8.2 strategic positioning

strategic positioning

how a business is viewed in comparison to other businesses in the same market in terms of products/services or price/value

competitive advantage

• a businesses offers better value than its rivals

  • offer better quality for less

  • offer more for more

    • high prices luxury products

  • offer more for the same

  • offer less for much less

core competence

source / foundation of a USP

cost leadership - porters generic strategies

• being the leader in terms of cost in your industry/market

• lower costs can be passed on as lower prices

• characteristics

  • EOS

  • access to capital to invest in technology

  • very efficient logistics

  • low cost base ( labour/materials)

ADV cost leadership

• attracts price-sensitive customers

• can lead to high sales volumes

• creates a barrier to entry for new competitors

• increases efficiency and reduces waste

DIS cost leadership

• risk of cutting costs too much and harming quality

• may lead to price wars

• less flexibility to respond to market changes

• competitors may copy cost-saving methods

differentiation

• ability to deliver unique high quality goods or services

• characteristics

  • good R and D and innovation - core competence

  • effective sales and marketing so consumers understand benefits

  • target specific market segments

ADV differentiation

• builds strong brand loyalty

• reduces price sensitivity

• allows higher pricing and better margins

• can create a strong market position

DIS differentiation

• often requires high investment in r&d, marketing, or quality

• uniqueness may be hard to maintain over time

• not all customers will value the added features

• risk of being undercut by lower-priced alternatives

examples of core competence

• apple

• high quality technology

• life style effect on brand

• good user experience

• high quality design

ADV focus (cost focus or differentiation focus)

• meets the specific needs of a well-defined market

• less direct competition in niche areas

• stronger customer relationships

• can be more agile and responsive

DIS focus (cost focus or differentiation focus)

• niche market may be too small to be profitable

• vulnerable to changes in the niche or new entrants

• larger competitors could move into the niche

• hard to grow outside the niche

benefits of a CA or USP based off a core competence

• hard for competitors to replicate

• supports long-term success – not just a short-term tactic

• adds real value for customers – based on what the business does best

• helps create strong brand identity – linked to consistent strengths

• increases customer loyalty – when the advantage meets key needs

• can be applied across products and markets – not limited to one area

• improves efficiency and innovation – core skills lead to better performance

• supports premium pricing – if the USP is clearly valuable to customers

difficulties in maintaining a competitive advantage

• fast-changing markets – trends and customer needs shift quickly

• new competitors – may copy or improve on your advantage

• technological change – can make your methods or products outdated

• cost of innovation – maintaining an edge often requires constant investment

• global competition – more rivals from different regions with different strengths