Positioning Your Software Product - Part I
by Rick Chapman

The first chapter of "The Product Marketing Handbook for Software" starts with a description of how to position your product for a very simple reason: proper product positioning drives all aspects of your marketing and sales efforts. Improperly position your software and despite the quality of your product, the design of your collaterals (either web-based or paper), the abilities of your sales force, all of your marketing and sales programs will immediately begin to misfire. Improper product positioning can wreak enormous havoc on a company. For example, a fundamental positioning mistake made by my first employer in the industry, MicroPro, publisher of what was once the world's most popular word processor, WordStar, literally destroyed a $67 million dollar company in the span of 18 months.

Over the last two decades literally dozens of books and articles and thousands of pages have been dedicated to explaining product positioning to the masses. In the chapter in my book "In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters" that describes the havoc MicroPro unleashed on itself by releasing two products with the same name, price, audience and functionality at the same time, I describe one of the most popular and widely used explanations. This is marketing guru Regis McKenna's take on product positioning. He believes it is a:

" ... psychological location in the consumer's mind, pertaining to the relative qualities a company, product, or service may have with respect to its competitors."

The only trouble with this approach is that software is, by its nature, an abstraction, a stream of electrons coursing through your computer or perhaps the Internet. You can never "see" a software application before interacting with it. For this reason, assigning a product a "visceral" or physical identity is very important. Too many times you'll see software products described as being the "best in their class," or the "fastest" or the most "reliable" without anyone having any clear idea of what the software actually does. A classic example of this is Lotus Notes. When the product was first introduced, few potential buyers knew what it did. Lotus was aware of the problem, and in a display of unintended humor, even talked about the issue in their documentation:

 "What Is Notes Anyway?

People have been asking that question since the beginning of time (or at least since Notes first came onto the market). It has been hard for people to define Notes because you can use it to do so many things."

—From the Notes 4.0 Beginner's Guide, published in 1996

By the way, the manual never DOES explain what Notes "is."

As a result of the confusion, Note's market acceptance was very slow, a fact that allowed Microsoft to catch up in sales to it with Exchange. When Exchange was first introduced, Microsoft positioned the product as a "post office" in your computer, an easy concept for buyers to grasp. On the strength of this positioning, Microsoft was able to limit Lotus' success with Notes. Yes, Notes did eventually become a solid seller, but when Lotus first released the product it had expectations it would become a "killer app," something the product's unclear identity to buyers made impossible.

Assigning software a physical identity is not usually very difficult (though it can be tricky with certain products) but despite all the ink spilled on the topic, many companies and marketing "experts" continue to get software positioning wrong. For instance, I attended the recent Software Business magazine conference held in September in San Francisco and sat through a presentation given by a consultant who specializes in high-tech "messaging." At one point, his presentation focused on Microsoft's rollout of Windows 3.X in the early 90s. During his presentation, he showed two slides. The first was filled with a fair amount of jargon and wordy gobbledygook. This, the presenter claimed, was Microsoft's original positioning statement. The second slide, he claimed, represented Microsoft's new, successful positioning strategy. It stated that:

"Windows 3.X Will Transform the Way You Use Your Computer"

This is wrong. This is not a "positioning" statement—this is a tag line. You can tell by the generic nature of the phrase, as it can be used to describe ANY product. For instance:

"Binky 3.X will transform the way you use mapping software."

"Binky 3.X will transform the way you manage shipping schedules."

"Binky 3.X will transform the way you live your life."

And so forth.

Now, how exactly did Microsoft position Windows 3.X? It was very simple. They said:

"Microsoft Windows (finally) makes your PC work like a Mac (for a lot less money than a Mac)."

Now, if you want, you could use the tag line:

"And thus transforms the way you will use your PC."

In the context of the events surrounding the early 1990s, this was a powerful statement. The Macintosh had been on the market since 1984, everyone who was interested in a desktop computer knew what a Mac could do (and what a PC running DOS couldn't), and IBM had just spent the last several years bungling the release of OS/2 (a complete chapter in "In Search of Stupidity" is dedicated to examining what may be high-tech's biggest fiasco). All that Microsoft had to do was produce a product that was good enough to stand up to the market's scrutiny of its claim about Windows working just about as well as a Mac. Despite the beliefs of Microsoft haters and Macophiles, Windows passed that scrutiny and the rest is history.

Later that evening I had a chance to put my product positioning techniques to work. In addition to writing books on high-tech history and marketing, I'm also the managing editor of Soft*letter, a bimonthly newsletter dedicated to examining all aspects of the software business. As I was handling out a free sample of the publication at a show reception, I was approached by a gentleman with some questions on how his company could position their software product.

"OK," I said, "can you first tell me what your software product does?"

"Sure, " he said. "It Bzzzzz application Zaaaappppiinn integration MOM Bzzzz diagnostics errrrburrr help desk Xxxxx network architecture."

I blinked at him. "Uh, again, what does your software do? How would I use it?"

"Bzzzzz application Zaaaappppiinn integration…"

"No, wait, stop. What does your software product work with?"


"And how does it work with applications?"

"It monitors them."

"And where does it monitor them?"

"It monitors them on a network."

"And what precisely does it monitor about the applications?"

"It monitors them for their functionality. If an application crashes, it informs a help desk that the application has crashed."

"What else does it tell the help desk? "

"It provides diagnostics that describes the network and user environment when the application crashed."

"OK, that's better. So, how about this? Your application functions as a sort of virtual fireman on call. He monitors your network for application problems. When a program crashes and burns, the fireman tells you that there's a fire and provides helpful information that will assist you in putting the fire out."

He looked at me thoughtfully for a moment. "You know, we paid some consultant six thousand dollars to come out and talk to us about our software. We talked about the fire, but never got to the fireman."

In part two of this article, we'll take a look at some contemporary positioning failures (including one by Microsoft) and discuss how to fix a positioning mess.

Merrill R. (Rick) Chapman is the publisher and managing editor of Soft*letter and Software Success newsletter. In addition to the aforementioned publications, Soft*letter also publishes the Soft*letter Financial Handbook and the Services Marketing and Metrics Handbook. Rick has worked in the software and high-tech industry since 1978 as a programmer, salesman, support representative, and consultant for many different companies, including MicroPro, Ashton-Tate, IBM, Inso, Bentley Systems, Berlitz, Hewlett-Packard, and Ziff-Davis. He has held senior marketing and sales positions at a variety of high tech companies including AGA, Stromberg, and Miacomet.

Rick is also the author of "The Product Marketing Handbook for Software" and "In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters" and is the co-author of the Software Industry and Information Association's US Software Channel Marketing and Distribution Guide. He is currently at work on a new book on marketing and selling open source software.