You can gain an advantage through strategic positioning. Let’s review the three kinds of strategic position.
Variety-based (serving few needs of many customers)
- Jiffy Lube offers many people a way to buy automotive oil
- Boost Juice offers many people a refreshing, on demand smoothie
- Medium allows many people to read and publish blogs
- Trello allows many people to keep track of tasks
- MailChimp allows many people to send email campaigns
You’re a specialist. You do one niche thing really well for a lot of people.
Needs-based (serving all the needs of a given customer segment)
- IKEA makes any and every kind of furniture to home-makers
- Bunnings has everything hardware & outdoor for DIY enthusiasts
- Microsoft Office is a complete toolset for word processing
You’re a one-stop-shop. You do everything for one set of people.
Access-based (serving broad needs of many people in a narrow market)
- Carmike Rural Cinema operates in cities with less than 200,000 people
You’re the big fish in a little pond. People don’t have a lot of choice but to use you.
At the heart of these positions is the old adage “if you try to please everyone, you end up pleasing no-one“. By taking a strong position, you focus your resources on pleasing a group of people consistently.
How will you compete at a given position?
Let’s assume you are assessing a new market opportunity and have a position in mind. There are already some incumbents. How will you survive? Why would anyone choose you?
Or perhaps you’re an existing product and you’re struggling to compete. How do you make that shift to get an edge on competitors?
There are two key decisions to make from within your position:
- Whether you will offer better quality, or worse
- Whether you will offer a higher price, or lower
These form the axis of the Jobs-To-Be-Done Growth Strategy Matrix (Ulwick, 2016).
Let’s look at when each of these approaches will work.
Better quality + more expensive: this will work when there are underserved customers. These people have an unmet need and will pay a premium for it to be filled. This is a differentiated strategy. These are the premium products in any category:
- Tiffany rings
- Boston Consulting Group
Better quality + less expensive: this works for all customer types, if you can pull it off. Either you have a new technology, a way of working, or are willing to survive on lower profits (ramen, anyone?). This is a dominant strategy. Through innovation, many of the most successful startups have found a better way to serve a need at a lower price:
- Uber X
Worse quality + more expensive: this can work for customers with limited options, aka an access-based position. If you’ve ever bought food from a cinema, you’ll know about getting a worse product for a higher price. This is a discrete strategy.
- Cinema popcorn
- Auto mechanics in rural areas
- Windows ME
Just kidding – not even those with limited options should have gone near Windows ME.
Worse quality + less expensive: this is the other hotbed for startups to play in. This works for overserved markets. Where existing products are too expensive and too high a quality for what people want. This is the disruptive strategy.
- IKEA furniture
- Dollar Shave Club
- Air BNB
Now, let’s do a health check. Where does your opportunity or your existing product fall on that quadrant? You want to be anywhere but “stuck in the middle” (a Michael Porter term).
Some argue that there is a case for “the midde”. A sustaining strategy of doing things slightly better or slightly cheaper. This may work for incumbents trying to hold onto market share.
Many market leaders of the past have become extinct trying to hold on to the middle. From Blockbuster, to Nokia, to Yahoo, you simply can’t survive in the middle.
Any old school Dungeons and Dragons player knows you don’t become a generalist; better is to ‘min/max’. This means you minimise one statistic (e.g. Magic) to maximise another (e.g. Strength). You make the trade-off and go all the way with it, to become the ultimate Magician or ultimate Warrior; not the ruggard-innkeeper-that-can-perform-a-light-show.
The heart of strategy is choosing what not to do, so you can nail the things you are doing. Min/Max your product. Don’t be stuck in the middle.
Porter, M. (1996). What is strategy?. Harvard Business Review, (Nov-Dec 1996).
Ulwick, A. (2016). Jobs to be done. [s.l.]: Idea Bite Press.