Factors Influencing The Strategic Position of a Business
You know that defining strategic positioning is important for your business, but what factors should be considered when developing strategic positions?
Your company's strategic position is an important element of brand identity.
If you've staked out a position based on low prices, your brand will be known as an industry leader on price. On the other hand, if your company's strategic position targets a market niche, your brand identity will be inextricably tied to that niche, even when you take other products to market.
Your brand is a valuable business asset, making it even more important to stay on top of the factors that influence your strategic position. The worse case scenario is to find your brand unprepared to react to developments that affect your position and threaten your ability to remain relevant with consumers.
Whether you are setting out to establish a new strategic position or reassessing your current market position, the factors that impact the effectiveness of your position remain the same. Here are some of the common influences on strategic positioning and suggestions about how your company can address them in the strategic positioning process.
- Market conditions. Changing market conditions can have a dramatic effect on strategic positions. A good example of this occurred during the recent economic downturn. Brands that positioned themselves as high price, high quality leaders were forced to quickly analyze their strategy and in some cases, reposition themselves with consumers.
- Competitive shifts. Like it or not, your competition can also play a role in determining your company's strategic position. If a major competitor suddenly reorients its strategy to occupy the same strategic position as your business, you may need to modify your strategy to differentiate your products with consumers.
- Financial forecasts. Strategic repositioning takes time and money. One of the most frustrating things for a business owner is to identify an attractive strategic position to occupy, but to be unable to do anything about it because you lack the financial resources. If next year's forecast looks grim, think about repositioning your brand and products over a longer time horizon.
- Resource reallocation. Similarly, your current and/or forecasted resource allocation may limit your ability to occupy a desired position. It's a big mistake to attempt to acquire a strategy position without the resources required to maintain it, so a better approach might be to adapt your strategy to your resources - not vice versa.
- Strategic planning. Strategic positions are the outcome of a comprehensive strategic planning process. By far, the most significant influence on your strategic position will be your strategic plan, which should answer many of the questions related to the factors that can influence your market position.
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