Positioning in the Internet Era

Jul 01, 2010

A few months ago I read a blog entry that suggested that all entrepreneurs should read Positioning: the Battle for Your Mind, a book which the author described as the “bible of marketing”. I bought the book at the time, but didn’t end up getting around to read it until today. The book, written advertising experts Jack Trout and Al Reis, was written in the 1980’s, and describes the idea of “positioning”, where a product or concept is advertised in such a way as to guide the consumer of the message around the product in a certain direction. The book was written in the 1980’s, so they cite a key example of Avis positioning themselves as “Avis is #2, and we try harder” as the canonical example of how positioning can be used to effectively advertise a product.

As the book was written in the 1980’s some of the examples cited seem out of date and perhaps incorrect (example: IBM is by far the leader in computing - really?), but the book reinforces some excellent points about how to market and position products and brands in consumer’s minds.

I got to thinking about how this applies to the startup and internet space, and I think a lot of the lessons still hold. One of the examples the authors consistently come back to is the problems Xerox had branching out beyond copiers. They wanted their brand to stand for more than copying, and entered markets like computing and communications, finding only failure. I think the same is true for a lot of today’s internet landscape: brands get positioned and then think that it’s easy to change and broaden, but in reality it’s very difficult to change in user’s minds.

I think myspace is a great example of this: it was positioned very well as a place where younger people (teens) and bands (music) go, and subsequently the feature set was tailored for this space. The mainstream and more grown-up crowd reacted to this “ghetto-ization” by fleeing the service to the up-and-coming Facebook, which currently owns the social networking space. Facebook, while riding high now (the NYT just reported they’ve been valued by Elevation Partners at $23B), may have it’s own positioning issues itself if they try to branch out beyond search.

Another instance is eBay. The internet auction site remains a giant, largely built on the huge lead they developed and the network effect that came with it. However, a number of attempts have tried to take eBay into a more premium space (newer, flashier goods), but have made little progress. It will be very difficult for eBay to try to become more upscale when the position the consumer already has for eBay is that of a large online flea market.

Google is an interesting case for a number of reasons:

  • They never advertised their brand, but it has become synonymous for search strictly through word-of-mouth

  • They are derided as a “one-trick-pony”, despite having a number well-trafficked services: search (of course), email, chat, maps, and chrome.

  • While some of these services do have traffic, nearly all their revenue is derived from sponsored search. Google argues that all of these peripheral products drive traffic to search, which is hard to argue with the success of the toolbar business.

That said, Google continues to launch products against market leaders, such as Checkout (launched against paypal), Knol (launched against wikipedia), and a rumored new foray into social networking (to compete against Facebook). I think that it will be exceptionally difficult for Google to pull it off, and Positioning explains why: once you are known for one product, and someone else is well positioned as the market leader in another product, it will be very difficult for a consumer to be persuaded to choose your product.