Indeed, your product or service may be truly horizontal and work for everyone; however, unless you have a Microsoft-size marketing budget, you cannot initially market to everyone.
You need to initially focus on a specific target customer. For a prospective customer to make a bet on your unknown company and product, the value your product brings must tightly match a painful problem they're trying to solve, compelling them to take the risk on your unknown product.
Positioning helps you clearly focus on a select a target market in which you can find willing "early adopters" to try out your product. Once satisfied, these early customers will serve as references to help you sell to the next customer in your initial target market and, overtime, to adjacent target markets.
Focus, Focus, Focus
Positioning is often very difficult because it requires hard choices. Giving up all possible targets to focus on just one requires a great deal of discipline. Interesting opportunities seem to lurk everywhere, tempting you away from your targeted goal.
First Customer - Critical Success Factor
As a startup your first objective is to find a customer who will try out your new product, give you insightful feedback, and provide word-of-mouth testimonial and references to help you entice customer #2. Your positioning must appeal to this first customer's specific needs and be a product or service that clearly is a tailor fit solution for their problem. Otherwise, they just will not have the time or interest to work with you.
Once you have a very satisfied customer #1, you market to customer #2, who has the same problem/pain, by referencing customer #1. After you have established a foothold in this first targeted sector, you expand to adjacent sectors, leveraging the references of the first sector. The successes of your satisfied customers will provide huge marketing advantages.
Value Proposition, Positioning and Messages
The objective of positioning is to differentiate your company in a compelling way for competitive advantage in a selected market segment. If you are struggling with this, it may be that you are too close to your product/service - not unusual, as it is "your baby." Crossing The Chasm, written by Geoffrey Moore, founder of The Chasm Group, provides tools for developing your own go-to-market strategy, as well as examples of approaches used by successful technology companies.
Many firms find bringing in a positioning expert to be the most effective and least divisive approach to developing positioning and messages. This expert will research and evaluate your product/service's market space and competition in the context of your unique value proposition. They will then work with you to craft relevant positioning and messages to attract your target customers.
1) Choose a First Target Customer that is "Bleeding from the Neck"
Choosing the right first target customer is a critical step. "You develop a large market by developing a small market first," says Paul Wiefels, Managing Director of The Chasm Group. "You need to create a beachhead, which is an accessible, well-funded target customer with a compelling reason to buy, . . . one that is bleeding from the neck," Wiefels says. In order to be the market leader, you want to choose a target customer where there is no entrenched competition and one that will serve you well as a reference.
2) Understand the Competitive Landscape
Who are the entrenched competitors in the market space? What does their product do? How are they positioned? What do they say about themselves? The Internet makes it fairly easy to conduct competitive research. You need to determine your unique value, compared to your target market competitors.
3) Your "Unique Value Proposition"
The value proposition is the definition of your product: whom it targets, what it does and how it benefits the user. Once you have selected a first target customer and analyzed the competition you should be able to articulate your unique value proposition. This is how you are different and why the customer will buy from you.
Once your company has determined its value proposition and the target customer, you are ready to develop positioning. Geoffrey Moore says in Crossing the Chasm, the "bible" of high-tech marketing, "Positioning is based on the target segment you intend to dominate and the value proposition you intend to dominate it with." Positioning is rarely articulated in marketing materials. Rather, positioning provides the guidelines for product development, marketing and sales - giving the entire team a clear understanding of your company and product focus.
Marketing messages are developed in concert with creating your positioning. These are the feature and benefit statements about your product that you will weave into all of your materials. Because they are based on your positioning work, they will be specific to the target market and resonate with your customers and prospects.
Effective, compelling positioning assures your company and product are competitively differentiated, relevant and compelling to target customers. This allows your company to gain a leadership position in the market segment. Leadership brings multiple benefits. Leaders receive an overwhelming share of publicity, are able to establish pricing models, have lower sales costs and access to decision-makers.
As your business grows, your target audience will broaden. "You'll sell different applications to the same target segment or sell the same application to different segments," says Wiefels. In addition, market conditions will change. Competition will change. Technology will change. Positioning must be revisited when any of these factors change.
Once positioning is established, you leverage this work to create your supporting corporate identity, website and marketing materials.
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