Strategic market choices and innovation: where to compete, where not to and what’s new
The focus is now on market strategy – choosing the markets and segments where we are going to compete. This ﬁ ts into our model of value-based strategy – the strategic pathway – as shown in Figure 7.1. But this is less straightforward than is often suggested. Deﬁ ning markets is not a one-off, throwaway thing that we do just so we can worship the false god of market share. Markets are ﬂ uid and those who fail to see this get trapped in a competitive box, where they will perish. Close study of shifting products and customers in a competitive domain and mapping market structures may help move from ﬁ xed views of markets to more useful ones. Marketing people love market segmentation – dividing markets into groups of customers to provide targets. This is great except for one thing – it completely misses the point. Conventional market segmentation obsesses with techniques and is largely tactical – where best to place ads to reach the same targets as everyone else. A strategic approach to segmentation highlights the priorities of aligning company resources around beneﬁ ts delivered to customers and the barriers to achieving this. Seen in strategic terms, market positioning is about the identiﬁ cation and domination of uncompeted market space, rather than more conventional comparisons between ourselves and the competition. Making market and segment choices is complex and overwhelmingly important to get right – it is based on the
attractiveness of the customer opportunity and how well we can exploit it. Market choice then links to value propositions – what do we have to offer our chosen customers – and key relationships – can we manage the relational demands of this market? The underlying structure of the chapter is shown in Figure 7.2.