Bowman’s Strategy Clock
When considering how to position your product, it can be difficult to ensure you have looked at all options. Bowman’s Strategy Clock helps you work through the choices that might be available to you.
Bowman’s Strategy Clock is a model developed by Cliff Bowman and David Faulkner. The model looks at options for strategic positioning of a product to ensure the product has the most competitive position in the market.
Bowman’s Strategy Clock looks at these positions over two dimensions;
the price of the product and the perceived value to the customers.
Each position on the clock describes a different scenario:
1. Low Price and Low Added Value
In this position, your business is not competitive. Even though your product has a low price, the customer does not value it. The only way to be successful is to stay the cheapest on the market and hope that no one can undercut you.
2. Low Price
If you position your business here, your strategy is about being the low-cost leaders of the market. For this to be successful, you need to cut costs as far as possible. You will have a low-profit-margin on each product so, to make enough overall profit, you need to sell high volumes. In this position, you are opening yourself up to a price war with your competitors.
A hybrid position, as suggested by the name, has some reliance on low price but also some on product differentiation. The aim of taking this position is to convince customers that the product has added value as a result of the combination of product differentiation and relatively low price.
The differentiation position has the strategy of looking for the highest perceived value. To this end, branding is a very important element of the strategy, as is the quality of the product. A business needs to have these to achieve the higher price that this strategy requires.
5. Focused Differentiation
Focused differentiation positions the product at the highest price, hoping that customers are buying the product because of its perceived high value. This is the luxury end of the market and can lead to high-profit margins if successful. However, it does require segmentation, great promotion and consistently high quality.
6. Risky High Margin
This is an interesting position as it is effectively going for high prices without the additional increase in perceived value. It can be possible in the short term. However, long-term customers tend to move away towards better-perceived value for the same price or lower.
7. Monopoly Pricing
Where a business has the monopoly in the market, the customer only has the choice of whether to buy or not – there are no other competitors out there. In theory in this position, you can set any price you wish, in practice if a monopoly exists then it is likely to be heavily regulated to prevent this!
8. Low Market Share
In this position, the product has a mid-range price but low perceived value. Potential customers have the option of either paying the same price for a higher perceived value or paying less for the same perceived value. A product in this position is unlikely to succeed.
As you consider where on Bowman’s Strategy Clock you currently sit, you can then start to consider where you would like to position yourself and start to work on the actions you need to take to get there.