This report will analyze price versus attributes in the article “Mapping Your Competitive Position” by Richard D’Aveni. The report will have the analytical summary of the main points and what these points mean to a manager in doing his job. The report will also have two related journal articles on the topic and give an analytical summary of the reports and what they mean to a manager.
“Mapping Your Competitive Position” by D’Aveni-An analytical Summary
The article “Mapping Your Competitive Position” by Richard D’Aveni is about a unique method of defining price benefit positioning maps from the customer’s perspective. The article provides a significant structure for classifying products graphically and evaluating relative prices of different products in the market. The interesting aspect about position mapping methodology is the minimal prices that could be completed or compared to other expensive and time consuming market mapping methods. The price benefits map indicates the relationship between the primary benefits a product gives a consumer and prices in a specific market.
The steps in creating a positioning map include first defining the market that entails specifying the interested market and identification of the consumer needs. In doing this, one needs to have a wider scope of products to meet these needs. This is to avoid being blindsided by new products entrants and new technologies. In defining the market, individuals should limit their study to a specific geographical position they wish to study. Finally, in defining the market one should decide on a specific segment being tracked or the entire market. Different maps can be created by changing these structures of analysis.
Once the market has been defined accordingly, one is expected to choose the price and to determine the primary benefit. Other pricing parameters should be considered in choosing the price. Such a choice depends on the yardstick the consumer chooses to make purchasing decisions in the market of study. The primary benefit determines the variances in prices of commodities. The benefits of a product are additional features, durability, serviceability and ease of use. Companies differentiate products by focusing on a different benefit from competitors.
Nevertheless, the strategy’s success is dependent on the value the consumer attaches to the features. For the determination of this value, a list of all the benefits offered by all different products in the market and data shows how the consumer’s perceive these benefits. The data collected from this should be unbiased. Once this data gets collected, regression analysis analyses which benefit show the largest variance in the prices of products. The use of regression analysis is more reliable than interviewing people on their preferences. Regression analysis determines the relationship between dependent variable numerous independent variables and thus creates a mathematical model. The resulting statistic shows the extent to which each benefit contributes to the price of competitive offerings. Positions are plotted and the expected price line drawn. The price line shows the consumer average price to get a varying level of the primary benefits associated with it.
Meaning to a manager in relation to their job
Positioning maps assist companies in interpretation of the competitive landscape in an industry. They show the benefits that consumer’s value. When interpreted in an industry’s context, they show why some firm’s products perform better than others. As such to a manager, positioning maps assist in knowledge about the competitors hence implementing the right strategy to counter this competition. By valuing intangible benefits, many companies desire to retain customers. By so doing they spend a great deal offering services to clients who do not need the services anymore. Companies can use the price benefit equation as a comparative advantage over their competitors in a market where consumers demand different benefits at different times. Once the identification of the benefits that appeal more to the consumer is done, the company executives like the managers come up with strategic ways of enhancing the new products. The cost of this new feature is also determined and how soon a next differentiator can be created. The positioning maps can also be used in finding least resistance paths. Companies can add more data into the price benefits maps. The maps include unit sales and growth of sales that help companies in identification of low competitive intensity.
Through extracting and valuing intangible benefits, many companies desire to retain customers. By so doing they spend a great deal offering services to clients who do not need the services anymore. Companies use the price benefit equation as a comparative advantage over their competitors in a market where consumers demand different benefits at different times. This could be used by the manager as a strategy to propel the firm he leads to great heights. Once the identification of the benefits that appeal more to the consumer is done, the company executives can choose on features to develop in the new products. The cost of this new feature is also determined and show how soon a next differentiator can be created. The positioning maps can also be used in finding least resistance paths. Companies can add more data into the price benefits maps. The position maps include unit sales and growth of sales that are instrumental in helping companies to identify low competitive intensity. To a manager, the position maps helps in the allocation of more resources in the marketing of his or her brand in a new territory.
Related article 1-“Managing Risk through sustainable development and building Competitive Advantage” by Bansal
Other journal articles related to this topic are “Managing Risk through sustainable development and building Competitive advantage” by Bansal Tima. The article is about business leaders who ignore social and environmental issues in their firms (Bansal 2010, p. 24). It is due to this that businesses today should practice the sustainable development practice to remain relevant in the industry and to avoid being forced out by competitors. Significant social issues threaten the stability in society today.
For this scenario to be avoided it is ,therefore, necessary for global and leading business leaders to embrace the concept of sustained development to avoid instances of being phased out by competitors (Salehi 2010, p. 12). This filters down to everyone in society as consumers are becoming sensitive to environmental issues it is for this reason that they tend to consume products manufactured by environmentally friendly industries. All this as an effort for sustainable development.
Relevance to a manager
For a manager, managing risk through sustainable development is essential in propelling the organization to meet its objective (Salehi 2010, p. 10). This means that the company would remain relevant in its respective industry without being phased out by competition from other firms. This would lead to an eco-friendly environment that supports sustained development.
Article relation to the topic
The article is related to Price versus attributes topic because it analyze how different market scenarios are affected by the price. Comparison is made between different attributes and how they could be improved to beat the competition from others in the same industry. If the attributes in question are keenly followed and analyzed accordingly, then the firm is bound to operate at break-even profits. As such manages to stay relevant in their respective industry. The article is related to “Mapping Your Competitive Position” by D’Aveni in the price versus attributes concept through the examination of competitors prices and attributes to manage risk through sustainable development and gaining competitive advantage.
Related article 2 -“Competitive Advantages and Strategic Information Systems”
In this computer generation era, it is also important for business to embrace emerging technological trends. This is the main theme in the article “Competitive Advantage and Strategic Information System”. Modern day businesses are encouraged to embrace technology in dealing with consumers and the products rolling out. It is for this reason that business enterprises are encouraged to embrace modern forms of communication through social media and the likes to market and popularize their products to the masses. Technological advances in Information systems have led to the numerous advantages in the business world (Bansal 2010, p. 22).
Importance to a manager
Relation to the topic
The article “Competitive Advantage and Strategic Information System” relation to Price versus attributes topic because it analyzes the effect of technology as an attribute to competition. Comparison is made between technological attributes that can be improved to beat the competitors in the same product.
If the attributes in question are keenly followed and analyzed accordingly, then the firm is bound to operate at break-even profits. As such, manages to stay relevant in their respective industry. Attributes like the durability of a product, ease of use and technology determine the price of a product in a market.
Bansal, T., 2010. BUILDING COMPETITIVE ADVANTAGE AND MANAGING RISK THROUGH SUSTAINABLE DEVELOPMENT. P. 44.
Salehi, M., 2010. Competitive Advantage. International Journal of Business Management, p. 34.