Brand Positioning: First Mover Advantages

Positioning a brand and particular product/service offerings is essential to any successful product launch. Before attending CMU for graduate school, I had the opportunity to work at a startup organization and was in charge of business development. This ambiguous title provided me with strategic marketing experience, a trait I never thought I would fully develop in my career. From what I learned with the launch of two companies in a saturated market is that brand positioning is essential at the very start of product development.

As mentioned in my previous blog entry, market segmentation and sizing can dictate the financial, operational, and marketing efforts of an organization. Narrowing down a target market is many times differentiating factor between successful startups and unsuccessful ones. However, with our Social Impact Bonds business, brand positioning is more difficult than I had anticipated. The reason being I am a bit lost as to how to position a company in an emerging and undeveloped market. Being that our venture is based on positioning an Intermediary Organization linking the government, investors, and non-profits, positioning our company to best serve all of these stakeholders is essential. This positioning is compounded by the uncertain regulatory environments of SIBs.

The six criteria useful for vetting positioning choices, as defined by Darden's Positioning: The Essence of Marketing Strategy, are:

1. Relevance
2. Clarity
3. Credibility 
4. Uniqueness
5. Attainability
6. Sustainability

I believe we are well positioned in terms of relevance, however clarity is going to be a hard selling point.  Because many investors do not necessarily understand the fundamental concepts of a SIBs, it is difficult to communicate our points of difference.

Our Company, colored in red, should be positioned with the highest growth potential and differentiation

We wish to make money on the spread of Social Impact Bonds. This spread is the difference between the Government repayment to our organization and our payment to Investors for bearing the risk of the investment.  We will create benchmarks for the non-profit to achieve and payment to investors is based on the attainment of these benchmarks. Our overhead is minimal in that the large fixed expense is derived from hiring an independent rating organization to vet the outcomes of the nonprofit.

That paragraph may be clear to Brendan and I, however it is still unclear to anyone who is hearing about SIBs for the first time. I need to figure out a good way to communicate this idea in a concise and understandable way. In my previous job, I would often times tell a quick story to help communicate our points of difference. However, since SIBs are unlike any other commonly understood financial vehicles, it is difficult for me to be clear and concise.

Credibility of our organization is premised on the attainment of top talent to set financial benchmarks for the non-profit as well as great communicators and lobbyists that have close ties to government.  Furthermore, uniqueness is tied to properly utilizing this top talent.  Because there are not too many financiers who understand how to structure these SIBs based on realistic but difficult to reach metrics, our expenditure to retain financial engineers is a large expense.

How attainable and sustainable is our solution? I think the answer to this lies in our product positioning based on our target market. If we can properly segment the SIB market and size it based on realistic metrics, I think we might have a shot of being a market disruptor in this industry. However, if we are not able to innovate with respect to the financial engineering of these SIBs, we will fail to differentiate from other Intermediary Organizations, ultimately leading to the failure of our venture.