Brand Positioning For Startups

Once a startup knows who they are and what they value, there’s one more crucial question before we start talking about typefaces and colour palettes: where do you fit in your industry?
We call this Brand Positioning.

We saw earlier how John Hegarty defined “a brand is the most valuable piece of real estate in the world – a corner of someone’s mind”, and a startup only has room for 3-4 words or associations in their little corner.
There’s no room for your life’s story, or even all of your core values.
Brand Positioning is when we deliberately design the words, comparisons and contrasts that we want our customers to remember.
These are not universal or consistent, the words iPhone, Android and Oppo have different associations to different people, not all of them positive.
Not every company has a recognisable position either, as Seth Godin demonstrates:

“If Nike announced that they were opening a hotel, you’d have a pretty good guess about what it would be like. But if Hyatt announced that they were going to start making shoes, you would have NO IDEA WHATSOEVER what those shoes would be like. That’s because Nike owns a brand and Hyatt simply owns real estate.”

Fortunately, a startup doesn’t need a brand like Nike’s, but it does need to be recognised and understood by their target market.
Here’s an obscure example from the US military-industrial complex:

Image credit: @josephpolitano

That ad might not be for us, but RTX are clearly trying to create a memorable and impressive position in their customer’s minds.

There’s Room For A Lot Of Brands

Your first instinct might be to lament that “all of the good positions are taken”, but history suggests that this is not true.
Customers change, technology changes, trends change, management teams change, international competitors change, and so nobody’s position in their industry is truly immune from disruption.
Imagine mapping the landscape of phones in 2005 – you’d think that the combination of Nokia, Blackberry, Ericsson, LG and Motorola would collectively dominate the next decade.
The same might well be true for your field – there might be massive overhaul in who is still operating in 5-10 years time.

There are a few reasons for this, but the main one is that a business doesn’t need to be everyone’s cup of tea, especially when they have such direct access to their best customers all over the world.
You don’t need to be famous if you are well known and well liked within your specific niche.
Since you have targeted access to a larger audience, you can spend your marketing money on pitches to exactly the type of customer who is ready to hear your offer.
Your offer translates into a short summary that sticks in their mind, and this becomes relevant the next time that your customer is ready to re-evaluate their next purchase.
e.g. you might form a new perspective on a certain car brand today, then only take action in 2-3 years time when you’re next in the car market.
But for startups, we don’t have 2-3 years to wait for the sales to come in, we need to make an instant impact on the minds of our customers.

Making The Customer’s Shortlist

It’s good to remember that your brand is only a slight advantage, a chance to make it onto the shortlist of options customers will even consider in their buying process.
Your logo won’t persuade customers to stay with you if your staff are rude, your service is slow or if you’re 30% more expensive than your competitors.
The aim is to be remembered enough to make it into the handful of options that your buyer will investigate.
If they can’t remember who you are, you’ve already lost.
If they don’t understand where you fit in the market, they are unlikely to give you much attention when they’re busily making a decision.
If they don’t know how trustworthy you are, then the risk level will automatically feel high, and they’re unlikely to proceed.

Image: Seeking Alpha, Scott Galloway

Where Do We Fit?

The best way to start mapping your industry on a few spectrums, such as affordability, status, environmental impact, traditional-progressive, specialist-generalist, simple-complex, personal-institutional, etc.
Spectrums are better than binary extremes, but let us compare and contrast several competitors at the same time.
e.g. think about how you might plot all of your country’s airlines on a spectrum that ranges from “we’re here to serve” to “we hate you”.
They might be clustered or they might be spread out, and they might all be bad options, but this lets us represent which are the least worst and which are the biggest offenders.

Then you can pick two spectrums and draw up a 2x2 matrix, plotting the other brands in your category, like the above example from Scott Galloway.
So for your airlines, you might map out customer service on one axis, and ticket price on the other, creating a clearer picture of a customers options when booking a flight.
Yes, these 2x2 maps are a cliché, but they’re a cliché because they work well enough.
We’ve used them in the past and they are good brainstorming tools and conversation starters.
There far more complex and sophisticated positioning diagrams out there, but you never hear of business owners say that these were particularly helpful in growing their companies.

There are a few benefits to this, the most obvious being that it forces you to research and understand your competitors, direct and indirect.
Importantly, it forces you to label your competitors as your customers see them, not how you see them.
You might see that their work is overpriced or full of shortcuts, but if customers don’t feel the same way then that doesn’t count.

Secondly, it shows you where there are clusters and where there are gaps in the market.
These gaps might be good opportunities, or they might spell death, there are countless stories for each.
As Rory Sutherland asked: “There may be a gap in the market, but is there a market in the gap?”.
Is different exciting, or is different off-putting?

This should be the basis of your next customer interviews – to understand which attributes play into your customer’s decision making process.
i.e. if ethics and tradition don’t play a role, they might not be important to your positioning.
On the other hand, if customers tend to buy what everyone else around them buys, that might be a clue that familiarity and ubiquity are important.

Where Should We Move?

Once you’ve mapped the industry as it stands today, and noticed the gaps and clusters, you get to decide where you’d like to be in the future.
This is a tricky one to prescribe because there are no “set positions” for your field.
To quote Rory Sutherland again, “the opposite of a good idea can also be a good idea”.
We see examples of startups who talk like rebels and those who talk like old institutions.
Startups who present themselves as better than the incumbents, others as cheaper than the incumbents, but rarely both.
Startups who are specialists with limited menus, and startups who are combining the best of several fields into one set of offerings.
The only real constant is that a startup can’t afford to be boring, confusing or amateurish.

While there are no strict laws or formulas for brand positioning that will apply to all industries, there do seem to be some recurring patterns that can offer some opportunities:

·      There is always a group of customers who want the best possible options and for whom money is no object

·      There is always a competitor willing to do it cheaper, even if it sinks their business model

·      There is always a competitor willing to overlook ethics if it gives them an advantage in the marketplace

·      There are always customers looking to get more and pay less, who are often not worth chasing

·      There are always customers who value being treated well, and who will show you great loyalty once you win their trust

·      There are always customers who cling to what they know, and who will avoid risk, change and uncertainty (even when they know “better” choices are available)

·      There are always customers pushing for the new and the novel, who want something specifically because others don’t have it

·      There will always be critics who say you should be doing more

·      There will always be critics who think what you do is easy, obvious, or easily copied

·      There will always be customers who want benefits without putting in much effort

·      There will always be (questionable) entrepreneurs who want to offer benefits without much user effort

·      People like things that are local and a great fit for their most comfortable culture

·      People like things that are foreign, different or imported

·      People like recommendations from a trusted friend

·      People like things that they’ve seen or heard about in their favourite entertainment

Take Inspiration, But Ask Why It Worked

It’s good to copy other approaches, so long as you truly understand why they succeeded.
It’s tempting to look at the world’s best and world’s luckiest companies and say “oh we want to be the Airbnb of our industry” or “we want to do our branding like Nike or Apple”.
These are great examples, but they are not easy to emulate when you have a billion dollars, let alone a startup’s budget.
We can’t take the aesthetic or tone of voice of another successful company and expect similar results.
In a lot of cases, brands succeeded in creating a bold new position because of great timing, creative risks and enormously talented team members.
e.g. they were launching during the infancy of a new technology, they had a world-leading designer on board, or maybe they were one of 10 startups that tried a similar approach and were fortunate to gain the most traction.
In a lot of cases, the brand position and brand identity were backed up by a great deal of effort in winning early customers, designing genuinely superior products and services, or by making unpopular tradeoffs that paid off in the long run.

There’s only only thing you’ve got that Apple and Nike don’t – your startup can afford to take risks, to polarise people, and to write content that doesn’t get scrutinised by a team of lawyers.
You can afford to move quickly, to change your approach and your menu within weeks, and to run small experiments without making a big commitment to a brand identity.
Copy away, but ensure that you’re copying the effort and strategy, not just the words or the style guide.

Two Small Cakes

One of our favourite “ugly questions” is:

“It sounds like you’re trying to have your cake and eat it too – maybe what you really want is two small cakes?”

Sometimes in life and business, one thing or brand can’t suit all people and all circumstances.
Maybe you’d be better off with two, each geared to serve and delight a different portion of the market.
No more compromise, each brand gets to specialise and compete without fear of being pulled in opposite directions.

You see this with car companies, beer brewers, fashion houses, movie studios, restaurant chains, almost anyone serving the mass market.
They run several different brands, each with their own distinct identities, each targeted at a different niche with different selling points.
While the products from the different brands might share components or team members, the customer might not see these overlaps, and that’s perfectly fine.
Some people want a Toyota, some want a Lexus.
Some want to feel like they’re getting a bargain, some want a premium experience, and perhaps you know how to serve both markets.

Working With A Designer

An entrepreneur doesn’t need to become an amateur graphic designer, but they need to be able to work alongside their designer.
That means explaining your industry, your closest competitors, where you want to be similar and where you want to show a point of difference.
You get to articulate where you want to be positioned, their job is to make stylistic choices that convey that message.
The designer’s job isn’t to create a brand that you like, their job is to create a brand that conveys your desired position in the market.
If you like it and the message is lost, you lose.
If you don’t like it and the right customers are drawn to your company, you’re winning.

Try it for yourself – map out your industry, talk to customers, and see where you’d like your brand to be positioned in the future.
Once you can explain it in a few sentences, it’s time to create your Brand Identity…