A simple chart shows how
much a customer will pay for
a perceived benefit. This is
Mapping Your
more than a marketing aid, Competitive Position

it’s a powerful tool for
competitive strategy.
by Richard A. D’Aveni

Reprint R0711G
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
copyright. Permissions@hbsp.harvard.edu or 617.783.7860

This is more than a marketing aid. COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. 50% of salespeo- harvard business review • november 2007 page 1 This document is authorized for educator review use only by K M Baharul Islam. the company’s fate rested executives desperately need new tools to help squarely on the Razr2. Worse. they must migrate quickly from one competi- ola’s top management team was more worried tive position to another. senior execu. Zander other players’ competitive positions in hyper- wondered if the iPhone had changed the com. Permissions@hbsp. most companies have to telephone. That’s all that separated the yet reliable way of capturing changes that launch of Apple’s revolutionary iPhone. Razr2 (pronounced Razr Squared) cellular Like Motorola. which PC World maga. competitive markets. on were emerging in the market so they could June 29. 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. No greatest gadgets of the past 50 years. according to a couldn’t wait for the results of focus group 2004 survey by Strativity. Most cus- Razr2’s new features? Should Motorola play tomers are unable to identify the features up the Razr2’s noise-filtering technology. ALL RIGHTS RESERVED. and consulting firm. petitive dynamics of the market in ways they One way to do that is to track the relation- Do hadn’t foreseen. and Motorola’s next-generation finalize strategy quickly. creating new ones. stroy others’ advantages faster than they used zine in 2005 ranked 12th on a list of the 50 to.7860 . A simple chart shows how much a customer will pay for a perceived t benefit.harvard. With sales of the American com. As innovation pervades the value chain. Senior tapering off. that determine the prices they are willing to which it had patented? The executives pay for products or services. them systematically analyze their own and tives like chairman and CEO Edward J. it isn’t easy to come to How much extra could they charge for the grips with either benefits or prices. it’s a powerful tool for os competitive strategy.783.Kashipur until January 2018.edu or 617. Moreover. on August 24. Motor. depreciating old ones. Copying or posting is an infringement of copyright. 2007. than usual. munication giant’s other cellular telephones The process is disorderly and unstable. D’Aveni op tC Eight weeks. a global research sessions or sample surveys. Before unveiling the build fresh competitive advantages and de- successor to the Razr. rP Mapping Your Competitive Position yo by Richard A. Indian Institute of Management . and matching rivals’. However. They needed a fast.

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

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

making and receiving calls matter to consum- lular telephones. which might have been anticipated in view of Apple’s iPod strategy. 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”). Apple started in a high-price. A regression analysis showed conversations. 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. 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. That was above the line. in the midrange group. In like vein. By advanced functionality. Although Motorola has patented a tech- features.Kashipur until January 2018. and a QWERTY keyboard.5% of the difference in the prices of hand- in launching the Razr2. and os designed to milk or build market share. 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. positioning products variation in prices. the Razr V3c was almost exactly on the line. and Wi-Fi technologies). The power of its superb color display. 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. because of the added pricing short-lived though. clearly Clearly. Motor- ola’s Q. cellular telephone market when Apple fall. For example. albeit to a lesser degree: display tioned products on both sides of the expected- price line. I found photographs. 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. Like all the other op sis customers paid on average $28 more for cellular telephone manufacturers. pact on the superpremium segment. This price-benefit positioning map sug- crowded and prices would soon go into free- gests there were five segments in the U.) the cellular telephone market. and according to my analy. for example. drawing a positioning map by returning for a These three benefits together accounted for moment to the challenges that Motorola faced 80. my sets. which work with the calling ers. Motorola will face a stiff challenge MID- RANGE because Apple is deploying its iPod strategy in MOTOROLA RAZR V3c Do iPHONE (Sept. touch screens) and advanced connectivity Let me illustrate the process and purposes of (Bluetooth. Copying or posting is an infringement of copyright. I found that competition had reduced plans of many U. as Apple quickly dropped the price by $200 in September. Mapping Your Competitive Position t with secondary benefits or pricing strategies quality (color. MOTOROLA V325 BASIC LG VX9800 NOKIA N80 In the market for downloadable-music play- MOTOROLA L2 MOTOROLA Q ers. Samsung. the presence of sophisticated five clusters of mobile phones (see the exhibit e-mail software. No move. Permissions@hbsp. nology that filters out background noise from and retail prices. Motorola vanced functionality accounted for 68% of the had wisely spread its bets. tC whereas the Razr SLVR L7 and Razr V360 were Mapping the Cell Phone Market below it. 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. but it had posi- ferences. will be outclassed.783. The LG VX9800 had positioned itself launched the iPhone in June 2007. it had no each advanced feature in a cellular telephone. Ad.S. in four of the five groups. telephones. iPhone seems to be pioneering. “Mapping the Cell Phone Market”).harvard. We drew up a list of the phones’ low). Sony Ericsson. Indian Institute of Management .edu or 617.7860 . and LG had also positioned devices below the line. In early June 2007. high-resolution screens. the iPhone will have a major im- puts pressure on many players in the superpremium segment. cellular service providers. SAMSUNG A800 iPHONE (June) Expected- PREMIUM PALM TREO 700p price line However. 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. consumer ratings of those features. product in the ultrapremium segment that the Two other benefits contributed to price dif. carving out a new ultrapremium niche. 3G.S. it is unlikely to have an PRICEY impact on the rest of the market—initially.

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

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. door tables and dancing. motorbike and that many women hated its from pizza to French haute cuisine. $3. Interestingly. the taste of the market share. The restaurants was eroding. indicating that the hotel chain could consumers keep demanding different benefits.700 restaurants in the city on os both Generation X and Generation Y consum.S.” These initiatives in. such as out- “Customer experience”— of marketing outreach activities. high-end restaurants were enjoying a rising taurants it should open in its New York City premium for the customer experience they hotels. the expected-price line became at what cost. were located in all the city’s boroughs. Harley-Davidson is also using its new trance from the lobby. executives can use the that served Russian food. eral trends and strategies. which set a customer back $75. a combination of decor. which Zagat. 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. indication of a more intense demand for the Take the case of a major U. so I de.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. rising adding dancing to the menu—something the only recently on rumors that Honda is trying W Hotels chain. which ones it should reformat. and motorbikes with lower the hotel chain would do better if it placed restaurants. we The longitudinal study helped identify sev- taste of food.7860 . on maintain. red. The newcomers’ highly customized average. The premium on Anticipating shifts in the value of benefits. and how soon they must create steeper over the three years of the study.edu or 617. which turns its lobbies into No to acquire it! clubs. 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. for dinner and a drink in 1998. earn more by repositioning its sushi bars as Once they have identified what benefits ap.60 to the price that could be charged for 73% of the price cluded ladies-only “garage parties”. which featured a $2 two-dogs-and- rP Rider” image. We hypothesized that ysis of the 1. locating a Hispanics. women. riod. the restaurant guide. and they bad-boy image.50 to $7. 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. to Le Bernardin’s Group and Harley’s MotorClothes helped seafood. Victory and Big Dog had capi. but that amount declined signifi- women’s jackets in pink. That was a convincing argument for floundered between 2005 and 2007.783. a line of each meal. that as incomes rose in the city over the pe- cided to conduct a three-year historical anal. and welcome more and more African-Americans. seafood restaurants and setting up restaurants peal to customers. and offered while the pricing power of low-end how it could earn more from them all. seafood and Russian food rose during the pe- Companies can employ the price-benefit equa. hotel chain primary benefit. cuisine seats to accommodate customers with smaller restaurants outside its properties. the an act of rebellion to one of self-expression. by 2006. This suggested variation at NYC tC bright colors. So it wasn’t surprising that that in 2000 wanted to know what new res. as one might expect. had data.5%. a new image for its products. were each responsi- and new strategies to connect with emerging ble for only 1% of the differences in price.Kashipur until January 2018. despite sine. blue. Initially. Buell line to reach out to younger riders who floors charged $4. and the service satisfied customers. As it turned out.5%. ers were seeing the Harley as their father’s The eateries served every possible cuisine. has successfully done. image. food. which the Harley Owners a-tropical-drink special. Indian Institute of Management . and younger riders into restaurant in a hotel added between $2 and service—accounted for the family every year. riod while it declined for French and Japanese tion to get ahead of rivals in markets where cuisines. Copying or posting is an infringement of copyright. whereas cuisine accounted for a mere 3. It seemed plausible food business is notoriously fickle. Through these efforts. Restaurants with dance accounted for 3. Mapping Your Competitive Position t appealed to customers.harvard. op customer segments. Permissions@hbsp. Harley-Davidson’s stock price years.5%. equation to decide which features to develop.5% and nual report: “We’ve embarked on a full range location just 2. an Do the next differentiator. 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. saying in its an. Other features. Still. with an en- builds. and other cantly between 1998 and 2000. new events. That Harley-Davidson recognized the need to create explained 73% of the variation in prices.

The rate of change sales were growing markedly. price-benefit analysis can provide an early car market (see the exhibit. we created positioning maps to spot the benefits they desire also change. characteristics such as engine power. customers size. In the 1990s. while the Saab’s 9-3 was exploring the stance. This suggested that a manu. paying an extra $1. Declining demand at the low end Fast-forward to 1999. A map that pricey high-end segments—was still virgin ter- includes unit sales and sales growth. seg- ter deals to hold market share or to grow: For ments with fewer than a couple of big sellers instance.S. and an additional $1. worked with a major U. Sure enough. the slope nity in the Crowded Midsize-Car Market”).edu or 617. but it created a dilemma bargain midrange positions. Copying or posting is an infringement of copyright. 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. for in midsize cars. were starting to pay more for safety. the Honda Accord. safety features overtook the platform side). we found some subseg. can help companies identify areas with white space below the premium end of the low competitive intensity.S. Most companies had with the lowest ratings in our sample fell moved from intensely competitive positions in from $7. When customers’ priorities shift radically. and crashworthiness. Mapping Your Competitive Position t rants.783. in those spaces. “Finding Opportu. trunk capacity.7860 . ity. Indian Institute of Management . For exam- good news for restaurants in the hotel chain’s ple. Instead. there was an exodus from the basic and rP high-end properties. gasoline tank capac. of luxury brands like Mercedes and Volvo re. 1999. For example. and you will see that os meant that such restaurants had to offer bet. Careful fresh opportunities in the American midsize. The Honda Accord moved to a bargain taurants’ cuisines. the Century shifted to a bar- chain lowered the price of the food to match gain midrange position. there were few open segments left (that is. Preempting rivals. 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. Companies can use price- member that in the mid-1990s. A of the expected-price line in the midsize- regression analysis showed that the most im. companies were withdrawing models as the primary benefit that customers looked from the market. 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.500 for No ments with few big sellers or products whose antilock-braking systems. the same time. market by One method of doing that is to draw maps repositioning the 3 Series. warning of such a shift. a meal’s average price in restaurants or fast-growing models). The three big for the middle-tier properties. low-end subsegment of the U. 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. ritory. In its budget hotels.20 to $5. rather than play catch-up. op facturer. Due to the advance warn- facturer with the right price-platform mix and ing provided by this analysis. it would enhance Nissan Altima—all moved to new positions by the customer experience or change the res.Kashipur until January 2018.harvard. and the restaurants in those hotels.800 for each increment When we created a price-benefit position. the 1999 map indicated some Finding paths of least resistance. That’s that there was an opportunity—and history what a division of a U. passenger capacity. The chain de. ated an ultralow position in the basic niche. The $1 billion unit. sellers in the 1993 basic subsegment—the cided that instead of reducing prices in the Buick Century. The map indicated based on projections of market trends. automobile manu. chassis our regression analyses showed. Fortune 500 company tells us that BMW capitalized on it. car market declined throughout the 1990s. the “platform. for in. In 1993. Auto aficionados will re. companies can white space between the pricey low-end and throw more data into the mix.” for new safety features. At yo rants needed traffic to make money. To extend opportunities.80. We customers weren’t willing to pay very much called this primary benefit. did. The pricey midrange—the the use of price-benefit maps. Permissions@hbsp. the low-end position. an indication in the expected-price line’s slope suggested of low competitive intensity. when I expected-price line. The tilt in the line was 1993 into less competitive positions. performance. of improvement in air bags and crash test ing map for 1993. 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. and the Altima cre- or undercut local rivals because those restau. by 2001. but by 1999 they were for lack of a better word.

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

it moved another product down the line.harvard. At the market moves. it had shifted the Primary benefit: performance expected-price line to the extreme right. and by 2004. giving customers a range of Actual 2000 options with even better performance for the price. Price In response.edu or 617. 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.783. over the next two years. Primo introduced a new high-end product. Price The projection showed that archrivals “Neutryno.” “Tokyo Tech. 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. Primo’s executives were shocked. rP materials for electronic components. Permissions@hbsp. lower-end product at a discount. That’s what a company we’ll call Primo did to same time. pinning anticipate rivals in the price-sensitive market for advanced its Japanese competitors down at the market’s low end. Indian Institute of Management .7860 .” and “Samur-Ion” would dramatically gain market share Actual 2000 as they boosted the performance/price ratio of their offerings. It also radically improved the performance/price ratio of its high-end offering. Mapping Your Competitive Position t os Capturing an Evolving Strategy Companies can use past trends to map projected future In 2000. Copying or posting is an infringement of copyright. Primo moved both up tC and down the expected-price line.Kashipur until January 2018. Neutryno quit the industry. As a re- sult.

Indian Institute of Management . vals’ profit margins. more than made up for the loss in margins. ••• vestment to come up with product improve. to seize the initiative.harvard.783. tables on rivals by shaping the emerging nario. price-benefit More and more people began to use the prod. Primo first moved at the and opens executives’ minds to many possi- high end. Primo had the biggest market’s low end. By forecasting the price-sensitive market would dominate the movements of prices and benefits. 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. or go to www. see the next page Having outpaced its competitors. They increased R&D in. At that stage. In 2000. Mapping Your Competitive Position t (the company requested anonymity). Had it not been for their parents’ deep yo reducing prices. pushing the expected-price line to a bilities. it isn’t tC higher level of the primary benefit even as it a silver bullet. Primo’s executives decided line—and its rivals. Primo market by 1999 because they would be able to stayed ahead of shifts in the expected-price op offer more for less. strategies. product’s price as Primo gained experience rP priced product that delivered better results and economies of scale. In 1997. manufacturing costs.hbrreprints. To order. tion in the basic segment. 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. Primo American company I’ll call Neutryno. an high-end niche to the mass market. though. we found that the generation of electronic devices. It also split its high-end prod. Primo or call 800-988-0886 or 617-783-7500 then decided to outflank them. ments and process changes that would lower suggests responses to competitive threats. Between product’s primary customer benefit was per. Primo gained market share. which left them without cle in the exhibit “Capturing an Evolving Strat. The strategy hurt Neutryno so much that it Reprint R0711G quit the market. as indicated by the size of its cir. This cut deep into its ri- market share. Not only did Primo escape historic rate of improvement. We projected and mapped pockets.edu or 617. manu. while high-end customers try to interpret them and arrive at the right might stick with its premium product longer. so that customers interested in changes in competitive positions. based on the firms’ left the market. the money to invest in new product develop- egy. maps allow executives to make decisions ucts. Every map suggests several lowered prices. Primo’s competitors in this highly competitive landscape.Kashipur until January 2018. Permissions@hbsp. hypotheses about the reasons behind uct into three. which wishful thinking. Ultimately. the Japanese companies would have their possible trajectories. and execu- middle-level performance would stop buying tives must use their knowledge of the indus- low-end products. Like all strategy frameworks. Copying or posting is an infringement of copyright. the company reduced this formance. the vicious cycle of declining market share When Primo’s senior executives saw the and profit margins but it also turned the map.org Do harvard business review • november 2007 page 10 This document is authorized for educator review use only by K M Baharul Islam. 2001 and 2004.” But its rivals were improving quality and ment. and to use them in additional applica. 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. Primo sold a high. based on fact and to avoid the fatal allure of No tions.7860 . they were shocked. According to the sce. moving it from a than the offerings of its three major rivals. A price-benefit map sounds early warnings.

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

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