Posted by: Chris | September 10, 2007

Formula for Positioning

Those of you who know me know that when it comes to math, I missed something along the way. So, call it unbridled zeal caused by being at a new job that focuses on monetization of…everything, or perhaps just an extra measure of confidence at realizing that paying $600 for an item, adding 10 weeks, then subtracting $200 from the price, and getting $100 back means you still got screwed, but I’m going to stick it out there and propose what I call, a formula for positioning. So here it is:

P=I/texperience)

Let me flesh this out a little.

Two client-side primary components of positioning are the customer’s initial exposure to your product (the first part of the formula), and the customer’s ongoing exposure to your product (the second part of the formula). Obviously, first impression is important. Even if you provide consistently good service, a customer is not going to forget that the first time she set up an appointment with you, she had to keep calling back because you didn’t return her calls. However, the resulting concern and disillusionment lessen over time; hence, the fraction I/t. I is first impression and t is time.

The second part is a tad more complex. To understand it, we need a quick review of beta. To simplify, in the context of finance, beta is a measure of the volatility of an investment. The actual formula is the covariance of the return of one’s investment to his overall portfolio over the variance of the return of the portfolio [written Cov(ra,rp)/Var( rp)]. In other words, how assured is the potential for a move/return on an investment in light of the assuredness of a move of the overall portfolio (which includes the investment in question)?

Let’s apply this to marketing.

The move/return on an investment is simply the impression made when a prospect experiences your product. The return on the overall portfolio is the composite impression formed by experiences with every possible option (including your product) to which a customer has been exposed. In other words, what is the customer’s perceived, amalgamate experience with your product in light of all of all options available (ßexperience)? For a regular user of your product, this translates into consistency. For those who don’t use your product regularly, this translates into recurrent impressions. Ultimately, you want for the result to be constant and favorable for your brand. The significance of this part of the formula rests in the fact that it has an exponential effect on the consumer.

So to bring it all home, my proposed formula for positioning boils down to the magnitude of the customer’s perception of your product, gleaned from recurrent exposure to your product-from within a choice of all products available-in light of the fact that a customer never forgets her initial (albeit, diminishing) impression of your product. The key is to control all of that. That is the real challenge, and is the impetus behind your company’s positioning strategy. For help on that, take a look at Positioning, by Al Ries and Jack Trout.

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Responses

  1. […] company (or city); a culmination of first-impressions, reputation, and consistency (see my formula here). And a sound brand requires a serious, significant investment. The adage “you get what you […]


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