The Difference Between Positioning and Competitive Advantage (And Why It Matters)

Do you ever get frustrated that your company isn’t gaining as much traction as you’d like in your market space?

From your perspective, you’re convinced that you have a better solution than your competitors and yet, it doesn’t seem like your marketplace sees that as clearly as you do.

In fact, the reality may be that your competitor’s products and/or services are “selling like hotcakes” while yours languish in relative obscurity (or are selling significantly less), even though their products/services are inferior to yours.

How can this be? Shouldn’t the better product/service be the preferred solution in your marketplace?

Intellectually this makes sense. In reality, it doesn’t. In general, the better marketed product will beat the better developed product all day long.

So, how can you begin to fight this unfortunate reality? Well, before you start ramping up your ad spend on intentionally marketing your products and/or services to a greater number of people, you’ll want to make sure you understand the difference between positioning and competitive advantage. Why? Because not understanding the difference can significantly impact the results of every one of your marketing efforts.

In other words, if you don’t get this distinction right, you could be wasting a lot of money and hindering your ability to gain more traction and leads in your marketplace.

So, what’s the difference? Well, here’s the difference.

I. Positioning is About Your Relative Place In You Market Space

Whenever you’re answering a question, it’s always helpful to define the terms (it never ceases to amaze me that so many people don’t do this). So, when you hear the word, positioning, what do you hear?

For example, when you hear of a race (let’s say, a NASCAR race) and the announcers are talking about positioning (e.g. car X is in the first position), what are they saying? They’re saying that relative to all of the other cars in this race, the position (i.e. the space) that this car holds is the first one in the first row, closest to the rail.

In other words, positioning isn’t about making a claim concerning the quality of an offer or if that offer is better than any other offer in that market space. Positioning is simply making a statement that this offer stands in this position in this market relative to every other offering.

For example, one of my first clients when I left pastoral ministry was a catering company. When we were working on his initial strategy we realized that there were a lot of catering companies focused on the low end (i.e. the price sensitive/cost cutting end), a few in the middle and a couple on the high end (i.e very gourmet). As we looked at that, we decided to create our own category, “the affordable gourmet” category. In other words, he created a space, relative to his competitors, as just below the gourmet caterers but above the middle priced caterers who were neither great nor bad. That was his position (which then informed all of his marketing efforts).

For example, who wouldn’t want to use the affordable gourmet as their caterer? Part of the power of this positioning choice was that it was a double positive (i.e. those who like affordable, not necessarily cheap, and those who like food that tastes great). He wasn’t going after those for whom money wasn’t an issue, he was going after those who watched their money but were willing to spend a little bit more to get great food that would delight their guests.

Another client who’s gotten this distinction down well was/is an attorney. When we first met, he described himself as a business attorney (i.e. I can do any commercial work for any business). Marketing yourself as a commercial attorney doesn’t move the market toward you since there are a lot of attorneys who do transactional work (like contracts and incorporation papers vs. commercial litigators who sue or defend).

As we wrestled with the work he did well, we focused on what he loved doing (and was good at), M&A work (mergers and acquisitions). This positioned him as something very different than just one of many who did general business legal transaction work. Later on, we refined this a little more as we focused even more closely on the work he really enjoyed doing, which is working on more complicated serial acquisitions work so he’s now positioned as the M&A guy for businesses that want to drive growth through serial acquisitions. That’s his position in the market.

Graphically, the positioning would breakdown like this from attorney > business attorney > transactional attorney > M&A attorney > Buy side M&A attorney for serial acquirers.

Note: this doesn’t mean he can’t do sell-side transactions (he can). Nor does it mean he can’t do incorporation work (he can). Nor does it mean he can’t do financing documents (he can). All positioning does is separate you out from the rest of the players in your market space and say, “this is the relative space we hold compared to the other players in our market.”

That said, this one strategic decision can and should radically impact all of your marketing efforts.

II. Competitive Advantage Is About Why You Vs. Your Competitors

Remember that positioning says nothing about the quality or the efficacy of your offering (i.e. how effective your solution is at solving the problem that ails your prospect).

However, competitive advantages say everything about those issues. Competitive advantages are the reasons why someone should select you and your company over every other option in your market space.

Note: in order to figure out what your competitive advantages are, you must, by definition, know what your competitors are doing/offering. This is a frequent problem for most small businesses. They tend to market something as a competitive advantage without observing the marketing of their competitors—and then they wonder why their marketing doesn’t seem to have much traction?

For example, virtual every bank on the planet markets that their competitive advantage is their customer service (raving fan service, exceptional service, white glove service, etc.). However, when everyone is saying the same thing, no one is saying anything. Whenever I see a bank marketing that their competitive advantage is their customer service I always think, “They clearly haven’t checked their competitors’ marketing lately, have they?”

In the case of my attorney client, when we wrestled with his competitive advantages we came up with the following list.

  1. He’s successfully completed over 300 M&A transactions (i.e. he’s not the typical business attorney who’s done a couple M&A transactions)
  2. Those 300+ transactions are worth over $3.5B worth of transactions (again, he’s not a new kid on the block)
  3. He offers his clients downtown expertise at suburban rates (30% less). Since he worked for years in a downtown D.C. firm, he brings that level of expertise to the table, but at a more affordable rate. On a decent sized deal, that can mean real money. For example, a $150K downtown M&A proposal, would be closer to $100K with him (yet, they’d still the same level of expertise). So, if someone really cares about saving money (in this case, $50K) while getting great expertise, my client would be their guy.

Do you see the difference now between positioning and competitive advantage?

With positioning, you’re simply staking out the ground you want to claim in your market space relative to everyone else. However, with your competitive advantages, you’re making the argument as to why someone should choose to use you and your company over every other option available. The difference is significant. 

More importantly, using both of these to drive your marketing will immediately improve all of your marketing efforts. 

  1. Your positioning will drive your targeting efforts
  2. Your competitive advantages will drive your copy
In other words, using the sample above, if you’ve decided you want to be the M&A guy for serial acquirers in your market, then you’re not going to focus your marketing efforts on just any business owner or CEO in your target market. You’re going to focus on those that want to drive growth through acquisitions (i.e. a much smaller number so you can invest more on fewer people to get better results). Then when you go to write your marketing copy, you’re going to highlight your competitive advantages as to why they should choose to use you so you can convert more of them.
 
That’s why this difference matters. Positioning will help you make sure you’re investing your marketing dollars and time more wisely on the right prospects (i.e. not wasting your money and/or money on people who won’t become customers/clients or who won’t be the right kind of customer/client). Whereas competitive advantages will help you close those right prospects faster.
 
In light of that, I have only two questions left for you before we’re done today.
  1. What position do you want to stake out for your company?
  2. What competitive advantages will help you close more of your ideal customers faster (i.e. what advantages will help more of your ideal prospects choose your company over any of your competitors in your target market faster)?
Once you answer those two questions, all you need to do is go back and use them to shape all of your marketing efforts and copy. Once you do, you’ll understand why this differentiation is so important to understand.
 

To your accelerated success!

Bruce

P.S. My attorney client mentioned above is Aaron Ghais. We recorded a Skype video call a few years ago on How to Prepare your Business for a Big Sale that you might be interested in (note: I did have a little bit more hair back them :-).

 

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