3.8.2 Strategic positioning: choosing how to compete

Question 1

What is strategic positioning?

Answer 1

Choosing how to compete with the other business in the market

Question 2

What is porters generic five forces?

Answer 2

This includes strategies that could be adopted in order to gain competitive advantage

Question 3

What are the factors of porters strategic matrix?

Answer 3

• Cost leadership
• Cost focus
• Differentiation leadership
• Differentiation focus

Question 4

What is having cost leaderhip?

Answer 4

Objective of becoming the lowest-cost producer in the industry

Question 5

What are some factors of cost leadership?

Answer 5

• Produce on large scale
• Associated with large scale firms offering standard products, easily accepted by customers
• Occasionally, this leader will discount its products to maximise sales

Question 6

What will cost leadership achieve or use?

Answer 6

• High levels of productivity
• HIgh capacity utilisation
• Negotiates the lowest prices for production
• Lean production methods
• Effective use of technology
• Access to most effective distribution channels

Question 7

What is cost focus?

Answer 7

Businesses seek a lower-cost advantage in just one or a small number of market segments

Question 8

What are some factors of cost focus?

Answer 8

• Products are basic and sometimes similar to higher-priced bus acceptable to sufficient customers
• Such products are called ‘me toos’

Question 9

What is differentiation focus?

Answer 9

Businesses aim to differentiate within just one or a small number of target market segments

Question 10

What are some factors of differentiation focus?

Answer 10

• Niche market
• They achieve higher prices than un-differentiated products through specialist expertise
• Firms ensure customers have different needs/wants
• Make sure competitors dont meed these needs

Question 11

What is differentiation leadership?

Answer 11

Business targets much larger markets and aims to achieve competitive advantage through differentiation across the whole of an industry

Question 12

What are the main factors of differentiation leadership?

Answer 12

• Involves selectin one or more criteria used by buyers in market and then positioning to meet those criteria
• Associated with charging premium price
• Higher prices reflect the higher production costs and extra value added features
• Gives customers clear reasons to prefer these products over others

Question 13

How can businesses to achieve differentiation leadership?

Answer 13

• Superior product quality
• Branding
• Industry-wide distribution across all major channels
• Consistent promotional support- often by advertising

Question 14

What is a competitive advantage?

Answer 14

An advantage of competitors gained by offering consumers greater value, by provising low prices or greater benefit and services justifying higher prices

Question 15

What is the importance of having a competitive advantage?

Answer 15

• Distinguishes company from its competitors
• Contributes to higher prices, more customers, brand loyalty
• Remains one of the main goals of any firm

Question 16

What are the challenges of maintaining a competitive advantage?

Answer 16

• Can be hard to maintain target audence when tastes and fashions are constntly changing
• Many competitors will try to outdo and bring new product ranges and deccrease prices even further