Mickenson Pierre MAPPING YOUR COMPETITIVE POSITION By Richard

Mickenson Pierre MAPPING YOUR COMPETITIVE POSITION By Richard A. D’Aveni

Richard D’Aveni • Professor of Strategic Management at Dartmouth College’s Tuck School of Business in Hanover, New Hampshire • Author of three books: • Hypercompetition • Strategic Supremacy • Hypercompetitive Rivalries

Drawing Positioning Map • Price-Benefit Positioning Map • • Define The Market: Three Steps • • Relationship between primary benefit and the prices of all the products in a given market Identify the customer needs Choose the country or region you wish to study Track entire market or a segment Ties to last week’s presentation about strategic statement

Drawing Positioning Map (Contd. ) ¥ Choose the price and determine the primary benefit The benefit that explains the largest amount of variance in prices ¥ Doing this could be complicated for a product may offer more than one benefit ¥ Companies usually differentiate by focusing on a different benefit than competitors do ¥

Drawing Positioning Map (Contd. ) ¥ Success of strategies depends on values customers place on features ¥ Steps to determine that value: Draw up a list of all benefits ¥ Use unbiased data, no gut instinct or manager’s opinions ¥ After gathering data, use regression analysis ¥

Drawing Positioning Map (Contd. ) ¥ Regression Analysis¥ ¥ A method used to find out which benefit explains most of the variance in product’s prices More reliable than asking people Software packages like Excel, SAS Analytics, for instance allow executives to perform regression analysis Final Step in drawing the map ¥ ¥ Plot positions and draw the expected price line How much customers expect to pay on average to get different level of benefits

Mapping The Cell phone Market

How Apple Set the Pace with the i. Pod

Interpreting Positioning Maps ¥ Help companies penetrate unattained market Pinpoint benefits valued by customers ¥ Locate unoccupied or less competitive spaces ¥ Identify opportunities created by changes in the relationship between primary benefit and prices ¥ ¥ When interpreted within the context of industry and customer knowledge, they help explain why some enterprises

Valuing Intangible Benefits ¥ Companies spent a great deal of money to offer additional services without knowing if customers want them enough to pay for them ¥ Drain on corporate resources ¥ Avoid problems by calculating the premiums earned for intangible benefits

Fall of Harley-Davidson ¥ 2002, Harley-Davidson’s models earned large premiums compared with rival products ¥ 2004, new American rivals, such as Victory and Big Dog, earned 41% premium over Harley-Davidson ¥ 2006, they created a new image appealing to more social classes ¥ Stock price still floundered

Anticipating shifts in the value of benefits ¥ Companies can employ the price-benefit equation to get ahead of competitors Example of major U. S. hotel chain ¥ Major Factor or primary benefit: Customer Experience ¥ Rivals had problems competing ¥

Finding Paths of Least Resistance ¥ Extend ¥ the use of price-benefit maps Throw more data into the mix ¥ Example: Major U. S. automobile manufacturer Price-benefit map helped identify opportunity ¥ BMW capitalized on an opportunity in the market in the mid 1990’s ¥ When customers’ priorities shift radically, the benefits they desire also change ¥

Finding Opportunity in the Crowded Midsize-Car Market

Preempting Rivals ¥ Companies could use price-benefit maps to Predict the strategic intent of rivals ¥ Find ways of preempting them ¥ ¥ One method used is to draw maps based on projections of market trends ¥ Example “Primo”

Capturing an Evolving Strategy ¥ Use of past trends to map projected future market moves ¥ Good to eliminate competition ¥ Primo moved up and down the expected line Give customers a range of options ¥ As a result one of its competitors quit ¥

Conclusion ¥ Price-benefit maps sound early warnings ¥ Suggest responses to competitive threats ¥ Open executives' minds to many possibilities ¥ Allow executives to make decisions based on fact

The End ¥ Questions?