#4 Key Question: What is the path to success driving competitive positioning?

The company must differentiate itself from competition in terms of capabilities, cost efficiency and ability to create sustainable value surplus in the perception of its potential target customer groups through particularly attractive offerings. Four strategic core questions lead to a competitive offering capable of success:

  1. Which target groups should be addressed with which products in which price segment?
  2. How are specific customer needs being addressed in a distinctive manner?
  3. What unique offering features create customer value and sustainable purchasing preferences based on which attributes?
  4. How independent and defensible are the unique selling points, customer value, and pricing positioning?

A defendable competitive positioning of customer value surplus leads to superior profitability compared to competitors. Scientific studies show that increased value creation can be achieved through four strategic positioning options resulting from the combination of two strategic dimensions and their characteristics (4-field matrix):

  • Strategic Strength
    • Cost leadership (value driver: lowest cost)
    • Differentiation (value driver: premium pricing)
  • Strategic Business Focus
    • Narrow market focus (niche provider, specialist)
    • Broad market focus (generalist, wide market approach)

A company which is not positioned in one of the four quadrants (Stuck in the Middle) operates with inferior value creation since it has no advantages over clearly positioned competitors, either in terms of cost, unique product features or market coverage. An analysis of over 10,000 companies across more than 160 industries shows that specialists achieve an average of around 13% higher profitability than generalists, while the value creation of Stuck in the Middle firms is approximately -27% and -18% below that of specialized providers and generalists, respectively.

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