The One Question that Really Matters

Al Ries, the renowned marketing strategist, recently said, “People buy categories first, then they buy brands. People don’t decide first to buy a Chevrolet and then go to a Chevrolet dealer and ask to see all the Chevrolets the dealer has for sale. First, they decide what category of vehicle to buy: car, truck, expensive car or electric car. They look into their minds to find what brand names they associate with the category they have decided to buy. A typical person might file vehicle brand names this way…” The point being - positioning is about finding a place in your prospect’s mind to unlock relatable perceptions about your product, based on what the prospect thinks they need.

But arriving at your positioning alone is not sufficient. When it comes to a pricing exercise, the goal is to understand and confirm the existing positioning of the company and/or a specific product in question (assuming, of course, that the company has had a working GTM, and this isn't the first time it will be selling an offering).

The confirmation of the positioning could be as simple as making sure that your understanding of the key buyer personas and the positioning statement roughly matches that of your executive team, sales leadership as well as marketing leadership across every main market segment that you are targeting.

The criticality of positioning lies in the fact that without clear positioning, no pricing model can work. In fact, without clear positioning, your company can fail. Here’s an example from my own experience to illustrate further.

The year is 2018, and I was working for a startup that offered a product for chat-based customer service. At the time, there was a debate on what exactly should be the positioning of our customer support software that primarily worked through a chat widget and via advanced AI-based chatbots. After examining the market landscape, my boss and I wanted to call our offering a Conversational-AI based Customer Service Platform to highlight the unique differentiator of the product within a large segment of Customer Service software. Our hypothesis was that 'Conversational-AI' would limit our field of competition to one we would do well against.

However, when we brought up this topic with our CEO, who was earlier at a much bigger established company, she disagreed with our approach. Her direction was that we were supposed to be competing with Salesforce and that our eventual destiny was to become a CRM solution. For us (my boss and I), this was totally discordant with the fact that the product was just not a CRM product, and this direction did not address our target buyer or our unique differentiation for that buyer.

This dilemma persisted with the company for quite a while and not only impacted the pricing effort but also slowed down the entire sales engine as the sales team was hearing completely mixed messages (changing every quarter) on who they were to be pitching and what the positioning was in the market.

Before you embark on a pricing exercise, make sure that there is alignment on the positioning within your own company, and if any disagreement exists (especially at the executive level) that it be resolved before you actually work to finalize the pricing.

As this Forbes article highlights, “Your positioning is a foundational, actionable element of your brand. If done right, everyone will be behind it and proud to be a part of it, which can only make your business better.”

For more on ‘Positioning’, check out our recent blog <add the link when uploaded>.

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‌This blog contains edited excerpts from author Ajit Ghuman’s book Price To Scale. Grab your copy now on Amazon.com!