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Mapping Your Competitive Position
Transcript of Mapping Your Competitive Position
Business Policy and Strategy
Presented, January 16, 2013 Interpreting Positioning Maps The Price-Benefit Positioning Map Conclusion Drawing Price-Benefit Positioning Maps What is the purpose of a
Price-Benefit Positioning Map? - It shows the relationship between the primary benefit of a product and its price in comparison to the other competing products within the market and industry. Why is this important? - Managers know what they are charging for.
- Customers know what they are paying for. Even more important... - Companies are then able to create products, taking benefits and price into consideration while positioning them into
unoccupied industry segments, with the greater potential in maximizing revenue. Example - Apple's iPhone vs. Motorola's Razr Applying what we know...
Creating a Blue Ocean - Using the Apple example to apply Price-Benefit Position Mapping to Blue Oceans...
- Apple's entry by creating an 'Ultra Premium' cell phone industry segment/market
- Altered an existing industry
- Unknown market space
- Untainted by competition
- Created demand, rather than fought over
- Rapid profit and growth
- Jeopardized Motorola's Razr line by later lowering price with superior benefits Step 1 Define the market. Step 2 Choose the price and determine the primary benefit. Step 3 Plot positions and draw the expected price line. Drawing Price-Benefit Positioning Maps and applying
what we know... - Defining the market, involves prospecting for industry segments of interest or markets when creating products and services, where we can use Porter's IO Perspective.
- From here, we can use the
Five Force Analysis to determine
which industry/segment is best to
- Choosing the price and determining the primary benefit, involves strategy in which the firm must perform activities differently or different activities in order for the product or service to be superiorly different from its competitors and rivals.
- Lastly, plotting positions and drawing the expected price line shows where the product stands in comparison to others in the industry, where such comparisons may also suggest tradeoffs that can occur. Importance of Interpreting
Price-Benefit Positioning Maps - Pinpoint benefits that customers value
- Locate unoccupied or less competitive spaces within the industry
- Identify opportunities created by changes in price/primary benefit relationships
- Anticipate rivals' strategies Valuing Intangible Benefits - Supplementary services in addition to products
- Japanese Big Four, Honda, Yamaha, Kawasaki, had better product offerings, engine power, displacement
- However, customers paid 38% more for Harley motorcycles due to its services, and image Anticipating Shifts in the Value of Benefits - Key here is the primary benefit
- Customer desires often shift, meaning that primary benefits change
- The price-benefit equation, shows which benefits are valued by customers more, letting companies get ahead of rivals
- Hotel Restaurant example Finding Paths of Least Resistance - Areas of competitive intensity
- Map then includes unit sales and sales growth
- Primary benefit is the "platform" of products
- BMW's repositioning of the 3 Series Preempting Rivals - Price-Benefit Positioning Maps help in predicting the strategic intent of rivals
- Maps based on projections of market trends
- Primo (company requested for anonymity) example Applying what we know...
Sustaining Superior Performance
through an Early Mover Advantage - Interpreting Price-Benefit Positioning Maps is crucial to achieving an Early-Mover Advantage.
- This is possible by pinpointing benefits that customers value, locating unoccupied or less competitive spaces, identifying opportunities creating by price/primary benefit relationships, and anticipating rivals' strategies before competitors are able to.
- As a result, there is a greater chance in obtaining private information, attaining size economies, and entering enforceable contracts/relationships in better terms. - Price-Benefit Positioning Maps depict the relationship between price and primary benefit.
- Helpful in Blue Ocean strategies, by showing unoccupied industry segments; alteration.
- Assists in selecting industries or industry segments/markets. (IO Perspective)
- Interpretation allows for Sustaining Superior Advantage through an Early-Mover Advantage.