Worse, 50% of salespeople don’t know what attributes justify the prices of the products and services they sell. Most customers are unable to identify the features that determine the prices they are willing to pay for products or services, according to a 2004 survey by Strativity, a global research and consulting firm. However, it isn’t easy to come to grips with either benefits or prices. One way to do that is to track the relationship between prices and a product’s key benefit over time. Senior executives desperately need new tools to help them systematically analyze their own and other players’ competitive positions in hypercompetitive markets. As innovation pervades the value chain, they must migrate quickly from one competitive position to another, creating new ones, depreciating old ones, and matching rivals’. Like Motorola, most companies have to build fresh competitive advantages and destroy others’ advantages faster than they used to. They needed a fast, yet reliable way of capturing changes that were emerging in the market so they could finalize strategy quickly. Had the iPhone created a new niche or would it take the Razr 2 head-on? How much extra could they charge for the Razr 2’s new features? Should Motorola play up the Razr 2’s noise-filtering technology, which it had patented? The executives couldn’t wait for the results of focus group sessions or sample surveys. Zander wondered if the iPhone had changed the competitive dynamics of the market in ways they hadn’t foreseen. Moreover, senior executives like chairman and CEO Edward J. With sales of the American communication giant’s other cellular telephones tapering off, the company’s fate rested squarely on the Razr 2. Before unveiling the successor to the Razr, which PC World magazine in 2005 ranked 12th on a list of the 50 greatest gadgets of the past 50 years, Motorola’s top management team was more worried than usual. That’s all that separated the launch of Apple’s revolutionary iPhone, on June 29, 2007, and Motorola’s next-generation Razr 2 (pronounced Razr Squared) cellular telephone, on August 24. The maps even allow companies to anticipate-and counter-rivals’ strategies.Įight weeks. Using examples as varied as Harley-Davidson motorcycles, Motorola cell phones, and the New York restaurant market, Tuck professor D’Aveni demonstrates some of the many ways the maps can be used: to locate unoccupied or less-crowded spaces in highly competitive markets, for instance, or to identify opportunities created through changes in the relationship between the primary benefit and prices. What you get is a picture of the competitive landscape of your market, where all the products above the line command a price premium owing to some secondary benefit customers value, and all those below the line are positioned to earn market share through lower prices and reduced secondary benefits. Third, draw the map by plotting on a graph the position of every product in the market you’ve selected according to its price and its level of primary benefit, and draw a line that runs through the middle of the points. This is done through regression analysis, determining which of the product’s attributes (as described objectively by rating services, government agencies, R&D departments, and the like) explains most of the variance in its price. Second, track the price your customers actually pay (wholesale or retail? bundled or unbundled?) and identify what your customers see as your offering’s primary benefit. You can draw such a map quickly and objectively, without having to resort to costly, time-consuming consumer surveys or subjective estimates of the excellence of your product and the shortcomings of all the others.Ĭreating a positioning map involves three steps: First, define your market to include everything your customers might consider to be your product’s competitors or substitutes. A price-benefit positioning map helps you see, through your customers’ eyes, how your product compares with all its competitors in a market.
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