As odd as it sounds, law firms and supermarkets share certain business challenges. This is because they both operate in mature markets. And, as often happens in such markets, both law firms and supermarkets are experiencing slow growth and lots of competition. The result: tremendous price pressure. In the case of supermarkets, margins are only about 1 or 2 percent!

But one supermarket chain has notably resisted these market forces: Whole Foods Market. In this piece, we discuss how Whole Foods pulled this off and how law firms can use similar tactics to achieve prosperity.

Whole Foods: The Exception

Over the past 30 years, while the rest of the supermarket industry was eking out a profit, Whole Foods was thriving. For example, it has experienced

• Dramatic growth. The company started with 1 store in 1980 and has nearly 500 stores today.
• Fat profit margins. Its profits are several times larger than the competition’s.
• Wide geographic pull. Whole Foods markets attract customers from a 20-mile radius, which is 10 times farther than traditional supermarkets.
• Strong word-of-mouth. The company has hardly needed to spend on paid media.

What’s Its Secret?

The difference between Whole Foods and the rest of the supermarket industry: better market positioning. The company knows who it is and whom it serves, and it isn't afraid to express it.

In our 25-plus years as marketers, one of the things we’ve learned is that the ability to clearly communicate your market positioning can determine the success (or failure) of your marketing and, in turn, your business. That’s why it’s so important to nail your firm’s positioning before beginning any big marketing project, such as a new website.

Positioning = Focus

Positioning is about focusing on a specific market niche or customer type. Most supermarkets, like most law firms, are positioned very broadly. They are seeking a wide variety of customers and try to be most things to most potential customers.

In contrast, Whole Foods has chosen a rather narrow (and profitable) segment of the market: people with ample income who are concerned about what they eat. With laser precision, the company has built its business around serving that market.

Below is a comparison between Whole Foods and the industry in general.

The Advantages of Positioning

If competitors in a market are otherwise equal, the well-positioned business will have a clear advantage over its broadly positioned competition. It’s like magic! Vexing marketing problems get solved, and other business advantages accrue. For example,

• Clearer Messaging – It’s much easier for a well-positioned business to develop a clear marketing message that will resonate with its target market. Poorly positioned businesses struggle with messaging because one-size-fits-all messages never have the same impact.

• Wider Geographic Reach – People are willing to travel for a well-positioned service that isn’t available locally. And when people are willing to travel, it also means that they are willing to pay more.

• Word of Mouth – Well-positioned businesses spend less money on advertising. Word of mouth works best when your message (and target market) are clear.

• Ability to Invest Effectively – Well-positioned businesses are better at investing in the future. They understand what their target market wants, and thus have greater confidence when investing in new products and services. They are also more willing to invest in marketing (e.g., developing thought leadership).

• Delivering More Value – A business that is focused on a specific client-type can predict its needs and walk in the door with solutions in hand. This makes for easier sales and happier clients.

• Less Competition – A well-positioned business can effectively eliminate large swaths of its competition. Take the carmaker Volvo, for example. If a safe car is your highest priority, you would seek out car brands that have a reputation for safety. And Volvo is at the top of that list.

The Results: Profits

In short, any well-positioned business, be it a law firm, supermarket, or car manufacturer, can take greater control over the buy/sell process. This means they can attract more clients, attract the most lucrative clients, and charge more. As a result, well-positioned businesses are almost always more profitable than their more broadly positioned competitors.

Does this Apply to Law Firms?

Law firms are unique beasts. A typical law firm serves dozens of industries and provides scores of service offerings. And its consensus-driven culture often makes positioning difficult. For these reasons, many of the positioning lessons learned from companies like Whole Foods are difficult to apply at most law firms. This is especially true of older, regional firms that have a long tradition of serving a wide market.

All that said, we believe that positioning is the key to profitability in the legal market. You just need to do it right. More about that in our next blog post.

** Note: In recent years, as Whole Foods saturated its markets and competitors responded, the company’s stats began to look less rosy. However, that didn’t prevent Amazon from buying Whole Foods for $13.7 billion.