Strategic Positioning

Strategic PositioningStrategic Positioning

Businesses must be able to protect their profits. They do so by ensuring their products are both profitable and hard to recreate in the market. In other words, the unique value you create for your product is what will secure your profits. Many do so through strategic positioning.

Why is strategic positioning important?

According to the Harvard Business School’s Institute for Strategy and Competitiveness (ISC), “strategic positioning reflects choices a company makes about the kind of value it will create and how that value will be created differently than rivals.” In this case, ISC sees value as a function of differentiation and cost leadership.

A business looking to protect profits might offer items at a higher price while still delivering on quality (differentiation). Alternatively, they can choose to undercut other competitors in price but deliver a product of acceptable quality and low manufacturing costs (cost leadership).

Take Apple for example. Apple differentiates its products from its competitors by offering very high quality at an equally high price. This in turn increases the market demand for their products. Consumers have a baseline understanding of what quality to expect from Apple products. Additionally, they have created an ecosystem around their products (iOS, MacOS and iPad OS) which ensures a high degree of loyalty and incentive to buy more Apple products. For example, an individual with an iPhone would be incentivized to purchase a Macbook due to how compatible their respective softwares are- even though Apple charges a premium price for their products. Apple has secured their place in their market by providing their customers with a unique value proposition. Further, it is incredibly difficult for competitors to replicate. This in turn creates their competitive advantage.

strategic positioning

Utilizing your chosen positioning in every facet

If we go back to the ISC’s definition of strategic positioning, it becomes clear that Apple has made very clear and deliberate decisions on the kind of value they choose to create for their products. Apple stands for innovation and high quality. This is apparent in their device quality, software quality, premium pricing, packaging,  and color schemes. Further, even their ability to step away from old technology such as the headphone jack- and do so confidently. Apple lives and breathes this idea of high quality to the point of importing German manufactured curved windows for their new headquarter building in Cupertino, CA.

How to apply strategic positioning to your business

Regardless of your current market conditions, it is always important to have a well established strategic position and value proposition. Even in a market without competitors, it is always beneficial to have product security to lead to long term profitability. Samsung entered into the mobile technology market with their Galaxy line in 2009. They arguably failed to knock Apple off its throne because even then, since the release of the first iPhone in 2007, Apple created a unique product with innovation and quality that Samsung could not replicate.

There are various tools to help businesses better understand and create a strategic position within their market. Regardless of the tools used, it is always better to be ahead of the curve. This helps to prevent being caught off guard by new competitors and products entering into your market. Think of what is probably the most examined case study in business- the fall of Blockbuster.

strategic positioning

Sometimes, you can create value for your company in other ways. A simple example is to have an easy to use and helpful website. The unique value you create for your product needs to be conveyed to your market in a manner which is consistent with the quality and principles you uphold. Beating a dead horse here, but Apple’s website is another example of consistent quality portrayed to its end user. The website is innovative, incorporates large beautiful imagery and CSS effects to create those captivating scrolling images. Their website has become an extension of their unique value proposition and further demonstrates their commitment to quality.

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