The first part of a position: Space

Three examples of finding a unique space
Sony PlayStation found a unique space through targeting a different audience. In the 1990s, the games console market was dominated by two global superbrands – Nintendo and Sega – who between them controlled over 90% of the market. In 1995, Sony PlayStation entered the market. At the time, video games in Europe were primarily thought of as being for young children. PlayStation created a unique position by targeting teenagers and young adults. Their marketing focused on the intensity of the gaming experience.

Brands like easyJet and Dyson have built powerful positions by targeting existing audiences with different offers. A much cheaper price in exchange for a no-frills service, in the case of easyJet. In the case of Dyson, a superior product for a premium price.

Cirque du Soleil achieved differentiation through both offer and audience. When Cirque du Soleil was founded in 1984, the circus industry was in long-term decline. Children made up the core audience for circuses, but were being lured away by computer games and television. Rather than try to compete for this audience, Cirque du Soleil went after a different market. They targeted customers of other forms of entertainment such as opera, theatre and ballet, and in particular the corporate market with its deep pockets. To appeal to these audiences Cirque du Soleil totally reimagined its offer. It created breathtaking set designs with the audience seated on all sides. There were stunning costumes, magical lighting and original music. And all of it animal free. Within 20 years of launching, Cirque du Soleil achieved revenues equivalent to those that the market leader, Ringling Bros and Barnum & Bailey, had taken a century to reach.

Space is the foundation of competitive advantage
Defining a brand’s space is the foundation on which competitive advantage is built. To deliver its offer to its audience, a brand will need to build a complex web of operations and activities. Take Ikea. It created a unique space in the furniture market by making modern designs attainable for price-conscious younger buyers. All of its decisions were guided by owning this position. Self-assembly products. Large stores with self-service warehouses attached. Play areas for the children of their young families. Ikea’s clarity of focus meant that over time its business reached a level where competitors simply couldn’t emulate it. The cost of copying all its interwoven activities became too great. It created a defendable competitive advantage.

Strategy is the art of sacrifice, and achieving a position like Ikea requires tough choices. In order to deliver on its offer, Ikea made decisions that would appeal to its audience but alienate others. Large showrooms that you have to walk all the way around. Self-service and self-assembly. Crowded stores with busy restaurants. There are plenty of people who are alienated by this, and choose to buy their modern furniture elsewhere for a considerably higher price.