Paul Sylvestre's Business Strategy and Marketing Blog

Tuesday, June 21, 2005

Market Positioning and Segmentation the Easy Way. Not!

Positioning is a perceptual location. It's where your product or service fits into the marketplace. Simply, positioning is how your target market defines you in relation to your competitors.

A good position is:
1. what makes you unique
2. considered a benefit by your target market
3. when run correctly, makes for a profitable business (and hopefully more profitable than your competition in the same space)

But how many small businesses do you know of that have let the market or competitor position their company and/or box them into a unattractive market segment, then hurriedly built a strategy around that to "validate" the situation? I think it is more common than entrepreneurs will admit, but I can understand why it happens. First of all, with small organizations running so lean, it’s easy to fall into something rather than take the time to assess the company’s situation and potential opportunity, and build a detailed strategy that supports the company’s objectives. In addition, here are some other potential situations that can corner your business into a less desirable market segment and product position.

1. Late to market. All the high margin and/or high volume market segments have been snatched up by the competition, who now have “first in market” advantage. It is very difficult to create strategies and tactics that will unseat these leaders from the top position.

2. Lack of understanding of prospects and their true motivations that compel them to buy: Owners and executives sometimes don’t fully understand how even subtle disconnects in positioning within a targeted market segment can adversely affect success, to the point of even causing failure of the business regardless of what star managers or top producing sales reps are added to the team.

3. Not enough time and resources available to drive a more challenging, yet more rewarding path as it relates to strategic business planning and product development. In this business environment most businesses are running lean, but small businesses are especially affected and have little time or resources to pull in experts to sort these issues out.

4. “My baby is not ugly” Syndrome: It is easy for entrepreneurs to let the attachment they have for their product or service, get in the way of making difficult business decisions. They are unwilling to change to meet the business challenge.

5. Poorly communicated positioning to internal employees, prospects and customers, which allows the competitors' marketing and sales force to position your company for you and to their advantage.

These are just a few ways that start-ups, and even larger businesses, court failure by not taking the time to nail down successful positioning and segmentation strategies. Change is difficult, and can be especially costly when modifying core business strategies such as product/service positioning and target market. But if you find yourself in this position, bite the bullet now, rather than later. You and your company will be better for it.