Part 1

Strategic Position Is More than Advertising

Don’t b e c o nfu se d : A tr u e s tr a te g ic p ositio n is n ot th e s a m e a s a n a d vertis in g c am paig n o r s lo gan . A dvertis in g a n d m ark etin g a re

m ean s to a ch ie v in g y ou r s tr a te g ic p ositio n — th ey h elp y ou c re ate th e im ag e c o nsis te n t w ith y our p ositio n a n d g et y our m essa g e

to p ote n tia l c u sto m ers . D eﬁ nin g a s tr a te g ic p ositio n is a b out c re atin g a m ean in gfu l p la ce fo r y ours e lf — a p ositio n — in th e

m ark et.

H ow d oes C oca-C ola d if f e re n tia te i ts e lf f ro m P ep si? V ery l ittle o f t h e d if f e re n ce i s b ase d o n t h e q ualitie s o f t h e p ro ducts o r t h e

m ark et s e g m en t t h ey a re t a rg etin g. T he t w o c o m pan ie s m ay h av e i n co rp ora te d s o m e o pera tio nal d if f e re n ces, b ut t h ey d if f e re n tia te

th em se lv es p rim arily o n th e b asis o f a d vertis in g — n ot str a te g ic p ositio nin g. W hen S nap p le c am e a lo ng, it c re ate d a to ta lly

d if f e re n t p ositio n f o r i ts e lf i n t h e m ark et. S nap p le d id n’t t r y t o c o m pete h ead -to -h ead w ith C oke a n d P ep si; i n ste ad , i t l o oked f o r a

d if f e re n t s e g m en t o f t h e s o ft d rin k m ark et: t h e n o n-c o la , n on-c arb onate d s o ft d rin k.

“ W it h t h e c o n so lid atio n o f d ep artm en t s to re s, w e k new o u r m arg in s w ere g oin g t o b e s q ueezed . T hey ’r e d oin g a l o t o f

th eir o w n p ro d ucts , p uttin g t h eir p ro d ucts i n t h e b est d is p la y s p aces. W e k new w e h ad t o c h an ge o u r s tr a te g ic

d ir e ctio n .”

K ay K oplo vitz

C hair , K ate S pade

If a l u xury c ar c o m pan y t h at h as s o ld p rim arily t o o ld er c o nsu m ers d ecid es t o m ark et t o y oung er d riv ers , i t w on’t b e e n ough t o

ta k e th e s a m e k in d o f c ar th ey ’v e b een m ak in g a n d d ev is e a c le v er a d vertis in g c am paig n. T he p ro duct its e lf — in th is c ase a c ar

— h as to b e re d esig ned to ﬁ t th e ta ste s o f th eir ta rg et m ark et. It m ay h av e to b e s m alle r, s p ortie r, fa ste r, w ith m ore e le ctr o nic

g ad gets . N ot o nly w ill th e m ark etin g m ate ria ls n eed to b e g eare d to w ard a y ounger a u die n ce, b ut th e s a le sp eo ple w ill h av e to b e

tr a in ed t o l e arn t h at t h e 2 0-s o m eth in g k id i n t h e r o ck b an d T -s h ir t m ay n ot b e j u st k illin g t im e w ith a t e st d riv e b ut m ay a ctu ally b e

a t e ch ie m illio nair e r e ad y t o b uy.

W hat K in ds o f S tr a te g ic P ositio ns A re T here ?

W hat m ak es a c o m pan y d if f e re n t? I s it th e n atu re o f its p ro ducts o r s e rv ic es? T he q uality o r c o st? T he g eo gra p hic a re a o r ty pe o f

cu sto m ers s e rv ed ? P erh ap s t h e c o m pan y h as p ro prie ta ry p ro ducts c u sto m ers c an ’t ﬁ nd e ls e w here .

T here a re m an y w ay s t o d is tin guis h y ours e lf f ro m y our c o m petito rs , i n clu din g:

■ C usto m er P erc ep tio n F acto rs

■ M ark et S eg m en t

■ M ark et S hare

■ O pera tio nal a n d/o r T ech nolo gic al A dvan ta g es

■ P ro prie ta ry P ro ducts , T ech nolo gy, A bilitie s, o r R ela tio nsh ip s

■ S ale s C han nels

■ B usin ess M od el

■ F ir s t- M over A dvan ta g e

■ L ean S ta rt- U p

■ B ra n din g

E ach o f t h ese s tr a te g ic a p pro ach es o ff e rs o pportu nitie s b ut a ls o p ose s p itf a lls . A nd t h ey m ay b e r e la te d : I f y ou a re p ositio nin g

your c o m pan y o n th e b asis o f lo w p ric e, y ou’ll a ls o n eed o pera tio nal e fﬁ cie n cie s to re d uce c o sts o r e ls e y ou w on’t b e a b le to

s u rv iv e a g ain st c o m petito rs w ith h ig her p ro ﬁ t m arg in s.

C usto m er P erc ep tio n F acto rs

T his is th e “ b ette r, fa ste r, c h eap er” a p pro ach , b ase d o n h ow c u sto m ers d is tin guis h y our c o m pan y a n d its p ro ducts a n d s e rv ic es

fro m t h e c o m petitio n. S om e k ey c u sto m er p erc ep tio n f a cto rs a re b elo w :

W HAT S E TS Y OU A PA RT ? Concen tr a tin g o n c u sto m er p erc ep tio n fa cto rs is th e m ost ty pic al m eth od o f a tte m ptin g to d if f e re n tia te y ours e lf fro m th e

co m petitio n. T hey se em th e sim ple st, m ost str a ig htf o rw ard w ay to c o m pete . S urp ris in gly , th ey m ay b e th e m ost d if ﬁ cu lt to

a ch ie v e a n d m ain ta in . F or in sta n ce, c o m petin g o n th e b asis o f p ric e is o fte n p erilo us. W hile it is e asy — in th e s h ort r u n — to

a ttr a ct c u sto m ers o n t h e b asis o f l o w p ric e, h ig hly p ric e-s e n sitiv e c u sto m ers a re t h e m ost ﬁ ck le , q uic k ly t e m pte d a w ay b y t h e n ex t

co m pan y o ff e rin g a lo w er p ric e. O nce y ou a p pear to b e a ttr a ctin g a s ig niﬁ can t p ortio n o f th e m ark et, w ell- fu nded e sta b lis h ed

co m petito rs c an l o w er p ric es ( e v en i f t h ey h av e t o t a k e a l o ss) t o c o m pete t e m pora rily u ntil y ou a re n o l o nger a b le t o s u sta in y our

lo sse s.

O th er p erc e p tio n fa cto rs m ay b e h ard er to “ p ro ve” to th e m ark et. Y ou m ay h av e to s p en d a lo t o f m oney o n m ark etin g a n d

ad vertis in g to g et c u sto m ers to re aliz e th at y o u o ff e r a d ditio nal fe atu re s, m ore c o nven ie n ce, o r h ig her q uality . O nce y ou d o,

how ev er, y ou m ay b e a b le to b uild a lo yal a n d c o m mitte d c u sto m er b ase th at a p pre cia te s th e d if f e re n ces b etw een y ou a n d y our

co m petitio n.

“ Y ou h ave t o u ndersta n d t h e c o n su m ers’ n eed . W hat’s t h eir p ain ? W hy d o t h ey n eed t o c h an ge? S olv e t h at p ain , a n d

th en g et t h at m essa ge o u t.”

A ndre w A nker

V en tu re C apita lis t