Product positioning vs. services positioning

Philip Morgan

Well, I sat down to write one of my daily emails and this came tumbling out. I'm curious what y'all think:

If you'd really like to understand the idea of positioning, it's useful to compare positioning in the world of products to positioning in the world of services.

They're both based on the same fundamental idea, which is moving into a position from which you can take advantage of some marketplace feature, need, or desire. We could shorten this to: moving into a position from which you can act on an opportunity in the market. Once you get past that similarity, though, they become different.

Product positioning is based on the inherent objective observability of a product, and the ability of advertising to amplify a message about those observable features.

The superior build quality of Apple's first generation unibody aluminum MacBooks was easily observable when compared to Windows PCs of the same generation. Almost anybody paying any level of attention would notice the sturdy yet smooth movement of the hinge that supported the MacBook screen. That person could pick up the computer and try to flex or twist it and see how strong it was. They could bang on the keyboard and feel how little give there was. And side by side with a same-generation Windows PC, they would notice a distinct difference in build quality.

This is what I mean when I say products have an inherent objective observability. You can see, feel, smell, taste, and measure the differences between products. This lends a sense of objectivity to how we compare products. Products also tend to have fixed, known prices, which further lends a sense of objectivity to how we compare them. "Apple is expensive, but very high quality. PCs are cheaper but lower quality." Reasonable people can disagree on those bottom line assessments, but at least you can explain why you arrive at that conclusion. "See! When you press on the MacBook's case it doesn't flex at all! When you press on this PC's case, it flexes 2 or 3 millimeters. That's why the Apple is more expensive!"

Services have no such objective observability.

Because most services are custom scope, custom price, and delivered under various forms of secrecy, they lack this quality of objective observability. We try to compensate for this with case studies, testimonials, and other post hoc artifacts that come from successful engagements. This is how we try to make our services seem more objectively observable, but ultimately they are not. They're like any human relationship: there's the reality of the relationship, there's what your close friends know about it, and there's what everybody else thinks they know about it. Those are three distinctly different categories of knowledge about the actual thing.

So services is positioning is actually all about developing a reputation. This makes it very close to branding in practice. Certain public figures (presidents, leaders of nations and multi-national companies, entertainers, etc.) will have a global reputation or brand. That is to say, those people will have a reputation among lots of people all over the plant. You, almost certainly, will not.

Instead, your reputation will exist within the context of an industry, audience, or community, and you will be relatively unknown outside of that group. So your choice of where or by whom to be known is very consequential to your marketplace position.

Remember that for both services and products, positioning is moving into a position from which you can take advantage of some marketplace feature, need, or desire.

Let's clarify some terminology using a few examples:

  • A feature of the market for Sitecore expertise is that the software itself is massively expensive and most service providers offer high ticket, long-term contracts because that matches the needs of the typical Sitecore user. The need for Sitecore expertise delivered with more flexibility is therefore underserved. More on this:
  • A temporary feature of the market for React skills is that demand currently exceeds supply. This (temporarily) simplifies lead generation and increases the price buyers are willing to pay.
  • A temporary feature of the AWS market is the complexity of understanding and managing the AWS bill. This creates a need for specialized expertise in this area. More on this:
  • A need of many businesses is drive down costs. Technology and custom software can address this need in an ongoing way. Shunting support delivery to self-service forums is one simple example of businesses satisfying this cost-reduction need.
  • A desire of some businesses is to innovate using software before others in the market do. Technology and custom software can address this desire.

How might you cultivate a reputation that helps you take advantage of some marketplace feature, need, or desire?

I can think of 7 ways:

  • Effectively leverage a platform
  • Start with a microscopically small group
  • Standardize/productize an offer
  • Piggyback on an audience or community
  • Find and fill an information deficit
  • Play the expertise long game
  • Identify an entrepreneurial opportunity early on and get involved while the signal/noise ratio is favorable

These 7 approaches break break down into 2 groups: those you can do almost anytime (evergreen) and those that are dependent on external factors that have to do with luck, timing, and the lifecycle of tech (I refer to these as temporal):

  • Temporal
    • Effectively leverage a platform
    • Find and fill an information deficit
    • Identify an entrepreneurial opportunity early on and get involved while the signal/noise ratio is favorable
    • Standardize/productize an offer
  • Evergreen
    • Start with a microscopically small group
    • Piggyback on an audience or community
    • Play the expertise long game

I'm not opposed to the temporal approaches to cultivating a reputation, but I'm more interested in the evergreen approaches because they tend to deliver better ROI when viewed across the length of a career.

A bit more detail on each of those approaches to cultivating a reputation:

Effectively leverage a platform

The popularity, complexity, or value of a platform can help you cultivate a reputation. Platform users are often actively searching for expertise in using or optimizing the platform, so you can place yourself in front of their search traffic, within the physical and online venues where they seek support, or on the stages where they seek leadership and inspiration.

Find and fill an information deficit

Change creates new needs for information, and like a hole dug in the sand some distance from the ocean will eventually fill with water, this information deficit will eventually be filled with varying forms of expertise. If the timing is good, you can fill an information deficit and thereby cultivate an expert reputation.

Identify an entrepreneurial opportunity early on and get involved while the signal/noise ratio is favorable

Change creates new opportunities; new needs for expertise. Before social media was a dominant force, there was no need for experts in social media addiction, experts in advertising on social platforms, or experts in social media strategy. Now there are. Change always opens up entrepreneurial opportunities, but those opportunities attract risk-takers, and so timing plays an important role in identifying and acting on these kinds of opportunities before they become saturated.

Standardize/productize an offer

Developing a specific, standardized offering that addresses a specific need can help you cultivate a reputation. The hopefully near-perfect alignment between the need/problem and your offer drives word of mouth which helps build a reputation.

Now we get into the methods that are more evergreen in nature. By the way, none of these 7 approaches to cultivating a reputation are mutually exclusive. In fact, you can often "stack" several of them for better results.

Start with a microscopically small group

Among your family or friends you probably have a reputation you didn't really work to cultivate. It just kind of happened. That's the power of small social groups: it's easier to meet, remember, and feel like we understand other members of a small social group. It's also easier to intentionally cultivate a reputation within a small industry, audience, or community, even if you start out as an unknown to them. It's simple but not necessarily easy: you start small, show up consistently, and contribute thoughtfully & generously.

Piggyback on an audience or community

This is a slightly different take on the "start microscopically small" approach. Finding an existing audience or community--so that you don't have to build your own--accelerates your ability to cultivate a reputation. It's not the only way, of course, but it gives you a head start.

Play the expertise long game

Finally, we reach my favorite approach, which is to cultivate economically valuable expertise over 2, 5, 10, or more years. Share freely what you learn as you are cultivating this expertise, and you will develop a reputation that scales in direct proportion to the value and impact of your expertise. The long timeframe I specify mandates that you choose expertise that has a long "shelf life" and that you go very deep with this expertise in order to credibly claim world class levels of expertise. The sharing as you go creates productive discomfort and provides plenty of quality marketing fodder so you're freed from cheap, manipulative, or less effective forms of marketing.

With services, for better or for worse, time combined with disciplined focus is your best ally in cultivating the expertise that builds a reputation that positions you to take advantage of an opportunity in the marketplace. In other words:

Focus + time + discipline -> expertise + sharing as you go -> reputation -> ability to take advantage of opportunity in a market

That's the most powerful version of positioning for a services business.

There are other ways to use the positioning concept in your business, but by comparison they are superficial in their impact on your career.