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.
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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.
Walmart is a classic example of a low price strategy market leader.
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.
4. Differentiation
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.
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.
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
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.
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.
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.
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.
Other strategy frameworks
- Porter’s Five Forces
- Ansoff Matrix
- Blitzscaling Canvas
- Business Analysis Framework
- Gap Analysis
- Business Model Canvas
- Lean Startup Canvas
- Digital Marketing Circle
- Blue Ocean Strategy
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