Go Where They Aren't:
A Checklist For Business Positioning
What does positioning your business mean? It's much more than PR or marketing, says Mario Morino, Chairman of the Morino Institute. It's knowing who you are, where you are going and what you have to do to get there. It's finding places where the competition isn't. Here are his comments from a Netpreneur Program's Coffee and DoughNets meeting from March 26, 1998.
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1998 Morino Institute. All rights reserved. Edited for length and
Good morning everyone.
I want to start with a disclaimer. Positioning is a tough subject. It's tough because it requires you to think hard about what you are going to do. It requires introspection. You have to look at who you are and what your business is, then you have to figure out how to convey that to your market in a way that gives you maximum leverage. If you're a small company, especially, that may mean people have to perceive you as what you can become, rather than what you are today. They have to see you in that eight-story complex you'll grow into, even though you are working out of your garage right now.
Since all of that is in the mind, positioning is very strategic. It's as much about perception as reality, but it is much more than marketing. Positioning is your business. It affects how you design products. It determines how you focus services and how you do customer support. All of this and more goes into the image of your business.
So, what is positioning? It's knowing who you are, where you are going and what you have to do to get there. In some ways it's simple basics.
One way to describe positioning is: finding places where "they" aren't. For example, if you're a two-person company, don't jump smack into a congested market, especially not a congested market which has giants ready to play in it. You've got to look at where they are not. That's what's going to give you the leverage you need to get started. Look for unserved market conditionsa hole in the market, a gap in a vendor's product line, a tremendous need for services that no one's filling well yet. Go where they are not.
Then you have to affect the mind of the marketplace. People talk about market share, but I'd say you want to talk about mind share. You want to create the image of who you are in the buyer's mind. That will determine how they accept you and deal with you.
But let me emphasize, once again, that this is not about public relations or marketing. Every element of your business is part of this process. After all, you might talk a great game, but if you don't deliver, your customer will see through you in an instant.
A Positioning Checklist
Let me offer a checklist of seven key positioning areas:
I'll talk about each of these briefly, then go back and concentrate on a few of them in detail, particularly on the essential concept of landscaping. It's not something you do for your lawn, but for your business. I'll also offer what I call "the poor man's route to positioning," some simple things you can do to create mind share without a massive marketing organization.
- Vision And Mission
- Know Your Offering
- Customer And Market Trends
- The Competitive Landscape
- Opportunities And Threats
- Strengths And Weaknesses
- Develop Your Strategy
1. Vision and Mission
On the subject of vision and mission, much depends on what you want to be, what you are selling and who you are selling to. If you are selling cable wire, you may or may not have a vision issue. With some kinds of products and services, however, it is essential that people think of you in the right way. For example, the image you create will have enormous implications if you are going to offer a "concept sell" versus a "point sell." A point sell means you are offering a specific, finite service or product. Your pitch will sound like: "it's this big, and it's this deep and has these four features." That requires one image or perspective. A concept or a solution sell, on the other hand, is broader and usually involves more of a relationship between you and the customeror the funder or partner. You have to convey a very different image because your size, strength, ability and capabilities are all much more important. You have to ask yourself, "What do we want to convince the market about ourselves?"
This is the same question you have to answer for venture capitalists, although they won't ask it that way What do you want to have happen? Why are you doing this? It's 2010 and you're looking back, how do you want to be remembered? What mark will you have left?
When all is said and done, how will you achieve that vision? That's the mission statement that you're going to craft. How am I going to dominate a market space?
You see, marketing and business are about dominationat least if you are going to play in the big game. Either you are going to dominate, or you're going to be dominated. You are either going to acquire, or you're going to be acquired. Of course, as we discussed at another Coffee & DoughNets (http://netpreneur.org/events/doughnets/10points), there are different levels of companies. If you are a lifestyle company, rather than a public firm, you've got a different environment. The minute you hit the public game, however, those hard rules come into play quickly. Then, you must know what you are really about. It dictates when you sell out and when you partner with somebody. Your vision and mission express that as part of your overall positioning.
I want to give you three examples of vision and mission statements that convey good, clear messages. One of the best is Microstrategy (http://www.microstrategy.com) which has laid claim to the world of data mining. They're taking on the giants and winning. Michael Saylor has crafted a statement that says, "enabling decision-makers to conduct sophisticated business analysis against large volumes of numerical data." Like a Procter & Gamble or a Pepsico or a General Motors, I know what they do. I know where they are going to dominate. Once I hear their whole story, I know they are good people who know their space and I'm going to bet on them because they are outperforming the giants right now. What's more, they have crafted a very clear statement of what they are about and what their vision is. If you put Saylor at the podium against some of those bigger players, he is going to blow them away with his understanding of the marketplace. He'll create a profound image that strongly positions Microstrategy in that market.
Here's another example, paraphrasing Brandy Thomas of Online Monitoring Services (OMS): Lead the market in protecting and maximizing the value of intellectual property on the World Wide Web. Right away, he is hooked into a specific category with immediate differentiation to everybody playing the game. OMS is focused on one area, the protection of intellectual property, one which immediately rings the chimes of identifiable buyers and markets. It's a very topical subject and a good focus point.
Now, I'll give you the more idealistic example, but one I love. Net.Capitol (http://www.netcapitol.com) is a company which is trying to be a dominant supplier in the arena of systems and Web solutions for the political processes. When I asked Orun Strauss of Net.Capitol what he wants to do, he said, "Well, we really want to change the political process in the country." Now, to me, that should get a gold star because you know there is a passion behind that business. If you remember what the speakers said at the "Networking With The Netpreneurs" event earlier this month at the Smithsonian (http://netpreneur.org/smithsonian), you heard the same kind of thing. They each had something in their background which was driving them to create that business opportunity.
Just remember to keep it crisp, something I've never been very good at, so trust me on this even if I caution you not to follow my example. When it comes to the elevator test, I need the World Trade Center. But at least I speak really fast.
2. Know Your Offering
Sounds pretty basic, doesn't it? Know your offering. What needs does it address? In terms of feature, function and benefit, what does it do and what doesn't it do? But here is the hard partthe more you love what you have created, the more difficult this is going to be as an exercise.
We get seduced by our solution. You'll drive a salesperson crazy because he or she is trying to figure out the five things the product does well and you are over here coming up with seven, eight, nine, ten. I call it tea leaf reading. Sure, it does numbers eight, nine and ten in the most extreme cases, but in the marketplace, they would never view your offering as doing those things. You must convey to the customer what your products or service does and what it doesn't do. Do that constructively, and the buyer respects it, helping you to build that long-term relationship.
By the way, whether I use the word "product" or "service," just consider them to be interchangeable for the purpose of positioning. This is about your offering and it should apply to either.
Here's another point. There is a joke among my marketing friends who say, "Never confuse selling with installing." As a CEO, I always confused selling with installing. You are not big enough to separate selling from installing. At the stage most of you are currently, you have no choice but to confuse those two things. When you sell, just make sure you know what you are selling, and that the customer or partner or funder knows what he is buying because it makes for a better relationship.
3. Customer and Market Trends
When you are talking about an opportunity, it's always tied to a change in the market or to a trend. You are probably not going into a space that is stable or that's already well-covered. As a result, you've got to know the relevant customer and market trends.
How do you convey to the investors, partners and others that the opportunity you have will succeed? What is changing out there? Where? What's happening to buyer patterns? What are the market trends? What are the technology changes?
Focus on this and don't go galactic or use platitudes because they don't count. Live in the world you are in. You just want to say crisply in several lines, "This change is happening in the market and and it opens this opportunity that we can capitalize on. The window for the opportunity is going to exist probably for two years, giving us the time to get ourselves entrenched."
Bingo. That helps you with your focus and is a key factor in your positioning.
4. The Competitive Landscape
This subject is one we're going to come back to once I've finished running through the checklist. Landscaping is about defining your universe. It's knowing which pool you're swimming in, how big it is and who's splashing along beside you.
The reason it's so important is that it's how you determine your partners, competitors, predators and your acquisition targets. Good venture capital firms live on what's called "consolidation by landscape definition." It means that they pick a block, identify the players in that block, and spend all their time identifying the one firm around which consolidation in that block will occur. Then they invest in that firm and work to cause the consolidation.. Everything flows from that point-of-power.
You want to be the point-of-power. But, you also want to know if you are not the point-of-power because that's going to dictate a lot about your positioning strategy as well.
How are you going to move your company? If you are not the point-of-power in your block, you are probably in a second class role, which means the chance you will ultimately sell the firm is higher, or the need to partner is much greater. These are not bad outcomes, just different outcomes than being king of the block.
Going through this landscaping exercise is one of the most important things you can do for your business. It shows people that you have tremendous understanding, gives them a context for what the business is and the universe in which it plays .
5. Opportunities and Threats
Very few companies come out of the gates with full product lines. Instead, you'll introduce an initial product or a particular service offering which is the basis from which you build a long-term relationship with your customers, clients, investors and partners. Remembering your vision statement, this offering is the first step of a journey. It's what your offering the market today.
Of course, you want to keep focused on today's offering and be successful with it, but you also want to say, "When we are successful, here are the opportunities that will open up." That changes your valuation because now people are going to understand that if you get to A, you are logically positioned to move to B. You've got market position. You can take the next step.
You also want to identify where the risks are if you are successful, because that will help you define your positioning strategy. If you succeed, you may introduce a series of consequences, for example, a big player might say, "That's an interesting market you have created for me!" If they do, now you have a different game on your hands.
If you've done your landscaping properly, you know that XYZ Megacorp is just one step away from you and that they are going to become very interested at some point. So, from day-one, you start cultivating a relationship. You get closer and closer together. Eventually you do succeed. When they become interested, you are not walking in cold. You'll already have a basis of understanding to build upon. You have something to leverage with that potential partner.
Again, I want to emphasize, you don't have to do extensive, complex market research for months and months. This is about getting a good team of people together with a blackboard and asking yourselves, "If we do this, what happens? What opens up?" Then, be able to articulate those opportunities and threats to the people you are dealing with.
6. Strengths and Weaknesses
The next point on the checklist is perhaps just as basic. It may sound like motherhood and apple pie, but it's essential and, like many of the others, too many entrepreneurs don't think it through enough. Know your strengths and weaknesses.
Yes, it's truly difficult to do. We tend not to be honest with ourselves. We allow ourselves to believe we are better than we are. Keep yourself grounded so you know what is working well for you and what isn't.
Let's face facts. Everybody has weaknesses. I need to address my own and stay on top of them. We all do. What's important is to be able to tell somebody what your strengths are and why, where you have weaknesses and what you are going to do to get by them. Real basic stuff, but as my coach always said, "It's all in the basics."
In business, strengths and weaknesses tend to involve people, fundamentally. If there's a problem in the product, it usually means there is a people problem at the end of the day. Especially when you are starting out, it's usually a people issue. I'll give you an example of a fabulously creative individual we worked with. I said to him right away, "More than anything else, you need to have a strong operating business person from the get-go. You are a creative type. You'll do wonders as a creative talent, but you are missing the business discipline to drive this." I think he would be the first to say that the company didn't realize how important their weakness in management was. It hurt them in two ways. He was never cut out to be the business type and he was so worried about business issues that he became effective creating new products. Instead of having one great person in either or both roles, they had one person sub-optimized on both fronts.
Another example is a company that recently introduced their product to the marketplace, and now they're saying to themselves, "We need a salesperson." There is no one in the group that has any idea what sales is about. Well, it's a little late. Don't think that selling is an issue which only comes up when you get your product or service out the door. If you know you don't have sales talent, get somebody while you are putting your product together who brings the sales mentality to the tableeven if it's on an ad hoc basis or somebody who is just helping you from time to time. When you do reach the market, my goodness, have somebody who knows how to sell when it's time to start selling.
Know what you need to be successful and what essential skills you must have, then figure out how you are going to get them.
7. Develop Your Strategy
Your strategy becomes the manifestation of your positioninghow you are going to do things? It is based upon all the points we have talked about so far, and comes down to one thingcritical thinking. There are no magic words for developing strategy. Last night we were working on a new project and we just stopped the whole thing dead. I said, "We have not thought through our strategies properly." After you have gone through the checklist items, nothing is more important, than knowing the three or four strategies you are going to pursue.
Make sure you are doing the right things, not simply that you are doing certain things right. You have to spend the time answering the question, "How am I going to get maximum leverage from my strengths and weaknesses, my product and my opportunity in the marketplace?"
Keep striving for maximum leverage. Spend time on this. Get outside advice. Talk to people.
Don't limit your thinking by focusing on your immediate resources. Great entrepreneurs assume that resources are boundless. They will figure out a way to get what they need. Cocky statement? Maybe, but it's true. That's what entrepreneurship is about. Say to yourself, "This is what I have to get done; I'll figure out how I'm going to do it." Don't say, "Well, I have this available to me..." and plan from there. If you do, you already constrain your options before you start.
Let's return, now, to some of these and other points, and deal with them in a bit more depth.
Defining Your Product Or Service
Product or Service?
There are several key points to be made here, but one that is especially topical for people in this room is: Are you a product company or a service company? I will argue that you cannot be both, not really. They are two different businesses which require different selling channels, development philosophies, management issues and entirely different structures of how you build the business.
That doesn't mean you won't offer both products and services, but which is the root? What is your business? If you do have both, you are either a services business with products that help fulfill your service offering, or you are a product business with services that help sell your product. But I suggest you are not a product and a services business. If you try to be, you will create a schizophrenia that will kill your thought process, dilute your efforts, cause you to lose focus and you will constantly find yourself in resource battles when you make decisions.
Products or services, one of them has to be primary. One of them has to be the overriding point that determines, "This is what I'm about." It doesn't mean that it won't change over time, just that right now you are either a services firm or a products firm in terms of your delivery point.
Consumer or B2B?
Next is the question of whether you're in the consumer or business-to-business marketplace. Again, there are companies which are in both spaces, but they are ultimately in one or the other. Once again I'd suggest that, at the end of day, you have to have a primary focus.
I know that there are examples of companies in multiple markets. People have been giving me good ones like Real Networks, PointCast, Netscape, but let's take Netscape for example. If Netscape doesn't crack the enterprise marketplace, there won't be a game for them!. It's that simple. That's where they're having the greatest difficulty, today. Business enterprises want real, reliable, big server technology. Who do you bet on?
I'm not being critical, I'm just saying this is where you get into positioning. If you are a corporate IT guy, when it comes to for server quality and support for that mission-critical banking application you are building, do you go to Sun, Microsoft, IBM or Netscape ? That's where Netscape is selling uphill, because their positioning was never in that space. There's a big image challenge for them, as well as a capabilities challenge in some respects.
When you are starting out, the consumer market can be even a little more brutal, a little more surgical and a lot more expensive to enter than the business-to-business market. Maybe ten years ago, a PC software product launch would be at least $3 million. When Microsoft rolled out Windows 95 their promotional budgets alone were over $30 million.
Sure, the Web changes things, but you're still going to advertise, you're still going to promote. The consumer market is a different machine and it has a different set of attributes. One of the reasons I think investors are often more comfortable with the business-to-business model is that it has more established buying patterns. Almost nothing happening today in Web development for the business worldwith regard to buying patternsis new at all. You're going down well-established business paths, procurement relationships and buying points in an organization. It's a great opportunity because most offerings are actually tailor-made for the organization.
Where an investor or partner can see this kind of linkageone step away from EDI or one step away from back office systemsthere is no leap of faith for your business to sell into the opportunity. There is a recognized need, it fits what they're used to and it will probably sell if you can do what you say.
When you move to the consumer market, you need to have people like a Bob Pittman looking at your model. It is very difficult for most investors to comprehend the consumer market today, because they are not in it. It doesn't mean you are not right; it means it's tougher, right now. You have to be much more selective in the investors you go to, the partners you go to. They must be people who really understand the consumer market side.
Reading the Tea Leaves
Let's revisit what I said before about knowing what your product does and what it doesn't do. I'd call myself a great "tea leaf reader." Tea leaf readers can take things that other people can't see and interpret from them. They find things which, right or wrong, no one else sees.
Software developers are great tea leaf readers. They create products for which there are three obvious uses, but they see 28through there own eyes, at least. Working onsite with a customer, this may seem great because the developer knows the product and is weaving magic with it. Once he leaves, however, everything in his head left also, especially the tea leaf part. Now the question is: What's still sitting with the customer?
You can't be there with every customer and, therefore, your early sales can be highly misleading because they bought you and your know-howthey bought your tea leaf readingmore than your product or service. You have to figure out how to uncouple yourself from the offering. The first test is when somebody else has to sell it. That's when reality hits home. The little feature you thought was so hot just doesn't come out with the same power and falls flat on its face. You come to understand what your product does by hearing what other people think about it, not what you think about it.
Other people will rarely see all of the virtue and elegance in it that you do as the creator. Too often, the elegance dissapears when you are not there. All of a sudden the product or service has to stand on its own.
So, be really honest in evaluating what it does and doesn't do to help you focus and position yourself properly. You must get down to the really relevant things your offering provides. That's your strength. Don't let the tangential pieces and the tea leaves distract you from it.
Developing for the Channel
You have to design your product in the context of the market, the buyer and their expectations, but also for the channel that delivers it. I used to believe that you write your product for a market. I never once thought you had to consider the channel and my big shock was realizing that you actually have to develop the product differently for different distribution channels. You may even have different versions or different parts of your product based on different channels.
For example, there are certain products you can't sell on the telephone because you have to do solution selling. This is just as true on the Web. If you want to sell over the phone or the Web, the product has to be highly focused, quick to demonstrate and easy to install. At Morino Associates we were selling $50,000 and $100,000 products over the phone, but we had to invest significantly in techniques that would allow the client to tailor and install them on their ownwith us a phone call away.
When you see large companies like Oracle selling to the federal government, there are entire development teams which work on their products and services just for that channel, just to sell to the government. You also have to do development to sell internationally because there are certain characteristics or cultural differences. That's possibly even more true for services.
When you form a channel relationship, it may feel wonderful, but you had better step back and ask yourself, "Can my product go through that channel?" You don't want to sign an agreement and suddenly discover that there are problems selling your product through that channel. A company like Planet Direct (http://www.planetdirect.com) understands this. They are doing custom design for Web sites, but through ISPs. That kind of an offering has to be architected much differently than one going through a face-to-face channel .
Mapping Your Competitive Landscape
As I said earlier, the landscape is simply a way to scope out and understand the universe, or what we call the "space," in which your product or service functions. It's a map for understanding how a space breaks down into its functional areas and the players in those areas. You use it to determine who your competitors and partners are today, who they might be tomorrow and where there are voids the places where they aren't. When you lay all this out, you'll say, "Wow, no one's in this space here, and there's hardly anybody in this one. That's an opportunity maybe we can take advantage of." It will help you make decisions like whether you will develop your service, whether you will buy your product or partner to get it, whether you should sell up or sell down to get it, or whether you should just leave it alone. It may help you decide not to compete in a given space at all. They will become conscious decisions with a road map of your universe in front of you.
The more you know your industry, the easier this will be for you to do. In fact, if it's difficult, that's telling you something you should know. Talk to other people to fill in the holes. Get it validated. There are resources that can help: studies, articles in the trade journals, conferences. Go to the research services like Jupiter and Forrester, or ask your clients to get information from them for you if they're a customer. Go to the industry analysts, the security analysts.
We went through this exercise with a firm I work with in the area of community-building, also called the online community space. In their landscaping exercise they broke it into two fundamental categories: Web communications and Web publishing.
The Web communications area further broke down into instant messaging, threaded discussions, chats, email, Web telephony, video conferencing. These are all sectors in the communications space, and you could break it down even further, depending on how you want to look at it. In the area of Web publishing, they looked at areas like collaborative tools, workflow tools, document management issues, imaging tools, Web authoring systems and decision support tools, all of which touch the "publishing" space in the Web. Now, you might say, "Well, those are a long way away for me," but not really because if you're in the community-building space, they are all one step away from you. That's the whole point of the landscaping exercise.
So you go through each of those sectors and you fill in the players. Clearly, companies like I-Chat; AOL's Instant messaging, Proxicom's conferencing, Front Porch, etc. are all around each other.
You see who's in your immediate space, and now you're beginning to realize somethingany company in an adjacent space is, or may become, a competitor or partner and you're going to have to deal with them. They're in your block.
First, you're going to compete with them for dollars because there's only so much money buying community software, tools and services. They are close enough to you that they can poach the budget from you.
As you start getting more refined in your block and the blocks right around you, you're competing harder. You may be coming to a customer with conferencing tools and the chat folks are telling that same person that chat is the better solution for their problem.
We did this breakdown for the community-building space about two years ago and we concluded that these people needed to come together. Conferencing tools and chat tools were different beasts. Now, each has had to infringe on the other's space in order to sell. The chat guys have developed conferencing tools and the conferencing guys have developed chat products. Survival. They were competing head-on. So, why didn't they partner? Well, early-stage status. ambition and egos, came into play. And it cost them all. But, see, what I mean? You've got look for the patterns.
Using the Landscape
Now, how do you use the landscape? First, the landscape itself is a simple discipline. It's a great way for you to do a high-level competitive picture which is easy to communicate to investors, partners and your own teams. It's a map you should always have in front of you. Every few months, you want to ask, "How has the terrain changed on me? Who else is in? Who is moving?" You want to look at the block you're in and ask, "What are the logical blocks I could expand into?" When you're talking to an investor, you can say, "I'm here, but you can see these are logically related markets and we expect to develop outwards to embrace them."
But, let me tell you the kiss of death. What the landscape is also defining is the bundled solution where some number of related products are incorporated into a single offering. By offering instant messaging, chat, conferencing, threaded discussion all in one, at a single price, with a single license and "we-do-it-all-for-you" service. It becomes really tough to sell a single solution against a bundled one. They can take you right out of the game, even if it's a product of lesser quality that yours.
Computer Associates, Tivoli/IBM, Microsoft . . . that's exactly their selling strategy. They sell entire suites. When possible, you should move to a solution set as fast as you can. Either you're going to move into it yourself or you're going to partner or you're going to acquire rapidly, because when that bundle comes into your space, you are swimming upstream in a severe current. Remember, this whole landscape is a consolidation map and a set of investors walking into the Web communications space will say, "Okay, which is the one firm with the greatest potential for everyone to aggregate around, if we invest in it?" Or, "Which are the two or three, if we can consolidate them, will become the dominant player?"
Now it becomes a self-fulfilling prophecy because that firm gets the investment money and the support of two or three key VCs who have great reach. They begin to put leverage on the other players in the space, either with price-point pressure or market pressure or venture pressure. Then you start seeing the consolidation take place.
You can see why it's important to understand whether you are the point of consolidation or one of the consolidated. Knowing that will help you plot your path. Uncover the consolidator, it will tell you who you might want to partner with.
The landscape also tells you tomorrow's competition. The fact that AOL is hitting instant messaging doesn't mean that the space is over, but I'd sure like to have an inkling of their intentions before moving aggressively into it. Talk about somebody who could dominate the space in a second, it's AOL, so I'm probably going to do a lot of work to understand where they are. It might be that it's an insignificant market for them right now. Selling software tools may not be high on their priority list, compared to content aggregation. Yes, you have to make a subjective judgment call. And, you need to explain that call to the investor or partner. After all, if they study this, they have the same concerns. With a well-executed landscape, you will have the answers up front.
Strategy: Think Outside the Box
As I've said, there is no magic answer when it comes to strategy. The magic is in trying to think outside the box. Pick a few key strategies to drive hard on, then leverage the heck out of them. Execute them extremely well.
Here's an example from DIGEX/Intermedia (http://www.digex.com) at the Southeast Technology Conference. Instead of staying in the large bandwidth game of major ISPs they are moving to provide communications infrastructure for campuses and buildingshow you wire, how you set the routers up, how you define what's inside the building. That's all pretty tough. The builders are all groping for this type of capability right now. It's an opportunity spot.
The move is an interesting repositioning strategy. It would clearly change their market space because they're selling the enterprise solution now, rather than selling predominantly to the Internet consumer. I think it's a smart strategy because when you look at where DIGEX is compared to the WorldComs and MCIs, there's a huge differentiation from selling global bandwidth against those players. They've moved to a different terrain where the others aren't. They get positioning and entrenchment, become specialists in the campus setting by developing intranets and Internet-based wiring technologies to make it all fly.
In another example, there was a local company we worked with, which looked carefully at their venture and finally concluded that they were never going to succeed alone. They sold up and merged with another firm. They consolidated. It was a mature move, a smart move. I think they're going to gain by it. They broke their original firm into two parts. Cut one loose and it is still performing services. The other had technology which they aligned with a group out of North Carolina to create a new firm. That was a positioning strategy.
One more case. There was a services firm we talked to which developed some software. I think we convinced them to give the software away because they were not leading edge. The software would have drained internal development resources, but there wasn't enough value to become a leader as a software company. They could, however, strike a unique arrangement by giving the software to a friend in the software industry on a most-favored license to use the technology. All the maintenance costs and development support now transfer to the new firm and they can focus on their real business. That's a clear divestiture strategy to strengthen their core business.
The Poor Man's Route To Positioning
How do you start creating image when you don't have a PR group, you don't have big marketing resources? Here are some low-cost positioning tools which you can use as the little guy trying to position yourself, to get yourself known.
First of all, you can write. You can publish articles, op-ed pieces, reports, studies, surveys. The markets love surveys. Do a survey of what is going on in your space and publish the results. Get the media to pick it up. Even if you don't publish it, it becomes a collateral piece for customers. It's a great device.
Let's say you're developing Web sites today. Are you creating the assessment list for a successful intranet application? You might grade every company on a scale of 1 through 15. Now you've got something to publish which people can use to measure the successful characteristics of an intranet application for their organizations. And you can say, "Hey, we'll come in for two days and only charge you this much money to do the audit for you and tell you how successful you are in each area." Now, they're paying you to do the research that will allow you to give them a meaningful proposal. It works.
If you start using techniques like this over and over again, you have information you can compile into a survey report that gets published. You can use it as a mailing list. You have ties to the people.
These are low-cost techniques which have high visibility and good value for the client. They are great for positioning, allowing you to penetrate markets and create mind share.
Use reports to establish terminology. If you're in a new area, you want to make sure that the terminology favors what you are doingusing a term like "Web conferencing," if that's what you call it, rather than "discussion threads." The person who comes in talking about threaded discussions is going to be one-off with the buyer who is already conditioned to think conferencing. It can be that simple and that specific. You want to condition the buyer to understand a set of terms which are in tune with what you are selling. Then, you are defining the topology of the solution set. You can win the game if you get there first and define the terms. Microstrategy has done this so effectively in the data mining space.
The last one I'll talk about is pricing. Now if you are in a commodity space, you don't have much choice here, but many new companies are so afraid of pricing that they typically low-ball the price and may be hurting themselves. I'm not telling you to go out and raise your prices, but it's funny how a customer perceives price and value.
If you are just another product in the battleselling word processors for exampleprice can be the end of the game. On the other hand, you can have a fabulous new service that a company really needs, but since it carries a $250 a year price, it's too low to hit the CIO's radar screen. The low price implies anything but the high-end solution you wish to convey.
Pricing has impact. I've seen people lose bids because they were 1/10th the price of other bids. They were automatically disqualified, psychologically, because they weren't perceived as being credible. So when you look at your pricing model, give it due thought. Is there a leverage point here that you need to communicate? If you are as valuable as you believe you are, make sure your price conveys what you believe. It's an essential part of your positioning.
Positioned For Speed And Responsiveness
Sometimes, the greatest advantage you have is that you are small.
You are in a world that's moving rapidly. When you're competing against the big players, they are going fill a lot of space, but you can move surgically and fast. The small company can operate like a guerrilla unit. That's how you should operate and you'll have that advantage for a long time. Listen to Russ Ramsey of Friedman, Billings, Ramsey & Co. (FBR) (http://www.fbr.com). He'll tell you that FBR's advantage on Wall Street is their quickness because of their size. They're able to push an IPO out the door a lot faster than anybody on Wall Street, and they're doing it right now.
The ability to respond very quickly offsets some of the risks of working with a small company. While the big player has to clear things through channels, you can get in, win the business and start the implementation before the big player can even finish the bid. Sell that advantage. Sell speed. Sell knowledge. It's compelling and it's very important piece of your position in this marketplace today. Sure, it gets less important as you go for the multi-million dollar contracts, but I don't think too many netpreneurs here have just pulled down a $25 million contract. Here's hoping you all will, very soon.
Clear positioning and maximizing your leverage will help.
Thanks very much, everybody.