Segmentation and Positioning

Get big, get niche or get out are words we have all heard. Many ISV’s and Var’s went niche but the market is still evolving and so how can your marketing develop and evolve to meet the challenge of the future?

Niche markets fragment further over time and it is understanding this process, in your market, that enables you to further develop your product, your market, your product proposition and your marketing communications.

Take the motorcycle industry. When I was a lad there were commuter bikes, tourers, racers, scramblers and trials machines. These days there are many more segments and each of these segments is further sub divided. Custom bikes are segmented into Harley Davidsons, Harley Davidson lookalikes, Japanese Custom bikes (4 cylinders), European custom bikes, high performance custom bikes, street racers and commuter custom bikes. You could further segment the market by chain, shaft or belt drive. And so it goes on.

One of the advantages of segmenting the market is in the efficiency you can communicate with that market. If you sell accounting systems to Solicitors you could segment Practices by the number of fees earners, the number of branches, the number of office accounts, the matter types, geographic area, etc. Thus having chosen the segments you wish to target you can now develop the message for that particular segment. Your message should be as specific to the chosen sector as possible so that your product proposition is stronger than your competitors and your company gains a reputation for being THE supplier in that sector, with the best product, best service and best price.

Unique selling points (USP’s) are those attributes of your offering which are unique to your company, product or service. Your company USP’s should be developed and matched to meet the needs of your target market sector. The problem today is that is difficult to continuously develop and evolve USP’s. You need more than just USP’s to differentiate your company, products and services.

Positioning is another approach to identifying your company, products and services in a complex market. Positioning narrows and strengthens the appeal of your offering, for the chosen target market sector. Provided the net market size, and your share of it, is sufficient to provide strategic growth, the narrower the target market you communicate with the fewer the enquiries you will generate but the enquiries generated will be higher quality. This will result in focused product development, more efficient marketing communications, increased credibility and an easier sale at higher gross profit margins.

Focused product development will result in more benefits for your chosen sector which should lead to a further developed competitive advantage. This competitive advantage will strengthen your position and lead to further sales of standard product.

The car industry was the first to use product positioning. BMW’s are positioned as a drivers car, Volvo’s are positioned as the safest cars, Mercedes as prestige cars. You can have a primary market position and a secondary position. Volvo’s secondary position varies. It was performance but is currently design. Porches secondary position is reliability and durability. Thus Volvo combine safety with performance, Porche performance with reliability and durability. Combinations which manufacturers hope will appeal to their chosen sectors like no other.

You can have a brand position with product sub divisions. Thus Volvo produce the safest cars whilst some models are sub positioned for performance, others for design. If I said ‘Think of a high performance estate car’, the Volvo T5 would probably spring to mind.

You can position your company, and or your product, by looking at where your strengths lie and by looking at the market segments which are the most attractive to you. From this you can create your position statements and strong position statements are a key to success.

One Apple Mac dealer I worked for positioned itself as ‘The friendly Apple Mac dealer’ with the secondary position of technical competence. They had years of experience and knew which version of an application would run on which version of the operating system, hard ware, chip set and which type of printer was required and how it should be connected etc, etc. All I had to do, as the marketing man, was find frustrated Apple Mac users! Not difficult! Turnover doubled in my first year.

Thus positioning led to defined marketing communications objectives which were easy to achieve at low cost. And this is the key to success for small to medium ISV’s and Var’s. In this continuously changing World you have to look at the evolving markets you wish to service and think how you are going to develop your products and services to meet those markets evolving requirements. You must then use creative and imaginative marketing communications to establish mind share and keep your company ahead of the competition. From mind share will come market share.

Segment your market into niches

  • Match product features to the chosen niches
  • Match the total product offering to your niches
  • Carefully position your company and products
  • Create strong positioning statements
  • Develop creative and strong marketing communications
  • Communicate regularly with your market
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