Snapshot : Following from last week’s article on how marketing and e-Commerce are divided by a common language, this week we focus on e-Commerce positioning. This is a specific area of business strategy where marketing and e-Commerce come together. Learn how working on your e-Commerce positioning helps you make key decisions and sets the direction for all your future marketing activity.
The best e-Commerce stores have a clear brand identity. If you’re setting up your own e-Commerce store, you can’t develop that identity unless you’ve first gone through the segmentation, targeting and positioning process.
Segmentation in the e-Commerce world starts with identifying all potential shoppers who can or are likely to buy your range of products online (also known as your e-Commerce universe). Online shoppers usually choose to shop online for one or more of these broad reasons :-
They like the ease and convenience of online shopping, they like the range of choice available or they like to compare the price, and find a good deal.
(Read our separate article on what online shoppers want for a more detailed view)
After you group online shoppers into segments based on similar shopping needs, you’d then work through which segment(s) to target. Here, you evaluate each shopper segment on its attractiveness.
Attractive segments in e-Commerce include those willing to pay a price premium for better service, those with more loyal shoppers, and those whose needs are currently not well met by competitors.
Positioning closes off the overall process.
Here, you define a clear, distinctive and desirable place in the mind of target consumers, relative to competitors.
It’s a concise summary of what the brand stands for and how it will compete.
This positioning work sets the direction for all your marketing activity, in particular to create your brand identity.
To create a positioning, you create a positioning map – a visual representation of where you and competitor brands play, and a positioning statement – a crafted summary of how you’ll go after your target audience.
E-Commerce positioning map
The positioning map visually represents how customers perceive all the brands against key buying decision criteria.
Though brand teams and marketing agencies can create this map based on what they already know about customers, it’s much better to carry out qualitative research. Ask customers directly how they choose brands. Which buying factors really matter to them?
You can then use the blank map with them in focus groups as a guide. Ask them to “position” where brands sit relative to each other on the buying factors they identified.
Positioning map - example
Let’s take an example based on a recent review we did of online fashion shopping sites.
Let’s also throw in a fourth brand, that might already play in a different section of the fashion market.
TK Maxx doesn’t currently sell online, but let’s imagine it’s considering it, and wondering where and how it could compete against those three existing brands.
We believe two of the major segmentation variables for online fashion market are range and service. (price is also likely a factor, but in the stores we reviewed, price differences were minimal).
As a first step, we would use qualitative research to ask target customers to rank the brands on those variables.
Myer has the widest range of products, since they also offer non-fashion products. Customers would rank them highest on range on the map.
The Iconic have a smaller range than Myer, because they focus only on fashion. But, they offer higher levels of service, such as their choice of delivery times. Customers would place The Iconic appropriately on the map in relation to Myer.
Converse’s Direct to Consumer store clearly has the smallest range of products as it only offer Converse products. But it also has a high level of service, arguably higher than Myer, and just below The Iconic. Customers would place Converse relative to the first two brands.
Ask customers to position your brand relative to competitors
Finally, if we were TK Maxx, we’d ask customers to position us on the map relative to where the other three brands sit. It’s likely we’d have a better range than Converse, but less than Myer or The Iconic. After all, they offer brand new fashions rather than older stock at a discount.
As we’d be new to e-Commerce, it’s also likely our service level perception would be the worst.
This type of map helps identify “gaps” to exploited and also how close customers perceive competitors to be. In this case, TK Maxx might feel confident they could offer a lower service, but compete separately on price instead.
E-Commerce positioning statement
The second “half” of the positioning work then articulates what the brand will will do to exploit its position on the positioning map. This articulation is the positioning statement – a templated sentence with gaps you fill in to define the brand positioning.
If you manage your own online store, you need branding to sit behind the mechanics of the store itself, otherwise you’re just a generic online store. No-one will notice you, or remember you without branding. Branding means creating a brand identity, and the e-Commerce positioning statement is a great way to start that.
That’s why e-Commerce positioning is a perfect connection point for marketing and e-Commerce. There’s a common shared goal. The language and underlying drivers are the same. The e-Commerce positioning statement sets the direction for how an e-Commerce brand plays in the market.
The (blank) positioning statement is laid out like this.
To (Target Audience), (your brand) is the (frame of reference) that (benefit) because (Reason Why and Reason to believe).
E-Commerce target audience
It starts with the target audience.
During segmentation and targeting, you build a picture of who your customers are, what they think and feel, and what they do.
If you haven’t already done so, it’s worth collating this customers knowledge into a customer segment profile to bring them to life.
At the very least, your target audience needs a meaningful name. Ideally based on an attitude, behaviour or need.
In the online shopping fashion example, we came up with “Service Seeking Susan” and “Range Researching Rachel” for example.
The profile beyond the segment name helps you collates relevant information and insights about demographics, occasions and needs. It helps you identify customer attitudes and behaviours that will determine the direction of your strategy and actions.
“Service Seeking Susan” for example might always check the delivery and returns options. So, those would need to be high-up in the website hierarchy.
“Range Researching Rachel” might check out multiple websites, and make multiple sections with any one website. So, you’d focus on key areas like search (so she finds your store first) and navigation (so she can move around the online store easily).
E-Commerce frame of reference
Once you name and define your target audience, you then build out “how” you’ll meet their needs. The first step is to define your frame of reference. In simple terms, this is the definition of the category you play in. It’s usually on a spectrum from narrow to broad.
In this pizza delivery example, the frame of reference could be narrow – pizza shops in Bondi, or it could be really broad – evening meals in Sydney. Or it could be somewhere in-between.
Each choice has different implications on how you’d operate, and who you’d compete against.
The Frame of Reference should refer back to the offer that you’ll bring to market, as customers will expect you to be able to deliver on it.
Are you a generalist store with a wide range of products, for example? This implies a broad Frame of Reference.
Are you a niche store with a specialist and exclusive range or products? This implies a narrow Frame of Reference.
Broader frames of reference are more competitive because they contain more customers. Narrow frames of reference are usually less competitive, because they have less customers.
Your Frame of Reference decision helps you determine which customer needs to focus on, and the scale of marketing effort and resources needed.
Let’s say your Frame of Reference means you need to compete on adding extra levels of service like delivery options, expert advice or personalisation. That would be a different proposition to a Frame of Reference that focuses on low price or fast delivery.
The Frame of Reference defines your competitor set
The e-Commerce frame of reference also helps define your competitor set. Knowing who your competitors are impacts all elements of your marketing plan. This will include the products you offer, your pricing strategy, your distribution set-up and of course, how you promote your offering.
For example, The Iconic and Myer are direct competitors as they go for big ranges and high service levels. These brands would closely monitor each others activities and focus their efforts on delivering superior options for customers.
But TK Maxx or Converse D2C don’t directly compete with either of those brands. Their Frames of Reference would be different. Those online retailers would compete against other online fashion value offers, or other shoe brand D2C stores.
The next stage of the e-Commerce positioning statement is to define the key benefit for the target audience. Benefits operate at many levels from functional product features, to more complex emotional benefits.
Whichever level of benefit you focus on, it needs to be relevant benefit for the target audience, and where they are in their customer journey.
As we cover in our article on what online shoppers really want, the three most common online shopping benefits are ease and convenience, range and price comparisons.
These are all functional rather than emotional benefits. They appeal to rational decision making rather than directly connecting with feelings or emotions.
Arguably, these functional benefits may have some indirect emotional connections. For example, you feel reassured you know when a package will arrive, you feel proud you’ve found something unusual or you feel happy you’ve got a bargain. But, these come after the buying decision, they’re not what drives the actual decision.
Which benefit matters most changes over the customer journey
As we covered in our recent article on marketing and e-Commerce differences, the benefit that matters to the customer depends on where they are in the journey.
At the top of the funnel, where awareness and consideration matter, emotional benefits create more attention and interest. Customers don’t care much about functional benefits at that point.
But towards the bottom of the funnel, near the point of purchase, the logical rational brain steps in, and functional benefits become much more important.
The challenge for e-Commerce store owners is to think through benefits through the whole customer journey. It’s hard to differentiate on functional benefits.
Most store websites and order to delivery systems offer similar functional benefits. You either need to find out some way of making them stand out, or dial up the emotional benefit to differentiate your store.
Differentiated functional benefits can and do exist, but need investment in the systems to support them. For example, your differentiated functional benefit could look something like these …
- The only store to deliver within 24 hours of the order being placed (ease and convenience.
- The only store to stock more than 1 million products (range)
- Find a cheaper product and we’ll refund the difference by 10% for example. (price)
All possible to do, but all requiring a focus on non-standard back-end systems to make them happen.
These types of functional benefits suit generalist stores. Generalist stores build economies of scale. They can invest in the necessary support activities (fast delivery, large range, price discounts etc) to support this benefit.
Emotional benefits in e-Commerce
Niche stores on the other hand don’t have the same economies of scale. A stronger, more defendable benefit for them is to dial up emotional benefits.
One online store we created for example, focussed on its ability to guarantee delivery within a specified time. The products it sold were in high demand, and were often out of stock in traditional channels.
Because this store was linked to the manufacturer, it could always guarantee stock and fast delivery. This gave a lot of reassurance to customers frustrated with finding the product out of stock elsewhere. The emotional benefit was the reassurance of guaranteed delivery.
Example – Amazon emotional benefit
Emotional benefits are tricky in e-Commerce, but not impossible. Bigger e-Commerce brands like amazon.com.au use advertising to create more emotional connections between the brand and customers. This works at the top of the funnel to drive more traffic to their website (where the functional benefits of ease, range and price then take over).
In this advert for example, there’s a cute dog, and a cute baby, neither of whom are going to shop at Amazon.
But they’ll have strong emotional appeal to the type of customer (family shoppers) Amazon wants to attract.
(plus they add a little humour for even more emotional connection).
Of course, if your brand already has a clear emotional benefit, then you can tie your e-Commerce store to this benefit. Many charities now have online stores for example. These link the emotional benefit of the charity brand (feeling good by helping others) to what their online store offers.
Example – Red Cross emotional benefit
Look at Red Cross Australia as an example.
They offer a limited edition Kindness Collection range of totes and bags, that have been exclusively designed and are not available elsewhere.
There’s a clear emotional benefit to supporting the Red Cross by buying these products. The focus is not on ease and convenience, range or price, it’s on supporting a good cause and helping others.
To summarise, your e-Commerce store benefit has to be relevant to the target audience, and their stage of the customer journey. It needs to stand-out from the competition. But, you also need to be able to live up to the promise of that benefit. It also needs to be credible and believable to the customers.
For that you need to look at the final two parts of the e-Commerce positioning statement – the reason why and the reason to believe.
E-Commerce Reason Why and Reason to Believe
When you write your e-Commerce positioning statement, the reason why is what helps customers understand the benefit. The reason to believe what proves the benefit, so they believe it.
Reasons why for manufactured products might include ingredients, or where and how the product is made. In e-Commerce, the reason why usually relates to how the online store works. It’s how and where the e-Commerce brand does things, so it’s normally related to a process or system.
Example Reasons Why for e-Commerce include the best navigation and layout, the simplest check-out process, the widest range of delivery options, the breadth of the product range, the frequency of price checks or some sort of pricing guarantee.
As these are functional benefits, competitors will try to copy or improve on them. You need to make them unique and defendable by supporting them with a clear Reason To Believe. Customers need to believe in your benefit, more than they believe competitors.
Reason to Believe – e-Commerce ease and convenience
Every online store will say it makes shopping easier and more convenient. If this is your focus benefit, you need to be more specific what you mean by this. Do you apply ease and convenience across every stage of the customer journey, or you do specialise on one particular stage?
Ease and convenience on your store website would mean good site navigation and lay-out. You could focus on the minimum number of clicks to buy for example, like Amazon’s 1-Click order system.
So, if you were Amazon, your convenience benefit could drive a Reason Why and Reason to Believe something like this :-
“the most convenient way to shop online due to our focus on making the purchase as easy as possible, proved by our 1-Click order system”.
(though in fact, as we cover in our article on working with Amazon, their primary benefit is generally range, not convenience).
Ease and convenience – e-Commerce systems
Ease and convenience could also apply to payments though. If you set up a member log-in system that remembers the customer’s payment details, this means they don’t need to enter them in every time. Definitely easier and more convenient.
Payment options like PayPal or After Pay add ease and convenience to payments. Subscriptions, repeat orders or reminder service all make the next purchase much easier.
Ease and convenience can also apply to your order to delivery system. Giving customers a range of delivery slots including evening or weekend deliveries for example, is easier and more convenient than only delivering on specific days. (The Iconic for example offers many more delivery options than Myer as we recently covered).
But obviously, though these make life easier for shoppers, they make like harder for you.
Each of these benefits needs the technical know-how to both set up and maintain. It’s better to make these types of decisions early at the e-Commerce positioning stage. This influences your priorities and investment plan for bringing your online store experience to life.
Reason to Believe – e-Commerce range
It’s easy to say your store offers a wide range of products. But wide ranges of products bring lots of e-Commerce implementation challenges. To support a wide range means holding on to a lot of stock inventory and that comes at a high cost.
It’s also a challenging benefit to show superiority over competitors.
To prove you have a wider range than competitors, you first need to know their range so you can make a comparison.
This isn’t always feasible.
An easier benefit to prove in terms of range is to follow an exclusives approach. Find specific products that only your store sells. Rare or limited edition products and one-offs are a great way to differentiate your benefit in e-Commerce.
This approach makes you unique and builds desirability for shoppers, as they can’t get those products elsewhere.
Reason to Believe – e-Commerce price
Finally, if your store competes on price, you need some way to prove your store offers the best value. This easiest way to do this is to (a) regularly price check against competitors to make sure they are actually better and (b) make it easy for customers to do the same.
In some categories, you’ll find third party websites who’ll run regular price checks. On these sites, both you and customers can go to make price comparisons. The site supermarket.co.uk for example does this for UK grocery shopping.
If there’s no site like that for your category, you can monitor competitor prices directly on their websites. But, if you have many competitors, and lots of product lines, it can be worth investing in marketing technology led solutions. Services like Edge by Ascential set up automatic monitoring and tracking of competitor prices, including alerts when prices change, for example.
To make it easier for customers to compare prices, there are also companies like Numerator who provide software that sits on your website and displays prices from retailer websites for each of your products.
So, for example if you are a manufacturer who doesn’t sell direct, but who sells through online retailers, you can show the prices those retailers charge on your website, like this example on Tim Tam biscuits.
What to do with your e-Commerce positioning statement
Once you’ve decided on these 5 core positioning elements for your e-Commerce store, you’re ready to kick off the brand identity development process.
The e-Commerce positioning statement may seem relatively simple and short, but it’s a powerful articulation of what you brand will do, and how it will do it. It represents hugely important choices you’ve made about your business.
Your e-Commerce positioning helps you find a clear and distinctive place in the market. That place is relevant to customers, and it’s where you can build on your strengths against competitors.
Conclusion - E-Commerce positioning
The lack of barriers to entry in e-Commerce makes it both attractive and challenging at the same time.
If it’s easy for you to set up your own store, then it’s easy for competitors too. E-Commerce is always going to be a crowded and competitive place for you to play in.
Developing a clear e-Commerce positioning helps identify where you should play.
It helps your store stand out from the crowd, and own a specific position in the minds of customers.
The key elements of the positioning statement – target audience, frame of reference, benefit, reason why and reason to believe – are core brand DNA elements that should be reflected in marketing agency briefs and all your marketing plans and activation.
It forces you to make hard but clear decisions about who your target customer is and how you’ll go after them. These decisions shape all marketing decisions that follow. Your e-Commerce marketing plan will have more relevant products, smarter pricing and targeted and more impactful communications.
The positioning identifies clear space in the mind of customers. It shows where you can be more relevant and memorable than your competitors. Being more relevant and memorable than competitors is what drives sales.
And whether you’re a marketer or an e-Commerce player, driving sales is surely your number one priority.
Read our guide to segmentation, targeting and positioning to find out more about positioning. Or, check out our article on the functions of e-Commerce to see how different unctions need to come together.
And of course, contact us if we can help be the translator for your marketing and e-Commerce ambitions.