8.2b Bowman's Strategic Clock

Question 1

What does Bowman’s Strategic Clock allow a business to do?

Answer 1

Choose the way to position its product or entire organisation in order to make it competitive

Question 2

What two concepts is the Bowman’s Strategic Clock based around?

Answer 2

• Price of product
• Perceived value of the product to the customer
  (these are the axes)

Question 3

The eight positions on Bowman’s Strategic Clock:

Answer 3

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 4

What can Bowman’s Strategic Clock be seen as an extension of?

Answer 4

Porter’s Generic Strategies

Question 5

What are the drawbacks of ‘low price and low added value’?

Answer 5

• No real competitive advantage can be achieved

- Competitors can enter the market and dilute your market share

Question 6

What is the feature of products in ‘low price and low added value’ position?

Answer 6

The product does not have differentiation from others

Question 7

Why would a business choose the ‘low price and low added value’ position?

Answer 7

If they wanted to be the ‘value for money’ option

Question 8

How does price compare to customer expectations in ‘low price and low added value’ position?

Answer 8

The price is equal to the perceived value, so customers low expectations are met

Question 9

How is ‘low price’ position achieved?

Answer 9

Through cost-minimisation, usually via economies of scale

Question 10

What is a drawback of the ‘low price’ position?

Answer 10

Price wars may occur

Question 11

How does price compare to customer expectations in ‘low price’ position?

Answer 11

They think that they are getting a bargain

Question 12

How does price compare to customer expectations in ‘hybrid’ position?

Answer 12

Product will have a low price, but will have value in the eyes of customers

Question 13

How is ‘hybrid’ position achieved?

Answer 13

Through product differentiation - adds perceived value e.g. convenience

Question 14

Example of a business in ‘hybrid’ position:

Answer 14

Ikea

Question 15

How does price compare to customer expectations in ‘differentiation’ position?

Answer 15

Mid-level price - customers perceive they are getting high quality products at a fair cost

Question 16

How is ‘differentiation’ position achieved?

Answer 16

Through strong marketing to create a brand image or a USP

Question 17

Drawback of ‘differentiation’ position:

Answer 17

Lots of market research is required

Question 18

Example of a business in ‘differentiation’ position:

Answer 18

Cadbury

Question 19

How does price compare to customer expectations in ‘focused differentiation’ position?

Answer 19

Business matches high perceived value of a product by charge a high price, usually in niche markets

Question 20

Drawback of ‘focused differentiation’ position:

Answer 20

Product has to be highest quality for success

Question 21

Advantage of ‘focused differentiation’ position?

Answer 21

Very high profit margins

Question 22

How does price compare to customer expectations in ‘risky high margins’ position?

Answer 22

High price but does not offer any added value, so the customers will perceive it as being expensive

Question 23

Disadvantages of ‘risky high margins’ position:

Answer 23

• Uncompetitive in long-term

- Only works until consumers find an alternative

Question 24

Example of ‘risky high margins; position:

Answer 24

Gyms

Question 25

How does price compare to customer expectations in ‘monopoly pricing’ position?

Answer 25

High prices taking no consideration of the value given to it by customers

Question 26

Disadvantage of ‘monopoly pricing’ position?

Answer 26

A lot of profit can be made through massive profit margins but most countries have laws preventing businesses abusing dominant market positions

Question 27

Example of a business in ‘monopoly pricing’ position?

Answer 27

Royal Mail before their privatisation

Question 28

How does price compare to customer expectations in ‘loss of market share’ position?

Answer 28

Sets a mid-range price for a product that the consumer sees as being low value

Question 29

Disadvantage of ‘loss of market share’ position:

Answer 29

Produced at low cost, so other businesses will offer same products in position 1 taking away its market share

Question 30

Example of a business in ‘loss of market share’ position:

Answer 30

Tesco

Question 31

Why are positions 6, 7 and 8 not suitable places for a business to be?

Answer 31

The price is greater than the perceived value in these positions so customers feel like they are being charged too much

Question 32

Example of a business in ‘low price and low added value’ position:

Answer 32

99p Store

Question 33

Example of a business in ‘low price’ position:

Answer 33

Primark

Question 34

Influences on which position between 1-5 to pick:

Answer 34

• If it is in a niche market (1 or 5) or if it is in a mass market (2, 3, 4)
• If it is large enough to create brand loyalty (3 or 4) or operate a cost leadership policy (1)
• If the customer sees the business as having high quality products (3, 4, 5) or a cheaper alternative to the mainstream (1)
• PESTLE

Question 35

Ways in which Bowman and Porter are linked:

Answer 35

• Cost leadership to position 2
• Differentiation to position 4
• Focus - cost to position 1
• Focus - differentiation to position 5