8.2 strategic positioning

The porters model is

A strategic tool to help decide on how to compete, this tool offers 4 strategies depending on choises made on

Point on difference, which market to operate in

Porters generic strategies model suggests that a business shoudl

Follow one of three positioning strategies in order to compete within its market essentially bsuinesses will compete either on:

Price ( cost leadership )

Uniqueness or value percieved by the customer ( differentiation )

Or by focuing on a niech or vey specific type of customer

Porters generic strategy looks like

Cost leadership strategy requires

A focus on cost minimisation

Large scale volume

Economies of scale

Differentiation leadership strategy requires

Strong usp

Focus on innovation

High profit margins

Developing brand loyalty

Not being the cheapest or not offering strong differentiaion means

being stuck in the middle and likely to fail

Influences on the choise of strategic position

Competitors, how strong are the competitors a business faces in its chosen strategic position, what advantages, if any, do those competitors face

External environment, careful and regualr scanning of changes in the extenal environment is key to effective strategic positioning

Core comepetancy, and honest view about the ability of the bsuienss to compete is essential,

The bowmans model is a

strategic tool to help decide how how to compete, this tool offeres 8 strategies.

Teh clock suggests

Price and percieved value

Position 1

Low price and low percieved value,

Generic product, usually inferiour product , very low profit margins, this strategy relied on high sales volume and economies of scales,

Position 2

Low price,

Cost leaderhship position

Low profit margins

Some percieved value

This strategy also relies on high sales valume and economies of scale

Position 3

Hybrid

Some differentiation, appear to offer good balance between price and value, attracting aspirationsl customers but still price conscious

Position 4

Differentiation

Strong usp and differentiation, brand name, featurs, quality, customer service, delivery time, ped is less sensitive

Position 5

focussed differentiation

Specialist niche market

Very strong usp or differentiation

Premium prices

High profit margins

Position 6

Risky high margins

Often new and high tech products attracting early adopters, uses skimming prices strategy, this strategy requies focus on innovation

Position 7

Monoply pricing

Premium prices for low value, unsustainable strategy unless in a monoply position, success of this strategy may depend on the power fo regulation

Position 8

Loss of market share

Appears to be overpriced for products or services that are similar to what other businesse provide, and an unsusatinable strategy

Strategy 6,7 and 8

Are likely to fail as they are seen as unfair by the customers