Thursday, October 10, 2019

MBA in a Nutshell #8 - Marketing : Product Positioning

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Product position can potentially be an offensive blog post, so I will not go all out to share my real thinking behind where I stand vis-a-vis my competitors. This is something between me an my business partners and can be work in progress as the competitive landscape in investment training changes.

To create a product positioning map, we will first need to build a 2 x 2 matrix. The axes are arbitrary but one common way to differentiate between different training providers is price.

I would not say that my program is expensive, but for the past two previews, customers are starting to remind me that I have a very close competitor who charges a mere fraction of what I charge. I do respect my competitor quite a bit, so I don't wish to talk about my competition since I am not a student of their program. I normally respond to clients by just saying that, in spite of my pricing, my course is getting a fair share of students and doing objectively rather well and let them infer the rest. So at least I know that, in the grander scheme of things, the perception is that my course is priced on the higher side.

There is considerably more leeway to determine what is the second axes to differentiate training programs. One possible axis is the "growth-dividend" axis - some training focus on growth stocks and capital gains while my course has a distinctive focus on dividend yields. Personally, I don't like this distinction because my course focuses on Early Retirement which means that my strategies can pivot away from dividends if a better retirement strategy comes along,

So perhaps I need a better axes to position the products available in the markets

Right now I am thinking of the "narrative-quantitative" as an axis that differentiates training programs in Singapore.

From what I do know, the value investing school has a strong narrative component where investors create a narrative around why a stock is a good investment. This may come from an intimate understanding of the history of a stock, the capabilities of management, and some idea of how they have a competitive advantage in the market place. You will know that a course is narrative when trainers invoke Warren Buffett's name a lot.

My course is actually quite averse to narratives. The name I invoke a lot is Clifford Asness - I've been invoking him long before The Economist made it cool to do so this week ! So I am a finance hipster, I was into Clifford Asness long before it was mainstream to do so.

My students do employ some qualitative criteria when investing but we emphasize the quantitative properties of a portfolio first and dip into the narrative second. Ideally, my students will process the news and raise an alarm when they see SPH in a screen and argue that SPH will be rejected because they are trying too hard in an area that they lack competence in. Another case is the repeated rejection of BHG REIT for the reason that analysts reports are strangely absent on the web for a REIT and it's focus on Chinese Retail. Whether they succeed in making a good judgment call is less important because the quantitative back-test results do most of the heavy lifting in my class.

Choosing a second axes is not enough. The final 2 x 2 matrix must be able to inform me whether I can get customers when I focus on one quadrant.

From the way I view the competitive landscape, the "narrative-low price" quadrant has decent customer demand so my competitors have been around much longer than I have been so this is a segment that I think folks can operate on. I think I can open up my own "quantitative-high price" quadrant and do fine for the medium term.

Gathering data on the availability of paying customers for each quadrant is currently not something I can do yet with total objectivity. Fortunately, Dr Wealth has an article pipeline that allows us to mine for ideas on what the investment community is most interested in.

1 comment:

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