Where do you play, and what is your market situation? (focusing on M1 and M2)
Understanding your market is a critical first step in defining your business strategy. It involves answering two key questions:
What is your market? (Market Definition - M1)
What benefits matter most in your market? (Key Expected Benefits - M2)
This article explores these questions in detail and provides actionable insights to help you identify and leverage competitive positioning options.
What is your market? (market definition - M1)
Defining your market means understanding the boundaries of where you operate, who your customers are, and the nature of the competition. This is not just about naming an industry—it’s about identifying a specific space where your product or service plays a role.
Key Considerations:
Who are your target customers? Define their demographics, behaviors, and preferences.
What needs do you fulfill? Clearly articulate the problem your product or service solves.
What is the scope of your market? Determine the geographical and category boundaries that frame your competition.
Example: Eco-Friendly Cleaning Products If you’re in the eco-friendly cleaning products market, your target customers might be environmentally conscious homeowners. The need you fulfill is effective, sustainable home cleaning. Your market scope might include regional markets with high environmental awareness and disposable income.
Example: Tesla Model S Consider the Tesla Model S. It belongs to the broad market of cars, but we can further narrow this down into sub-markets. A common mistake is to categorize the Tesla Model S under the market of electric cars. However, being electric is a feature, not a market. Although both a Toyota Prius and a Tesla Model S are electric cars (one being a hybrid), they do not belong to the same market. The Tesla Model S fits into the Luxury E automobile or Executive/Mid-size luxury market, which also includes vehicles like the Porsche Taycan or the BMW 5 series.
Watch More: Tesla Market Positioning
As we delve deeper, we'll discover that once we have identified the market where our value proposition will compete, it's crucial to understand and follow a set of rules to shape our commercial strategy. After identifying your company's competitive market, we need to delve into the specifics. Just like a painter cannot create art without understanding their canvas, a marketer cannot formulate a strategy without understanding their market.
What benefits matter most in your market? (key expected benefits - M2)
Every market revolves around a set of benefits that customers prioritize. These benefits can be divided into two categories:
Functional Benefits: Practical and measurable advantages your product or service provides.
Emotional Benefits: Intangible, psychological rewards customers experience.
These benefits form the basis for competitive positioning, as each player in the market may emphasize different combinations of these elements.
Example: Eco-Friendly Cleaning Products Market
Effectiveness (Functional): Products that clean thoroughly without compromising on eco-friendliness.
Health and Safety (Functional): Non-toxic ingredients that are safe for families and pets.
Convenience (Functional): Easy-to-use packaging and availability in local stores or online.
Environmental Impact (Emotional): Customers feel good about reducing their carbon footprint and supporting sustainability.
Brand Trust (Emotional): A sense of confidence in the brand’s authenticity and values.
Example: Tesla Model S
Performance (Functional): Exceptional acceleration and range compared to competitors.
Innovation (Functional): Cutting-edge technology, including autonomous driving capabilities.
Sustainability (Emotional): Pride in contributing to reducing carbon emissions.
Prestige (Emotional): Association with a high-status, forward-thinking brand.
Ownership Experience (Emotional): Access to a seamless, premium experience from purchase to service.
Each of these benefits represents an opportunity for differentiation. For example, Tesla emphasizes performance and innovation as key functional benefits while simultaneously building strong emotional connections through sustainability and prestige.
Final thoughts
Defining your market (M1) and understanding its key benefits (M2) are foundational steps in building a competitive strategy. These insights not only clarify your market position but also inform how you can differentiate your offering in a way that resonates with your audience.
Take the time to explore these two critical dimensions of your market. Doing so will set the stage for deeper strategic decisions and ultimately, greater success in your chosen space.
