What makes a business last?

If you opened up a marketing 101 textbook right now, you would no doubt find a chapter on positioning.

Given how basic it is, you’d think entrepreneurs know how to use it to set their businesses up for long-term success. But that’s not true at all. Hardly anybody effectively applies good positioning to their business.

Positioning is the most important concept of business strategy, but it’s only shallowly understood. Let’s break it down.

Marketers say positioning is when you design the marketing of your shampoo towards dog owners with curly hair who didn’t go to college.

That’s half right, but not likely to move the needle for any company.

It’s important to know that positioning and most other business strategy concepts are war metaphors. Mainly because the study of strategy comes directly from war.

Imagine a war room. A general might ask his staff questions like, “What’s the position of the enemy?” “Is our position secured?” “Let’s put ourselves in an attack position.” etc…

If one side of war captures a fortress, they’ve taken that position.

Your position is the space that you hold mainly for the purpose of stopping your enemy from taking your territory away from you.

It’s the same in business.

In business, there are 3 core ways to position your company and fortify yourself from competitive arbitrage.

1. Product

Oil companies are hardly in competition with tech companies. They are positioned far away from each other. But oil companies have other oil companies close to their position that they have to deal with. Tech companies have to deal with other tech companies.

One option for you, and every company, to give yourself a better position in the marketplace is to change the features of a product so they are not easily comparable with your competitors.

This could be in function, layout, features, use cases, design, and others.

But keep in mind here, it won’t be a powerful enough position if it is easily adopted by your competitors.

2. Distribution

Distribution refers to how you get your product to your customers.

IMO all marketing falls under distribution. If you are competing in the same distribution channels as every other company in the space. You’ll suffer from CAC attrition.

Whereas in a product arbitrage situation, you are in a race to the bottom in pricing. Often referred to as the commodity problem. With distribution arbitrage, you are in a race to the top when it comes to customer acquisition costs. In this scenario, the person willing to spend the most resources to acquire customers wins.

The key to better positioning from a distribution perspective is to find channels for reaching and selling to customers that your competitors aren’t currently in, and you can reliably keep your competitors out of.

It used to be easy enough to keep competitors out because distribution was often separated from a company’s operations. Good politicking and gatekeeping could keep competitors off of core publications. But now that companies can go direct to consumer, there are huge advantages to owning your distribution channels completely.

That said you’re owned distribution channels start out weak and not that valuable. You have to use other channels to support your own.

3. Market

The last landscape for repositioning yourself is by going to a different market altogether.

Another word for market is customer: Are competitors going for the big accounts? You prioritize the small ones.

Competitors targeting males because they buy 80% of this product? Then you target the females that buy the 20%.

Positioning here can be successful even if the market you want to prioritize is in the umbrella of your competitors’ market. Actually, that might be the best way to approach it.

By prioritizing a subset of the market, you can establish yourself as the better solution for that sub-set while at the same time taking that market share away from your competitor.

Conclusion

Some final notes here. Positioning is taught in marketing, but it couldn’t really be put in the hands of the marketing department. Maybe, and only maybe, you could argue the CMO would be the decision maker when it comes to distribution positioning.

But the reality is these decisions must be made by the top authority (CEO) in a given company.

Why? Because the entire operation of the business has to reflect these strategic courses. If the only result of your positioning decision is that you run a spicy marketing campaign, you’ve missed the point altogether.