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Positioned For Success – Market Positioning

What Exact;y Is Market Positioning?What Exactly is Market Positioning?

Every business holds a ‘position’ in its market. Market Positioning is generally considered as: ‘The customer perception of how competing suppliers are comparatively positioned relative to key buying criteria’

However, whilst customer perception remains perhaps the most important determinant of market positioning, there are other market positioning aspects that can be considered such as; competitor performance, markets & products. I will cover these later.

What Impact is Your Market Position Having on Your Business?

Experience would suggest that most SME’s don’t really think too much about or try to pro-actively manage their market position, at least strategically. This of course creates opportunities for those who do to create a competitive advantage over those who don’t. If you are in the ‘don’t ‘camp you may already be losing out. Your market position will ultimately determine:

Who your customers are, who your competitors are, how much money you can make, how big you can grow and what your future may hold

That makes it a pretty important aspect of business to understand. Let’s take each of those aspects in turn to see just how your market position is impacting on your business. Your market position will:

  • Determine who your customers are – obvious really, a key part of your market position is which markets you are operating in, which segments of those markets. This will determine which customers you can sell to and with whom you will be competing for their business.
  • How much money you can make – it is well understood that different industries and their related markets can generate very different overall levels of profitability. For example we see the Biotechnology field generating operating profits in excess of 30% whilst Pharmaceuticals sits at 22.5%, these contrast with Paper Products at 5.2% and Steel at 1.2%. Within individual sectors we can see large differences for example IT. Here we see Systems Software averaging 29.1% but Computer Hardware only 13.1%. These types of profitability differences exist in most industry sectors and markets. Understanding how your market position places you in terms of likely profitability can help direct effective strategic decisions. A close examination of your competition will give you an indication of your potential.
  • How big you can grow – a close examination of your market position will indicate the growth or decline rates of your chosen market(s). If these show low growth or decline, it would be a limiting factor to your growth potential. Your market position will also determine the number, size and strength of the competition you will have to beat. Most importantly your market position will ultimately determine the number, type and potential sales value of the customers you will be able to sell to.
  • What your future may hold – understanding markets and market positions will give you a clear indication of how the future might pan out for your business. By understanding market dynamics and trends, thinking how these might affect your market and your market position are all ways of trying to look into the future of your business.

So you can see how managing your market position should be a part of your strategic thinking. To read or download the full article follow this link