bowman’s strategic clock

Question 1

what does bowman’s strategic clock show?

Answer 1

• bowman’s strategic clock shows different positioning strategies based on different combinations of price (from low to high) and perceived added value or benefits (low to high).
• it shows that some positioning strategies are likely to be more successful than others

Question 2

what are the 8 positions on the bowman’s strategic clock?

Answer 2

1) low price and low added value
2) low price
3) hybrid
4) differentiation
5) focused differentiation
6) risky high margins
7) monopoly pricing
8) loss of market share

Question 3

what is the low price and low added value position (position 1)

Answer 3

• offering the poorest quality products and the lowest prices
• useful when in intense competition
• think about price wars
• sales volume must be very high to compensate for the very low profit margins
• low quality often means no repeat customers
• products often have short life cycle

Question 4

what is the low price position (position 2)

Answer 4

• companies competing in this category are the low cost leaders
• businesses have very low profit margins because they force the prices down
• due to the large volume of sales, low cost leaders can become the market leader and force other businesses to be price takers
• at the very least it forces a short term price war

Question 5

example of a business that is a low price competitor

Answer 5

• asda is a key example of a low price competitor

Question 6

what is the hybrid position (position 3)

Answer 6

• they offer products at a low cost but offer products with a higher perceived value than those of other low cost competitors
• volume is an issue here but these companies build a reputation of offering fair prices for reasonable goods
• the quality and value is good and the consumer is assured of reasonable prices
• this combination builds customer loyalty

Question 7

example of a business that is a hybrid competitor

Answer 7

good examples of companies that pursue this strategy are discount department stores

Question 8

what is the differentiation position (position 4)

Answer 8

• companies that differentiate offer their customers high perceived value
• this can include high prices and/or higher value products
• branding is important with differentiation strategies as it allows a company to become synonymous with quality as well as a price point

Question 9

example of a business that is a differentiation competitor

Answer 9

• nike is known for high quality and premium prices
• reebok is also a strong brand but it provides high value with a lower premium

Question 10

what is the focused differentiation position (position 5)

Answer 10

• these are your designer products: high perceived value and high prices
• consumers will buy in this category based on perceived value alone
• the product does not have to have anymore real value but the perception of value is enough to charge very large premiums
• highly targeted markets and high margins are the wats these companies survive

Question 11

examples of businesses that are focused differentiation competitors

Answer 11

• gucci
• armani
• rolls royce

Question 12

what is the risky high margins positions (position 6)

Answer 12

• sometimes companies take a gamble and simply increase their prices without ant increase to the aloe side of the equation
• when the price increase is accepted they enjoy higher profitability
• when it isn’t, there share of the market plummets until they make an adjustment to their price or value
• this strategy may work in the short term but it is not a long-term proposition as an unjustified price premium will soon be discovered in a competitive market

Question 13

what is the monopoly pricing position (position 7)

Answer 13

• this is classic monopoly pricing, in a market where only one company offers the goods or service
• as a monopolise you don’t have to be concerned about adding value because if customers need what you offer they will pay the price you set
• fortunately, for consumers in a market economy, monopolies do not last very long, if they ever get started and companies are forced to compete on a more level playing field

Question 14

what is the loss of market share position (position 8)

Answer 14

• any company that pursues this type of strategy will lose market share
• if you have a low value product, the only way you will sell it is on price
• you can’t sell day-old bread at fresh prices
• customers will not pay premium prices for low quality products you may fool people once but word spreads quickly