A Current Look at Positioning

by  Charles Smith

Let me posit the following statement. The semiconductor equipment and materials (SEM) industry is the "fastest track" there is! Our industry is characterized by rapidly cascading new technologies impinged on a volatile global economy, which straddles a growing chasm of unrest. In this context SEM marketing people must be knowledgeable and current in chemistry, electronics, metallurgy, physics, business and economics. SEM marketers are integrators of masses of technology and business trend materials, specific product performance data, and both subjective and objective information from multiple sources. Overlaying all the above are the demands for cost control, margin enhancement, assistance in relationship development and maintenance, product performance and sometimes, instant gratification. From this information milieu they create and execute positioning strategies and tactics for new and existing products and services

This is the environment in which SEM marketing professionals must effectively position their products and services.

The Basics

In The QUEST Team's "Fundamentals of Product Marketing" (FPM) seminar, which QUEST created and currently conducts for SEMI several times a year, we discuss the basics of the positioning discipline. For more than 1500 industry professionals during the past ten years, we have focused on the basics of the positioning process -- influencing the minds of prospects and customers, in the context of competition -- through understanding the way customers think and the needs we as marketers must meet with our product offerings. In the 1 1/2 -hour module we impart a broad and necessarily shallow understanding of the positioning process and provide a highly simplified roadmap for developing positioning strategies. We emphasize the WORK required to be successful: networking, building relationships, and developing multiple sources of information. Most of all, we stress the extensive knowledge of competitors -- detailed, current, constant and factual (when facts are available, or intelligently deductive when hard facts aren't available) -- required to execute an effective positioning strategy. Sadly, we learn from almost all the classes we conduct that knowledge of competitors is shallow at best.

The concept of "positioning" was pioneered by Jack Trout and Al Ries in the 1970s; it flowed from their experience in creating effective advertising and communication programs for a number of large consumer products companies. The concept has been refining and growing in importance in the semiconductor and SEM industries for more than 15 years. "The customer's PERCEPTION IS the supplier's REALITY" is the basic rule of positioning; it's an exercise in counterintuitiveness, and is often quite difficult for product marketers who have come to marketing (where thinking often must be analog) from a technical background (where thinking is more digital). The truth of any customer situation must lead the logic of that situation.

Reducing the risk of failure of a product introduction or of sustaining a value-based relationship is the major reason for the increasing importance of the positioning discipline. And it can only be successfully applied through in-depth, realistic and continual analyses of customer needs in the context of supplier and competitor capability and likely action.

Making It Work

Why do companies, especially small and medium sized ones, often fail or meet only modest success in their positioning efforts? They either won't make the time and resources available to understand their customers' perceptions; OR they incompletely develop relevant competitive information (in other words, immature managements want instant gratification, and they want it on the cheap); OR if they do allocate the required people and financial resources, they refuse to believe the results if different from their preconceived notions. The results of all the networking, relationship building and competitive G-2 must be brought together, fully analyzed and then applied, not rejected out of hand.

Value Positioning

When positioning thinking first became accepted in the industry, the emphasis was on promotion (the communication aspect) rather than on performance. This often led to disappointment (in the form of unmet expectations) and missed opportunities for both customer and supplier. In today's era of fewer and more demanding customers, supplier consolidation, global account management, and "open kimono" relationships, emphasis is on real performance, followed by consistent and accurate communication of sustainable and provable value.

Positioning is no longer an event in the product life cycle, but rather is a tough, continual process. If your company is trying to break a competitor's hold on a key customer, one set of aggressor tactics is required. If your company is the in-place supplier, the tactics for remaining in and enhancing that position are entirely different. In either case, the lowest common denominator in the positioning equation is VALUE ADDED. It must be provable, sustainable and a key part of the relationship between key customer and key supplier. And the facts of that value must be continually reinforced with the customer.

Differentiation

Product differentiation was always at the core of a successful positioning strategy. It still is -- but with a much broader definition of differentiation. Today product performance along with applications and service support (including high MTBF and MTTR values) are mandatory basics. Dimensions of long-term compatibility between customer and supplier in a key corporate relationship include financial strength, top management commitment, R&D plans, strategic driving force alignment, etc. In other words, all the elements of the relationship are part of value differentiation.

Element of Key Account Management

In this volatile era the need for reduced risk and improved earnings performance is even higher than usual. Global account management (GAM) is seen by many as the best mechanism for achieving success and maintaining supplier relationships with key customers over the long term.

Necessarily this role includes executing the tactical portion of a successful positioning strategy and therefore demands even closer interaction between a supplier's marketing and sales groups. In-depth, continuous knowledge of key customers and of relevant competitors is needed, and an excellent source of such information is the GAM team. The kind of soft and micro information needed to make a relationship operate smoothly doesn't flow outside of a strong inter-corporate relationship. When that kind of information is added to the hard and macro information available to marketing groups, it can provide a significant edge in continually executing well-planned positioning strategies.

Principles Still Apply

The basic, often counterintuitive rules of positioning still apply, especially "Perception is Reality". But today's track is faster, the players are more sophisticated, and the price of a poorly developed and executed positioning strategy is much greater.

‹‹ Charles Smith [About the Author]