Rescuing Products with Stealth Positioning
You may have a great product, but the category turns off potential customers. Think household robots. In this Harvard Business Review excerpt, professor Youngme Moon looks at how Sony and Apple broke consumer prejudice.
When firms adopt a reverse or breakaway positioning strategy, there is no pretense about what they're up to. Part of the appeal of their cleverly positioned product offerings comes from explicitly subverting convention through unconventional promotions, prices, and attributes. In contrast, companies that use stealth positioning adopt a covert approach. They conceal the true nature of their products by affiliating them with a different category.
This is a powerful strategy for marketers when a category is in some way tainted. Consumers may feel intimidated by products in the category (as can be the case with new technologies); they may be skeptical of the products because previous offerings have failed to live up to expectations; or they may have personal objections to products or companies in the category. By using stealth positioning, companies can, in effect, sneak products into the market and gain acceptance that might otherwise prove elusive. Although stealth positioning doesn't typically disrupt categories, it can give products a fresh run at the life cycle and keep them from languishing—or dying outright—in the introduction phase.
One word of caution: There is an important difference between stealth positioning and deceit. The difference is both ethical and economic. When used thoughtfully, stealth positioning is a legitimate way to diffuse prejudice about a product or company, encourage acceptance, and deliver value to customers. But the strategy can backfire if consumers discover that a company used the technique to cheat them by exploiting their naïveté. The difference is evident in the following examples, where companies have thoughtfully adopted a stealth-positioning approach.
EyeToy: Play. Sony's PlayStation is the dominant game console in the market. But its market penetration—like that of rivals Microsoft (with the Xbox) and Nintendo (with the GameCube)—has been limited by a narrow customer base of mostly males in their late teens and twenties. Sony's goal is to make the PlayStation a broad platform for home entertainment and communications. But first, it has to undo the common perception that the product is an intimidating machine for guys.
As part of its strategy, in July 2003, Sony introduced a PlayStation product in Europe called EyeToy: Play—a video camera (the EyeToy) and game software (called Play) that plugged into the new PlayStation 2 console. The game concept was simple but groundbreaking. Standing in front of the EyeToy camera (which sits unthreateningly on top of the TV), users place themselves into the game, appearing "inside" it on the television. There they interact with objects on the screen by moving their bodies, without using a complicated handheld controller. EyeToy: Play was an enormous success, selling more than 2.5 million units in its first seven months on the European market. More significant, it succeeded in engaging mothers and fathers, boys and girls, the very old and the very young. The immediate appeal for the atypical user was that the game was simple and unintimidating. But it was also a fun social activity, a diverting game to bring out during the holidays or at informal get-togethers.
By using stealth positioning, companies can, in effect, sneak products into the market and gain acceptance that might otherwise prove elusive.
In fact, EyeToy: Play is more than a toy, although most customers don't yet see that. It can record brief video messages, and, with an application called Chat slated for release this year, it will be able to turn the PlayStation into a video phone. "It's not just that we wanted to break the ice with a piece of software that people would view as a game rather than a communications application," one Sony executive explained. "It's also that we wanted to establish the EyeToy hardware in people's minds as a plaything rather than a scary communications device Gradually introduce it, and then slowly add functionality." Sony hopes its stealth-positioning strategy will change the way consumers view its PlayStation offering and slowly shift this niche product into the mainstream.
AIBO. Sony exploited a similar stealth strategy to gain a foothold in the nascent household robot category. In a March 2004 article in Harvard Business Review, I described the company's approach to the challenge of warming consumers to its imperfect early robots. Sony had spent tens of millions of dollars to develop the first household robot, with the goal of seizing a leadership position in the emerging field against formidable competitors like Honda, Toyota, and Matsushita. But making a robot that could do anything useful proved daunting. Sony knew that marketing an unreliable, humanlike household robot that couldn't handle even simple chores was sure to backfire.
Sony's solution was to stealth position its product. Rather than set consumers up to be disappointed by an inadequate household robot, Sony positioned the product as a lovable but otherwise useless pet. Although buggy and unpredictable, the doglike AIBO was an immediate hit. In its first two years on the market, Sony sold out its limited production of 100,000 units. During what amounts to a five-year market test of a flawed technology, Sony has gathered invaluable consumer feedback to guide continued development of its robots. The company is now prototyping its next-generation robot, a little humanoid named QRIO.
Mac Mini. Moments after Apple unveiled its $499 Mac Mini in January 2005, the Internet was buzzing with speculation about just what the new computer was for. Sold without a monitor, mouse, or keyboard, the Mini was a minimalist aluminum box, six inches square and two inches tall. It left everything up to the imagination—which is precisely what Apple had in mind. Downplaying its PC capability, Apple's marketers emphasized the Mini's many other uses: It could be a music server for your car; a dedicated Internet port for the kitchen; a mobile recording studio for the band; a backup device for your photos; a TiVo-like recorder and digital entertainment hub for the living room.
Despite the buzz, Apple faced a familiar marketing challenge. Most people use Windows-based PCs, and to many of them, Apple computers seem overpriced and out of step. Past attempts to woo PC users have been unsuccessful, and Apple's share of the PC market has steadily eroded. Saddled with this baggage, the company stealth positioned the Mini as anything but what it fundamentally is: a competitively priced machine that can go head-to-head in the low-end PC market. What's striking about this stealth strategy is that Apple didn't affiliate the product with a specific alternative category. It simply suggested that it was not a PC—a strategy that not only disassociates the Mini from other low-priced, commoditized PCs, but leaves future marketing options wide open.
Excerpted with permission from "Break Free from the Product Life Cycle," Harvard Business Review, Vol. 83, No. 5, May 2005.