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.
PERCEIV
PRICE ED
VALUE
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.
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.
Profit margins on each product
are low, but the high volume of
output can still generate high
overall profits. Competition is
usually intense – often involving
price wars.
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.
A differentiation strategy aims 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.
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.
A high risk strategy that likely to fail
– eventually. 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, this is an uncompetitive
strategy.
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 monopolies
are usually tightly regulated to prevent
them from setting prices as they wish.
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).
