Strategic position

From CEOpedia | Management online

Strategic position is a term used to describe a company's overall competitive advantage in a given market. It takes into account factors such as a company's competitive advantages, market share, product and service offerings, pricing, and marketing and distribution strategies. A company's strategic position is used to determine the best way to position the company in the market and to develop strategies to maximize the company's competitive advantage.

Strategic position is the position of the business in relation to market and competitors. In order to achieve certain strategic position managers analyze the environment and the company (e.g. using TOWS analysis), then they create mission and vision of the company, and strategic objectives. Achievement of strategic objectives is possible through realization of different projects (related to marketing, production, etc.). If the objectives are fully achieved, the company takes planned strategic position.

Taking the strategic position is a bit more complicated, as at the same time competitors do the same and the market changes (new requirements of customers, change of fashion, alternative goods become available). Therefore, taking strategic position is a long process that involves many changes and adjustments.

Examples of strategic positions

These are only few examples. There are many more options:

  • Cost Leadership: The strategic position of cost leadership involves offering products and services at the lowest cost in the market while maintaining acceptable levels of quality and service. Companies that use this approach attempt to reduce their costs through economies of scale, improved operational efficiency, and the use of low-cost materials. Companies that adopt this strategy typically operate in highly competitive markets, and they use cost leadership to gain market share and profits.
  • Differentiation: Differentiation is a strategic position that involves offering unique products and services that are distinct from competitors. Companies that use this approach attempt to differentiate their products and services based on features, convenience, design, quality, and customer service. This approach is typically used in markets where there is high customer loyalty and brand recognition.
  • Focused Strategy: Focused strategy is a strategic position that involves targeting a specific market segment with specialized products and services. Companies that use this approach attempt to understand the needs and preferences of the target market and tailor their products and services to meet those needs. Companies that use this approach typically have a smaller market share, but they are able to generate higher profits from the segment they are targeting.

How to build strategic position?

Building strategic position is also known as positioning strategy. These are few steps. Some of them are described below in detail:

  1. Analyze the market and competitors: The first step in building a strategic position is to analyze the market and competitors. This involves researching the industry, understanding customer needs and preferences, and identifying competitors’ products and services. This analysis will provide valuable insights into the competitive landscape and the opportunities for a company to gain an edge in the market.
  2. Identify core competencies: The next step is to identify the core competencies of the company that can be used to gain a competitive advantage. These competencies can be related to the company’s products and services, finance, marketing and distribution, and other areas. Understanding the company’s core competencies will provide valuable insights into the strategic position that the company can adopt.
  3. Develop a strategy: Once the core competencies have been identified, the company can develop a strategy to leverage those competencies to gain a competitive advantage. This involves determining the company’s value proposition, pricing, promotion, and other elements of the strategy. This strategy should be focused on creating value for customers and differentiating the company from competitors.
  4. Implement the strategy: The final step is to implement the strategy by taking action. This involves executing the strategy through marketing campaigns, pricing changes, product innovation, and other initiatives. It is important to track the progress of the strategy and to make adjustments when necessary. By implementing the strategy, the company can gain a competitive edge and achieve its strategic position.

Components of Positioning Strategy

  • customer targets - Customers are differ in some aspects. The target customer is the person who is most likely to buy products. This is a much more segmented part of the target market because some aspects of this person have been identified. This may include a specific age, not a range, a specific level of income compared to a large group of income types, and the reasons why these customers most often buy your products.
  • competitor targets - The aim of the competition is to thoroughly get to know both current and potential competitors. The competition can be implemented in various ways. This manifests itself in an offensive or defensive attitude towards competitors and in the use of customary methods of competing in the given environment or methods that break the existing customs.
  • competitive advantage - A marketing strategy for competitive advantage must enable the company to produce goods or services at the same value at a lower price or in a more desirable manner. These conditions allow the production entity to generate more sales or better margins compared to its market rivals. If the company achieves a competitive advantage, it thus increases its freedom in the field of operating with prices and other instruments related to the material interests of buyers[1]

Effects of positioning strategy

  • technology development - New technology helps dynamically plan new locations, evaluate their performance, provide customers attitude to new offered products and services. With electronic technology and machines being produced and improved all the time, it was very likely that along with the positive aspects of these new advancements, people would also consider the negative aspects and look to criticise new technology.
  • Classification customer - The process of splitting customers into different group with similar level of interest. Choosing between competing products and services, customers select the proposition that meets their needs better than any other. The company must ensure that their offers is better than any other.
  • Brand benefits - The brand must be a persevering, unique and business identity.The designation of an effective and catchy company name helps clients to remind themselves of its existence[2]

Brand Positioning Strategy

Brand positioning is a specially designed marketing strategy, thanks to which it is possible to highlight the features of a given brand and its offer in comparison with the competition. Positioning is conducted on the basis of a given target group of clients, offer features, its category, origin, price, distribution channels and communication, as well as other types of parameters that allow the brand to be distinguished.

Brand positioning should not be carried out chaotically, but choose its various parameters. The most important thing is to choose one parameter around which you can build the whole concept. The more complex the positioning concept, the more difficult it is to achieve the intended goal. The simple definition of a brand allows it to be easily remembered by potential customers. It is necessary to carry out appropriate market research and on this basis determine the clients' needs. Thanks to this, you can stand out against the background of competing brands, while not copying their ideas[3]

SWOT Strategic Analysis

SWOT analysis is a structured approach to assessing the strategic position of an enterprise by identifying its strengths, weaknesses, opportunities and threats. Internal strengths and weaknesses are evaluated in terms of external opportunities and threats. It is a comprehensive method used to study the organization environment and analyze its interior. It also includes suggestions on how to conduct strategic analysis and take its results into account in strategic planning. All factors shaping changes in the organization may be beneficial or not conducive to change. We can distinguish internal and external factors here.

Clashing opportunities and threats with the strengths and weaknesses of the company allows to determine its strategic position. Properly made SWOT analysis creates an opportunity to use the strengths of the company and avoid weaknesses in areas where opportunities and protection against threats arise[4]


Strategic position — recommended articles
Market development — Competitive position — Criteria of market strategy evaluation — Concentration strategy — Market opportunity — Beachhead market — Brand value chain — Focus strategy — Value drivers

References

Footnotes

  1. ↑ Roger Brooksbank, (1994), 10-13
  2. ↑ Asaph Ngetha Kamau, Moses Kimani Wafula (2015), 2-5
  3. ↑ Patrick Hartmann, Vanessa Apoalaza Ibanez and F. Javier Forcada Sainz, 10-15
  4. ↑ Radha Balamuralikrishna, John C. Dugger (1995), 1-6

Author: Weronika Góra

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