bowmans-strategy-clock

What is Bowman’s Strategy Clock And Why It Matters In Business

Bowman’s Strategy Clock is a marketing model concerned with strategic positioning. The model was developed by economists Cliff Bowman and David Faulkner, who argued that a company or brand had several ways of positioning a product based on price and perceived value. Bowman’s Strategy Clock seeks to illustrate graphically that product positioning is based on the dimensions of price and perceived value.

Understanding Bowman’s Strategy Clock

Bowman’s Strategy Clock seeks to illustrate graphically that product positioning is based on the dimensions of price and perceived value.

Here, the illustration features price on the x-axis and perceived value on the y-axis.

On the graph lies the circular Bowman’s Clock.

Varying combinations of price and perceived value lead to eight conceivable marketing strategies.

Businesses can pick one of the eight strategies that suit them best, according to the price and perceived value of the product, service, or brand they are trying to market.

Bowman’s Strategy Clock was developed in 1996 in response to Michael Porter’s Generic Strategies, a model that explained three general ways in which a company could gain a competitive advantage.

While Porter’s model was useful to some extent, some found his approach a little too generic and desired something more detailed.

Cliff Bowman then developed his model to expand Porter’s idea into the various strategic options that we will discuss in the next section.

The eight strategies of Bowman’s Strategy Clock

Businesses must select one of the competitive strategies of Bowman’s Strategy Clock according to their specific needs, circumstances, and the particular barriers they are experiencing.

For example, a business that competes on price should assess whether it has price leadership and can exploit cost advantages to sustain that advantage.

A business that competes on perceived value, on the other hand, should focus on understanding its target audience with respect to their needs, wants, and pain points.

To effectively differentiate themselves, it is also important that they understand how the market as a whole perceives competitor products.

Now it is time to dive into each of the eight strategies.

1. Low price and low value-added.

Since the first strategy involves low-value products sold at the lowest possible price, there is little scope for strategic positioning if a competitor is already selling for the lowest price possible.

The consumer also perceives very little value, despite the low price, which decreases brand loyalty.

2. Low price

The low price strategy means a product is the lowest cost option in its marketplace.

Businesses who want to utilize this strategy must manufacture products in large quantities while also being cost-effective and efficient.

cost-leadership
According to Porter, there are three core strategies for competitive positioning: cost leadership, differentiation, and focus. Cost leadership is straightforward, as the player rolling this out will become the lost-cost producer in the industry.

Walmart is a classic example of a low price strategy market leader.

walmart-vision-statement-mission-statement
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.

3. Hybrid

In the hybrid strategy, consumers perceive added value through a combination of competitive low pricing and product differentiation.

If the added value is offered consistently, this can be an effective positioning strategy.

Flatpack furniture outlet IKEA is a great example of the hybrid strategy.

who-owns-ikea
IKEA is a brand comprising two separate owners. INGKA Holding B.V. owns the IKEA Group, the holding the group. At the same time, that is held by the Stichting INGKA Foundation, which is the owner of the whole Group. Thus, IKEA Group is a franchisee that pays 3% royalties to Inter IKEA Systems. 

4. Differentiation

sustainable-competitive-advantage
Sustainable competitive advantage describes company assets, abilities, or attributes that are difficult to duplicate or exceed. The qualities of these attributes mean the company that possesses them can enjoy a superior and long-term position in its market or industry. In business theory, sustainable competitive advantage is associated with cost leadership, differentiation, or cost focus.

The differentiation strategy is equated with high perceived value.

Because of this, brand equity is high – allowing businesses to compete in highly competitive markets.

Ultimately, the consumer chooses to pay a higher price for a product they could purchase elsewhere for less.

Starbucks is a company that uses the differentiation strategy to its advantage.

starbucks-business-model
Starbucks is a retail company that sells beverages (primarily consisting of coffee-related drinks) and food. In 2018, Starbucks had 52% of company-operated stores vs. 48% of licensed stores. The revenues for company-operated stores accounted for 80% of total revenues, thus making Starbucks a chain business model

5. Focused differentiation

Focused differentiation is where most luxury brands reside.

They have extremely high perceived value and a price to match.

Companies such as Rolex and Ferrari are competitive in this sphere through product promotion to their highly targeted audience.

Brand equity is similarly very high. 

what-is-brand-equity
Brand equity is the premium that a customer is willing to pay for a product that has all the objective characteristics of existing alternatives, thus, making it different in terms of perception. The premium on seemingly equal products and quality is attributable to its brand equity.  

6. Risky high margins

As the name suggests, this is a high-risk strategy where businesses set high prices without offering much value in return.

Often, they are relying on brand equity to drive sales.

Inevitably, a competitor will enter the market and offer a product for a similar perceived value but at a lower price.

Businesses that offer gym memberships are one such example.

7. Monopoly pricing

monopoly-examples
A monopoly is a market structure characterized by the presence of a single, dominant individual or enterprise that is the sole supplier of a product or service. Monopolies are associated with a lack of competition and an absence of viable product substitutes. As a consequence, the company can sell products and services at prices that result in substantial profits. 

A company that enjoys a monopoly over its market is less concerned about perceived value or pricing.

This is because the consumer is reliant on the business for the products and services that it offers.

Thus, perceived value is often low and so too is brand equity.

Despite total market share, monopolies are difficult to obtain and such companies are often dissolved by regulatory bodies.

American telecommunication company AT&T is a notable recent example.

8. Loss of market share

The loss of market share strategy involves products with low perceived value but with disproportionately high pricing.

When the iPhone was first launched in 2007, it quickly rendered the dominant Blackberry obsolete.

iphone-sales-2007-09

As a result, Blackberry phones lost their perceived value and market share very quickly.

Read: What Happened to BlackBerry?

Non-viable market positions in Bowman’s Strategy Clock

Note that the sixth, seventh, and eighth positions are not viable strategies in competitive marketplaces. 

Whenever the price of a product is greater than its perceived value, the business will find it difficult to sell its products in the face of other companies selling cheaper alternatives.

Companies that find themselves in this predicament have two options.

They can either add perceptible value to the product or service on offer or increase perceived value by lowering its price.

If none of these initiatives can be accomplished, the business should exit the market.

Advantages and disadvantages of Bowman’s Strategy Clock

Advantages

  • Choice – as noted in the introduction, Bowman’s Strategy Clock sets out a broader spectrum of strategic options for a company when compared to Porter’s Generic Strategies. This gives decision-makers more freedom of choice.
  • Ease of use – while more detailed, Bowman’s framework is easy to understand and analyze. It provides multiple starting points for a business looking to establish and maintain a competitive advantage in a market-driven economy.

Disadvantages

  • One dimensional – the primary criticism of Bowman’s Strategy Clock is that it fails to account for firms that occupy more than one strategic position at the same time. Since the model is focused on developing a sustainable competitive advantage, the business in a market characterized by low competition will need to look elsewhere to define a strategy.
  • Differentiation – each of the eight strategic positions of the model is represented in a circle divided into segments, not unlike the face of a clock. However, the boundaries between each position are somewhat blurred and may be difficult to understand as a result.

Bowman’s Strategy Clock example

While we briefly touched on some examples earlier, let’s describe some other companies in more detail for each of the eight strategies:

1 – Low price and low value-added

Dollar Tree is an American chain of discount variety stores with a core focus on extremely low-priced items in categories such as cleaning supplies, housewares, candy, party supplies, stationery, craft supplies, and seasonal décor. 

Many items are disposable and sold for $1 or less, providing very little scope for a competitor to undercut Dollar Tree’s prices.

2 – Low price

American airline JetBlue used the low price strategy to not only remain competitive but expand across the country.

The company has been able to differentiate itself by serving airports with lower taxes and removing perks that tend to be underutilized at other airlines.

3 – Hybrid

Lush is a British cosmetics retailer that sells competitively-priced items with several important points of differentiation.

The company is known to support issues like climate change and sustainability, with this stance becoming part of its brand identity.

Lush has also made the often dull experience of buying shampoo and soap fun with its interactive, fun, and immersive retail stores.

4 – Differentiation

Apple is a master at implementing the differentiation strategy with superior levels of brand equity and perceived value.

The company has made phone ownership a status symbol and its consistently innovative products are always eagerly anticipated by consumers.

5 – Focused differentiation

Luxury automaker Rolls Royce uses focused differentiation to offer premium vehicles at very expensive prices to niche audiences. 

The Rolls Royce Cullinan, for example, retails for $335,000 and offers lavish features such as lambs wool floor mats, a shooting star headliner, and a rear suite with two backward-facing leather seats and a picnic table.

6 – Risky high margins

The Juicero Press was an American-made juicing machine that was over-engineered and initially retailed for $699.

The high-margin product could only be used with proprietary packets of pre-juiced fruits and vegetables that were sold on a subscription basis.

Despite backing from serious tech investors, the company went bankrupt because its juicer was overpriced and delivered little value.

Consumers could obtain the same results from much cheaper machines and avoid the expense of having to purchase pre-juiced fruit.

7 – Monopoly pricing

Pharmaceutical company Pfizer had a monopoly in the Viagra market for over twenty years, selling the blue pills for as much as $65 each and earning $400 million just three months after it was launched in 1998.

But this success inevitably attracted the interest of competitors who challenged Pfizer’s patents and by extension, its monopoly.

The last of Pfizer’s patents expired in 2020, with a slew of much cheaper generic versions introduced since that time selling for much cheaper.

8 – Loss of market share

British supermarket chain Tesco lost market share over a period of years in the early 2010s despite the grocery market itself experiencing growth

Market share was lost to competitors such as Lidl and Aldi established who offered similar products to Tesco but at much more attractive price points.

Key takeaways:

  • Bowman’s Strategy Clock is a marketing model that investigates how a product might be positioned to give it a maximum competitive advantage. It is a more detailed framework that seeks to build on the somewhat more generic Porter’s Generic Strategies approach. 
  • Bowman’s Strategy Clock features eight possible competitive strategies that apply to different markets and products.
  • Of the eight different strategies, three are associated with undesirable market positioning. Nevertheless, many businesses find themselves in these positions and must find ways to increase the perceived or actual value of their products.

Connected Strategy Frameworks

ADKAR Model

adkar-model
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived from whether the market is new or existing, and whether the product is new or existing.

Business Model Canvas

business-model-canvas
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

lean-startup-canvas
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Balanced Scorecard

balanced-scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

GAP Analysis

gap-analysis
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

GE McKinsey Model

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

McKinsey’s Seven Degrees

mckinseys-seven-degrees
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

McKinsey Horizon Model

mckinsey-horizon-model
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis

Scenario Planning

scenario-planning
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

Read Next: SWOT AnalysisPersonal SWOT AnalysisTOWS MatrixPESTEL AnalysisPorter’s Five ForcesTOWS MatrixSOAR Analysis.

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