Market Position Analysis

Key Concepts in this Module

The following are some of the key concepts that will be covered in this module:

· Market position is predicated on the identification of a specific niche or focus. This activity of finding a market niche will enable a product to compete successfully.

· Value proposition is the aspect that entices the buyer or consumer to understand the “worthwhileness” of a given product or service.

· Differentiation or competitive advantage is how a product or service separates itself from the competition in the marketplace, that is, how the product or service is different, better, or unique.

· Strategic fit is defined as making sure all the elements of the business come together internally as well as externally. This is used to assess whether it makes sense for a given organization to be in the line of business it is in and offer the services and products that it does. The viability of aligning products, services, mission, or market niche comes together to provide opportunity for growth and to support the business direction and goals.

· Generic strategies focus on cost differentiation (when the product or service offers something a little more unique or different than the competition), cost leadership (lower cost leader in the industry given a set quality), and strategy focus (this effort narrows the playing field or market segment and also offers some differentiation, possibly in cost).

· Vertical integration (supply chain) is often referred to as the degree to which a firm owns its upstream suppliers and its downstream buyers. This often influences corporate strategy because a focused vertical integration approach can significantly impact cost as well as the ability to differentiate.

· Diversification (horizontal integration) allows businesses to add to their existing suite of products, services, and even markets. Most often, the purpose is to allow the company to enter lines of business that are related but new. However, diversification can also be completely different from current operations.

· Outsourcing involves contracting with another business or person to perform specific business functions. For example, many companies outsource their payroll function to a firm to process, manage, and distribute paychecks. Some smaller firms may have an outsourced chief financial officer (CFO). They may not need someone full time, but still need the skills or expertise a CFO can provide on a part-time and contractual basis.

· Timing refers to the two old adages—“timing is everything” and “be in the right place at the right time.” Most likely these were coined by business people, as they understand that timing is key. 

Case Study—Introduction to ABC

Throughout this course, to help illustrate the concepts, you will follow the story of the ABC eLearning Company and its activities. The company was founded in 2003 when eLearning was just taking off in the marketplace.

When you examine your business or organization, whether as an owner or an employee, it is important to understand business in general, your specific industry thoroughly, and also the economic indicators. By triangulating basic business practices, industry demands, consumers, and key economic indicators, managers and leaders are able to develop a diverse and flexible strategy around driving business success.

Organizations may enter the marketplace with one product or a focused product suite approach, but it is critical to be constantly paying attention and allowing the business to evolve based on what is going on with the general economy as well as marketplace demands.

ABC’s initial proposition was to help academic institutions develop online learning. The company was just at the right place at the right time and picked up customers because of the growth of online learning. However, two years after it was established, the founders realized it was important for the business to define its strategy and plan how to execute it in a way that employees could support it and the marketplace would adopt it.

The company set up an innovative consortium of academic institutions and businesses that served online learning but did not compete with ABC. This consortium brought vendors and prospective clients together to better understand needs and what services could support the needs. This was the first of many steps the company used over the years to position itself in the marketplace and communicate its strategy.

ABC Case Study—Market Analysis

Short- and Long-Term Strategy

Having a good product and being able to convey value is important. However, it is also critical to have both effective short- and long-term strategies. There are many examples of companies that rose to great heights quickly and then failed. Although there were likely numerous reasons, often the failure revolved around issues with strategy, alignment, and execution of short- and long-term business plans. Timing is a key element as well and can be involved in something as simple as the timing of an e-mail, a customer satisfaction survey, or follow-up on an issue with a defective product. Timing is an important part of the overall process to strategy development and execution.

Let us check in with the ABC eLearning Company and learn more about its corporate strategy.

The ABC eLearning Company began with a focus on academic institutions and the company took on new customers. Later, through marketplace analysis, management realized that not only academic institutions needed help with developing online learning but so did businesses. Therefore, ABC eLearning expanded its market position. 

Next, it realized that many businesses and academic institutions were not prepared to take on a large learning management system (LMS). ABC eLearning then outsourced its LMS and created a relationship with the vendor to allow others to piggyback on its LMS. The vendor benefitted with a fee and ABC eLearning helped clients and benefitted with additional revenue. Next, the company started helping customers with eLearning strategic planning and introduced channel partners to help with marketing client online programs and courses and providing access to other technology (such as student information systems).

The key to ABC’s success was paying attention to the core business as well as the evolving trends and needs in the marketplace, which enabled expansion of services and products (course development and hosting). Within the organization, a cross-functional team was developed that included a management member from each of the following areas:

· Course development and programming

· Client services (customer support and LMS technology services)

· Sales

· Training

· Accounting/finance

ABC Case Study—Employee Alignment

The goal of using cross-functional teams was to ensure that all employees stayed aligned with the strategy and could help navigate the path to success with regular communication. In lieu of building silos within each function, the cross collaboration and communication served to ensure that an optimal client growth plan could be created and achieved. Course development personnel were aware of what was going on with client services as related to a specific customer and therefore, potential issues could be addressed before they became a problem, and services could be offered or adjusted to better meet the client needs. The company won an “honorable mention” award from the American Society for Training and Development (ASTD) for integrating internal training and cross-functional workgroups to improve the organization and how it was serving customers.

Communicating Strategy

As you review the readings and work on the assignments, consider how the ABC eLearning Company communicated its strategy versus how Amazon uses its annual report to communicate its strategy. Different companies adopt various strategies based on what is assessed and what will deliver the optimal results.

To understand how companies design strategy and share the strategies with key stakeholders, it is important to talk to various members of the management or leadership team to see how this is decided.

It is necessary to have a cross section of management and speak to at least one management team member from the company. Be sure to ask the following key questions:

· How is success defined in the organization?

· How does this relate to the current marketplace position and goals?

It is always interesting to hear, based on the functional area within the company, how the goals are viewed and what the results mean to the company (that is, finance and bottom-line, sales and customer acquisition, and operations and delivering the products or services).

Applying Concepts and Theories

The readings and other assignments in this module will help you develop a greater understanding of these and other concepts related to evolving with market demands. You will have the opportunity to compare notes with your classmates about your experiences with strategic planning or execution and discuss the issues you may have encountered in developing strategic plans. In other assignments, you will discuss the best strategy for a business. You will also begin your work on your strategic audit by identifying a suitable business unit, interviewing at least one mid-level or senior manager, and conducting a market position analysis.

In addition to your required assignments, be sure to take time in this module to read the directions for preparing your course project. Get started by identifying the organization or business unit of your choice. It is important to have reliable sources in the business unit/organization you identify for the project because securing information and being able to revisit for clarification and understanding during the engagement is essential. Share with the organization the project overview so the decision-maker who provides you with access understands and fully supports the parameters of the assignment.