Strategic positioning – how to be different & perceived as valuable!
A successful business has both a strong business model and a good strategy: those are essential to make your business competitive and profitable.
Strategy is a plan to differentiate the business and give it a competitive advantage. The differences between you and your competitors are the basis of your advantage.
Competitive advantage is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
What is your strategy for gaining competitive advantage?
- Will it make you stand out from your rivals and attract their customers?
- Will it help you displace the competition? Will it draw new customers into the market?
- Will it give you a tangible advantage?
Being different only, will not however keep you in business. You must be different, as well as be perceived as valuable. The list of customer pleasing values is very long, as customers define value in different ways: lower cost, greater reliability, greater convenience, outstanding service, more aesthetic appeal, etc.
What value does your strategy aim to provide? Can you deliver?
Consider these examples: eBay made classified ads, flea markets and formal auctions simple, efficient and wide-ranging. Strategies can be based on low-cost leadership, technical differentiation or focus. They can also be understood in terms of strategic positions, emerging from three sources:
Choose a narrow subset of product or service offerings from within the wider set offered in your industry. This strategy can help you succeed if you deliver faster, better, cheaper than your competitors. For example, Starbucks offers premium coffee products and it locates its branches in convenient locations. Its focus is on coffee.
Choose to serve most or all needs of the target market. The target customers may be price sensitive, may demand a high degree of personal attention and care or may want products or services customised to their needs.
Choose this strategy if you want easier access to your customers. A pound shop for example may choose to locate its stores exclusively in low-income areas. This reduces competition from shopping centres located in the remote areas and provides easy access to its target market of low income shoppers.
Post originally published via ICAEW Business Advice Service – click here