Bowman's Spinning Clock

Question 1

How many positions on the clock?

Answer 1

8

Question 2

What are the 8 positions?

Answer 2

Low Price and Low added value
Low Price
Hybrid
Differentiation
Focused Differentiation
Risky High Margins
Monopoly Pricing
Loss of Market Share

Question 3

What are the 2 axis of the clock?

Answer 3

Price, Perceived value

Question 4

Describe low cost, low added value

Answer 4

Low Perceived value at a low price
Low profit margins
Allows for undercutting other business to gain customers
No value to product, competitors can offer better

Question 5

Describe low price

Answer 5

Medium perceived value, low price
Medium profit margins
Undercut competitors
Very competitive, market can be saturated

Question 6

Describe Hybrid

Answer 6

Higher perceived value than low price
Lower price
High profit margins due to volume of sales
Unique products
Risk of becoming stuck in the middle

Question 7

Describe Differentiation

Answer 7

Highest perceived value at medium price
High profit margins
High added value builds loyalty
Requires extensive R+D

Question 8

Describe focused differentiation

Answer 8

Medium to high perceived value
High price
High profit margins
Can gain a large market market share in a niche market
Requires extensive R+D

Question 9

Describe risky high margins, monopoly pricing, loss of market share

Answer 9

Low perceived value
High to medium price
Medium to low profit margins
Unlikely to win many customers, they may search for better options at a lower price

Question 10

How does size of a business influence choice of strategy?

Answer 10

Small = niche market, fewer resources (differentiate)
Large = lots of resources, differentiation

Question 11

How does core competencies influence strategy?

Answer 11

R + D= differentiation
Cutting costs= low cost
Both = hybrid

Question 12

How does customer perception influence strategy?

Answer 12

Inferior = low cost, monopoly
High quality and luxury = differentiate
Innovation = hybrid
mid value = low price, risky high margins

Question 13

How does customer base (target market) influence strategy?

Answer 13

Higher income = differentiation + focused
Lower income = low price, hybrid

Question 14

How does a business’ resources influence strategy?

Answer 14

Highly skilled staff differentiate - Theory Y
Theory X staff - low cost, low added value

Question 15

How do economic factors influence strategy?

Answer 15

Recession = low price
Boom - differentiate

Question 16

How do competitors influence strategy?

Answer 16

If they are cutting costs, be low price
If they are innovating, then differentiate
If there is a gap, be both

Question 17

How do stakeholders influence strategy?

Answer 17

Key players are most sig
Customers- low price
Shareholders- differentiate
Customers not important choose RHM, LMS, MP