Your messaging and positioning may include generic category-level benefits and your specific product differentiators. The right dose between these two ingredients depends on your market and your company’s position in that market. Let’s assume that you are in a competitive, established category – what Dave Kellogg would call a Hot Market.
Positioning Strategy for Market Leaders
If you are a clear leader in a category, it makes sense to focus on category expansion. View your competitors not as other players in the category but as different categories that compete for your customers’ budgets. As the total size of your category increases, you will benefit disproportionately.
Taking CRM as an example, your marketing is answering the question, “Why should I buy CRM software?“. Category-level CRM marketing benefits Salesforce, who may view non-CRM spend with vendors like SAP, Oracle, and Microsoft as competing for their share of business applications spending. Unsurprisingly, Salesforce offers plenty of marketing material about why CRM is a good thing.
Outside of the tech space, working with McCann-Erickson, Campbell’s Soup famously ran a series of campaigns starting in the 1970s that promoted soup. “Soup is Good Food.” By running this ad, Campbell would have increased sales of all soup brands but would have taken more than its fair share of the growing market, not only because it was the brand that was running the ad, but because it was the category leader.
Category-expansion marketing also makes sense if category expansion is your job. The California Milk Processor Board’s famous “Got Milk?” campaign promotes milk. Individual milk brands focus on their differentiation.
Positioning Strategy for Market Challengers
Most technology companies are not dominant leaders in their category. If you are a challenger in an established market and promote the category, then your marketing will benefit every vendor, both you and your competitors. You are marketing your competitors’ products.
By interacting with challengers in an established category, buyers demonstrate knowledge of the market. We know that buyers research before contacting vendors. An active buyer of CRM solutions might fit this profile:
- They are running a CRM evaluation for a funded project
- They are responsible for their current CRM implementation
- They have run similar systems in the past
- They have years of CRM operations experience
- They have a personal preference for Salesforce
- They know that a meticulous evaluation includes multiple vendors
What question does this person have? Not, “Why should I buy a CRM solution?”.
They understand the high-level benefits of the systems, and they know how to run them. The real question they are asking is, “Why should I buy your CRM?”
They went to the trouble of finding your company. So be helpful. Answer their question.
Your message to this buyer must be differentiating. Education on category-level benefits would be at best ineffective, at worst annoying or insulting.
A challenger in a competitive market is guilty until proven innocent. The leader is the obvious choice. If you fail to differentiate, buyers will assume that there is no difference, and buy from the leader.
If you are a challenger in a competitive market, focus on differentiation.
Let the market leader educate the market on the category. It is in their interest, and they have more reach, resources, people, and time.
What am I missing? Share your thoughts and experience with the PMM Hive.