A simple chart shows how much a customer will pay for a perceived beneﬁt. This is more than a marketing aid, it’s a powerful tool for competitive strategy. by Richard A. D’Aveni
That’s all that separated the launch of Apple’s revolutionary iPhone, on June 29, 2007, and Motorola’s nextgeneration Razr2 (pronounced Razr Squared) cellular telephone, on August 24. Before unveiling the successor to the Razr, which PC World magazine in 2005 ranked 12th on a list of the 50 greatest gadgets of the past 50 years, Motorola’s top management team was more worried than usual. With sales of the American communication giant’s other cellular telephones tapering off, the company’s fate rested squarely on the Razr2. Moreover, senior executives like chairman and CEO Edward J. Zander wondered if the iPhone had changed IGHT WEEKS.
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Mapping Competitive Position
110 Harvard Business Review
Harvard Business Review 111
Mapping Your Competitive Position
the competitive dynamics of the market in ways they hadn’t foreseen. Had the iPhone created a new niche or would it take the Razr2 head-on? How much extra could they charge for the Razr2’s new features? Should Motorola play up the Razr2’s noise-ﬁltering technology, which it had patented? The executives couldn’t wait for the results of focus group sessions or sample surveys. They needed a fast, yet reliable way of capturing changes that were emerging in the market so they could ﬁnalize strategy quickly. Like Motorola, most companies have to build fresh competitive advantages and destroy others’ advantages faster than they used to. As innovation pervades the value chain, they must migrate quickly from one competitive position to another, creating new ones, depreciating old ones, and
sumer electronics, where the number of features makes comparisons complicated; in markets like computer hardware, where technologies and strategies change all the time; and when products, such as insurance policies, are intangible. Seven years ago, I came up with a way companies could capture competitive positions graphically to serve as the basis for strategy discussions. Drawn by using simple statistical analysis, a price-beneﬁt positioning map provides insights into the relationship between prices and beneﬁts, and tracks how competitive positions change over time. Executives can use the tool to benchmark themselves against rivals, dissect competitors’ strategies, and forecast a market’s future, as we shall see in the following pages. By creating an accurate map of the competitive landscape, companies can also get
Whenever I’ve asked senior executives to map the positions of their company’s brands and those of key rivals, we end up confused and dismayed. matching rivals’. The process is disorderly and unstable. Senior executives desperately need new tools to help them systematically analyze their own and other players’ competitive positions in hypercompetitive markets. One way to do that is to track the relationship between prices and a product’s key beneﬁt over time. However, it isn’t easy to come to grips with either beneﬁts or prices. Most customers are unable to identify the features that determine the prices they are willing to pay for products or services, according to a 2004 survey by Strativity, a global research and consulting ﬁrm. Worse, 50% of salespeople don’t know what attributes justify the prices of the products and services they sell. If customers don’t know what they’re paying for, and managers don’t know what they’re charging for, it’s almost impossible for companies to identify their competitive positions. Whenever I’ve asked senior executives to map the positions of their company’s brands and those of key rivals, we end up confused and dismayed. Different executives place their ﬁrm’s offerings in different spots on a price-beneﬁt map; few know the primary beneﬁt their product...
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