Knowing your market position is important
In a recession the business environment becomes more competitive. The stakes are higher and the margin for error, much lower. Understanding who you’re competing with, and how you’re competing with them, helps you to reduce the risk. It helps you to make the best use of your resources. This is why knowing your market position is important.
Your market position is an indication of how you compare to your rivals, when assessed against specific criteria. Understanding this enables you to be more efficient and more effective in the way you do business. When you know who you’re competing against, you can make better decisions about how you compete with them.
To understand your market position, it’s useful to plot it on a table. The table above shows the market position of some UK supermarkets. The two axes are the criteria that are being used for comparison. In this example those criteria are “price” and “quality”. Depending on their position on the table, you can see how each supermarket ranks for price and quality. Waitrose is ranked high for quality and for price. Aldi is also ranked high for quality, but low for price.
When you can see how you compare to your rivals, you can make better decisions about what you need to do to compete. This is why knowing your market position is important.
To establish your market position there are three factors you need to consider:
Your products or services, your business, your competitors.
Your products or services
The first step in establishing your market position is to identify what criteria you are going to use for comparison. You need to do this from a customer perspective. You need to consider what criteria are most important to your customers, when they are make the decision about who to buy from. In the example those criteria are price and quality.
What’s important to consider now, as your customers emerge from lockdown, is that things are different now. The way your customers live and work has changed. So their needs and expectations may have changed. The criteria that were most important to them before Covid-19, might not be the same as they adjust to life with Covid-19. So be sure you know what’s important to your customers now, and you choose the right criteria.
When you have established the two criteria you are going to compare, you can now consider where your business sits on the table. As your business adapts to Covid-19, it’s important to recognise that your strengths – and weaknesses – may have changed. You may have found more efficient ways to deliver your services, that saves time. But increased costs may have pushed your prices up.
The final element to consider are your competitors. Where do they sit on the table? How do they rank for the criteria you have selected? Like your business, your competitors will also have adapted to the challenges of Covid-19. It’s important to identify how they have changed (or you think they have changed), so you can position them accurately.
Another factor to consider is whether there are any new competitors that have entered your market. Covid-19 has forced many companies to look for new customers and new markets. Have any chosen to enter your market?
When you know how you compare with your rivals, you can make better decisions about how you compete. You can invest your time and money where it will make the greatest difference. In an uncertain economy, where so much is changing, knowing your market position is important.
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If you would like to have a chat about your market position, drop us an email. It would be great to hear from you!
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