C H A P T E R

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Strategic market choices and targets: where to compete and where not to
This chapter . . .
The focus is now on market strategy choosing the markets and segments where we are going to compete. This is less straightforward than is often suggested. Dening markets is not a one-off, throw-away that we do just so we can worship the false god of market share. Markets are 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 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 benets delivered to customers and the barriers to achieving this. Seen in strategic terms, market positioning is about the identication and domination of uncompeted market space, rather than more conventional comparisons

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Market-Led Strategic Change

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?

Introduction
We took the rst step in our strategic pathway as the development of market sensing capabilities. The rst area where superior market understanding should impact is on the market choices that we make and then re-make as we learn more. This is the topic for this chapter, leading then to considering our value proposition and key relationships. A critical part of building and designing an effective market strategy is the key choices we make about our markets (Figure 7.1): Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 market denition and the competitive box how we select part of the outside world and identify it as our market, and avoid the trap of shortsighted, xed market denitions; market segmentation and targeting how we identify groups within the market as targets for our products and services; market positioning where we want to be in a market relative to the competition; and market choices what we decide makes a market or segment attractive to us and a position we take good or bad, and the choices we make about where to concentrate and to establish our marketing priorities.

Market definition and the competitive box

Market segmentation and targeting

Strategic market choices and targets

Market positioning

Market choices

Figure 7.1 Strategic market choices and targets

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Strategic market choices and targets: where to compete and where not to

Market Denition and the Competitive Box

The rst point is simple but dogmatic in an era where the Internet is daily fuelling the blurring of traditional product-market boundaries, new business models are being created, radical innovation is changing the rules there is nothing xed or static about the denition of the market where you hope to earn a living. The danger is that you can be trapped by the competitive box into believing that markets stand still and the boundaries stay the same.

The competitive box

The competitive box model shown in Figure 7.2 is a way to convince the non-believers that there are big things going on in most markets, which can destroy the incumbents if they do not open their eyes (yes, that is you). You can try this. The trap of the competitive box reects the tendency of managers to build a xed mental map of the industry in which they compete. The competitive box puts a ring-fence around familiar competitors using Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 similar technology to produce similar products and services for a shared customer base these are the usual suspects we mean when we talk about our competitors. We know these people well we probably swap personnel with them every so often, we go to the same trade fairs and exhibitions as they do, we belong to the same trade associations,

The competitive box

The usual suspects Known competitors, operating in traditional ways with the existing, known customer base and competing for market share through incremental innovation

New types of competitor

New business models

Conventional value propositions New customers Existing customer base New customers

New customer base

Figure 7.2 The trap of the competitive box

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Chapter extract

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