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This document is authorized for educator review use only by K M Baharul Islam, Indian Institute of Management - Kashipur until January 2018. Copying or posting is an infringement of
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them systematically analyze their own and tives like chairman and CEO Edward J. A simple chart shows how much a customer will pay for a perceived t benefit. Zander other players’ competitive positions in hyper- wondered if the iPhone had changed the com. and Motorola’s next-generation finalize strategy quickly. Before unveiling the build fresh competitive advantages and de- successor to the Razr. rP Mapping Your Competitive Position yo by Richard A. That’s all that separated the yet reliable way of capturing changes that launch of Apple’s revolutionary iPhone. most companies have to telephone. a global research sessions or sample surveys. it isn’t easy to come to How much extra could they charge for the grips with either benefits or prices. on were emerging in the market so they could June 29. Worse. ALL RIGHTS RESERVED. This is more than a marketing aid. competitive markets. Senior tapering off. petitive dynamics of the market in ways they One way to do that is to track the relation- Do hadn’t foreseen. depreciating old ones. they must migrate quickly from one competi- ola’s top management team was more worried tive position to another.783.7860 . COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. Had the iPhone created a ship between prices and a product’s key bene- new niche or would it take the Razr2 head-on? fit over time. However.edu or 617. creating new ones. munication giant’s other cellular telephones The process is disorderly and unstable. Indian Institute of Management . the company’s fate rested executives desperately need new tools to help squarely on the Razr2. With sales of the American com. and consulting firm. D’Aveni op tC Eight weeks. which PC World maga.Kashipur until January 2018. No greatest gadgets of the past 50 years. Copying or posting is an infringement of copyright. As innovation pervades the value chain. on August 24. than usual. Moreover. Most cus- Razr2’s new features? Should Motorola play tomers are unable to identify the features up the Razr2’s noise-filtering technology. senior execu. 50% of salespeo- harvard business review • november 2007 page 1 This document is authorized for educator review use only by K M Baharul Islam. Permissions@hbsp. according to a couldn’t wait for the results of focus group 2004 survey by Strativity. Motor. 2007. that determine the prices they are willing to which it had patented? The executives pay for products or services. and matching rivals’. it’s a powerful tool for os competitive strategy. Razr2 (pronounced Razr Squared) cellular Like Motorola. stroy others’ advantages faster than they used zine in 2005 ranked 12th on a list of the 50 to.harvard. They needed a fast.

you must also consider other pricing parame- panies could capture competitive positions ters. College’s Tuck School of Business in given market. turbines. Different executives competitors.edu) is the Professor of primary benefit that a product provides to cus. we end up con. D’Aveni (richard. rather than Strategic Management at Dartmouth tomers and the prices of all the products in a rely on gut instinct or top managers’ opinions. when you chose which market to focus on. iden- os prices of the products and services they sell. Executives can in the market under study. and so on. decide if you on a price-benefit map. you need to specify the scope of your nologies and strategies change all the time. You yo lack of understanding about competitive can create different maps by changing these positions is palpable in industries such as frames of analysis. as we shall see in the fol. vides insights into the relationship between These choices depend on the yardstick that tC prices and benefits. restaurants. Let me show you how customers. in mary benefit. success of strategies depends on the value that motorcycles. cast a market’s future. and fore. a price-benefit position. Dartmouth. dissect competitors’ strategies. Mapping Your Competitive Position t ple don’t know what attributes justify the market in which you’re interested. consumer electronics. However. and managers don’t know what and services that satisfy those needs. if you wish to ex- estimate the benefits of their own offerings plore the retail or wholesale market. few know the primary want to track the entire market for a product benefit their product offers. harvard business review • november 2007 page 2 This document is authorized for educator review use only by K M Baharul Islam. but op Seven years ago. where tech. fused and dismayed. Permissions@hbsp. you must specify the boundaries of the product ratings of independent organizations. You can draw on the Hypercompetition (Free Press. A product offers get everyone in the organization on the same several benefits: basic functions. you must first draw up a list of the benefits offered by all the differ- Drawing Positioning Maps ent products or brands in the market and Do In its simplest form. such as insurance poli. Drawn by using simple statistical prices with transaction costs or without them. where the number of Choose the price and determine the pri- features makes comparisons complicated. I came up with a way com. cellular tele. nologies. retailing. it’s almost impossible for aren’t blindsided by fresh entrants. or unusual offerings that take care of tions. customers use in making purchasing decisions tive positions change over time. He is the three steps. including Define the market. ent benefit than competitors do.Kashipur until January 2018. new tech- companies to identify their competitive posi. By creating an accurate map of that explains the largest amount of variance in the competitive landscape. including automobiles. tify the consumer needs you wish to under- If customers don’t know what they’re pay. You have implicitly decided and when products. or the way products are used dif- place their firm’s offerings in different spots fer widely across borders. and ships. It’s best to limit the brands and those of key rivals. place on features. I have applied this tool in more than 30 of use. or only a specific segment. During my consulting and research tures. aesthetics. ease work. First. rectly. while gathering data. Besides. analysis.harvard.daveni@ ing map shows the relationship between the benefits. are intangible. whether to study retail or wholesale prices cies. To draw a meaningful today than ever before. and tracks how competi. Identifying the primary benefit—the benefit lowing pages. There are more sources of hard data author of three books. gather data on how customers perceive those Richard A. the phones. companies can also prices—can be complicated. You must choose whether to compare ini- graphically to serve as the basis for strategy tial prices or prices that include life cycle costs. Second. Remember to be use the tool to benchmark themselves against consistent about the price definition you use rivals. To determine that value. not companies. Copying or posting is an infringement of copyright. Once you’ve defined the mar- markets like computer hardware. New Hampshire. Indian Institute of Management . so you they’re charging for. artificial sweeteners. and the prices of unbundled or bundled offers. stand. choose the country or re- rP to map the positions of their company’s gion you wish to study. You should cast a wide net for products ing for. The you’re going to track products or brands. serviceability. geographic scope of the analysis if customers. additional fea- No page. durability. a price-benefit positioning map pro. and they all over.7860 . advanced differentiate products by focusing on a differ- materials. ket. and if while underestimating those of rivals. map.783. Whenever I’ve asked senior executives those needs. Finally. to create and read a positioning map. You should use unbiased data. Creating such a map involves so that you estimate the benefits’ value cor- Hanover. analysis of prices. discussions.edu or 617.a. tires. 1994). companies usually industries.

like primary benefit. free sweetener leaves an aftertaste. and Ed. Your own R&D department probably levels of the primary benefit. Permissions@hbsp. efits.783. Indian Institute of Management . instance—allow executives to perform regres. tioning map by plotting the position of every ministration. you can combine them pay less for the same level of dieting benefit into a single benefit by creating an index or the sweetener gives them. you are ready to draw a posi- the U. possibilities in theory. other words. Sometimes. half the points should lie above ple how much they are willing to pay for each the line and half should lie below. If several price below what people would usually pay for benefits correlate with one another. it will also yield an incre. through the middle of the cloud of points. for accident but because of companies’ strategies. J. In such cases. also provide information on be an oversimplification. Companies can slot their offerings below ences in the prices of competing offerings the line to maximize market share by simply while controlling for the impact of all other charging less than expected. websites. such as Zagat company’s product (or brand) in the market- and Michelin. and SPSS 15. a product’s Do ation in prices than the other benefits. employ regression analy. Enterprises position a product or brand above No sion analyses. some secondary benefits to attract price- mental r-square accounts for more of the vari. line—that is. the line that best fits the points For example. Research feature because consumers often can’t explain shows that in almost all industries. Consumer guides. is likely to pay for a higher level of the primary tion on audio and video systems’ reproduction benefit. or they may drop benefits.S.Kashipur until January 2018. a straight how they make their choices and they often line that rises to the right fits the data best. Industrial catalogs pub. Using regres. by the added or reduced value associated harvard business review • november 2007 page 3 This document is authorized for educator review use only by K M Baharul Islam. the price-benefit positive slope. Such positioning maps may rP Ward’s AutoWorld.harvard. Curved lines and negatively sloped lines are Regression analysis examines the relation. by simply raising the price in the short run. and people (product benefits) and creates a mathematical tend to pay more for a higher level of benefit. which they can do regression equation. Mapping Your Competitive Position t such as Consumers Union. data by taking the slope associated with the Once you’ve gathered data on products’ portion of the price-benefit equation that links benefits and prices.0 for Windows. mental r-square statistic for each independent They can also do so by enticing customers to variable. such as TripAdvisor place according to its price and its level of and the Tire Rack. That statistic shows the extent to pay a higher price for desirable secondary ben- which each benefit contributes to the differ. You can find the line that best fits the quality. vehicle dealers gather warranty on the map. people will ences. if a calorie- suggests they jointly influence price differ. and trade publications. deviations a scale—a common practice in marketing in price above or below the line are caused research. Plot positions and draw the expected- os munds. In addition. that that level of benefit. as well as on government agencies. in op sion analysis is more reliable than asking peo. Environmental Protection Agency and primary benefit.7860 . Copying or posting is an infringement of copyright. Products lie on either side of the line not by SAS Analytics. so it’s secondary attributes may actually reduce its the most important driver of price. The benefit with the highest incre. Markets tend to converge case. Many software packages—Excel. but they show the products and services. collect informa. the yo tracks scientific data: Consumer electronics line’s slope tells us how much more a customer manufacturers. sensitive customers.edu or 617. but they describe short- tC ship between a dependent variable (in this lived phenomena. National Highway Traffic Safety Ad. don’t do what they say. The line shows how much custom- information to track how reliable automobiles ers expect to pay on average to get different are. Or you can look sis to find out which benefit explains most of at the map and draw a line that runs roughly the variance in products’ prices. equation). relative positions of competitors on a com- lish detailed product specifications. model of that relationship called the regres. especially mon scale. For example. Power. for high-tech and industrial goods. When you have identified the the U. Thus. Distributors Finally. you must draw the expected-price often collect details about product benefits. for instance. so those trends create a straight line with a sion equation (in this case. price) and several independent variables on the same price for each benefit. When the software finds the the line to maximize profits.D. the primary benefit to prices.S. like price line.

Motor- ola’s Q. as Apple quickly dropped the price by $200 in September.S. iPhone seems to be pioneering. MOTOROLA V325 BASIC LG VX9800 NOKIA N80 In the market for downloadable-music play- MOTOROLA L2 MOTOROLA Q ers. touch screens) and advanced connectivity Let me illustrate the process and purposes of (Bluetooth. which might have been anticipated in view of Apple’s iPod strategy. Like all the other op sis customers paid on average $28 more for cellular telephone manufacturers. in four of the five groups. In early June 2007. Permissions@hbsp. cellular telephone market when Apple fall. For example. and according to my analy. the results suggested the com- that advanced functionality accounted for pany should think twice before emphasizing yo most of the difference in the prices of cellular that as one of the Razr2’s main benefits. the iPhone will have a major im- puts pressure on many players in the superpremium segment. Indian Institute of Management .7860 . will be outclassed. Motorola will face a stiff challenge MID- RANGE because Apple is deploying its iPod strategy in MOTOROLA RAZR V3c Do iPHONE (Sept. my sets. Motorola vanced functionality accounted for 68% of the had wisely spread its bets. because of the added pricing short-lived though.S. in the midrange group. albeit to a lesser degree: display tioned products on both sides of the expected- price line. I mean When I mapped the competitive positions high-tech features like the ability to play music that various products occupied in the market- in the MP3 format and to snap high-resolution place and drew the expected-price line. Samsung. high-resolution screens. SAMSUNG A800 iPHONE (June) Expected- PREMIUM PALM TREO 700p price line However.edu or 617. it had no each advanced feature in a cellular telephone. but it had posi- ferences. Copying or posting is an infringement of copyright. the com- Primary benefit: advanced functionality pany slashed the price of the iPhone by 33% in harvard business review • november 2007 page 4 This document is authorized for educator review use only by K M Baharul Islam. 3G. which work with the calling ers. Ad. In like vein. and Wi-Fi technologies). those to hygiene factors (indicated by the fact We also gathered all the data we could find on that their r-square values were extremely the iPhone. and a QWERTY keyboard.) the cellular telephone market. I found photographs. A regression analysis showed conversations. Although Motorola has patented a tech- features. We drew up a list of the phones’ low). which Plotting prices against the primary benefit products offer in a market makes it easy suggested that the segment was becoming to see how that market looks to customers. the presence of sophisticated five clusters of mobile phones (see the exhibit e-mail software. No move.5% of the difference in the prices of hand- in launching the Razr2. consumer ratings of those features. The LG VX9800 had positioned itself launched the iPhone in June 2007. This price-benefit positioning map sug- crowded and prices would soon go into free- gests there were five segments in the U. drawing a positioning map by returning for a These three benefits together accounted for moment to the challenges that Motorola faced 80. The power of its superb color display. nology that filters out background noise from and retail prices. the Razr V3c was almost exactly on the line. and LG had also positioned devices below the line. While Price some customers are likely to postpone pur- ULTRA- PREMIUM chases of cellular telephones until they can SUPER- SAMSUNG A990 PREMIUM afford the iPhone. Mapping Your Competitive Position t with secondary benefits or pricing strategies quality (color. and os designed to milk or build market share. product in the ultrapremium segment that the Two other benefits contributed to price dif. “Mapping the Cell Phone Market”). positioning products variation in prices. it is unlikely to have an PRICEY impact on the rest of the market—initially. clearly Clearly. Apple started in a high-price. tC whereas the Razr SLVR L7 and Razr V360 were Mapping the Cell Phone Market below it. high-benefits ULTRA- LOW position but rapidly moved down and to the MOTOROLA SLVR L7 right by lowering the price for the same pri- mary benefit (see the exhibit “How Apple Set LG CG300 MOTOROLA V195 MOTOROLA V360 the Pace with the iPod”). cellular service providers.Kashipur until January 2018. pact on the superpremium segment. carving out a new ultrapremium niche. That was above the line.783. for example. By advanced functionality. I found that competition had reduced plans of many U.harvard. Sony Ericsson. Contrary to the popular perception that research assistant and I spent a week collecting battery life and the clarity of sound while rP data from public sources on 40 “unlocked” cel. making and receiving calls matter to consum- lular telephones. telephones.

retain customers by offering intangible bene- tend with a line of iPhones that will match fits. such as Victory and Big Dog. locate unoccupied or less earned large premiums compared with rival competitive spaces. as measured by displacement. to push those of the out knowing if customers want them enough Razr2’s advanced functions that consumers to pay for them. Motorola would money to offer supplementary services with- do well. If it does the same with nies. we concluded that the in market strategy clear. scape. Dell. In this example.S. 10GB 20GB 30GB 40GB 40GB PHOTO 40GB However. That has made it tough for competitors like offered. most of Harley-Davidson’s models customers value. New MINI 4GB MINI 6GB American rivals. and Suzuki. Kawasaki.Kashipur until January 2018. tomers want it? Perhaps—but it comes second That was driven home to me when my col- to the advanced functionality they are more leagues and I conducted an analysis of the U. identify opportunities products. they spend a great deal of Motorola’s full line of Razrs. They can pinpoint the benefits that in 2002. According to a regression analysis. the 2004 positioning map revealed PHOTO 60GB a different picture. ex- Positioning maps help companies penetrate plained much of the difference in motorcycle op the fog that shrouds the competitive land. Mapping Your Competitive Position t early September. Many compa- uncontested spaces.7860 . Because we had ac- How Apple Set the Pace with the iPod counted for the impact on prices of all physical Plotting price against the primary benefit over time for a product line can make shifts features and attributes. especially PHOTO 60GB among the baby boomer generation. two months after its launch. 10/01 7/02 4/03 10/03 1/04 10/04 2/05 These benefits had helped Harley-Davidson iPod iPod iTunes Store iTunes Store Apple responds iPod Photo create the impression that its customers were launch becomes opens online becomes to entries by introduced compatible PC compatible Sony. created by changes in the relationship be- os If Apple continues to use the same strategy. The SHUFFLE 512MB market leader was leaving money on the Primary benefit: functionality table. and Creative to gain toeholds. Companies can avoid yo features. Do cus. in the early 2000s. motorcycle market. explain why some enterprises’ products and Apple also created a full line of iPod brands perform better than others do. The price of a Harley was Do 5GB 10GB 15GB 20GB 20GB PHOTO 40GB still higher than that of equivalent Japanese PHOTO 30GB motorbikes. on aver- age. rather than add more secondary on corporate resources. willing to pay for. seek to the iPhone. When interpreted within the context of will then become a basic phone because it industry and customer knowledge. Apple has stayed ahead in the MP3-player premium was most probably the result of the market since October 2001 by giving customers more functionality and additional intangible secondary benefits the company storage capacity at ever lower prices. earn for intangible secondary benefits. in that case. Copying or posting is an infringement of copyright. they help doesn’t offer the iPhone’s advanced functions. The Razr2 gies. that they enjoyed an adventurous life- with IBM PCs Creative Price style. tween the primary benefit and prices. rP products.harvard. MINI 4GB earned a 41% premium over Harley-Davidson SHUFFLE 1GB for the same level of engine capacity. To that end. Indian Institute of Management . and that they belonged to a macho club. making it tough for rivals to find Valuing intangible benefits. variations in en- Interpreting Positioning Maps gine power. prices. and rebels. but it no longer commanded 5GB 10GB 10GB 15GB 20GB the highest premiums in the market. tC even though the Japanese Big Four offered 8% to 12% more engine power. and the iPhone will move quickly from the ultra. possibly because its image no longer harvard business review • november 2007 page 5 This document is authorized for educator review use only by K M Baharul Islam. Yamaha. This often proves to be a drain value most. having a haptic touch the problem by calculating the premiums they screen on the Razr2 is a novel benefit.edu or 617. Permissions@hbsp. for Harleys than they did for motorbikes from Honda. For instance. allow companies to anticipate rivals’ strate- premium to a midrange position. Harleys had attained cult status. especially in industrial markets. such as the image created by member- Sony. Yet a positioning map showed that. Customers paid 38% more. ship in the Harley Owners Group (HOG) and No apparel from Harley-Davidson’s MotorClothes. Dell.783. Motorola will soon have to con.

5% and nual report: “We’ve embarked on a full range location just 2. whereas cuisine accounted for a mere 3. We hypothesized that ysis of the 1. It was a composite yo the fact that industry experts insisted it would factor I called “customer experience”—the remain dominant owing to its history and extent to which the decor. riod. rising adding dancing to the menu—something the only recently on rumors that Honda is trying W Hotels chain. as one might expect. This suggested variation at NYC tC bright colors. seafood and Russian food rose during the pe- Companies can employ the price-benefit equa. has successfully done. cuisine seats to accommodate customers with smaller restaurants outside its properties. and they bad-boy image. $3. red.Kashipur until January 2018. food. products were trumping Harleys because The analysis revealed that from the begin- riding a motorcycle had changed from being ning of 1998 through the end of 2000.7860 . and welcome more and more African-Americans. and younger riders into restaurant in a hotel added between $2 and service—accounted for the family every year. we The longitudinal study helped identify sev- taste of food. Indian Institute of Management . blue. that as incomes rose in the city over the pe- cided to conduct a three-year historical anal. door tables and dancing. primary driver of variations in food prices The 2004 analysis was an early indicator wasn’t restaurants’ locations or the type of cui- that Harley-Davidson was in trouble. That Harley-Davidson recognized the need to create explained 73% of the variation in prices. the an act of rebellion to one of self-expression.5%. ers were seeing the Harley as their father’s The eateries served every possible cuisine. equation to decide which features to develop. an Do the next differentiator. It seemed plausible food business is notoriously fickle. Victory and Big Dog had capi. on maintain. so I de. had data. and offered while the pricing power of low-end how it could earn more from them all. which set a customer back $75. eral trends and strategies. The premium on Anticipating shifts in the value of benefits. Other features. high-end restaurants were enjoying a rising taurants it should open in its New York City premium for the customer experience they hotels. the restaurant guide. Initially. and other cantly between 1998 and 2000. with an en- builds. despite sine. new events. were located in all the city’s boroughs. indication of a more intense demand for the Take the case of a major U. the taste of the market share. more people frequented upscale restau- harvard business review • november 2007 page 6 This document is authorized for educator review use only by K M Baharul Islam.5%. The talized on the desire for a “New American restaurants in the analysis ranged from Gray’s Bike” as opposed to Harley-Davidson’s “Easy Papaya.5%. for dinner and a drink in 1998. the expected-price line became at what cost. and motorbikes with lower the hotel chain would do better if it placed restaurants. earn more by repositioning its sushi bars as Once they have identified what benefits ap. image. a new image for its products.25 more for a meal want to have fun rather than portray a macho and saw their pricing power rise over the three location just 2. motorbike and that many women hated its from pizza to French haute cuisine. Copying or posting is an infringement of copyright.60 to the price that could be charged for 73% of the price cluded ladies-only “garage parties”. a line of each meal. and the service satisfied customers. The restaurants was eroding. saying in its an. executives can use the that served Russian food. which featured a $2 two-dogs-and- rP Rider” image. which turns its lobbies into No to acquire it! clubs. by 2006. riod while it declined for French and Japanese tion to get ahead of rivals in markets where cuisines.50 to $7. seafood restaurants and setting up restaurants peal to customers. Interestingly. That was a convincing argument for floundered between 2005 and 2007. Mapping Your Competitive Position t appealed to customers.” These initiatives in. Buell line to reach out to younger riders who floors charged $4. women. to Le Bernardin’s Group and Harley’s MotorClothes helped seafood. op customer segments. which Zagat. which the Harley Owners a-tropical-drink special. Restaurants with dance accounted for 3. locating a Hispanics. Harley-Davidson’s stock price years. Permissions@hbsp. As it turned out. So it wasn’t surprising that that in 2000 wanted to know what new res.700 restaurants in the city on os both Generation X and Generation Y consum. a combination of decor. which ones it should reformat. Still.783.edu or 617. and how soon they must create steeper over the three years of the study. Harley-Davidson is also using its new trance from the lobby. were each responsi- and new strategies to connect with emerging ble for only 1% of the differences in price. indicating that the hotel chain could consumers keep demanding different benefits.S. hotel chain primary benefit.harvard. such as out- “Customer experience”— of marketing outreach activities. The newcomers’ highly customized average. Through these efforts. but that amount declined signifi- women’s jackets in pink.

A of the expected-price line in the midsize- regression analysis showed that the most im. Declining demand at the low end Fast-forward to 1999. market by One method of doing that is to draw maps repositioning the 3 Series.” for new safety features.S. op facturer. Permissions@hbsp. we found some subseg. In the 1990s. the “platform.783. The tilt in the line was 1993 into less competitive positions. When customers’ priorities shift radically. the low-end position. rather than play catch-up. companies were withdrawing models as the primary benefit that customers looked from the market. ritory. the Century shifted to a bar- chain lowered the price of the food to match gain midrange position. but it created a dilemma bargain midrange positions. The chain de. seg- ter deals to hold market share or to grow: For ments with fewer than a couple of big sellers instance.7860 . but by 1999 they were for lack of a better word.800 for each increment When we created a price-benefit position. and an additional $1. chassis our regression analyses showed. Most companies had with the lowest ratings in our sample fell moved from intensely competitive positions in from $7. which I’ll call Primo harvard business review • november 2007 page 7 This document is authorized for educator review use only by K M Baharul Islam. automobile manu. passenger capacity. In its budget hotels. In niches like the that the basis of competition among midsize pricey low-end (where the low-end versions cars would shift by the 2000s.Kashipur until January 2018. Fortune 500 company tells us that BMW capitalized on it. we created positioning maps to spot the benefits they desire also change. it would enhance Nissan Altima—all moved to new positions by the customer experience or change the res. Copying or posting is an infringement of copyright. A map that pricey high-end segments—was still virgin ter- includes unit sales and sales growth. “Finding Opportu. by 2001. Companies can use price- member that in the mid-1990s. ity. paying an extra $1. The Honda Accord moved to a bargain taurants’ cuisines. portant driver of price in that segment was a implying that customers were becoming less tC measure that combined several automobile willing to pay for a larger platform.S. trunk capacity. and the restaurants in those hotels.S. low-end subsegment of the U. The rate of change sales were growing markedly. were starting to pay more for safety. car market declined throughout the 1990s. This suggested that a manu. warning of such a shift. The $1 billion unit. there was an exodus from the basic and rP high-end properties. Careful fresh opportunities in the American midsize. for in midsize cars. To extend opportunities. Preempting rivals. did. The map indicated based on projections of market trends. a meal’s average price in restaurants or fast-growing models). For example. many experts benefit maps to predict the strategic intent of criticized BMW for trying to enter the pricey rivals and to find ways of preempting them. while the Saab’s 9-3 was exploring the stance. Mapping Your Competitive Position t rants. 1999. For exam- good news for restaurants in the hotel chain’s ple. of improvement in air bags and crash test ing map for 1993.20 to $5. sellers in the 1993 basic subsegment—the cided that instead of reducing prices in the Buick Century.80. The pricey midrange—the the use of price-benefit maps. Indian Institute of Management . That’s that there was an opportunity—and history what a division of a U. Due to the advance warn- facturer with the right price-platform mix and ing provided by this analysis. the Honda Accord. for in. and you will see that os meant that such restaurants had to offer bet. gasoline tank capac.harvard. in those spaces. and crashworthiness. ated an ultralow position in the basic niche. characteristics such as engine power. can help companies identify areas with white space below the premium end of the low competitive intensity. customers size. an indication in the expected-price line’s slope suggested of low competitive intensity. Instead. At yo rants needed traffic to make money. the same time. price-benefit analysis can provide an early car market (see the exhibit. performance. Sure enough. of luxury brands like Mercedes and Volvo re. safety features overtook the platform side). We customers weren’t willing to pay very much called this primary benefit. In 1993. and the Altima cre- or undercut local rivals because those restau. when I expected-price line. the car manufac- some desirable secondary benefits could find turer I worked with was able to anticipate the Do untapped customers by offering products shift. worked with a major U. The three big for the middle-tier properties. the 1999 map indicated some Finding paths of least resistance. the slope nity in the Crowded Midsize-Car Market”). there were few open segments left (that is. companies can white space between the pricey low-end and throw more data into the mix.edu or 617.500 for No ments with few big sellers or products whose antilock-braking systems. Auto aficionados will re.

Subaru Legacy + PREMIUM BASIC Buick Century . Mazda 626 + BARGAIN MIDRANGE Buick Skylark .000 BARGAIN LOW-END high-end? Ford Contour . Olds Intrigue ++ units sold in year Chevy Malibu ++ Honda Accord + Olds Cutlass Supreme + Daewoo Leganza Hyundai Sonata ++ * = model withdrawn Dodge Stratus . as the dotted ovals show. and by 1999.. Mapping Your Competitive Position t os Finding Opportunity in the Crowded Midsize-Car Market Adding more data to a price-benefit map can make it easier to spot opportunities to reposition products.. Permissions@hbsp. bold = more than 100.. Toyota Camry ++ Primary benefit: 1993 platform tC Automakers quickly slotted more products into those niches. rP In 1993. Mitsubishi Galant ++ Buick Regal + Ford Topaz ++ Nissan Altima Ford Taurus ++ Honda Accord Oldsmobile Achieva . Acura Vigor ++ PREMIUM 3% to 10% Infiniti G20 Mitsubishi Diamante - MIDDLE Mazda Millenia + Nissan Maxima + ++ = annual unit sales rose Chrysler Cirrus Volvo 70 ++ more than 10% Toyota Camry + BASIC VW Passat + .edu or 617.- Pricey No Expected- midrange? Infiniti I30 Saab 9-5 ++ Audi A4 ++ price line KEY BMW 3 ++ + = annual unit sales rose Chrysler Sebring ..7860 .S. midsize-car market—pricey low-end. Olds Cutlass Supreme Dodge Colt + Pontiac Sunbird . from market in year Subaru Legacy - = segments of lower Primary benefit: 1999 platform competitive intensity harvard business review • november 2007 page 8 This document is authorized for educator review use only by K M Baharul Islam. In this case.Kashipur until January 2018. 1999 base price PRICEY HIGH-END PRICEY LOW-END Acura CL ++ Audi A6 ++ Lexus ES 300 . = annual unit sales fell Mazda 626 + 3% to 10% BARGAIN MIDRANGE Mercury Mystique .. and withdrawn models revealed subsegments of the midsize-car market in which competition was less intense and were therefore good opportunities to pursue. Even the middle subsegment remained competitive owing to the overwhelming dominance of the Toyota Camry. best-sellers. all three had become crowded. Indian Institute of Management .harvard. Hyundai Sonata + op Mitsubishi Diamante - Nissan Maxima ++ BARGAIN LOW-END Olds Cutlass Ciera - Chevrolet Corsica/Beretta + Plymouth Acclaim . 1993 base price PRICEY HIGH-END Audi A6 ++ Chrysler Imperial * PRICEY LOW-END Audi 90 Infiniti J30 . bargain low-end. and premium—were relatively less competitive than the others. including indicators of sales growth and decline.- Lexus ES 300 + Saab 9000 - Acura Vigor ++ Saab 900 ++ Volvo 900 - Mercury Sable . Saab 9-3 ++ Nissan Altima + Buick Century ++ -. = annual unit sales fell Plymouth Breeze . three subsegments of the U.783. Copying or posting is an infringement of copyright.Mazda 929 . Buick Regal ++ more than 10% Do Ford Taurus Bargain Mercury Sable .. Expected- BMW 3 + Volvo 800 ++ price line Infiniti G20 yo Mercedes 190 * Volvo 240 * MIDDLE Acura Legend .

Primo introduced a new high-end product.edu or 617. it had shifted the Primary benefit: performance expected-price line to the extreme right. Indian Institute of Management .Kashipur until January 2018. As a re- sult. At the market moves. Copying or posting is an infringement of copyright.783.” and “Samur-Ion” would dramatically gain market share Actual 2000 as they boosted the performance/price ratio of their offerings.7860 . Neutryno quit the industry. Permissions@hbsp. Price In response. giving customers a range of Actual 2000 options with even better performance for the price. Price Actual 1997 yo PRIMO Projected 1999 SAMUR-ION NEUTRYNO SAMUR-ION TOKYO TECH TOKYO TECH Primary benefit: performance op Primo continued to sell its old.harvard. it moved another product down the line. over the next two years. It also radically improved the performance/price ratio of its high-end offering. Price Actual 1997 Actual 2004 PRIMO Projected 1999 SAMUR-ION Actual 1999 No NEUTRYNO TOKYO TECH Primary benefit: performance Do Primary benefit: performance harvard business review • november 2007 page 9 This document is authorized for educator review use only by K M Baharul Islam. pinning anticipate rivals in the price-sensitive market for advanced its Japanese competitors down at the market’s low end. and by 2004.” “Tokyo Tech. lower-end product at a discount. rP materials for electronic components. That’s what a company we’ll call Primo did to same time. Primo moved both up tC and down the expected-price line. Price The projection showed that archrivals “Neutryno. Mapping Your Competitive Position t os Capturing an Evolving Strategy Companies can use past trends to map projected future In 2000. Primo’s executives were shocked.

Kashipur until January 2018.7860 . Primo gained market share. 2001 and 2004. they were shocked. price-benefit More and more people began to use the prod. based on fact and to avoid the fatal allure of No tions. Primo or call 800-988-0886 or 617-783-7500 then decided to outflank them. and two also sold its old product at a discount to keep Japanese competitors I’ll label Tokyo Tech and its Japanese competitors pinned down at the Samur-Ion. tion in the basic segment. Primo first moved at the and opens executives’ minds to many possi- high end.” But its rivals were improving quality and ment. which wishful thinking.edu or 617.hbrreprints. the vicious cycle of declining market share When Primo’s senior executives saw the and profit margins but it also turned the map. vals’ profit margins. A price-benefit map sounds early warnings. an high-end niche to the mass market. By forecasting the price-sensitive market would dominate the movements of prices and benefits. We projected and mapped pockets. we found that the generation of electronic devices. Ultimately. To order. ••• vestment to come up with product improve. moving it from a than the offerings of its three major rivals. Primo moved one of its products down the os factures advanced materials for high-tech new expected price line to a low-cost posi- component makers in the electronics industry. It also split its high-end prod. or go to www. while high-end customers try to interpret them and arrive at the right might stick with its premium product longer. Permissions@hbsp. maps allow executives to make decisions ucts. Every map suggests several lowered prices. as indicated by the size of its cir. Not only did Primo escape historic rate of improvement. the money to invest in new product develop- egy. manu. Primo’s executives decided line—and its rivals. though. based on the firms’ left the market.783. the company reduced this formance. tables on rivals by shaping the emerging nario. Like all strategy frameworks. and to use them in additional applica. the Japanese companies would have their possible trajectories. hypotheses about the reasons behind uct into three. This cut deep into its ri- market share. which left them without cle in the exhibit “Capturing an Evolving Strat. Primo had the biggest market’s low end. Primo American company I’ll call Neutryno. In 1997. At that stage. Primo sold a high. product’s price as Primo gained experience rP priced product that delivered better results and economies of scale. Primo’s competitors in this highly competitive landscape. According to the sce. Primo market by 1999 because they would be able to stayed ahead of shifts in the expected-price op offer more for less. to seize the initiative. so that customers interested in changes in competitive positions. ments and process changes that would lower suggests responses to competitive threats. Had it not been for their parents’ deep yo reducing prices. The same year it When its senior managers and I teased out the also introduced a high-end product for a new impact of each feature. Copying or posting is an infringement of copyright. In 2000.harvard. manufacturing costs. and execu- middle-level performance would stop buying tives must use their knowledge of the indus- low-end products. The strategy hurt Neutryno so much that it Reprint R0711G quit the market. strategies. it isn’t tC higher level of the primary benefit even as it a silver bullet. Between product’s primary customer benefit was per.org Do harvard business review • november 2007 page 10 This document is authorized for educator review use only by K M Baharul Islam. Mapping Your Competitive Position t (the company requested anonymity). more than made up for the loss in margins. pushing the expected-price line to a bilities. see the next page Having outpaced its competitors. Indian Institute of Management . They increased R&D in.

8842 Harvard Business Review on Leadership op Product no.org. 1445 Harvard Business Review on Change Product no. or e-mai customizations@hbsp.hbrreprints. Go to www. Permissions@hbsp. call 617-783-7626.edu or 617. 8834 Harvard Business Review on Managing People Product no.harvard.Kashipur until January 2018. t Further Reading os The Harvard Business Review Paperback Series Here are the landmark ideas—both contemporary and classic—that have rP established Harvard Business Review as required reading for businesspeople around the globe.edu page 11 This document is authorized for educator review use only by K M Baharul Islam.7860 .harvard. including the following best-sellers: yo Harvard Business Review on Brand Management Product no.hbrreprints. The series includes over thirty titles. 9075 Harvard Business Review on Measuring tC Corporate Performance Product no.783. Each paperback includes eight of the leading articles on a particular business topic. No To Order Do For Harvard Business Review reprints and subscriptions. 8826 For a complete list of the Harvard Business Review paperback series. call 800-988-0886 or 617-783-7500. Copying or posting is an infringement of copyright.org For customized and quantity orders of Harvard Business Review article reprints. go to www. Indian Institute of Management .