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To establish and maintain a distinctive strategic positioning, a company needs to follow six fundamental principles.
1. Start with the right goal: superior long term return on investment. Only by grounding strategy in sustained profitability will real economic value be generated. Economic value is created when customers are willing to pay a price for a product or service that exceeds the cost of producing it. When goals are defined in terms of volume or market share leadership, with profits assumed to follow, poor strategies often result. The same is true when strategies are set to respond to the perceived desires of investors.
2. A company's strategy must enable it to deliver a value proposition, or set of benefits, different from those that competitors offer. Strategy, then, is neither a quest for the universally best way of competing nor an effort to be all things to every customer. It defines a way of competing that delivers unique value in a particular set of uses or for a particular set of customers.
3. Strategy needs to be reflected in a distinctive value chain. To establish a sustainable competitive advantage, a company must perform different activities than rivals or perform similar activities in different ways. A company must configure a way it conducts manufacturing, logistics, service delivery, marketing, human resource management, and so on differently from rivals and tailored to its unique value proposition. If a company focusing on adopting best practices, it will end up performing most activities similarly to competitors, making it hard to gain an advantage.
4. Robust strategies involve trade-offs. A company must abandon of forgo some product features, services, or activities in order to be unique at others. Such trade-offs, in the product and in the value chain, are what make a company truly distinctive. When improvements in the product or the value chain do not require trade-offs, they often become new best practices that are imitated because competitors can do so with no sacrifice to their existing ways of competing. Trying to be all things to all customers almost guarantees that a company will lack any advantage.
5. Strategy defines how all the elements of what a company does fit together. A strategy involves making choices throughout the value chain that are interdependent; all a company's activities must be mutually reinforcing. A company's product design, for example, should reinforce its approach to the manufacturing process, and both should leverage the way it conducts after-sale service. Fit not only increases competitive advantage but also makes a strategy harder to imitate. Rivals can copy one activity or product feature fairly easily, but will have much more difficulty duplicating a whole system of competing. Without fit, discrete improvements in manufacturing, marketing, or distribution are quickly matched.
6. Strategy involves continuity of direction. A company must define a distinctive value proposition that it will stand for, even if that means forgoing certain opportunities. Without continuity of direction, it is difficult for companies to develop unique skills and assets or build strong reputations with customers. Frequent corporate "reinvention," then, is usually a sign of poor strategic thinking and a route to mediocrity. Continuous improvement is a necessity, but it must always be guided by strategic direction.
Positioning of the company in the market is very important. We can say it is a goal to locate a distinguished position for the company in the market between others. This can be in terms of rank in quality, market share, or specific services.
To set a strategy for positioning, we need to:
Study the real capabilities of the company / organization.
Study the norms, bench marks and conventional KPI’s of the market.
Study the current ranks and positioning of the competitors.
Make a comparison in terms of services, capabilities, market share and capacities.
Check the weakness and strength of the company / organization.
Based on the above, you should identify / select the position (s) that the company can achieve easily, and the position (s) that needs more setup, investment or long term plans. Positions (s) have to be prioritized.
Strategic positioning is a very tricky tactic, but it increases the probability of you reaching out only to the desired target market. That way most if not all your resources have concrete return value in terms of sales or increasing positive brand equity.
Healthy signs of good positioning are:
Differenciation
Healthy long term financial results
Potential eager consumers
Accordance with the company's philosophy
Find a niche for your product or service, and built your reputation in that niche. From there on, expand to other sectors. Always keep in mind your core principles (quality, low cost, good service...whatever it is).
Hold on to your strategy and establish yourself as a reliable partner.
Hello, some main principles are:
1. the right goal in mission
2. value proposition
3. distinctive value chain
4. continuity of direction
5. the main elements of company fit together
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