Punch above your weight and overcome giants: an introduction to competitive psychological positioning

In all forms of business, there are two principal competitive positions. The first is the physical, tangible competitive position relative to your competitors and customers—turnover. The second is the psychological position in the minds of your customers, competitors, employees, and the broader community. This second competitive position comprises the beliefs and concepts associated with your brand that differentiate you—status, safety, security, fun, sexiness, style, etc.

Successful consumer marketing has used psychological positioning to create differentiation for years. We believe it is now time for B2B (business-to-business) companies to seize this opportunity.

Creating Emotional Value

The first competitive position is obvious and well established. It is tangible and measurable, dealing with the attributes and qualities of an organisation, individual, or product: the largest, the fittest, the fastest, and the most technologically advanced.

In B2B markets, much emphasis has been placed on achieving competitive advantage in the physical dimension alone. It’s time to redress the balance. A purely physical competitive position is no longer sufficient to guarantee a sustainable competitive advantage.

The aim of positioning is to win twice—and then keep on winning—by achieving success psychologically and emotionally, in addition to physical and qualitative strengths. As Sir Alex Ferguson put it, “Anyone can win occasionally. Winning consistently is what counts.”

Take two sports teams with players of equal quality. The winning side is the one with greater belief in their ability to win. In other words, the team with the psychological advantage prevails.

The crowd sees the ‘better’ team win and is inclined to believe that the better team contains the better players. While this may often be true, the crucial point of difference—the winning margin—can often be defined not by speed or agility, but by psychological advantage.

If the business development process is measured in terms of effects on market share, then the ultimate competitive advantage of an organisation should be assessed in terms of its ‘mindshare’. This emotional state of mind, which the buyer/user/adopter enters during the business process, represents the most significant differentiator a business possesses.

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The Benefits of Competitive Positioning

Protected shareholder value

Release of latent value

Ability to command premium pricing

Ability to attract and retain top talent

Improved mergers and acquisitions integration

Increased and protected market share

Accelerated new product development

Business is more competitive than ever, fuelled by the rapid exchange of information. Improved communication channels and the shrinking global marketplace have changed the landscape. What was once perceived as a transatlantic voyage is now no more than an eight-hour journey, impacting how quickly indirect competitors can move into your established market.

The Competitive Environment

Evolving and converging B2B markets are becoming increasingly crowded, with competitors claiming multiple competencies and indistinguishable ‘total solutions packages’. Today, it can be hard to identify what business you are truly in. We are all experiencing the effects of market consolidation, mergers and acquisitions, new competitors, market shifts, globalisation, and technological advancements.

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It’s a post-modern world, where fragmentation, change, and unpredictability are the norm. Responding positively to change is essential for ensuring your business survives.

If it were true that the physically dominant always won, then Virgin could never have successfully competed with British Airways, Hewlett-Packard would still be innovating in their tiny shed, and the iPod wouldn’t be an icon. Brazil wouldn’t have won the World Cup five times, Coca-Cola wouldn’t exist, and Father Christmas would still be blue!

If it were true that the cheapest products always win, the leading baked beans brand couldn’t charge 50% more than its own-label competitors. Physical strength alone does not guarantee competitive advantage.

When competition is at its hottest, it’s time to take a fresh and unique position in the minds of your customers, competitors, and employees. The aim of competitive psychological positioning is to gain advantage before the game begins. It’s about winning before you even set foot on the pitch.

The Power of Psychological Positioning

Taking a competitive psychological position means taking control of the buying decision. It usually involves shifting the discussion into a space that you control, providing criteria on which your competitors will be adversely judged.

Winners harness a psychological dimension that is more powerful than physical attributes alone. They not only possess a physical position relative to competitors but also establish a position in the mind—the psychological competitive position.

Psychological positioning influences competitive advantage directly by communicating perceived values and associations. This explains why leading attributes and measurable qualities alone do not necessarily guarantee success. If you hold a differentiated and attractive position in the minds of customers, you can increase your value.

Added value is often mistaken for extra features and should not be confused with positioning. Positioning exists in the mind, dining off the desires it creates. Without the concept of love, diamonds would be priced based on their usefulness, availability, and cost of production. In a rational and emotionless world, diamonds would only be used in industry.

However, diamonds have been positioned to represent both status and the human emotion of undying love. Diamonds are forever, right? Both true physically—the hardest material known to man—and conceptually—a love that never dies.

This desire creates a premium value for diamonds in the customer's mind. Psychological positioning acts as a contract: “We have something intangible and often emotional that you want (in the diamond’s case—love); if you want it back, you’ll have to pay a premium for this product, service, or individual.”

Thinking about it, one could argue that De Beers takes your love and sells it back to you. Because this positioning makes you appear as a great lover, you are happy to play the game. Where there is value, there is psychological positioning, and the currency of psychological positioning is BELIEF.

David, sustained by his belief, defeated Goliath when he appeared to be the underdog. If we could only judge logically and without emotion, psychological positioning wouldn’t work; there would only be one of everything. We would live in a repressed, colourless, emotionless world. Psychological positioning drives differentiation and accelerates our judgement.

Punching Above Your Weight and Overcoming Giants

What is psychological positioning? B2B sectors often focus solely on the tangible as the only way to dominate. Consequently, competing offers communicate indistinguishable positions, leading to the SYMPTOM OF SAMENESS. This is the use of the same language for the same products, technologies, and services. Confronted with sameness, it’s no wonder customers struggle to identify differentiation between companies or products.

If B2B firms believe this is the only way, the implication is that they must be the physically strongest to lead the market and dominate competitors. This strategy denies the power of the psychological dimension. We can learn from David and Goliath: physical strength alone may not guarantee success.

What people believe in is often more durable, defendable, and sustainable than purely physical product positions. These are eroded as markets mature and new competition takes market share and margin, often leading to price-based competition strategies.

Thus, in business, there’s really only one choice: either strategically assert your own psychological position or passively allow the market to create one for you. Which would you prefer?

There’s an invalid argument often presented that sums up B2B denial: “Business-to-business is different from business-to-consumer, and psychological positioning will not work for us.” This is the very mindset we hope your competitors embrace.

Paradoxically, this belief is why psychological positioning remains such an opportunity for B2B companies brave enough to invest the time in creating a defendable psychological position.

Regardless of your market position—whether you're a market leader, equal, or a newcomer—psychological positioning adds competitive advantage. If you understand your customers’ subconscious state and what drives them (often without them even knowing), you have the chance to create a powerful and differentiated position.

However, it’s important to communicate your psychological position to customers rather than merely ask them. Decisions begin in the emotional centres of the brain, which has led to the emergence of fields like ‘neuro-strategy’ and ‘neuro-marketing research’. These fields use functional magnetic resonance imaging (fMRI) to test activity in the reward centres of the brain as subjects view packaging, advertising, or new products. The previously invisible effects of creative communications are being revealed in brain waves.

Positioning concepts in the subconscious mind override and influence rational judgement. Spock of Star Trek fame ?notwithstanding, it’s virtually impossible to stop emotional responses, often without being consciously aware of the triggers. In this way, a rational assessment of the product has been hijacked, and what we think is rationalised is, in fact, post-rationalised.

As mentioned, successful consumer marketing has used psychological positioning to create differentiation for years. It is now time for B2B to take its opportunity.

By understanding our customers’ environments—their customers, competitors (direct and indirect), trends, and resources—we gain insight into their fears and desires. As customers, we are often unaware of these underlying emotional drivers that influence our purchasing decisions. The first time we recognise these stimuli is when we rationalise our purchase.

Skilful psychological positioning affects decisions before conscious awareness. For example, our tastes are often cultural; we are taught what we like. This is a sleight-of-hand, as cultural (psychological) value translates into quantitative (physical) value. Can there be any justification for the elevated price of a product, which, under analysis, proves practically identical to a competing product charging 45% less?

Establishing a Competitive Psychological Position

Psychological positioning adds competitive advantage. Customers are often in denial about the emotional basis of their decisions and choices. Thus, ‘quality’ shifts from a concept based on scientific and rational assessment of a product to one based on customers’ conditioning and intangible beliefs and perceptions. We believe this mechanism applies even in the most rational B2B markets.

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During research for a lubricating oil brand, a distributor shared a story of a machine tool cutting bit made by one manufacturer and sold under no fewer than five different brand names. Machine engineers, typically a rational breed, would swear that one bit outperformed the others and would happily pay a premium for it. There was no rational or analytical basis for their preference; it was purely a matter of belief.

Reflect on your own buying decisions, and you’ll likely find emotionally driven purchases that you routinely rationalise. When we create a sense of belief, we bypass rational and conscious judgement, which can measurably impact the tangible world. When uncertain about what to choose, customers will select the product with a psychological position they can believe in. This position answers the customer’s “why buy?” He who offers the best “why” wins.

In a customer’s mind, positioning justifies WHY they should purchase your product instead of another. Answering WHY is emotionally driven. Why should I use IBM? They protect my career. Why should I buy a Volvo? It prioritises safety for my children. Why do I buy a BMW? It offers status ‘the ultimate driving machine’ reflects my uniqueness. Why do I buy shoes from Gucci? They enhance my style. In the competitive arena, the product or service that occupies the WHY position in the mind of the customer emerges victorious.

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A classic B2B case study is IBM. Recognising the high-risk position of IT managers, who expect challenges and prefer not to compound that risk with an unknown product (even if it’s superior and cheaper), IBM positioned itself as a solution to the anxiety inherent in the role. Hence, “No one got sacked for buying IBM.” This reassurance forms IBM’s psychological position—it answers the customer’s “why buy?”

In value terms, the rational position of any product group—a car, a vacuum cleaner, a dress, or a chocolate bar—does not enable a customer to discriminate one from another within that group. Differentiation arises when a company defines for the customer WHY they should believe they should buy a particular product from them. And the answer should rarely be price.

In B2B markets, you can leverage this psychological positioning, as customers are eager for more creatively positioned concepts. They are bored and frustrated by comparative product offerings and are ready to respond to psychological positioning. Consequently, the more emotionally brave companies are reaping the rewards.

It’s time to establish a psychological competitive position. Companies, individuals, products, and services that possess a differentiated, intuitively engaging concept are more relevant and meaningful. Consequently, they hold greater value. Without positioning, you risk becoming a hostage to THE SYMPTOM OF PRICE.

Conceptual competitive positioning can be applied to almost anything: an individual, a team, a product, a tender, a bid, a new product, or a new service. Psychological competitive positioning enhances competitive advantage.

What’s yours?

Famous Psychological Competitive Positions

IBM: Job Security

Caterpillar: Rugged, Hardworking

UPS: Synchronising

Volvo: Safety

Special Air Service: Daring

Hewlett-Packard: Invention

Lucozade: Energy

Infamous Psychological Positions

Wimbledon FC: Intimidation

Marlboro: Masculinity

Hell’s Angels: Outlaws

Sex Pistols: Anarchy