Name: Zain Ul Haq Malik
Class: BBA 8th Bowman’s Strategy Clock of Ramada
Roll#: 161242
Bowman’s Strategic Clock is a model that explores the options for strategic positioning i.e.
how a product should be positioned to give it the most competitive position in the market.The
purpose of Bowman's Strategic clock is to illustrate that a business will have a variety of
options of how to position a product based on two dimensions: price and perceived value.
Low Price and Low Value Added (Position 1)
This is not a very competitive position for a business. The product is not differentiated, and the
customer perceives very little value, despite a low price. This is a bargain basement strategy.
The only way to remain competitive is to be as “cheap as chips” and hope that no-one else is
able to undercut you.
Low Price (Position 2)
Businesses positioning themselves here look to be the low-cost leaders in a market. A strategy
of cost minimisation is required for this to be successful, often associated with economies of
scale. Profit margins on each product are low, but the high volume of output can still generate
high overall profits.
Competition amongst businesses with a low price position is usually intense – often involving
price wars.
Hybrid (Position 3)
As the name implies, a hybrid position involves some element of low price (relative to the
competition), but also some product differentiation. The aim is to persuade consumers that
there is good added value through the combination of a reasonable price and acceptable product
differentiation.
This can be a very effective positioning strategy, particularly if the added value involved is
offered consistently.
Differentiation (Position 4)
The aim of a differentiation strategy is to offer customers the highest level of perceived added
value. Branding plays a key role in this strategy, as does product quality. A high-quality
product with strong brand awareness and loyalty is perhaps best-placed to achieve the relatively
prices and added-value that a differentiation strategy requires.
Focused Differentiation (Position 5)
This strategy aims to position a product at the highest price levels, where customers buy the
product because of the high perceived value. This the positioning strategy adopted by luxury
brands, who aim to achieve premium prices by highly targeted segmentation, promotion and
distribution.
Done successfully, this strategy can lead to very high profit margins, but only the very best
products and brands can sustain the strategy in the long-term.
Risky High Margins (Position 6)
This is a high risk positioning strategy that you might argue is doomed to failure, eventually.
With this strategy, the business sets high prices without offering anything extra in terms of
perceived value. If customers continue to buy at these high prices, the profits can be high. But,
eventually customers will find a better-positioned product that offers more perceived value for
the same or lower price.
Other than in the short-term, Risky High Margins is an uncompetitive strategy. Being able to
sell for a price premium without justification is tough in any normal competitive market.
Monopoly Pricing (Position 7)
Where there is a monopoly in a market, there is only one business offering the product. The
monopolist doesn’t need to be too concerned about what value the customer perceives in the
product – the only choice they have is to buy or not. There are no alternatives. In theory the
monopolist can set whatever price they wish. Fortunately, in most countries, monopolies are
tightly regulated to prevent them from setting prices as they wish.
Loss of Market Share (Position 8)
This position is a recipe for disaster in any competitive market. Setting a middle-range or
standard price for a product with low perceived value is unlikely to win over many consumers
who will have much better options (e.g. higher value for the same price from other
competitors).
Overview
Looking at the Strategy Clock in an overview, we see that three of the positions (6, 7 and 8)
are uncompetitive. These are the ones where price is greater than perceived value. Provided
that the market is operating competitively, there will always be competitors that offer a higher
perceived value for the same price, or the same perceived value for a lower price.
In case of Ramada:
Ramada uses focused differentiation strategy. As products/services are positioned at highest
price levels and they are bought and utilized due to high perceived value. It has projected its
image as a luxurious and high-end brand. If we take a look towards their categorization of
rooms and tariffs, they charge against it, we will understand its placement in focused
differentiation.
If we take a look at following four categories of rooms i.e.
1. Single
2. Deluxe
3. Royal Executive
4. Presidential
1. Single:
Maximum occupancy for this room is 3 adults. Pool view is available. Also, a king size bed is
provided in the room.
Charges/day: 20,000+Tax.
After discount: 13000+Tax
2. Deluxe:
Maximum occupancy is for 2 adults. A queen size bed is provided in the room. Luxurious
designs available.
Charges/day: 28,500+Tax.
After discount: 17000+Tax
3. Royal Executive:
Maximum Occupancy is for 3 adults. 1 king size bed is provided. Also, lounge access is
provided. It is equipped with a living room and kitchen ate.
Charges/day: 70,000+Tax.
After discount: 40,000+Tax
4. Presidential:
Maximum occupancy is 2 adults. 1 king size bed is available. Access to executive lounge is
given. It has living room with sitting area of 15-20 people. It has its own kitchen ate,
microwave and access to balcony.
Charges/day: 120,000+Tax.
After discount: 105,000+Tax
Other services:
Pipe system air-conditioning (heating and cooling possibilities are available for all
seasons)
LCD televisions
Free wireless internet services in the rooms and the hotel overall
An in-room safe box large enough to accommodate a laptop
24 hours room service
Minibar
Iron & Iron board (Complimentary)
Complimentary tea, coffee, coffee mate, sugar varieties and two bottles of water
All rooms have business desks
Rooms have either one king-size bed or twin beds
Access to swimming pool & Health Club
Laundry Services are available on Request
Pick and drop on request.
By offering variety of quality services at higher rates, Ramada chose to operate through focused
differentiation. Their segmentation is highly targeted they target lower-upper and upper-upper
class. In some instances, upper-middle class as well. Yet, they manage to run their operations
smoothly and earn profits. All the foreign delegates, sportsmen etc. use their services to have
a high-end luxury experience.
Perceived value of customers is high, due to many reasons ranging from quality of services to
having dinners and stay alongside elite class.
