Selecting a position on paper is easy – implementing it is hard.
Positioning traps typically appear once you have some wins under your belt. Your customer base is probably growing – and they start wanting more. Requirements are flooding in from all sides.
- Senior management want to launch more products. More products = more profits!
- Marketing reports our competitors have a new offering that we need to copy to stay relevant
- Sales team talk about barriers to sale and that one extra thing that will help sign more deals
- Customer support want a better user experience and to fix all your bugs
- Existing customers know your product and they know about the gaps. Now they are the power users and want improvements
- New prospects like the system they have. Unless you can do everything as good or better, they won’t want to switch
Any combination of the above could spell doom for your trade-offs, and thus your competitive position. Let’s dive deeper into the four positioning traps.
#1 Copy Cats
We’ve all seen this before. Someone shares a competitor’s latest website or email campaign. They are announcing a feature you don’t have.
Soon your sales & marketing people are asking for it. New prospects get word of it, and senior management are saying it’s now a table stakes feature that we just have to get on with and build. An emergency meeting is held about how you’re going to respond – which could involve compromising your position.
#2 Your Wish Is Our Command
This happens when a customer is deemed more important than your product. Either you have very few customers (and feel the need to pander to them to keep afloat) or you’ve landed a whale customer. Being the biggest account, they throw their weight around and demand you build what they want ‘or else’. Thus when they ask, your management team asks “how high?”
The land to consulting-ware is paved with this kind of wish-granting. The roadmap is always twisted towards the latest shiny object for your biggest customer. After a few years of this, you’ll have a confusing and bloated product that is ripe for a focused disruptor to capitalise on.
The customer in question may have your best interests at heart. However, they are certainly going to be biased in their thinking. They do not have to pay the costs for you. From the opportunity costs, the coding time, ongoing maintenance and support, technical debt and more, certainly doing these things is taking you away from doing other ones.
#3 Straddling Two Positions
When you take a position, you simplify everything. Both internally and externally, people understand your brand, where you sit and who you are for. When I mention Tiffany’s, you know to expect high end jewelry, service, product quality and experience and that light blue carry bag. They are a differentiated, premium brand.
When you fly SouthWest airlines, customers know to expect no frills and little legroom, in exchange for the lowest price. They can offer this low price because they are making trade-offs (like not offering any food). They are a disruptive, budget brand.
However what happens when you straddle between two positions? Could you not capture two different segments and make more money?
Continental Lite tried to straddle and it cost them millions.
They were a premium, full service airline that tried to offer a ‘budget’ option at the same time.
The problem was customers associated the Continental brand with good service. Despite the “Lite” moniker and cheaper price, customers were disappointed in what they received.
Continental Lite didn’t enjoy the operational efficiency of SouthWest, because they hadn’t made the same trade-offs in plane type, food service, and hub-and-spoke model. This means their cost base was higher and profits disappeared.
Ultimately Continental Lite was a disaster born out of the lack of courage to make trade-offs. Straddling weakens your brand and confuses customer and staff expectations. It’s why you don’t see a drive-through Tiffany’s offering cheap rings.
#4 Growth Trap
Often the pressure to grow causes companies to get either desperate or overconfident. They want to offer more products, a bigger menu, more features, more integrations, go into other verticals and markets, all in the search of more money. These activities also dilute you from being the absolute best at what you do.
Bunnings made a monumental disaster by taking their extremely successful “big box, one stop hardware shop” from Australia to England. They simply assumed that something that worked in one country would work in another. This failed venture ultimately cost the Bunnings group $1.7B – money that could have been spent strengthening their local position even further.
What are the options to grow your position?
The positioning traps are cautionary tales that come with wanting to grow your business. So what other ways are there? Typically you can broaden your position or deepen it.
Broadening your position
MailChimp is synonymous with simple email campaigns. For a long time they were specialists in this area; it was the only thing they offered. However the growth trap is powerful. How could they continue to increase revenue and market share? In recent times, they’ve chosen to broaden their position, moving from a specialist of sending email, to a one-stop-shop, where you can now send email, text messages and snail mail.
I wonder what they gave up by adding these services?
Certainly there was an opportunity cost. Adding multi-channel communications took investment away from new Email features, integrations, bugs and more. They diverted resources from defending their position as the go-to email service to build new products.
They also introduced competition to themselves. There are already other “full service” marketing products out there (from Salesforce, Hubspot, etc) which include stronger CRM elements that MailChimp do. By broadening their offering, MailChimp is also moving from having a dominant offering (best at email + best price), to a disruptive offering (less overall features + lower price). When Customers are looking for a fully-fledged marketing solution, there is an increased consideration set, which could harm them overall. I don’t have the data as to whether this choice was justified versus doubling-down on email features or other ventures, however it would make an interesting case study.
Deepening your position
Rather than broaden your position, it is often stronger to deepen it.
Boost Juice is a great example of a company that stuck to its core offering. It offers smoothies that are positioned as tasty and healthy. They are a classic specialist (or variety-based position). Once they had conquered Australia, they had two options to grow:
- Transition into a ‘needs-based’ position (a one-stop shop)
- Deepen their current position (expand geographically)
The growth trap is powerful; it would have been pulling Boost to expand their product lines. They could have offered fresh sandwiches, wraps, salads, and more. However imagine the complexity that adds to their supply chain, training, marketing, service experience, and more.
Instead, they chose to deepen their position. They kept the same position and product line, and expanded globally. They already had the recipe for success; they just rolled it out to a larger area. By leveraging their brand and position, they became an even bigger success.
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Ulwick, A. (2016). Jobs to be done. [s.l.]: Idea Bite Press