Tuesday, May 8, 2007

An “Able” Position

Have you ever noticed that in many little diners there is a sign on the wall claiming that the diner sells “the world’s best coffee”? This brings to mind several questions:

1) If a lot of diners have this sign, then how can all of them be true? How many “World’s Best Coffees” can there be?

2) What could a little old diner in the middle of nowhere be doing so differently to make their coffee the world’s best? Can they afford to have someone combing the world for the world’s best coffee beans?

3) Who gets to determine what the world’s best coffee should taste like? Isn’t it true that different people like different types of coffees?

5) How could anyone taste a sample from every establishment in the world that sells coffee in order to assure me that they know which one tastes best? After that many samples, how would they even remember what each one tasted like?

4) If their coffee is so good, then why do I see more people at a Starbucks?

5) If their coffee is so good, then why is it so cheap?

All businesses need a position in the marketplace. Positions tell people what your business stands for and why they should prefer doing business with you. If you cannot come up with a position which explains why people should prefer to patronize you, then why are you in business? Why should people care about you? Just “showing up” is not good enough. Your business needs to create a competitive advantage through proper positioning.

Not all attempts at positioning are successful. In the story above, the diners claimed to have a position: the place to get the best cup of coffee in the world. I seriously doubt that anyone takes such a statement seriously. If your position is not taken seriously, then it is not really a position.

Therefore, one not only needs a position, but one needs a successful position.

Successful positions have four characteristics. I call them the 4 “ables”. To be successful, a position must be:

1) Desirable
2) Achieveable
3) Believable
4) Ownable

Each of these is explained in more detail below.

1) Desirable
It is possible to create a position you can achieve and own, but that very few people actually care about. For example, you could create a one-stop shopping environment for people who want to get just ice cream and battery acid on the same trip. The world may allow you to own that position, but very few people are looking for something like that. It’s not the sort of position that will cause people to prefer you. First of all, those two items are not usually bought together and there is little advantage to bringing them together into the same store. Second, there could be fears that the ice cream would be poisoned by coming in contact with the battery acid.

Therefore, when choosing a position, make sure that you have chosen something people want—something so desirable that it would cause a significant number of people to choose you first over the alternatives.

2) Achievable
It’s great to come up with a position which people desire. However, if you are incapable of living up to the promises of such a positioning, then you are just going to end up disappointing people. For example, around 20 to 25% of the consumer population will put up with a lot of grief to get the lowest price. Therefore, owning the low price position in your industry will make you popular with a lot of people. However, if you are a small business with a high cost structure, then it is highly unlikely you can achieve and sustain the lowest prices in the industry. Eventually, people will figure out that you really are not the lowest priced and you will lose the battle. (In today’s internet age, there are so many sites doing comparison pricing and performance ratings that it is even harder to fool people with an unachievable position.)

You need to pick a position which is suitable to your capabilities—something you can be the best at. What is achievable for someone else, may not be achievable for you (and vice versa). That’s why there is not one single position which is best for everyone. You have to find the one that is best for you.

3) Believable
People act based on what they believe. If people do not believe that you own a position, you will not get credit for it. People’s beliefs are not always rooted in reality. Therefore, achieving a position which is verified by scientific measurement may still fail if customers do not believe it to be true. Positions are held in the mind of the customer. It is in the mind where you have to measure you success.

In the story above, it is hard to believe that a small diner has the world’s best coffee (even if it does). Therefore, it is not a very persuasive reason for choosing the diner.

A few years back, I saw a Menard’s home improvement center with a large sign on the outside claiming that Menard’s was “the official home improvement center of the new millennium.” First of all, I’m not exactly sure what that means. Second of all, it is hard for me to believe that such a claim is true. Third, the only thing it got me to believe was that there are some goofy sign creators at Menard’s (and that’s not a reason to prefer them).

Sometimes, companies that have tried to own a “quality” position have had believability issues because their prices are too low. Like in the story above, customers can wonder how your quality could possibly be that good if your prices are that cheap. In many cases, companies going after a “quality” position have had greater success once they raised their prices, because it made their position more believable.

4) Ownable
Finally, a position must be ownable—something that is relatively unique to your firm and not already owned by someone else. Remember, the goal is to find a position which will cause people to prefer you over someone else. If everyone has this quality, then it will not get people to prefer you. For example, if a doctor claimed his position to be “the doctor that cures people of their illnesses” it would not be a very successful position. After all, it is assumed that all doctors are qualified to cure people of illnesses. Hence, it would not be something that this doctor could own. He couldn’t say, “Unlike most other doctors, I cure people of illnesses.”

Another ownership problem occurs when someone claims ownership to that position before you. For example, Wal-Mart has spent a great deal of time and effort to own the low price position in basic consumables. For a newcomer to try to take that position away would be very difficult. It is already owned by Wal-Mart. It is usually better to look for a position not already firmly held by someone in the industry.

Last week, Eddie Lampert, Chairman of Sears Holdings announced the new positions for Sears and K Mart. Although it is too early to make a final assessment, let’s put the new positions to the test. For Sears, the new position is to be a “one-stop shop for the home.” The slogan is “Sears. Where it Begins.” The icon is a throwback to the big Sears catalog, where stories about people and their homes come out of the book.

For K Mart, the position revolves around being a “marketplace of discoveries.” The slogan is “turn on to something new.” The icon is a throwback to the blue light special via a cartoon Mr. Bluelight.

Starting with Sears:
1) Is it desirable? It’s nice to get everything relevant for the home at one place. But do I really want a Home Depot and a Bed Bath and Beyond under one roof? Maybe.

2) Is it Achievable? Well, wasn’t Sears’ Great Indoors format everything possible for the home under one roof? So it can be done. (Of course, the lack of success of the Great Indoors does make one a little skeptical about the desirability).

3) Is it Believable? What about all the clothing in the store? What does that have to do with the home? I doubt that all the clothes are being taken out. So it is reasonably believable, but compromised by non-home items.

4) Is it Ownable? Home Depot and Lowes own the hardlines part of the home and Bed Bath & Beyond owns the softlines part of the home. By combining the two, do you compromise your image as an expert? Can people believe that you are the expert in both?

Now how abut Kmart:
1) Is it Desirable? I’m not convinced of what it is I am to desire. Is it the ability to find new and different items? If so, that is desirable.

2) Is it Achievable? It is very difficult to always be on the cutting edge of what is new and different, especially as a discount store.

3) Is it Believable? Kmart is not known as being hip or new or unique. This will be a tough sell. Having a cartoon light explaining it to me probably will not change minds. So far, I’d say no.

4) Is it Ownable? Target owns the hip, new discovery position in discount stores. If the bent is more towards one-time closeouts, that is owned by Big Lots. I don’t see a lot of ownership possibilities, here.

Final vote: Sears brand has modest potential, Kmart seems weak. Neither a home run.

Successful positions must be desirable, achievable, believable and ownable.

On May 4, 2007, Eddie Lampert said, “A company without positioning is like a ship without a rudder.” I’d add that a company with a weak position is like a ship with a broken rudder which causes you to go in circles, rather than moving forward.

No comments:

Post a Comment