Toolkit Strategy 5 min read

Translated from the Vietnamese original

The Strategy Clock, developed by Cliff Bowman and David Faulkner, helps a company position its competitive strategy for sustainable growth. It rests on two factors: price, and the value customers perceive in the product or service.

Price →

Low

Medium

High

High

3Hybrid

4Differentiation

5Focused differentiation

Medium

2Low price

Strategy clock

6Risky high margins

Low

1Low price, low value

8Loss of market share

7Monopoly pricing

↑ Customers’ perceived value

Positions 1 to 5 are strategies that can be sustained. Positions 6 to 8 usually lose customers, unless the company holds a monopoly.

Eight strategies on the clock

1. 1. Low price, low valueCheap products that deliver limited value. The low price usually comes from cutting costs to the minimum. It targets price-sensitive customers willing to accept lower quality for a lower price.
2. 2. Low priceThe company aims to be the low-cost leader, offering competitive prices with acceptable quality. Because competition is mainly on price, it must keep optimizing cost to stay profitable.
3. 3. HybridBalances a reasonable price with added value, appealing to price-sensitive customers who still want good quality. IKEA, for example, offers modern furniture design at affordable prices to many segments.
4. 4. DifferentiationUnique, high-value products or services that justify a higher price. Apple, for example, is known for refined design and a distinctive ecosystem that let it charge more than many rivals.
5. 5. Focused differentiationUnique, high-priced products or services for one specific segment. Rolls-Royce, for example, focuses on luxury cars with distinctive models at very high prices for wealthy customers.
6. 6. Risky high marginsHigh prices without matching value, which easily loses customers. Some newly launched tech products, for example, are priced high but fail to meet expectations, and sales stay low.
7. 7. Monopoly pricingHigh prices for low value, usually only possible in a monopoly. In some monopoly markets, for example, a supplier can charge a lot for a basic service because there is no competition.
8. 8. Loss of market shareA standard price for low value, which easily loses share. Poor-quality products that are no cheaper than rivals, for example, struggle to attract customers and sales fall.

Using the model

1. Assess where you areLocate your company on the clock to understand your current strategy.
2. Analyze competitorsCompare their positions to spot opportunities and threats.
3. Set future directionAdjust strategy based on the analysis to strengthen your competitive advantage.

Bowman’s Strategy Clock is a useful tool for positioning a product strategy. It clarifies the relationship between price and perceived value, so a company can build an effective competitive strategy.