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Positioning: the permission factor.

Consultant Amy Wohl has spent much of the past 20 years offering tough-minded, no-nonsense advice to major hardware and software companies. She often helps fine tune product specs and interfaces, but her real specialty is helping with high-level business strategy--product positioning, strategic alliances, market analysis, and technology direction. We recently caught up with her at a positioning seminar she conducted in Boston:

Amy, we're especially intrigued by your notion that companies need "permission" to enter new markets. Can you elaborate?

"'Permission' is one of those simple concepts that turn out to be much more powerful than they sound. Essentially, 'permission' is any special competency the marketplace will agree to give you credit for. It's a kind of tacit agreement that you know how to do something well, and that you can be trusted to perform equally well in some new area that the marketplace perceives to be related.

"For example, a company like Avery Dennison, which has an acknowledged competency as a manufacturer of mailing labels, found that it also had permission to sell label printers and label-printing software. Similarly, Lotus, because it's a major spreadsheet company, has an almost automatic permission to extend the spreadsheet category by introducing a next-generation spreadsheet like Improv. One reason other Lotus products like Agenda, Manuscript, and Magellan failed is that the marketplace didn't believe Lotus had any equivalent competency in these categories."

So how does a company 'earn permission' to enter a new market?

"The trick is, you can only put one foot at a time into a new territory. If the marketplace doesn't perceive a strong connection between your past competency and your new market, you're very likely to fail. When Claris tried to move into the Windows market from its Macintosh-only software base, it started by acquiring IBM's Hollywood presentations product. That effort didn't get very far, because Claris wasn't perceived as a competent performer in either the Windows market or the presentations category."

Yet some acquisitions clearly do work--for example, Lotus's entry into the word processing market with Ami Pro. What's the difference?

"With Samna, Lotus acquired a company that had an existing, well-defined permission to be in Windows word processing. Lotus then leveraged that permission by promoting Ami as part of a closely integrated suite of Windows products. Claris, by comparison, acquired a product that wasn't very successful or visible in the first place, and then waited too long to deliver other Windows titles."

What happens when a company has no reputation to leverage?

"If you have a completely new company, getting permission to be in the market is one of the hardest things you face. One of the few things you can do is to get permission to be an innovator--to create a perception that you're doing something absolutely new and valuable. (If you invent something that's patentable, incidentally, the Patent Office can become a source of permission that you can leverage.) But you really have to create something great, and then do a great job of telling people about it."

Is there a way to test how much permission you actually have?

"There are lots of ways. The easiest is to try out your positioning on industry influencers--the press, panels of customers, analysts, beta testers, etc. You need to ask these people if they want to buy the product you're showing them at the price you need to charge. And, most important, you need to ask them if they want to buy it from you."
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Consultant Amy Wohl discusses the strategy of market entry
Publication:Soft-Letter
Article Type:Interview
Date:Feb 19, 1993
Words:578
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