Marketing Strategy and Competitive Positioning pdf ebook

Figure 18.4 
Basic positioning 
options
Low price
High price
Basic quality
Limited service
Imitation
Undifferentiated
Standardised
Premium quality
Superior service
Innovation
Differentiated
Customised

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COMPETITIVE POSITIONING STRATEGIES
18.3.1 Price positioning
Costs must be kept in check. By this we mean at least as low (or preferably lower) than competi-
tors’, in order for a low-price position to be achievable or sustainable. If there is no cost advan-
tage, price wars may put the instigator at a financial disadvantage and the whole positioning 
strategy may not be sustainable. Positioning as the low-price supplier requires strong inside-
out and spanning capabilities. Effective cost-control systems (through activity-based costing) 
are needed, not only within the firm’s own operations but also within suppliers’ operations. 
Procurement of raw materials and other factor inputs is organised around keeping costs to a 
minimum. Distribution logistics are similarly managed for minimum cost (see Figure 18.5).
While the low-price position is a viable option for some firms, there is a constant need to 
work at keeping costs down, especially when new competitors enter the market with new 
operating methods or unique assets that can be used to undercut the costs of incumbents.
For a price positioning strategy to be successful in the marketplace, the existence of a 
viable, price-sensitive customer segment is also required. In most markets there are custom-
ers who will buy primarily on price. Also, in most markets, price-sensitive customers have 
been very much present of late, given the global economic conditions. Price positioning can 
be successful where there is a clearly defined, price-sensitive sector of the market and the 
firm has a cost advantage in serving that market.
Nonetheless, reliance purely on low-price-based positioning also carries risks. Those 
adopting this approach must be constantly mindful of opportunities to reduce costs and 
very defensive of any (no matter how small) increase. Ryanair (the low-cost Irish airline) is 
a good example of an organisation that ruthlessly pursues cost reduction and cost control. 
It is very clear regarding the value it creates for the customers it serves, and also the value it 
needs to create. Additionally, it has aligned its systems and processes throughout the value 
delivery chain to deliver just that.
Some firms position at the other end of the price spectrum. They deliberately price their 
products and services more highly than competitors to create exclusivity for their offerings. 
High-price positions are usually accompanied by higher-quality, branded offerings requir-
ing strong reputations and clearly superior images (such as that of Harrods department 
store in Knightsbridge). The competencies required for high-price (premium) positions to 
be effective are focused on the ability to create a superior or exclusive image that customers 
are willing to pay a premium to be associated with. Brand assets, in particular, need to be 
built through the use of creative promotional campaigns and associations.
18.3.2 Quality positioning
Positioning as a high technical-quality (grade) supplier also requires effective internal control 
systems, especially quality assessment and quality assurance. Beyond control, however, it