The strategic Position Analysis Tool is an effective approach to analyze and discuss both current and future offerings in comparison to the market.
Many solutions may be conceived, but which ones will be better positioned to succeed in the market place? And which will enhance competitiveness? This is the objective of the Strategic Position Analysis tool.
Current or future solutions can be mapped along two axes: “ability to compete” and “market attractiveness.”
Solutions can be compared for their market fit as well as their strength relative to the competition. Teams can evaluate the various options available and discuss which solutions are more aligned with company objectives, enabling better allocation of limited investment budgets.
A variation of this tool is to focus not on solutions but on markets. This becomes another powerful method to determine which markets to target and why.
A marketing strategy aims to identify market hot spots that offer optimal growth opportunities. When evaluating current or future offerings, three dimensions of marketing decisions are useful to consider:
Market segment potential – This refers to the relative size of a segment compared to others.
Market attractiveness – This is derived from multiple factors, such as relative growth (e.g., segments growing faster than others), markets where your company has mature technology, or solutions that are attractive due to profitability or alignment with your company’s image. Many factors can be considered to assess market attractiveness.
Ability to win – This reflects the capacity to differentiate from competitors. Developing the perfect solution and encountering a strong competitor can be a challenge. A strong ability to differentiate must be factored in.
These three dimensions form a useful map with two axes: market attractiveness (vertical axis) and ability to win (horizontal axis), while the bubble size represents the market potential addressed by the solutions plotted on the map.
It’s important to note that the two axes are not entirely independent. For example, reducing price to increase the “ability to compete” may result in reduced “market attractiveness.” Therefore, solutions can sometimes shift along certain diagonals. Price is also a poor tool for increasing attractiveness since adjusting it often signals competitors to do the same. Never adjust price without a strong value proposition!
When it comes to optimizing solutions, the business questions this map helps teams discuss are:
These questions are designed to address the company’s objectives and mission, which are regularly reviewed and discussed. These objectives typically include profitability, growth in certain geographies or segments, and more.
When searching the internet, you will find many recommendations, particularly about focusing on market segments that are growing faster or are more profitable. This is a clear application of the Strategic Position Analysis.
Here are some useful articles, starting with one that provides a comprehensive review of this tool:
https://www.cascade.app/blog/strategic-analysis
And this one, which is concise and clear:
https://morgancross.co.uk/strategy/how-to-assess-your-companys-strategic-position/
Both articles refer to market segments, but when considering sub-segments, solutions naturally emerge as the focus of the Strategic Position Analysis tool.
A discussion on strategic Position Analysis of solutions allows for a critical evaluation of the solutions roadmap and helps determine how investment funds should be optimally allocated.
By analyzing competitive scenarios, the solutions development roadmap can be made more resilient.
The Strategic Position Analysis tool provides a framework with four quadrants, and understanding what actions to take in each quadrant is essential. The quadrant with the highest ability to win and the highest market attractiveness should be developed and protected, especially for solutions facing strong competition. Solutions in other quadrants require specific attention. For instance, solutions with low market volumes and poor market attractiveness may need to be considered for termination or replacement.
All these considerations must be thoughtfully discussed, as solutions within a portfolio are often interdependent.
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There are multiple situations where projects need to be prioritized according to various criteria such as impact, ease of implementation, short-term vs long-term considerations, Return on Investment (ROI), and possibly more. The Excel tool proposed here is an essential tool that simplifies the comparison between projects or actions, providing visual capabilities to assess, discuss, and prioritize them.
The number of solutions for comparison can be set from 2 up to 100. They can be organized by category (e.g., market segments, initiatives, business units). Excel filters can be utilized to display only selected ones. Color coding can be adjusted, as well as the size of “bubbles” used to represent each project.
The initial setup of the tool allows for the horizontal axis to represent the ease of implementation, and the vertical axis to represent the impact, making the top-right quadrant the most attractive. The bubble size represents the market segment volume, but it can also be used to indicate profitability or ROI. Color coding can be employed to distinguish product categories, present versus future states, or other relevant criteria.
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