, please contact me. Details of  how to interpret REPAMA studies can be found in the Lustratus REPAMA Guide here.

[slideshare id=2493636&doc=cloudsoftware-applicationservicesmanagement-repamasegmentanalysisstudy0-90-091113100411-phpapp02]

Danny Goodall

I had a meeting with a prospective client earlier in the week and we were chatting about how differentiation and positioning in Cloud Computing has to mature.

The contention was that cloud computing vendors and service providers today are too inwardly-focussed and that they should look at the external market to determine their competitive marketing strategies. Cloud Computing differentiation bears all the hallmarks of early market strategy and is very limited. It got me thinking. Imagine if competitive differentiation was carried out in other walks of life the way it is currently carried out by most Cloud Computing vendors and service providers.

Imagine if Porsche for example had spent 7 years perfecting its new sports car, a car that was specifically engineered to be better than the comparable Ferrari in many very specific ways, a car that can do many things for its prospective owner. Imagine then if at the car’s launch it’s main differentiation was:

The Porsche 912 – you no longer need a horse to pull it along the road

Imagine if Xerox copiers, in an attempt to differentiate itself within the highly competitive markets in which it is present made the bold claim that:

The Xerox X987 – eliminates the need for corporations to maintain a typing pool full of typists to make copies of documents.

When the car was a disruptive new technology it was important to explain to its potential users how it was different from the paradigm it was replacing – the horse and cart. Likewise this was true with the discontinuous innovation introduced with the photocopier / photostat / copier. But once these technologies matured to the point where the paradigm was accepted and there was a genuine choice of suppliers to source it from, vendors then had to focus on their real competition and their real differentiation.

But today this is exactly how much of the differentiation in the various segments of the Cloud Computing market is currently carried out. Vendors and service providers have not yet made the leap that Cloud Computing is “an idea whose time has come”. So instead of aiming their fire at other cloud computing vendors, their differentiation strategies focus on the thing that they are replacing – the corporate data centre, on-premise hardware, non-virtualised operating systems, non-scalable web applicatons, etc.

Don’t get me wrong, it is absolutely essential that the prospect knows how cloud technologies differ from traditional technologies, but Cloud Computing vendors must also realise that they are in real competition for this business and lead with clearly drawn lines of differentiation between themselves and their actual, cloud-shaped competition.

The good news is that there are many “positions” still available to cloud computing vendors. And once these positions are established in the minds of  prospects, it will be doubly difficult for their competitors to change these perceptions.

Taking such a position now will give some vendors a great advantage in the nascent Cloud Computing market but others will just feed the horse and call “walk on”.

Danny Goodall

OK so having arrived at the first cut of a segmentation model for the Cloud Computing market, I am now embarking on a series of Reverse Engineered Positioning and Messaging Analysis (REPAMA) studies.

The problem I now face though as I start tp look in detail at various cloud vendors’ marketing propositions is that their products, capabilities and value propositions all appear to blur into one.

I guess this is a symptom of the early market nature of Cloud Computing. I would expect that as the market develops, real prospects will make real decisions based upon their real needs, and real differences will be stressed and perceived between the products and services of different vendors/service providers.

But right now the general approach I see is that no matter which product or service of a particular vendor I’m looking at, the proposition to the prospect typically boils down to.

Cloud Computing is good

…and this fits for any product in the portfolio. I see…

Cloud Computing does this, Cloud Computing enables that,Cloud Computing reduces this and Cloud Computing increases that.

Fine. But there are a couple of problems with that.

Firstly, and somewhat obviously, if all vendors/service providers simply evangelise the category like this instead of focussing on what they specifically can do, there is zero differentiation. And with zero differentiation the business typically goes the way of ‘market leader’ or at least the vendor/provider with the greatest market reach.

Secondly, if I were a prospect and all I hear about is the generic capabilities and benefits of the cloud, how do I know what each of the different products in your portfolio could do for me? It might be good to talk to me in terms of what the individual products do, how they are each different from/superior to competitors’ products or alternative approaches, what tangible things each product changes for me and what I would be left with AFTER I’ve bought each product from you.

I should stress that there is another category of proposition developing in my analysis which says cloud is good BUT there are lots of problems and potential problems to address first.

This is an obvious proposition and one that vendors/providers in new paradigms like cloud quickly rally around. It goes something like this…

Cloud will do lots of great things for your organisation but you have to make sure you do it right or all sorts of bad things could happen…

The problem with this proposition is that there is an obvious implication.

…and if you don’t solve these things, you’ll lose your job.

This negative connotation and association with the potential failures of cloud initiatives are perhaps not the best way to attempt to mobilise prospects. Having said that, as the movement toward the cloud builds pace it will likely be this “proceed with caution” proposition that gains traction. As cloud becomes a given, so it will be the vendors/providers that can prove that they can quickly address the deficiencies inherent with current cloud strategies and mitigate the risks involved that will rise to the top.

Anyway these are some of my early findings that I thought I would share.

I’ve decided to first look at the Cloud Software / Cloud Management / Application Services Management category from the segmentation model. And I’ve decided to take a look at Appistry first – mainly because its a category that I’ve had direct experience of but also because in a market as broad and as complex as this one, well, you have to start somewhere.

I’ll keep you posted as I move forward.

Danny Goodall

I hope you like the alliterative heading for the blog which was born from some work I’ve been doing recently for a client.  I’m not sure that diffident is exactly the right word but there was no way that I was going to ditch it when it looks so beautiful set against all those “diff” words.

Anyway, I was struck recently by the reluctance of some people to fully embrace the concept and importance of aggressive differentiation.  Whilst I’ve long understood that different types of people reach decisions about products (and lots of other things too) in different ways based on our bias towards one of the following psychological functions (Intuition, thinking, feeling and sensing), I’ve seldom before encountered this on the vendor side of the marketing battle.

I’m certainly not sitting in judgement on this.  On the contrary it has made me look carefully at the way I work with my clients moving forward.  My client has a very strong business and is growing at an incredible rate but they are starting to encounter stiff competition hence my involvement.  I’ve been working on strategies to help to grab a position in the market for them that will undermine their competitors and am pretty pleased with the results.  It’s been a great project and I’ve really enjoyed working with them, they are top people and have great products.  The problem lies in their reluctance to stick out their chest, beat the drum and proclaim their greatness.  They are, I guess you would say, corporately shy.

It made me dust off my copy of Differentiate or Die by Jack Trout to review the psychology of differentiation but this time from the perspective of the vendor.  It set me thinking there is no “one” way to build differentiation strategy.  Whilst it’s important to be able understand the behaviour of your target audience, it’s also important to ensure that you are happy with the chosen strategy and that it sits well with the philosophy and perhaps even the ideology of the company itself.

For example could Company A, staffed and populated by conservative and modest management feel comfortable going to market with a message of “We’re different from Company B because we do X better than them”?  It’s not an easy step for them to take.  The opposite of this would be to expect a vendor who really understands competitive differentiation such Oracle to say “Test our product and it will speak for itself”.  Whilst this might be true a company like Oracle will never turn up the opportunity to thrust the differentiation dagger into the chest of the competition.

Somewhere in the middle lies the truth I guess.  There is immense credibility, not to mention the moral high ground in looking to let your product win the battle for you.  But equally, aggressive marketing by aggressive competitors can cause you to be de-positioned in the eyes of your prospects such that they think they know where you are positioned and won’t even bother to evaluate the product.

So I’m going to cover this subject in a series of short blogs taking a look how differentiation works from a psychological perspective and how this translates into corporate psychology.

Danny Goodall.

So closing out this series of posts looking at differentiation in markets where technical standards have caused little technical difference between products, I’m going to look at standards bodies and technical education as a technique to create differentiation.

Preach the gospel – Educate

The first point to make is that in my experience products that have developed through the process of ratification of technical standards, first find an audience amongst the technical community.  This means that there is an opportunity, albeit with a finite window of opportunity, to become the first vendor to provide education together with access to evaluation software for these early technical evaluators.

I’ve had first hand experience of this early stage marketing exercise.  We fed the thirst for knowledge and the need for evaluation software (to mix metaphors) to build a loyal community of technical evaluators, developers and systems architects.  We were able to craft an image for the company as the developer-friendly standards implementer, the first company to turn to when wanting to understand how the standards should be interpreted and implemented.

Obviously at some point you have to turn this rather “altruistic” approach into a business that  licences software and keeping that audience with you as you do this is not easy.

“Work” the standards bodies

Another technique that can be exploited, although it needs significant “muscle” to be able to carry off, is that of leading that standards-bodies.  Again I’ve had experience of working for a relatively small vendor that was represented on standards-bodies where we came up against larger vendors.  These vendors were able to almost completely dictate the direction of the body through a mix of funding, bluff, bluster and threats.  It was an interesting process to observe and the outcome, whilst not being everything that larger vendor wanted to achieve, was that they were able to grab territory from other vendors on the committee.  If a camel is a horse designed by committee then all I can say is count the humps on the back of the standard when a large technology vendor charitably volunteers to donate 50 man years of code to “expedite” the adoption of the standard.

Time to abandon standards

Lastly, understanding at what point it is right to move on from the standards to create a “proprietary” offer is important.  This may not be a public admission that your product now features proprietary capabilities alongside the standards-based functionality, but the point will come when in order to take the product forward at the pace required standards become secondary.

Using this message of “We have used standards to get ourselves to this point but now we need to implement specific technology to deliver what the market really needs” can be powerful but is a double-edged sword.  Being seen to “abandon” standards in this way can have a very negative reaction.  Whilst this would typically only happen once the market has reached the later stages of maturity, the benefit to the vendor that can first differentiate with proprietary features whilst externally still being perceived to embrace the philosophy of standards is significant.

So if you can be seen as more devout than the other guys, and preach the standards gospel further afield than anyone else, you can grab a position in the market that other vendors will struggle to defend.

Danny Goodall

I’m carrying on this series of posts on how vendors can differentiate themselves in the market when technical standards have had the effect of removing significant functional difference between competitive products.

This time I’m going to look at partnering to create differentiation in your offer.  Whilst the product proposition will remain materially similar to that of the standards-driven competition, a proposition carved from the synergies of the product and a strategic partner can be beneficial.

Partnering – Other complimentary vendors

As I suggested in this post, broadening the product portfolio is one way to create differentiation.  Whilst this can be done through internal product development, it is also possible to broaden the product proposition through strategic partnerships.  Obviously there are some ground rules here.  Firstly the products must be complimentary in that they should not overlap functionally.  Secondly the resultant product set must take the vendor into new areas when compare to the competition.  Thirdly, the partner must not have the same resultant product set themselves or conflicts can occur.  Lastly, the resultant feature set must not be too much of a departure for your sales team to credibly take to market.  If, to sell the partner’s products would require your own sales team to take on skills that they don’t naturally posses, this can be counter productive.  All of these caveats notwithstanding, one shouldn’t underestimate the value of partnering for obfuscation.  i.e. you partner to achieve a tick in the box and to create differentiation with no real intention of selling the partner’s products.

Partnering – Professional services

Similar in concept to the ideas I discussed on methodologies, differentiation can be created around how you implement your technology within your customer’s organisation.  Third-party system integrators or boutique technical consultancies can add value and create differentiation in your offer.  If you are going to rely on a third party organisation to create differentiation like this. it is essential that the reputation of the third party is second to none and that they provide something that you alone cannot.  Perhaps access to a different audience strata or a reference customer base you don’t posses.  In addition you should be wary of laying yourself open to the challenge that your proposition is so different or complex that you require specialist third-party services to implement it.

Partner – Embed your technology

Finally, the ultimate differentiation through a third party is to embed your technology within a third-party’s product.  Not really differentiation as typically when this embedding is carried out your own proposition is actually hidden within that of the embedding vendor’s offering.  That said, I have had first hand experience of using embedding deals like as references to create differentiation.

The claim that “We’re the solution that is embedded in ACME Corp’s product” can have a significant positive impact on credibility.

I’ll close out this discussion in the next post when I look at the use of standards bodies and technical education for differentiation.

Danny Goodall

Part 4 – Broaden the Debate

I’m continuing this series of blogs here by looking at the techniques that software vendors can use to create the “illusion” of differentiation in markets where technical standards have led to little material product difference.

So moving on from my last blog where I looked at the way an organisation can differentiate based on the way that they sell, this entry will look at techniques to move the focus away from the technology and onto some other element of the proposition where real differentiation between vendors exists.

I should perhaps first acknowledge that achieving this sort of holistic approach to taking a proposition to market is not the work of moments.  It takes a committed and capable marketing machine to craft the story and then real focus to ensure that the entire organisation rallies behind the proposition as one.  Getting the prospect to evaluate the competition on your terms is the objective and only through consistent and disciplined messaging can that be accomplished.

But if you can pull this off, in my experience it is one of the most successful ways to move the debate away from a particular product or technology where little difference exist towards an holistic proposition where difference can be noted.

Synergies, other product lines and product stacks

The most obvious place to start, and if you’ve monitored the SOA infrastructure software space at all you’ll be familiar with this concept, is that of combining products or even building out complex stacks of products that together deliver synergistic benefit to the prospective customer. Whilst the capabilities of one product may be very similar to those of the competition, when combining those features with additional products the total is greater than the sum of the parts and is very different from the competition.

The idea goes something like “Well whilst our XYZ product might be based on the same set of standards as ACME corp’s, when combined with our ABC product line you can achieve these additional benefits that ACME cannot deliver”

Methodology or philosophy

Another technique I’ve seen work well is that of presenting the product as being as-is or even commodity and suggesting that the real value delivered comes from a specific way in which the product is implemented.  Professional services offerings often come into play here.  Taking the product and the services together, it is suggested, helps deliver benefits that the product alone cannot.  Again the implication is that whilst the competition might ape the features of the product, the methodology is borne out of a deeply philosophically differentiated approach.

Ensuring the competition is evaluated “properly”

Creating broader propositions as outlined above is actually not that difficult.  The key is ensuring that prospects are encouraged to evaluate the competition on your terms.  You want the prospect to be asking the competition if they have an implementation methodology or a complete product stack.  That doesn’t sound easy and in my experience it’s not as easy as it sounds!  But if you can force the market to value the elements of your proposition that are different from the competition then you’re half way to building a successful business.

Danny Goodall.

Part 3 – Sell Differently

I’m continuing this series of blogs here by looking at the techniques that software vendors can use to create the “illusion” of differentiation in markets where technical standards have led to little material product difference.

Perhaps the most obvious differentiator between organisations that have “broadly” similar technology, and an area that particularly hurts smaller or less well established software vendors, is the vendor’s approach to selling.

Which audience strata do you aim at and what do you say to them?

At its most crude this can be the difference between Vendor A talking to a technical audience about the features of Product A whilst Vendor B is talking to line of business managers within the same company about how their product will provide some business benefit or other. Two similar offerings, with similar capabilities being “sold” in very different ways to very different parts of the same organisations.

The benefit of selling at a business level is enormous.  Decisions get made at that level, budgets get signed off at that level and enterprise-wide relationships get built at that level.  However, the difficulty with this approach, especially for smaller or less well connected vendors, is that gaining access to senior management outside of the IT domain of their prospects’ organisations is very difficult.

It takes years of building credibility and demonstrating proof of delivering benefits (reducing risk, Increasing profit, saving time,removing cost, etc.) to buy a ticket to the business-benefits ball.  Unless you’ve paid your business benefit taxes, have documented how you’ve helped deliver benefits and have an army of references willing to stand up on your behalf you’re likely to not be taken seriously.

In addition, in my experience, the skills that a sales exec needs to credibly describe the features of a technical proposition are usually mutually exclusive from the ones they need to engage a senior C-level exec in a discussion about the business issues that keep them awake at night.

So where to start if you’re a technology-focused vendor looking to sell differently?

Well it’s a journey and will involve dramatically changing the way your organisation thinks, behaves and looks.  Many of your staff will have to undergo a dramatic transformation and many won’t make it (especially the sales team).  Then you need to look at developing marketing messages for IT Business and the Business audiences.  You’ll do this by talking less about specific product capabilities and instead aligning yourself with where the prospect wants to be AFTER they’ve done business with you.

What are their pains, what are they looking to achieve, how can you help them do this and what proof can you provide that you’ve done it before?

The marketing materials and programs that support such a business audience-focused sales approach are very different too.  And whilst this has a significant impact on the structure of the marketing organisation, perhaps the biggest challenge is that just because you’re now selling to a business audience doesn’t mean that you stop marketing to the technical audience.  We still have to convince these guys that we’re able to do the job. So now you’re waging a marketing battle on two fronts and this means significantly greater investment.

But before embarking on this approach you should ask yourself whether you’re committed to the journey.  I’ve worked for, and with many organisations that have seen “selling to the business” as the holy grail, the panacea to address their competitive losses and their inability to control the sale.  But embark on this journey without fully committing to the changes it WILL have on your organisation and it will lead to a bloody disaster.  I speak from bitter experience.

Well that’s about it for the “selling differently” approach to differentiation in a homogenised market.  The benefits of selling at the business level while your competitors are talking to “minions” in the technical side of the business are enormous, but as I’ve mentioned about it’s not an easy journey.

I’ll cover some more differentiation techniques in coming blog posts.

Danny Goodall

A History Lesson

Continuing on from this blog entry, I’ve decided to create another mini series of blogs, this time looking at the difficulty of differentiation in markets where software standards have created homogeneity amongst the offerings of the protagonists.

So first a little bit of a history lesson…

I surfed the wave of middleware resurgence in the early stages of the new millennium and had great success marketing various technologies. Initially, working with some of the best people in the industry, I introduced SonicMQ to the world while at Sonic Software (now Progress Software).  This was a market proposition that was heavily based on standards. Well at least we made sure that the debate was about standards – JMS in this case.  My ex-colleague Dave Chappell was talking to developers all over the world and writing books that led the debate on JMS and other standards.  We de-positioned the competition as being complex and proprietary and we enjoyed great success. Obviously the competition reacted by introducing their own JMS-based products, a move which we expected but by then Sonic had introduced the Enterprise Service Bus (ESB) and had moved the debate on to standards that enabled a service oriented architecture (SOA).

All the while I was creating marketing programs that stressed Sonic’s commitment to standards and, by implication, I was de-positioning other vendors’ technologies as being the Devil’s spawn due to their reliance on proprietary features. “How,” we asked “would organisations ensure interoperability between their, and their trading partners’ infrastructures if they didn’t conform to the emerging standards?”

Sonic enjoyed great early market success with this strategy as did the other vendors in the JMS and related markets such as Fiorano, Cape Clear, PolarLake, et al.  These vendors punched above their weight and went into battle and won against some of the industry’s heavyweights.  All of this was made possible by their commitment to standards.  These companies existed because a) standards made it easier for them to build software and b) customers wanted to move away from vendors’ costly and proprietary solutions and ran with open arms to this new breed of standards-based middleware.

For a while the old school vendors held out.  Claiming that their incredibly feature-rich offerings justified their proprietary methods and high price tags because they could do more “stuff”.  But the slow move towards standards gathered pace and eventually turned into an avalanche as, helped by maturing software standards, first the least established proprietary vendors and then latterly the market leading EAI vendors validated the market by introducing their own standards-based products.  Sonic had won the battle.

But then the problems became obvious.  When your product is based around freely available specifications and built with the help of common libraries that are available to others, how can you differentiate when your competitors are using the same specifications and standards?  If the software must conform to these standards, differentiation, at least at the product level, becomes a challenge.

Obviously not all animals are equal so some degree of difference exist between standards-based products.  During customer evaluations these come to the surface.  In fact in the sales situation where prospects can be engaged in detailed discussions about a technology and the company that is behind it, it’s actually not too difficult to draw distinctions between different approaches.  But within the marketing organisation, where we’re tasked with creating a credible, unique space in our prospects’ minds by placing 130 words on a web site, how can you do this?

It’s not easy and there are no hard and fast rules or guarantees but I’ll take look at some of the techniques that can be used to achieve this in upcoming blogs.

Danny Goodall.

Positioning and the Positioning Statement

This page contains a summary of a series of blog entries I made during January and February 2009.  It describes the format of the positioning statement that we use in the REPAMA competitive intelligence methodology. I refer to the concept of positioning and the positioning statement frequently so I wanted to pull them all together in once place.  So here you are.

Danny Goodall

Links to Original Posts

The Positioning Statement
FOR… positioning element
WHO…positioning element
OUR…positioning element
IS A…positioning element
THAT PROVIDES…positioning element
UNLIKE…positioning element
OUR PRODUCT…positioning element

Part 1 – Positioning

Happy 2009! I’ve been in debate with a number of correspondents about the layout and format of the positioning statement that we use in the Lustratus REPAMA-based research.  So I’m going to dedicate the next few blog entries to the positioning statement.  I hope to answer the following questions.

• What is the positioning statement?
• Why use a positioning statement?
• What is the value of a positioning statement?
• What is the format of a positioning statement?

The first thing to say is that over the years, having worked with some of the best product marketing people in the industry, I’ve seen many different approaches to positioning and equally many different formats for positioning statements. Each of them, to a greater or lesser extent has been valuable.  Most positioning statements that I’ve seen and used have had a very similar structure.  Although I have seen some that have been very different, in fact more like a what I would refer to as a value statement or a value proposition.  Perhaps I will revisit them in a future blog but here I’m going to focus on the classic positioning statement.  So as I’ve mentioned there is no single way to construct a positioning statement but Lustratus has settled on a specific format that captures and conveys the seven key product marketing elements and it is this format that I will concentrate on here.

What purpose does the positioning statement serve?

It’s probably best to start with a definition for positioning first.  And if positioning statements are contentious then the the broader subject of positioning is even more so.  Whilst there are many views on this, for me, positioning is about creating a unique, compelling and defensible space in the minds of your prospects where your product/service and only your product/service sits.  Your ideal prospect must feel that you created the product/service for them alone to answer their specific problems and very importantly they must understand exactly how you are different/better that the alternative/competition.  Most product marketing professionals understand this well but as mentioned above, the development of positioning strategies and the statements that captures those strategies can take many different forms.

In my experience most positioning statements are designed to be internal tools for the development and then internal communication of a unique and compelling market proposition.  The positioning statement seldom gets used externally (with customers or prospects) in its raw format.  External marketing communications strategies are typically developed using the internal positioning statement as a guide.

The positioning statement conveys the following seven product marketing elements:

1. The Ideal customer
2. The main pain that the ideal customer has or the negative situation they find themselves in
3. The name of the product
4. The name of the product category – the generic way to refer to the class of product (I often see this omitted)
5. The main benefit that the product provides and the key reason that the prospect should buy the product
6. The primary competition or alternative
7. The unique selling proposition (USP)

The format of a positioning statement

A positioning statement is natural language-based and should read fluidly and easily as a single sentence and yet should contain all seven of the marketing elements above.  This sounds like a complex task and to aid us in that development we use a specific structure for the statement.  This is shown below.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

So the “for”, “who”, “our”, “is a”, “that provides”, “unlike” and “our product” elements give our positioning statement the structure it needs.

An example positioning statement

An example positioning statement is shown below. It is taken from the upcoming Lustratus REPAMA Segment Analysis Study into theEnterprise Service Bus (ESB) market segment. In the study we reverse-engineer the seven marketing strategy elements of positioning statement (as well as many others) used by a number of the vendors in the ESB space – in this case the products examined were Microsoft ESB Guidance, Oracle Service Bus, Progress Sonic ESB and TIBCO ActiveMatrix Service Bus.  In the example below we’ve attempted to capture Microsoft’s position and proposition in the ESB market.

FOR Microsoft BizTalk Developers WHO are building solutions that leverage the SOA pattern OUR Microsoft ESB Guidance IS A loosely-coupled messaging environment THAT PROVIDES an infrastructure for enabling a service-oriented architecture UNLIKE traditional ESBs OUR PRODUCT provides a superset of ESB functionality, extending the ESB pattern to include modelling and execution of business rules, workflow, and adapter integration

It’s notoriously difficult to be precise when reverse-engineering a vendor’s positioning statement and sections like the “that provides” and “our product” are especially difficult to define precisely.  But hopefully it shows how an organisation like Microsoft might set about defining its approach to a particular market segment.

In the next several blogs I’ll expand on the positioning statement and cover each of the seven elements in a bit more detail.  <More information can be found in the Lustratus REPAMA Guide here>

Part 2 – The Ideal Customer

As mentioned in the previous blog entry on the positioning statement, I’m going to continue to flesh out the details of the seven other positioning elements.

This time its the ideal target customer, so let’s first revisit the format of the positioning statement just to give us a context.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

The ideal customer allows the organisation creating the positioning statement to express the characteristics of their ideal target customer for the product or service they sell.  This can obviously be done in many different ways and I’ll list some of the more common ones below.  In the previous blog entry I gave an example of the REPAMA reverse-engineered positioning statement forMicrosoft ESB Guidance.  We saw that Microsoft’s ideal target customer was defined as:

FOR Microsoft BizTalk Developers

Between you and I, this is not the most definitive classification of ideal customer I’ve ever seen, but when reverse-engineering a vendor’s implied positioning from their outbound marketing communications, it’s often as close as we can get. I suspect that Microsoft’s internal classification will expand on this to include other characteristics that make their ideal target client more relevant to them.  That said, in the context of the ESB REPAMA Segment Analysis Study that we conducted, we’re pretty confident that this ideal target client is correct for Microsoft.

Other customer characteristics that can be used to segment the market to effectively define the ideal target customer include:

• Industry/Vertical – Can you define the industry or vertical market that the ideal client belongs to?
• Geography – Where are they based?
• Size – What size of organisation? – by revenue or employees
• Reach – The reach of your organisation – local, regional, national, multi-national?
• Budget – Is the client able to be classified in terms of how much money they have to spend?
• Pricing – Are they sensitive to price?
• Job title – What is their position/job title?
• User – Who will use the product?
• Decision maker – Who makes the decision on this type of product?
• Image – What image does this client have? – Leading edge, conservative, well know, leader in their own market.
• Benefit – What will the product do to improve the client’s life?
• Reason to buy – What compelling reason does the client have to buy the product?
• Use – What other complimentary or competitive products are they using?
• Concerns – What are the main concerns of your target client?
• Business type – What is their type of business?
• Business model – What is their business model?
• Competition – Who is their competition?
• Clients – Who are their clients?
• Problems – What are their problems?

So examples for a company that sells products used by telecommunications organisations might include:

For…

• Mobile telecommunications organisations
• Mobile telecommunications organisations concerned with adhering to new governmental regulations
• Mobile telecommunications companies that sell through channels
• Mobile telecommunications organisations that have a prestige image
• Mobile telecommunications organisations that operate at the budget end of the market
• Mobile telecommunications organisations that compete with RingRingTelco Corp.
• etc.

What we’re attempting to do here is to segment the total available market so that we end up with a segment that is a) big enough to sustain us but b) small enough for us to dominate.  Obviously credibility and ability to reach these organisations comes into the decision.  So if I were a product marketing VP for a 10 man start-up software organisation, whist I might be attracted to an ideal target client of “the largest global banks struggling to implement a worldwide roll-out of XYZ application”, I might lack the credibility or the reach to be able to deliver on this.

So as we can see the ideal target client goes right to the heart of the business planning for the product unit or corporation and is incredibly important to define accurately.

So that’s ideal customer, I’ll tackle the “pain” section in a future blog.  <More information can be found in the Lustratus REPAMA Guide here>

Part 3 – Pain, problem, need or desire

Continuing  the series of blogs looking at the elements of the positioning statement I’m going to look at the customer pain or problem section.

In this entry I will look at the pain, problem, need or desire that we believe that target customer is looking to resolve.  So just so we have a the context for the discussion, here is the positioning statement format that Lustratus uses.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

In the last blog entry we had started to create the unique position in a prospect’s mind where our products and services uniquely sit.  We did this by first identifying the ideal client.  Now we’re going to expand on the ideal client segmentation by adding a specific pain, need or desire that the ideal customer can relate to or a situation that they find themselves in.  The “who” element describes the situation, nearly always negative, that the ideal customer finds themselves in and the implication is that we can positively alter the ideal customer’s situation.

The following questions often help to narrowing down the “who” element of the positioning statement:

• What is the ideal customer looking to do or achieve that they cannot do without help?
• What must the ideal customer do that they are struggling to do?
• What is the desired state that the ideal customer is looking to achieve?
• What is the problem that the ideal customer is wrestling with?
• What situation (needn’t be negative) does the ideal customer find themselves in?
• etc.

Some examples

In a previous blog entry on the positioning statement we looked at an example REPAMA reverse-engineered positioning statement forMicrosoft ESB Guidance.  Here, we saw that Microsoft’s “who” section was was defined as:

WHO are building solutions that leverage the SOA pattern

For those readers who are not experts in SOA (service-oriented architecture) or the infrastructure software market in general, “SOA” here is an esoteric software architecture model that many organisations believe provides great benefits.  Microsoft, amongst other vendors, claims that its products help its users to implement SOA more effectively.

Microsoft is effectively saying that it believes that the situation its target customer (Microsoft BizTalk Developers) finds themselves in is that of ”building solutions that leverage the SOA pattern”.  Interestingly, in our attempt to reverse-engineer Microsoft’s positioning statement, we see that Microsoft has not aimed at an overtly negative pain for the ideal customer.  Rather it has chosen to simply focus on a situation the ideal customer finds themselves in.  Other vendors from the ESB REPAMA SAS report show a different approach to the pain.  Oracle with its Oracle Service Bus product chooses to identify the following area of pain in our reverse-engineered positioning statement:

WHO need to enforce quality of service, security and performance policies across an enterprise-wide network of multiple SOA domains

Progress with its Progress Sonic ESB product identifies this need

WHO need to connect many different IT resources using many different technologies in many physically different locations

So whilst Microsoft has chosen to simply state a situation, other vendors have chosen to highlight specific needs or deficiencies. Remember the positioning statement in its entirety should be used to make the ideal customer feel that you have designed and built the product (or service) specifically for them in response to their specific problems.  Other, more generic examples might include:

• WHO are struggling to implement the latest governmental regulation
• WHO need to remove costs from their IT operations
• WHO fail to bring new products to market ahead of their competition
• WHO are unable to ascertain their risk exposure in a timely manner
• WHO cannot currently meet their corporate governance requirements
• etc.

So that’s the main pain, need or desire section, I’ll tackle the “OUR [product name] section in a later blog entry.  <More information can be found in the Lustratus REPAMA Guide here>

Part 4 – The Our Product Element

In this series of blogs we’re looking at the elements of the positioning statement format that Lustratus uses in our REPAMA research methodology.

In this entry I’m going to tackle one of the easier elements, where little specific planning or strategy is needed.  Here we’re looking at the “Our [product name]” section of the positioning statement.  So as usual let’s look at the context of this element in the wider positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

Having said that little planning or strategy is required here, what I should have said is that from the perspective of the product marketing task of creating the positioning statement, the product name is usually already in place.  But not always.  Obviously an incredible amount of effort, research and focus group feedback can go into selecting the product name. And whilst the name doesn’t usually change based on the ideal customer or the pain that they have, it might be that specific products are “created” so as to appear focused on a specific audience and/or problem.

I’ve had experience of companies (mea culpa!) where the engineering effort required to bring such a product to market stretches only as far as to add an adjective or a noun to a product name in order to make it appear more targeted at a specific problem or prospect.

Whilst the science of product naming is outside the scope of what I want to cover here, if you’re interested there is an good discussion on that subject, as well as many others in the seminal book by Ries and Trout “Positioning: The battle for your mind“.  It’s a good read even if its roots are in advertising and it appears a little dated now.  Perhaps I’ll revisit it later with a book review.

So other than that, that is the product name section – really just a place holder for, as you might expect, the name of the product (or service).

<More information can be found in the Lustratus REPAMA Guide here>

Part 5 – Product Category

Continuing this series of blogs where we are looking at the positioning statement format that Lustratus uses in our REPAMA research methodology.  In this blog entry we’re going to look at one of the elements that usually, but not necessarily, picks itself.  This entry is looking at the “IS A [product category]” element here.

So as usual let’s look at the context of this element in the wider positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

The product category is a bucket into which other similar offerings are placed whose definition is generally understood in the wider market.  Product categories can be defined by convention, market analysts or by vendors themselves.  It is typically used as a mechanism for a vendor to communicate quickly and generically, what type of product they take to market.

• OUR XYZ product IS A Database
• OUR XYZ product IS A Relational Database
• OUR XYZ product IS A Spreadsheet
• etc.

From a marketing communications and lead generation perspective, selecting the correct product category is critically important.  When prospects are actively looking to make a purchase, they may believe that they know what type or category of product will best solve their problem.  Ensuring that you use language that matches with your prospect’s expectation is key.  The product category should also ideally clearly communicate, in terms that the target customer would understand, what the product is and, ideally, does.  Many highly technical vendors will use incredibly complex terminology to describe their product category.  As long as the target audience within the ideal customer understands this terminology then there isn’t a problem.  But if the target audience, as often happens, evolves over time to include individuals that do not understand such terminology then problems can arise.

The temptation to re-segment an existing product category (as with Database and Relational Database above) or to even introduce a new product category is great amongst vendors looking to differentiate themselves versus the competition.  This is especially true in early market situations where some form of significant innovation might have taken place.  The logic here is simple – “I need to make my prospects understand why we’re different so I will create a new product category that better describes what it is that we do.”  It sounds like a good plan however the task of successfully re-segmenting or even creating a new category is often underestimated.  With millions of dollars in marketing spend at my disposal throughout my career, I have only once been part of the sustainable introduction of a new product category and only once have I successfully re-segmented an existing category.  The lesson I learned was that It’s often better to work from within the category and differentiate there.

Another key thing to remember when defining the product category, other than to question very hard whether you actually need to change an existing product category, is to keep an external perspective.  Most vendors look in detail at the capabilities of their product and discuss this internally with the people they work with on a day-to-day basis.  Instead of looking in the mirror, in my experience it’s best to look at the problem from the outside in.  By putting yourself in the shoes of your prospects and asking how they will go about attempting to solve their problems you’ll gain greater insight.  What category of product would a prospect turn to, to solve their particular problem?  In many cases it’s moot anyway as, if you’re a market follower rather than a leader, you typically have to go with the category of the market leader anyway. And this is where competitive intelligence plays a key role.

Examples

In the example REPAMA reverse-engineered positioning statement I’m using as part of this series of blogs, we’re looking at how Microsoft takes its ESB Guidance product to market – as well as other vendors such as Progress, Oracle and TIBCO.  (For no other reasons than I have just finished the primary research on the REPAMA SAS into the ESB market so its fresh in my mind.)

Microsoft describes its product category as follows:

IS A loosely-coupled messaging environment

(This paragraph for those interested in the SOA and ESB market only…) In the context of the Lustratus REPAMA Segment Analysis Study on the ESB market, this is significant as the other three vendors in the report all define their product as an Enterprise Service Bus.  And whilst Microsoft generically uses the ESB term in its product name (ESB Guidance), it decides to refer to the category of product without it.

So that’s it for the “IS A [product category]” element of the positioning statement, other than to say that from my experience in infrastructure software marketing, this element is the one most likely to be omitted or combined with the OUR PRODUCT [product name] element.  I think that’s a mistake, but as Lustratus competitive intelligence is based on comparing the relative positioning strategies of different vendors, I guess you’d expect me to say that.

In the next blog in this series I’ll be looking at the “THAT PROVIDES [this main benefit and reason to buy]” element.  <More information can be found in the Lustratus REPAMA Guide here>

Part 6 – The Main Benefit or Reason to buy

In this series of blogs I’m exploring the format of the positioning statement that Lustratus uses in our REPAMAresearch methodology.

Today I’m looking at one of, if not the most important elements.  This is an element that in my experience vendors often find the most difficult to define about their own offering.  This is the “THAT PROVIDES [main benefit]” element.  First some let’s look at how this element fits into the context of the complete positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

In my experience, this positioning element is often watered down so that it lacks any real convincing power.  The purpose of the THAT PROVIDES element is to describe the main benefit that your product or service provides your customer.  It details the value that your target customer can potentially derive and should be compelling enough to provide a reason for them to buy from you.  Instead of this, I often see this element used as a place to add another ho-hum feature or an also-ran benefit.  The question that should be asked is

“What benefit or value will compel the target customer to want to go through the process of buying from you?”

Whilst this is not a hard and fast rule, the THAT PROVIDES element is often paired with the WHO [has this specific pain or problem] element of the positioning statement.  So that the WHO section  sets up the main pain experienced by the target customer and the THAT PROVIDES section often outlines the solution or antidote to the pain.

It’s worth stressing one more time that the positioning process should produce a description of your overall approach to the market so that a target customer feels that you, and you alone a) understand their problem b) have the most compelling solution.  Ideally, they should be left feeling that you went into business simply to solve their specific problem.

Examples

• THAT PROVIDES a reduction of up to 20% in data centre costs
• THAT PROVIDES a 15% reduction in the time to bring new products to market
• THAT PROVIDES complete alignment between corporate objectives and IT infrastructure
• THAT PROVIDES complete, accurate and timely visibility into corporate risk
• etc.

The impact of this positioning element is improved dramatically If the benefit can quantified or at least expressed in detail.

There is often a temptation when creating this element to fill it full of technical features or justification.  This is especially true of early market technology companies.  Whilst it is a generally held rule that it is better to concentrate on what the product leaves behind (i.e. the benefit), it is OK to focus on the technical value of the product IF the target customer or at least the target audience within the target customer, is highly technically-focused.

(This section for those interested in the SOA and ESB market only…)  I’m using an extract from one of Lustratus’ REPAMA reports to illustrate “real-world” positioning statements.  Here I’ve reverse-engineered the positioning statement for Microsoft’s ESB
Guidance product.  According to their outbound marketing, Microsoft sees the following as the main benefit they provide their target customer (BizTalk developers):

THAT PROVIDES an infrastructure for enabling service oriented architectures

This example falls into the “vanilla” category and certainly doesn’t really cut it as a compelling reason to buy.  That said, for the target audience (technical) within the target customer (BizTalk Developers), it represents a clear and (albeit overtly technically) compelling proposition.

OK so that was the THAT PROVIDES section. In the next blog entry in this series I’ll be looking at the “UNLIKE [the primary alternative or competitor]” element.  <More information can be found in the Lustratus REPAMA Guide here>

Part 7 – The Primary Competitor or Alternative

I’ve been looking at the positioning statement In this series of blogs.  This entry will focus on the UNLIKE [the primary alternative or competitor] element.

So just to recap here we’re constructing a natural language statement that captures a number of key strategic marketing positioning elements.  This particular element in the positioning statement above is where the ideal customer’s alternative to our product is defined.

First let’s see this element in the context of the complete positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE[the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

Whilst this sounds straightforward – “It’s just the number one competitor, right?”, it actually requires a fair bit of thought, analysis, and planning.  This element effectively recognises that the ideal client has a choice as to how they will go about solving their problem.  The primary alternative from the ideal client’s perspective is captured in this element.

In my experience this element is nearly always paired with the OUR PRODUCT element that follows it in the positioning statement.  The combination allows the UNLIKE element to define the primary alternative or competitor and the following OUR PRODUCT element outlines the Unique Selling Proposition benefits that differentiates “our product” versus the primary alternative.

For example:

UNLIKE alternative approaches to managing risk OUR PRODUCT not only manages risk but also reduces your corporate governance budget by up to 15%.

This example assumes that the ideal client believes that they have a number of “alternative approaches to managing risk” we then go on to differentiate ourselves versus these alternative approaches.

I have seen and used many different approaches for this element and it is critical to understand who or what we need to be “better than”, or at least “different from” to convince the prospect to put their business with us.  The key question to ask here is:

What does my ideal client perceive as their primary alternative (to my product) to solve their pain, need or desire?

This is key question.  Many mistakes that I see in competitive marketing start by getting the perspective wrong here.  It is critical to think from the prospect’s perspective and not from one’s own organisation’s perspective.  Many marketing organisations typically think:

• “who do we compete with here?”
• “who has the largest market share?”
• “who has a product that is most similar to ours?”
• “who do the analysts think we compete with?”

Each of these approaches is internally-focussed and whilst answering them will certainly help with competitive marketing, the answer might not be that important to the ideal client.

Approaches that I’ve used or seen for this element include:

• A key competitor
• A key competitive product
• A number of key competitors (it’s better to have a single defined alternative)
• A key category of competitor
• Other vendors’ approach in the same market category
• An alternative approach to solving the problem
• Inaction – i.e. doing nothing

Examples

• UNLIKE ACME Corp…. (key competitor)
• UNLIKE ACMEProTurbo… (key competitive product)
• UNLIKE ACME Corp and XYZ Inc…. (multiple key competitors)
• UNLIKE relational database vendors…. (a key category of competitor)
• UNLIKE other cloud computing vendors…. (other vendors’ approach in the same market category)
• UNLIKE using spreadsheets to manage data…. (an alternative approach)
• UNLIKE outsourcing your data management needs…. (an alternative approach)
• UNLIKE managing information manually as you’ve always done…. (inaction – doing nothing)

Real world example

(This section for those interested in the SOA and ESB market only…)  In this series I’ve used an example positioning statement from Microsoft’s go to market strategy for their ESB product.  Here I’ve used our REPAMA methodology to reverse-engineer the positioning statement for Microsoft’s ESB Guidance product from their outbound marketing communications, Microsoft apparently perceives the primary alternative to be:

UNLIKE traditional ESBs…

So Microsoft is using the “other vendors’ approach in the same market category” strategy listed above.  This suggests that Microsoft believes that their prospect’s primary alternative lies with other ESBs and also that there is something about Microsoft’s approach to the ESB category that sets it apart from “traditional” ESBs.

So being clear about the primary alternative or competitor is important as is thinking from the prospect’s perspective and not from the organisation’s.  That is the UNLIKE element covered and in the final blog entry in this series I’ll be looking at the “OUR PRODUCT [has this unique selling proposition] element.  <More information can be found in the Lustratus REPAMA Guide here>

Danny Goodall.

BTW
It should be borne in mind that Lustratus’ focus is on the high-tech software industry and whilst positioning as a concept will transfer to just about any business to business industry, many of the classifications we use assume that we’re dealing with a technical audience for infrastructure software.  So please bear that in mind for your own industry.

Whilst I couldn’t find any reference to restrictions on the use of the Spot The Difference caption used in this blog entry, I wanted to ensure I provided a link back to its original location.

Part 8 – The Unique Selling Proposition

Throughout this series of blogs I’ve been examining the format of the positioning statement that we use in our REPAMA consultancy and analysis services.

In this final entry in the series I’m going to close out by looking at the pay-off, the crescendo, the exclamation mark at the end of the positioning statement – the USP or unique selling proposition.

But first, and for one last time, let’s take a look at this element in the context of the complete positioning statement.

FOR [the ideal customer] WHO [has this specific pain or problem] OUR [product name] IS A[product category] THAT PROVIDES [this main benefit and reason to buy] UNLIKE[the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition].

USP is one of those over-used terms that has found friends at all levels of responsibility throughout sales and marketing organisations. I’ve heard everyone from line of business managers, to sales people to CEOs use this term.  Everyone feels they have a handle on it and over time the term has come to generically mean “differentiator”.  Whilst I’m in favour of strategic marketing concepts finding friends throughout an organisation, there is a considerable amount of subtlety and craft missing from the “common” understanding of the USP.  So let’s start with some definitions and perhaps a little bit of history.

Rosser Reeves – what a great name.  He sounds like he should have been some shady 1940s London underworld gangster.  But he wasn’t.  Instead he was an advertising man, one of the first in fact and it was he who brought us the concept of the unique selling proposition.  For him, its use and definition were rooted in (print) advertising and as such the formal definition assumes that the USP is being used in some form of promotional campaign.  There was also an implied assumption that we were dealing with business-to-consumer advertising too.  Since then we’ve broadened the definition to think of it as any general proposition made via any medium (adverts, web site, emails, phone calls, face-to-face conversations, etc.) whether that be business-to-business or business-to-consumer based.  Whilst the use of the USP may have changed, the disciplines and thought processes used in its creation are still valid today.

The definition below is taken from the book Differentiate or Die (survival in our era of killer competition) by Jack Trout and Steve Rivkin.  In this book the authors refer to Rosser Reeves’ 1961 work Reality in Advertising from which they quote Reeves’ three-part USP definition:

1. Each advertisement must make a proposition to the consumer.  Not just words, not just product puffery, not just show-window advertising.  Each advertisement must say to each reader “Buy this product, and you will get this specific benefit.”
2. The proposition must be one that the competition either cannot, or does not, offer.  It must be unique – either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising.
3. The proposition must be so strong that it can move the mass millions (i.e. to pull over new customers to your product).

As I mentioned above, whilst many of these disciplines are still valid, there is now so much competition in just about every market category, segment and sub-segment that being “unique” is increasingly more difficult.  So it’s no surprise that many of the USPs I see when reverse-engineering vendor’s positioning statements are often just SPs - with little or nothing unique about them.

When looking at the USP in the context of the positioning statement its important to remember that the “OUR PRODUCT” positioning element is typically paired with the “UNLIKE” section.  The UNLIKE element sets up the main alternative and the OUR PRODUCT element describes the USP that the alternative doesn’t have.

As shown below:

UNLIKE [the primary alternative or competitor] OUR PRODUCT [has this unique selling proposition]

The biggest challenge in defining this element of the positioning statement is in defining that unique space (number 2 on Rosser Reeves’ list above).  With product categories, segments and sub-segments so granular across many markets and with ultra competitive competitors competing within each of those segments, finding a position that only you can own is not the work of a moment.  In addition its important to remember that we’re not just trying to find a unique space, but a unique space that has compelling value to the consumer/customer as outlined in Reeves’ point 1 above.

In reality what tends to happen (in my experience of the infrastructure software space) is that the first entrant to the market (first mover) aims for something unique which is then “flatteringly” copied by later entrants to the market.  To later entrants this makes sense as they want to have some of the pie of the first movers and are happy to trade uniqueness for being perceived as similar to the market leaders.  Understandably it makes sense to “look” like the first mover.  This tends to lead to what I call “standards-based marketing” and simply creates a homogeneity of messages and propositions amongst the market protagonists.  This leads to little real differentiation and leaves prospects studying highly technical features to really understand the differences between products.

Examples

• OUR PRODUCT removes up to 20% of data centre costs whilst reducing your carbon footprint
• OUR PRODUCT starts reducing risk from day one.
• OUR PRODUCT not only integrates with your existing systems but also provides comprehensive management capabilities
• OUR PRODUCT ends world hunger (Well maybe not – but you get the idea)

Real world example

(If you have a specific interest in the SOA and ESB market you might find this section interesting…)  In our latest REPAMA Segment Analysis Study we looked at how a number of ESB vendors approach the market.  The vendors and products studied included Oracle’s Service Bus, Progress Software’s Sonic ESB, TIBCO’s ActiveMatrix Service Bus and Microsoft’s ESB Guidance.  Reverse engineering these vendors’ positioning statements gave some interesting insights and as an example I’ve listed Microsoft’s USP section below:

OUR PRODUCT provides a superset of ESB functionality, extending the ESB pattern to include modelling and execution of business rules, workflow, and adapter integration.

Here Microsoft selects a pretty strong USP.  They claim that UNLIKE other ESBs they provide extended functionality.  Whilst other ESBs may legitimately say  that they also offer extended functionality, these vendors may not actually be making that claim.  So this certainly passes Rosser Reeves’ test above.

The basis for this claimed USP is that their ESB Guidance is underpinned by their BizTalk product – which features broader functionality than other “simple” ESBs.  I think this is a pretty well constructed USP – despite the fact that the rest of Microsoft’s marketing for the ESB Guidance is pretty poor.  Perhaps this is a function of the non-product nature of ESB Guidance.

In summary when defining the OUR PRODUCT element we’re looking to communicate a specific benefit that will be delivered that none of the competitors or alternatives is able to offer, all of this couched in language that compels the prospect to take action.

So that’s it for the OUR PRODUCT element and for the positioning statement series too. <More information can be found in the Lustratus REPAMA Guide here>

Danny Goodall.

BTW
It should be borne in mind that Lustratus’ focus is on the high-tech software industry and whilst positioning as a concept will transfer to just about any business to business industry, many of the classifications we use assume that we’re dealing with a technical audience for infrastructure software.  So please bear that in mind for your own industry.