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Positioning: How to outmanoeuvre your competitors print Print

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When faced with a competitor, the instinctive response of many business owners is simply to lower prices. But taking a strategic view of your business’ position in the marketplace can be much more constructive.

It’s easy to panic when faced with a new competitor or an existing one that’s suddenly taking your customers.

The instinctive response of many business owners is to just lower prices, but taking a more strategic view of your business’ position in the marketplace can be much more constructive.

What is positioning?

Positioning is a marketing term. Every business in a market has a ‘position’ it defends and promotes against its competitors. The more unique the business’ selling points and the stronger its competitive advantages, the more prime a position it will take in the marketplace.

Just take the Apple iMac. To make Apple’s rival to the PC stand out from the rest of the marketplace Apple promoted its superior design and usability features. This positioned them as the innovators and underdogs in the marketplace, and led Apple to garner a devoted following against the status quo represented by PC-makers.

The key to positioning, however, isn’t just finding strong unique selling points (USPs) and promoting them – it’s about aligning the core influences that make your position.

These are the ‘4 Ps’:

  • Price
  • Product
  • Place
  • Promotion

If any one of these is out of alignment your position can be weakened. Let’s say you develop a highly-usable and unique product with targeted features your customers can’t find elsewhere. If you slap a bargain basement sticker price on it, sell it on the side of the road or promote it using ‘cheap and cheerful’ marketing techniques, you’ll then damage your brand’s “quality” position in the marketplace. That’s why premium European cars aren’t sold on shopping channels!

Start by defining your unique selling point

Review what makes your business unique from others in your industry – your point of difference that separates your business from the competition. Often it’s a combination of you as a business owner, your team and your individual approach to customer service just as much as the products you sell or the services you provide. It’s all about working hard to make sure your customers are aware of the advantages of doing business with you over your rival.

If you are facing competition from a large business, like a retail chain that’s just set up shop in your neck of the woods, remember that being a small local business has certain benefits that you can use to your advantage. These could include trust and loyalty in your brand, your personal approach to customer service and your passion and knowledge in your industry. You’ll need to leverage these advantages as your position in the market and feed them into your marketing strategy.

If you struggle to define your USPs, talk to your customers. They may know your business better than you do.

Aim to find out:

  • What they like and dislike about your products or services.
  • Howthey think your products or services could be improved.

The processes you use don’t have to be formal, you just need to focus on finding impartial feedback. It’s always tempting to ring up your top 20% of customers because you know they’ll talk to you, but chances are they’ll give you a positive bias on your results. For this reason, it’s always worth going that extra mile, even if it means taking a clipboard and a set of questions onto the street.

Let’s look at the two main ways you could gather information from your customers:

Develop a questionnaire

A brief questionnaire that asks the key questions can be useful. For example:

  • Do you prefer to shop in store or online?
  • Are you more likely to buy from a business that is socially and environmentally responsible or one that offers you better value?
  • Which do you value more – price or convenience?
  • How convenient do you find it to do business with us?

When writing your questionnaire, remember to refrain from ‘leading’ people to a certain answer in the way you phrase a question.

Quick and easy questionnaires are perfect for online use. You could place your questionnaire on your website and send a link out to your customer database with a message outlining an incentive, such as “Take this quick survey to be in the draw for a free service!”

Remember, questionnaires are better for quantitative data, in other words questions requiring short answers. If you want qualitative data – i.e. opinions – it might be worth placing an open-ended feedback section on your website or investing in a focus group instead.

Use a focus group

If you want to drill down into greater detail behind customers’ purchasing decisions then a focus group can be very effective. Gather a number of customers (generally smaller groups of up to 20), to talk about your product or service for an hour or so. Participants could be more candid if you take a back seat and allow someone else to run the focus group for you.

You want your focus group to contain a snapshot of your target markets. It’s a bit like selecting a jury but you want to make sure the people in the room are a cross section of the customers that you’re targeting. If they’re not, their opinions may be counterproductive.

How do you find these people? Simple, ask customers that come into your business, post a call out for focus group attendees on your website, or approach societies, clubs and professional groups that are important to your business.

Mix it up

There’s a variety of market research techniques you can use. Make sure you use a mix, so you can get a broad range of answers that’ll give you better accuracy. If you just ask the same type of questions in the same way, you’ll only get a very small part of the picture.

Competitor analysis

Once you’ve identified your USPs, it’s time to look at your competitors to see just how unique they are.

Some questions to help you get started:

  • What and how is my competitor selling?

Are the products premium or value orientated? Are they sold in-store, online, or both? Are they delivered by courier or taken home by the customer?

  • Who are they targeting?

Think about their target market profiles, including average gender, age, location and habits. How well are they targeting these customers?

  • What are their advertising methods?

Do they rely on print ads, pay per click ads online, TV ads? Do they forgo advertising completely in favour of sponsoring an event or good cause?

  • Why do people buy from them?

What aretheir competitive advantages? Is it location and convenience? Price?Do they offer expertise and after-sales service?

Start by talking to people who have dealt with your competitor and find out what they thought of their products, service, prices, location, and website.

You can also do your own research by searching your competitor’s business name on Google. This could bring up all kinds of information including their Facebook page, Twitter or blog that they may use to promote their business. Social media is a great platform for seeing customer comments, both positive and negative, and how your competitor has responded.

Once you’ve built a picture of how your competitors are viewed in the marketplace, you can start to see their position. Remember, it’s how the customers see your competitors, not how they intend to be seen, which is important.

When you better understand what your competitors are known for, you can then look at your initial list of USPs and relegate the ones that are similar to your core competitors so you focus on what’s unique about your business and stand out from the crowd.

From there, it’s about optimising your 4 Ps to accentuate your important USPs.

Think long-term

Positioning isn’t a short-term measure. It can cost money to reposition a business and it can take time to achieve that position.

For this reason, it’s imperative that you base your positioning decisions on long-term market trends as well as short-term competitor analysis.

After all, the position you identify as strongest now may not always be so. Look into the long-term trends affecting the marketplace and how they’ll likely affect your chosen market position and those of your competitors in years to come.

Make a strategic decision

Once you’ve researched your competition and carried out in-depth market research into the market’s long-term trends, you should have a better idea of the position you can aim for in the marketplace and how you can optimise the 4 Ps to get there.

Just remember to take every step you can to reduce risks along the way. Carry out a feasibility study for repositioning, create a budget and calculate cashflow forecasts on a frequent basis. 

Cashflow forecast

Cash is the lifeblood of every business, which makes forecasting it an essential skill. Use this quick calculator to help ensure your forecasts are as accurate and reliable as possible.

download button-22 (Excel spreadsheet, 103kb)

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