Strategic Positioning and Performance Measurement

John Devlin MBA FCCA https://au.linkedin.com/in/JohnDevlinSydney

Strategic positioning and its implications for performance measurement

John Devlin, MBA, FCCA https://au.linkedin.com/in/JohnDevlinSydney


Content

Why do we need a position?

Topic

1

Strategic Positioning & Segmentation

2

Core competencies & value proposition

3

How we measure what matters?

4

Discussion 5


Why do we need a position?

Pre WWII

Production Orientation

Focus on efficiency in producing standard product.

We make the product according to our specification

1940’s -1970’s

Selling Orientation

Post 70’s

Market Orientation

Focus on selling our product.

Selling the brand

If people know about our product they will buy it

If we find out what customers want & then make it, then market it to customers, they may buy it if it suits their needs at a particular time

Source: P Kotler, Marketing Management, 7th Ed

Can we produce the product?

Can we produce enough of it?

Can we sell the product?

Can we charge enough for it?

What do customers want?

Can we develop it while they still want it?

How can we keep our customers happy?


Strategic positioning is about

answering some key questions

Key Q

uestions t

o A

nsw

er

Who are we serving?

What do we want to be?

What is our value proposition?

Requires a basis of segmentation.

We can’t be everything to everybody

What do we have to invest in/

improve to satisfy our key markets

How will we meet our chosen

segments needs?


Demographic

Industry

Size

Needs based

approach

Attribute based

approach

Segmentation should give us insight

as to how we can serve our clients

Segmentation

Reactive basis of

segmenting market

Proactive approach

What is the driver

of value that a

customer requires

to be met


Each Strategic Position requires a different

set of organisational capabilities

Value Provided

(Position)

Market

Deliverable 1

Market

Deliverable 2

Market

Deliverable 3

Specific

Deliverable 1

Specific

Deliverable 2

Specific

Deliverable 3

Specific

Deliverable 4

Specific

Deliverable 6

Specific

Deliverable 5

Resource or Capability 1







Each Strategic Position requires a different

set of organisational capabilities

Value Provided

(Position)

Market

Deliverable 1

Market

Deliverable 2

Market

Deliverable 3

Specific

Deliverable 1

Specific

Deliverable 2

Specific

Deliverable 3

Specific

Deliverable 4

Specific

Deliverable 6

Specific

Deliverable 5







Segment 1


Each Segment requires a different value

proposition which must resonate with their needs

Segmentation, comined with an audit of core competencies, generates options for

potential target markets to serve.

A value proposition is generally built around excellence in one of three dimensions

Operational Excellence

•Price

•Selection

•Convenience

•Zero Defects

Product Leadership

•High performance product

•Entering new market spaces

•Product Introductions

•Service Introductions

Customer Intimacy

•Customer knowledge

•Solutions offered

•Share of wallet

•Retention

It also provides the basis around which a value proposition should be built


Segment will determine “excellence”

dimension on which we will compete

Operational

Excellence

Customer Intimacy

Product Leadership

• What is it that clients want? • How do we deliver this in a way that is more

efficient & effective than competitors

• Different Types of Value • Price

• Benefit

• Quality

• Value equates to clients perception of

benefits received versus costs sacrificed.

• Costs • Monetary

• Search

• Psychological


Competitive advantage comes from

an organisation’s core competency

Combines in ways

competitors cannot

easily or quickly imitate

Able to be exploited

across the business

Ads value as perceived

by customer

Core

competency

Is a source of major competitive advantage

Can be defended for required period.

Can be applied across a wide range of applications


Internal capabilities enable our core

competency

Economic

Technological

Human

Management

Organisational

Assets, Financial Resources, Economies of

Scale, Brands, Customer Loyalty

Process, IT systems, Plant & Equipment

Skills attitudes and behaviour of employees.

Loyalty to organisation

Ability to coordinate and allocate capabilities.

Ability to make strategic choices and

implementation

The structures and systems people which

together comprise the organisational culture


The formulation of a strategic

position enables us to fill in the gaps

We are the

To

That

Because of

Our target market

Our core value

Our value proposition

Our capabilities


So…are we really measuring what will

enable our value proposition to be delivered?

Operational

Excellence

Product

Leadership

Customer

Intimacy

•Price competitiveness

•Availability

•Convenience/Speed of purchase

•Quality & consistency of products/services/processes

•Growth in customer base

•Share of Market

•First to market – Quality product development process

•High Performance product – Features & Functionality

•Marketing/Brand Awareness in Target Segments

•Customer referrals

•Share of Wallet of Target Segment

•Completeness of the solution – Selling multiple branded products & services

•Exceptional pre/post sales service

•Relationship length/customer retention

•Customer information

•Share of wallet of customer/customer profitability


Remembering that customers needs and

operational performance change over time

Cost

Dependability

FlexibilityQuality

Speed

Our perceived delivery Client Needs

Cost

Dependability

FlexibilityQuality

Speed

Time


Performance measures can involve

different levels of aggregation

Broad Strategic

Measures

Functional Strategic

Measures

Composite Performance

Measures

Generic Operations

performance Measures

Detailed Performance

Measures

High Strategic relevance

& aggregation

High diagnostic power

and frequency of

measurement

Overall Strategic Objectives

Market Strategic Objectives

Operations Strategic Objectives

Financial Strategic Objectives

Customer Satisfaction

Agility Resilience

Quality Agility Speed Cost Dependability

•Defections per Unit

•Customer complaints

•Time between failure

•On time delivery

•Product Range •Time to market

•Order Lead time •Throughput

time

•Transaction Costs

•Efficiency •Labour Costs

Source: Slack, Chambers & Johnson; Operations Management; Prentice Hall Pg 584


Customer Perspectives

Financial Perspective

Process Perspective

Learning Perspective

Vision & Strategy

Process Perspective:

To satisfy our shareholders & customers

what business processes must we excel at?.

Customer Perspective:

To achieve our vision how should we appear

to our customers?

Financial Perspective:

To succeed financially how must we look to

our stakeholders?

Learning Perspective:

To achieve our vision how will we sustain

our ability to change and improve?

Translates the vision

through 4 perspectives:

Source: Kaplan & Norton; Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review , January – February 1996

The Balanced Scorecard:

We have a tool to ensure we are

measuring what needs to be measured


We have a tool to communicate &

coordinate the company’s strategy

Translating Vision

Feedback & Learning

Business Planning

Communicating & Linking

Vision & Strategy

Feedback & Learning:

Articulating the vision

Supplying Strategic feedback

Facilitating Strategic review & learning

Business Planning:

Setting Targets

Aligning Strategic Initiatives

Establishing Milestones

Communicating & Linking:

Communicating & educating

Set goals

Links rewards to performance measures

Translating the vision:

Clarifying the Vision

Gaining Consensus

Four Objectives:

Source: Kaplan & Norton; Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review , January – February 1996

The Balanced Scorecard:


Strategic positioning and its implications for performance measurement

John Devlin, MBA, FCCA https://au.linkedin.com/in/JohnDevlinSydney

Strategic Positioning and Performance Measurement

Business

Transcript of Strategic Positioning and Performance Measurement