Monday, November 10, 2014

Categorizing your Software

Software buyers sort applications by category. And positioning is all about the location of your product in prospects' minds. As you start to design your next application, consider how you want prospective buyers to think about your new program. By designing your application with your market positioning in mind, you'll have a much easier time selling your new product to your target audience.

The History of Positioning

Fifteen years after Al Ries and Jack Trout wrote "Positioning: The Battle for Your Mind," Jack Trout released his updated analysis and insights on the topic of positioning. His new study of positioning is called "The New Positioning - The Latest on the World's #1 Business Strategy." The world had changed in those 15 years, and Trout has a lot to add to his earlier thinking about marketing and positioning.

The original Positioning book by Ries and Trout was a breakthrough because it changed the focus of marketing from what you do to the product to what you do to the mind of the prospect. We've learned a lot about the mind in recent years, and the current book talks about what we've learned, and how it should affect the way we do marketing.

Marketplace Forces Define Categories

Specifying a category for your product or service can be complicated. Here are some of Trout's latest ideas, translated into the software development industry.

Creating a product or service in a new category, Trout explains, makes it very difficult to sell. This is especially true, I think, in the software industry, for a number of reasons:

  • Google and the other search engines are keyword and key phrase oriented, and often these words and phrases are categories. If your prospects don't know the category name, it will be more difficult for them to locate your application using search engines.
  • When you send press releases to magazine and newspaper editors, many of these writers want to determine which cubbyhole your program fits into, so they can put it in context and compare it to similar software. Totally new software is a real challenge for columnists and reviewers. They may play it safe, ignore your application, and write instead about a program that's in a category that their readers will understand.
  • When prospects search for software on a download site, they first select a category or type the category keywords into a search box. If your application doesn't fit neatly into an existing category, it's going to be very difficult to find on the download sites.

Who Creates Categories?

Trout says that companies don't create categories. Users do.

In my opinion, companies with substantial marketing budgets can do a lot to create their own categories. If you're a well-funded software publisher and you can get prospects to recognize your product or service, you stand a good chance of convincing them to categorize your application as you'd like. With a typical microISV budget, however, it can be quite a challenge.

It's difficult to invent a new category. It's usually easier to segment an existing category, and try to set yourself up as the market leader in your new sub-category.

Trout names a couple of exceptions - Tandem created fault-tolerant computers, and Orville Redenbacher created gourmet popping corn. But for the most part, marketers cannot easily create new categories for their products and services.

Your Current Marketplace Positioning

Is it better to try to get the world to accept your new category? Or can you sell more software by declaring that your program fits into an existing category, and that it has more features - perhaps unexpected features - than your competitors' offerings? It's complicated.

Is Your Niche Growing?

Your ability to create a new category for your software depends upon whether your software is in a growing marketing niche, a stable one, or one that is in decline.

If your software niche is growing and branching out into new directions, then you might be able to turn one of these branches into a new category, and dominate that category. We saw this happen with anti-virus software a few years ago. Several companies competed with each other with applications that were based upon huge databases of virus signatures. And a few companies broke away from the pack and took a different approach to protecting PCs from the bad guys. These innovative companies were able to create new categories - or at least new sub-categories - for their applications.

If your software is in a stable niche, then it's harder to create a new category for your applications. Unless you're doing something which is particularly innovative, you will have trouble convincing the public that you've introduced a new category of software.

If your software category is in decline, then you have an opportunity to define yourself in a new category. Your competitors are probably not spending a lot of money on product design or on advertising. You can take advantage of their passive marketing to nudge your program into a new category, and declare yourself to be the leader of this new product niche.

Take Me to Your Leader

Your ability to define a new category of software also depends upon whether your software niche has one (or more) established leaders, or whether there are a lot of contenders for that title with no obvious leader.

Breaking into, say, the zip archiving business would be very difficult today. And convincing people that your application does everything that they can get from the free archiving capabilities found in Windows, as well as the functionality found in WinZip and WinRAR, would be a difficult task. To go further, and position yourself as the publisher of an innovative new category of archiving application would be nearly impossible.

On the other hand, if you're competing with a number of microISVs, none of which has a leadership position in your marketing niche, then your chances of creating a new category for your program are much better. The buying public is less likely to know exactly what each of your competitors is offering. And that gives you a chance to define a new category for your application.

How Strong Is Your Budget?

Your ability to position your application in its own category depends a lot on the size of your marketing budget. If you can afford to launch and sustain an advertising campaign that defines your program as an innovative new application, then you might be able to create a new category for your brand.

If you're as innovative in your marketing as you are in your application, you might be able to craft a press release campaign to accomplish the same goal, at a significantly lower cost.

A lot of your success will depend upon how well funded your competitors are, how willing they are to compete with you, and how clever their marketing ideas are.

The Bottom Line

You probably can't control the entire marketplace when it comes to positioning your software in the optimal category. But knowing the issues and forces at work will make it easier to position your software properly.

The time to start thinking about software categories and positioning is when you're designing your application. Don't wait until you're beta testing your program to start thinking about how you're going to market it. You need to bake your marketing innovations into the software itself.

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