Book Notes by Abi Noda

Positioning by Al Ries & Jack Trout

ISBN: 0071373586
READ: Jan 27, 2014
ENJOYABLE: 8/10
INSIGHTFUL: 9/10
ACTIONABLE: 8/10

Critical Summary

Positioning is about how to define your product or entity in an optimal way so as to differentiate it from competitors and drive preferential purchase or use. Ries and Trout argue that positioning has become especially critical for marketers as our society has become increasingly overburdened with communication and advertisements.

I wish I could go back in time after having read this book — Positioning gave me numerous epiphanies related to companies I have started or worked for. Positioning is a must-read for anyone who works in marketing or business, especially those launching a new product or struggling to hit stride with an existing product.

The book hammers home the point that the only reality that matters with is the perception of your customers. It's the prospect's world-view and interpretation of your product that counts, not yours. And although this book contains outdated examples as it was published over 30 years ago, I didn't feel that this detracted from the core content. Rather, the authors' prophetic and timeless concepts helped reinforce their arguments. Overall, this book helped me move along the path towards critically understanding and evaluating positioning strategies.

My primary criticism of this book is that while Ries and Trout provide a highly practical explanation of how and when to use line extensions, I did not feel as well-armed with practical examples or guidelines for positioning in general. Other than semantic differential, no research strategies or exercises were provided for defining the positioning of an entity. The book also discusses redefining product categories in order to attain the #1 position, but it doesn't go into detail about how to accomplish this. I was somewhat able to fill these gaps with material published online by Roger Straus. In particular I would recommend his "triangular" strategy, which incorporates rational, affective and relational positioning, as a great supplement to Positioning.


Positioning

Positioning = defining the meaning of an offering so as to positively differentiate it from the competition and drive preferential purchase, trial, or use.

Positioning is about reaching and filling a vacant spot in the mind of the prospective customer, decision maker, end-user, etc.

"Positioning is how you differentiate yourself in the mind of the prospect."

See Roger Straus's article and presentation on rational, affective, and relational positioning.

Positioning can apply to anything — a product, company, service, person, etc.

Trip the customer and whisper your brand's name. Whatever flashes through their mind before they hit the ground is the positioning for that customer —Marc Julius

Key points:

Narrow Your Target

The narrower and better defined target the better. We can't successfully communicate, position, or understand prospects' minds without first segmenting the market and focusing on a narrower set.

Focus on the prospect, not the product

In order to select your message, look for the solution to your problem not inside the product, not inside your own mind, but inside the prospect's mind. Concentrate on the perceptions of the prospect, not the qualities or reality of the product.

In the minds of customers, "the perception is the reality."

Oversimplify

In an increasingly over communicated society, you are lucky if people can remember one message and associate it back to your product. Less is more. Oversimplify and stick to a single message. One good strategy for creating a simplified message is to look at what your competitors are doing and then subtract the poetry/creativity which has become a barrier to getting the message into the mind.

"Finding the core" from Made to Stick

Be first

The best way to get into a person's mind is to be first.

What's the tallest mountain in the world? What's the second tallest? People know Charles Lindbergh was the first man to fly across the Atlantic. How about the second person?

Find a position in the prospect's mind that you can be first in — it's better to be a big fish in a small pond than to be a small fish in a big pond (p. 25 - beer advertising example). Create a category you can win. Define the category differently so that you are the biggest/best/awesomest. You have to be #1 or #2.

Connection to Lean Startup — you can think of problem interviews as an opportunity to identify potential unoccupied positions in prospects' minds

The definition of "first" seems a little bit unclear. Does Ries mean "first" as in original? Or "first" as in the best? My interpretation is that Ries means that for a given category (eg. fast cars), whatever flashes in the prospect's mind first wins.

How does positioning differ based on whether customers are recurring or not? For example, with Coke vs Pepsi, it's clear that it's difficult for Pepsi to dislodge Coke as being the leader because once Coke is first in a person's mind, it is unlikely to change. But compare that to coding bootcamps, where customers are not recurring... is it about being first chronologically? Or is it about being first to the mind in the lifecycle of a typical prospect? This distinction is unclear.

Don't blow your first impression

You never get a second chance with a product, company, or even as a person to make a first impression. You shouldn’t communicate with prospects until you are ready to release your long term positioning strategy. Consider the time and place. When two people meet each other and end up falling in love, it requires an open window (vacant spot) and both individuals being receptive to the idea. The same type of situation has to occur when you position a product.


How the prospect's mind works

When analyzing or devising a positioning strategy, the only thing that matters is what's already in the prospects mind. Positioning is a chess game played in the mind of your prospects.

People reject incongruent information

If your positioning strategy involves changing that people already think you will have a difficult time. The best strategies are congruent with what people already think. The mind accepts only that which matches prior knowledge or experience.

Example: Ask a democrat and republican to read an article on a controversial subject. then ask each one if the article changed his or her mind — little mind changing takes place. Instead they've each picked the facts supporting their side.

Example: Blind tastings of champagne often rank inexpensive ones over expensive ones. with the labels on, this is unlikely to happen.

Semantic Differential

Semantic differential is a research technique for mapping out prospects mind. A prospect is given a set of attributes and for each attribute, ranks competitors on a scale of 1-10 (p. 159).

To develop a strategy around the results, conventional wisdom says work on your weaknesses. Positioning theory says you must accept the position the prospects mind has given you, and reinforce those.

Thus if your proposed position calls for a head-to-head approach against a marketing leader, forget it. It's better to go around an obstacle rather than over it. Try to elect a position that no one else has a firm grip on.

The Product Ladder

People rank products and brands in the mind. A good way of conceptualizing this is to visualize ladders, each representing a category and each step being a brand (p. 31).

If you're not #1, be #2 Moving up steps of the ladder is difficult if the brands above have a strong foothold.

Instead of trying to compete head-on with a competitor established at the top of the ladder, relate to it in order to establish the #2 position. "Avis is only No. 2 in rent-a-cars, so why go with us? We try harder." Avis recognized the position of Hertz and didn't try to attack them head on — Avis did not occupy the first position, but it became the first to occupy the No. 2 position. The rent-a-care product ladder = Hertz, Avis, then other competitors.

Introduce the new by way of the old In the case of introducing a new product category, creating a new ladder is also difficult because the mind has no room for what's new and different unless it is related to the old. If you have a truly new product, it's best to tell the customer what it's not, rather than what it is, to effectively worm your way onto a ladder owned by someone else. eg. "horseless carriage", "sugar-free" soda, "lead-free" gasoline. By calling 7-up "un-cola", it established it as an alternative to a cola drink, giving it a position on the cola drink product ladder which had huge existing mind-share (2/3 of soft drinks consumed in the US were cola drinks). The cola drink product ladder = Coke, Pepsi, 7-Up

Don't play a losing game When the product leader is dominant and established, it can be a losing game to try and compete. RCA vs IBM example (p. 38): RCA had no hope of making progress heads-on against the position IBM had established


Positioning of a leader

Becoming the product leader

You become the product leader by getting there first and with force. History shows that the first brand into the brain, on average, gets twice the market share of the No 2. brand and twice again as much as the No. 3 brand, and that the relationships are not easily changed.

I'm curious about this. Ries is very affirmative about being first, yet I'm aware of lots of research and examples that dispel "first-movers advantage" in business.

Brands rarely stay "tied"

Consumers are like chickens — they are much more comfortable with a pecking order that everybody knows about and accepts (Hertz and Avis, Harvard and Yale, McDonalds and Burger King). When two brands are close, one or the other is likely to get the upper hand and then dominate the market for years to come. If you are in a tie and the winner is in doubt, you should go all-out to win.

Maintaining leadership

In the short-term, leaders are almost invulnerable. Momentum alone carries them along. Their worries should be long-term. Leaders should use their short-term flexibility to assure themselves of a stable long-term future. Leaders are in the best position to exploit opportunities as they arise, and constantly use the power of their leadership to keep far ahead of the competition.

Don't repeat the obvious

As long as the company owns the position, theres no point in running advertisements that repeat the obvious (e.g. "We're no 1"). Rather, it's much better to enhance the product category in the product's mind. IBM's advertising, usually ignores competition and sells the value of computers — all computers.

Advertising that says "We're No. 1." jeopardizes your position in peoples' minds — you seem insecure to someone who already knows you are No 1. or you have just defined your leadership in your own terms and not the prospects.

Reinforce the originality

The essential ingredient in securing the leadership position is getting into the mind first. The essential ingredient in keeping that position is reinforcing the original concept. Coca-Cola is the standard by which all others are judged. In contract, everything else is an imitation of "the real thing".

Cover All Bets

Product leaders should swallow their pride and adopt eery new product development as soon as it shows signs of promise to protect against the unexpected

Don't forget the power of the product

Avoid the illusion that the power of the product is derived from the power of the organization. it's the reverse. the power of the organization is derived from the power of the product — the position that the product owns in the prospects mind. Coca-Cola has power. The Coca-Cola Company is merely a reflection of that power. Outside the coal field, the Coca-Cola Company has to earn its power the hard way—either by getting into the mind first, by establishing a strong alternative position, or by repositioning the leader.

Cover with multibrands

leaders should cover competitive moves by introducing another brand

moving an established position is enormously difficult — instead, create new brands that are uniquely positioned

proctor & gamble: joy, crest, head & shoulders, bounty

Cover by name broadening

Change dethrones leaders (eg. for New York Central Railroad, the covering move would've been to open an airline division at an early stage in the game)

one way to adapt to change by is by broadening the name of the brand (Haloid -> Haloid Xerox -> Xerox) to help bridge the gap from one era to the next and allowing the company to make the mental transition


Positioning of a follower

When a follower copies a leader, it's not covering — it's a me-too response.

Most products fail to achieve reasonable sales goals because the accent is on "better" rather than "speed". the no 2 company things the road to success is to introduce a me-too product, only better. it's not enough to be better, you have to introduce your product before someone else has established leadership, with more marketing power, and a better name.

"Cherchez le creneau" == French marketing expression, "look for the hole"

examples of creneaus (p. 54): small, large, high-price, low-price, sex (eg. masculine brand), age, time-of-day

Don't look for creneaus in the products — the game is played in the prospects mind. Don't try to be everything to everybody; carve out a specific niche

Repositioning the competition

When you can't find an open creneau, you must create one by repositioning the competitors that occupy the positions in the mind. to move a new idea or product into the mind, you must first move the old one out.

The crux of repositioning is undercutting an existing concept, product, or person; don't ben afraid of conflict — conflict can build a reputation overnight.

When Tylenol successfully repositioned aspirin, it started its ad by listing all the side effects on the back of the aspirin bottle before even mentioning its own brand.

For a repositioning strategy to work, you must say something about your competitor's product that causes the prospect to change his or her mind not about your product, but about the competitor's product.

Repositioning is not about comparatives, e.g. "we're better than our competitors".

Don't be concerned with feeling like repositioning is "unethical" — to be successful in this over communicated society, you have to play by the rules that society sets.


Naming

The name is the hook that hangs the brand on the product ladder. Naming is the single most important marketing decision.

Look for a name that tells the prospect what the product's major benefit is, but don't get too close to the product itself that the name becomes generic (eg. "Miller Lite" — light beer became a common descriptive term)

Avoid being subtle and tricky, or hiding the origin of the product.

Coined names like "Coca-Cola" or "Apple" are dangerous — only when you are first in the mind with an absolutely new product that millions of people are certain to want can you afford the luxury of a mean-nothing name. We confuse cause and effect, causing us to be lured to coined names and initials (because Apple and IBM are successful.).

Take Cyril and John — people who don't know someone with these names nevertheless expect a Cyril to be sneaky and a John to be trustworthy. Names like Eastern Airlines create self-inflicted wounds.

Examine the aural qualities of names, even if you plan to use them in printed material only

The most common initial letters are S, C, P, A, and T

To folks in Atlanta, Coca-Cola is a company and a great place to work. To the consumer, Coca-Cola is a sweet, dark, carbonated beverage. Coca-Cola Clear wouldn't make any sense (thus sprite).


Line extension is generally bad

Generally, new products should not have well-known name associated with it. The well-known name already occupies a position on a ladder in the prospect's mind, so tying that position to a new product category blurs the focus of the brand in the customer's mind. New ladder, new name.

Owning a position in the mind means the brand name becomes a surrogate or substitute for the generic name — eg. "I want to eat jell-o, give me a kleenex". to make your brand name stand for the generic is the essence of positioning.

The name of the brand is a hook to hang attributes on. Line extension blurs the sharp focus of the brand in the mind. you can no longer say "give me the Dial [soap]?" if Dial has also has toothpaste, shaving products, etc.

The one short-term advantage of line-extension is that the name carries over certain attributes with it, thus leading to an instant flash of understanding (and sales).

After the initial recognition, line extension names are forgettable because they have no independent position in the mind. They are satellites to the original brand name, serving to blur the position occupied by the original name which is potentially catastrophic.

"A name is like a rubber band — it will stretch, but only to a certain point. and the more you stretch it, the weaker it becomes."

"shopping-list test" — write down brand names (kleenex, Dial, Heinz) and see what spouse comes home with. if there is confusion, it means that the brand now stands for more than one thing and is sapping the strength of the original brand. eg. Kraft

"step-up" line extensions (releasing a higher-end product than what the brand is known for) result in anemic prices at the higher-priced end (who wants to pay premium price for a low-price name?)

"step-down" line extensions are often instantly successful, at the cost of a hangover later when the prestige position of the original brand becomes weakened

Line extension is appropriate in certain circumstances:

  1. Expected volume. Potential winners should not bear the house name. Small-volume products should.
  2. Competition. In a vacuum, the brand should not bear the house name. In a crowded field, it should.
  3. Advertising support. Big-budget brands should not bear the house name. Small-budget brands should.
  4. Significance. Breakthrough products should not bear the house name. Commodity products such as chemicals should.
  5. Distribution. Off-the-shelf items should not bear the house name. Items sold by sales reps should.