strategic positioning

 What are the titles of Porter’s strategic matrix  

• Competitive advantage (lower cost and differentiation)

• Competitive scope (broad target and narrow target) 

Where is cost leadership in the Porter’s strategic matrix 

• Lower cost

• Broad target 

Where is differentiation in the Porter’s strategic matrix 

• Differentiation

• Broad target 

Where is cost focus in the Porter’s strategic matrix 

• Lower cost

• Narrow target 

Where is differentiation focus in the Porter’s strategic matrix 

• Differentiation

• Narrow target 

Explain cost leadership 

• Useful in highly competitive markets where there are homogenous products 

• Customers may frequently switch supplier to gain best value 

• New entrants to the market will use low process to build a customer base 

Explain differentiation  leadership

• Useful strategy in highly technology markets where there are rapidly changing and evolving features of products and services 

• Where customers needs are very diverse 

• Where the competitors in the market are all following a similar differentiation strategy 

Explain cost focus 

• Useful strategy when the business wants to offer very low prices to a small market segment 

• Niche marketing but at very low cost 

Explain differentiation focus 

• Useful strategy when the business wants to offer products and services to a small market segment 

• Products or services will be differentiated and aimed at a niche market 

• Niche market products can change premium price 

What is the value of porter’s strategic matrix 

• Those in support of porter’s strategic martix (generic strategies) say that is establishes a clear direction for the business to go in  

• Identifies when a business may be in trouble  

• This may be true for Debenhams 

Explain Bowman’s strategic clock 

• He is a famous economist and professor at Cranfield Uni in America- who invented the strategic clock theory 

• The main aim was to make businesses aware of their position in the market compared to competitors 

• It shows how a business can position its products based on z dimensions; price and the perceived value of the product 

What is the x axis of Bowmans strategic clock 

Price 

What is the y axis of Bowmans strategic clock 

Percieved value of the product 

What is position 1 in Bowmans strategic clock 

• Low price

• Low added value 

What is position 2 in Bowmans strategic clock 

Low price 

What is position 3 in Bowmans strategic clock 

Hybrid 

What is position 4 in Bowmans strategic clock 

Differentiation 

What is position 5 in Bowmans strategic clock 

Focused differentiation 

What is position 6 in Bowmans strategic clock 

Risky high margins 

What is position 7 in Bowmans strategic clock 

Monopoly pricing failure 

What is position 8 in Bowmans strategic clock 

Loss of market share 

Explain position 1 and 2 the Bowmans clock 

• Products are sold at lower prices than the perceived value, so will have low profit margins but sell in high volumes

• Not a very competitive position for a business

• Products are not differentiated and the customer perceives little value despite very low price 

Explain position 3 in the Bowmans clock 

• Short-term strategy to boost sales or create awareness of the product during a launch or promotional period, a hybrid is a mix of low price and product differentiation 

Explain position 4 in the Bowmans clock 

• Differentiation but not premium priced, customers get the highest level of perceived value 

Explain position 5 in the Bowmans clock 

• High quality goods that attract premium prices, customers pay high prices because of high perceived value 

Explain position 6,7 and 8 in Bowmans clock 

• Basic products or services but at premium prices so unlikely to attract sales, customers may switch to substitutes unless the business is a monopoly. 

• High risk strategies likely to fail.  

• Offering low value products at standard prices will lead to a loss of market share 

Define strategic positioning 

• Strategic positioning is the process of choosing the strategies that the business will use to differentiate themselves, and their products and services, from their competitors 

What are the 3 influences on strategic positioning

• SWOT

• PESTLE

• functional departments

explain how SWOT influences strategic positioning

• Strengths and Weaknesses are both internal to the business​

• A company would want to produce goods that exploit their core competencies and avoid producing any products which exposes their weaknesses​

• Opportunities and Threats are external and a business would want to take advantage of opportunities and avoid threats

explain how functional departments influences strategic positioning

• The functional departments of a business can have an impact on the strategic positioning of a business or its products:​

• Operations – do they have productive capacity to be a mass market company​

• HRM – does the business workforce have the necessary skills to innovate and design new products​

• Finance – does the business have access to funds to spend on R&D​

• Marketing – is there customer loyalty, what is the existing brand image

the value of different strategic positioning strategies

• To be able to occupy a market position which is profitable a business must strategically differentiate​

• The positioning strategies will help a business to differentiate its brand based on the features and benefits that it offers​

• It helps the business to make decisions about price and added value to be created

define competitive advantage

The unique characteristics of a business that differentiates it from its competitors and helps it to make a profit

The benefits of having competitive advantage

• Competitive advantage means that the business has the best product or service when compared against its rivals​

• This can mean increased sales volume and sales revenue​

• It can mean that the business can increase the price to match the perceived value of the products​

• It enables cost savings and has a positive impact on profitability

The difficulties in maintaining competitive advantage part 1

• If a business has a competitive advantage through a brand image, it may have difficulty maintaining that advantage if there is a scandal surrounding the brand​

• Sometimes businesses can’t bounce back from the negative publicity

The difficulties in maintaining competitive advantage part 2

• If a business has a competitive advantage through geographical location then it may lose this advantage if other competitors follow it​

• Occasionally it can have the opposite “cluster “ effect where customers view their purchase as from a choice of companies rather than to buy or not to buy

The difficulties in maintaining competitive advantage part 3

• If a business has a competitive advantage through customer service or customer experience then it may lose this if it gets bad reviews online or in a local newspaper​

• Particularly important in the tourism, food and entertainment industries

define Bowman’s Strategic Clock

This is a strategic planning tool which can be used by business managers to help the, position a product or service on two different axes which leads to eight possible strategies

define differentiation

Making products or providing services which are unique in some way e.g. Lotus cars have unique styling and handling

define Positioning Strategy

A business strategy where a company chooses two key areas and then excels in those areas e.g. Rolex watches might focus on quality and prestige

define Competitive Advantage

These are factors that allow a business to have an advantage over their rivals e.g. being able to produce goods at lower costs than the competition