Page 147 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 8: Business Level Strategies

8.2 Positioning of the Firm Notes

When starting a new firm or launching new product, a prime strategic decision is to identify the
target audience. But even though a useful segment has been identified, this does not in itself
resolve the organisation’s strategy. The competitive position within the segment then needs to
be explored, because only this will show how the organisation will compete within the segment.
Competitive positioning is thus the choice of differential advantage that the product or services
will posses against its competitors. Competitive positioning allows an organisation to compete
and survive in a market place or in a segment of a market place. To develop positioning, it is
useful to follow a two-stage process-first identify the segment gaps, second identify positioning
within segments.

Identification of Segment Gaps and their Competitive Positioning Implications

From a strategy viewpoint, the most useful strategy analysis often emerges by exploring where
there are gaps in the segments of an industry. The starting point for such work is to map out the
current segmentation position and then place companies and their products into the segments;
it should then become clear where segments exist that are not served or are poorly served by
current products.

Identifying the Positioning within the Segment

From a strategy perspective, some gaps may be more attractive than others. For example, they
may have limited competition or poorly supported products. In addition, some gaps may possess
a clear advantage in terms of competitive positioning. Others may not.
The process of developing positioning runs as follows:
1. Perceptual mapping: In-depth qualitative research on actual and prospective customers
on the way they make their decisions in the market place, e.g. strong versus weak, cheap
versus expensive, modern versus traditional.
2. Positioning: Brands or products are then placed on the map using the research dimensions.
3. Options development: Take existing and new products and use their existing strengths
and weaknesses to devise possible new positions on the map.
4. Testing: First with simple statements with customers, then at a later stage in the marketplace.
It will be evident that this is essentially a process, involving experimentation with actual and
potential customers.

Task Find out the positioning statements of major Indian banks.

8.3 Generic Strategies

Generic strategies were first outlined in two books from Michael Porter of Harvard Business
School. These were “Competitive Strategy” in 1980 and “Competitive Advantage’’ in 1985. The
second book contained a small modification of the concept. The original version is explored
here.
Michael Porter made the bold claim that there are only three fundamental strategies that any
business can undertake. During the 1980s, they were regarded as being at the forefront of

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