Strategic group analysis (SGA) is a tool used to analyze an organization's competitive environment. SGA identifies groups of competitors that follow similar strategies or compete on similar bases. Groups are identified using characteristics like product diversity, market segments served, and branding. SGA helps identify direct competitors and the basis of competition. It can also reveal opportunities and strategic problems. The process involves analyzing industry structure, mapping strategic groups, assessing competitiveness, and understanding strategic interactions. Conducting SGA involves using criteria like integration, market segmentation, ownership structure, and cost structure to distinguish groups.

1. STRATEGIC GROUP ANALYSIS
• The process of conducting research on the business environment within
which an organization operates and on the organization itself, in order to
formulate strategy.
• It aims to identify organizations with similar strategic characteristics,
following similar strategies or competing on similar bases. Such groups can
usually be identified using two or perhaps three sets of characteristics as the
bases of competition.

2. Examples of SGA
 Extent of product (or service) diversity.
 Extent of geographic coverage.
 Number of market segments served.
 Distribution channels used.
 Extent of branding.
 Degree of vertical integration

3. Use of Strategic Group Analysis.
 Helps identify who the most direct competitors are and on what basis they
compete.
 Raises the question of how likely or possible it is for another organization to
move from one strategic group to another.
 Strategic Group mapping might also be used to identify opportunities.
 Can also help identify strategic problems.

4. STEPS OF STRATEGIC GROUP
ANALYSIS
1. Analyze Industry Structure
2. Map Strategic Groups
3. Identify Relative Competitiveness for each strategic group
4. Understand firms' strategy vis a vis strategic groups interaction
5. Identify strategic group responses

5. How do we conduct a strategic group
analysis?
- SGA is done to distinguish between strategic groups within a sector and to
analyze the differences in their behavior, the following criteria can be used
 Integration
-Vertical
-Horizontal
 Market segmentation
-Demographic segmentation
- Geographic segmentation
- Behavioral segmentation
 Ownership structure
 Company size
 Capacity utilization
 Cost structure

6. STRATEGIC POSITIONING
 This is how an organization competes and serves customers in its markets,
mainly through customer bonding: the attraction, satisfaction and retention of
customers.
 A company’s relative position within its industry matters for performance.
Strategic positioning reflects choices a company makes about the kind of value
it will create and how that value will be created differently than rivals.

7. Customer Bonding
 Customer bonding is one of key forces driving strategy today. Traditional,
product-centric ways to compete - on price, quality, features, etc. - are
necessary, but insufficient to lock-in customer relationships. Competitors can
imitate these sources of differentiation, and customers can quickly change
allegiance
 Bonding is a continuum is a way of increasing customer bonding. It extends
from the first loyalty a customer feels toward a product to a full lock-in, it is
most feeble with Best Product strategies and is strongest at System Lock-In.
four stages in the bonding continuum: a successful Best Product strategy should
generate a dominant design, Total Customer Solutions draws on customer lock-in,
and System Lock-In utilizes both competitor lock-out and proprietary standards.

8. Stages in the bonding continuum
 Dominant Design-customers are attracted to a product because of its intrinsic
value – either the product's low price and differentiated set of features or
services that accompany it.
 Customer Lock-in -customers may be initially attracted to the product due to
its attributes, but then are retained due to a range of externalities that are
created as the customer uses the product.
 Competitor Lock-out – the company creates significant barriers for
competitors trying to enter the business, and thus reduces the options for
current customers to switch
 System Lock-In- utilizes both competitor lock-out and proprietary standards,
firm must have complementors adopt its "standard", creating a self-
reinforcing feedback loop (e.g., the customers seek the standard with the
most complementors, and complementors support the standard with the most
customers).

9. The Triangle
The Triangle contains a new set of strategic positioning with three distinct
strategic options, which offer very different approaches to achieve customer
bonding;
 Best Product - Low cost or differentiation: commoditization of customers
limits opportunity for bonding
 Total Customer Solution - Reducing customer costs or increasing their profits:
enhancing the customer's economics can lead to stronger bonding
 System Lock-in - Complementor lock-in, competitor lock-out, or proprietary
standard: identifying, attracting and nurturing complementors can further
increase the value of your offering – and the strength of your customer
bonding

10. AREAS IN WHICH A COMPANY CAN APPLY
POSITIONING STRATEGIES
 Cost Positioning Strategy-focuses on ways to eliminate any wasteful procedures
within the company and pass the savings on to their customers.
 Quality Positioning Strategy- companies differentiate themselves from their
competitors by using exceptional parts and materials and committing to minimal
defects thus getting an edge over the rest of the members.
 Flexibility Positioning Strategy- ability by companies to change products and services
based on the needs of a customer.
 Quick Customer Response Positioning Strategy- companies establish sophisticated
logistical operations to offer immediate delivery of the products in order to beat their
competition e.g. fast food joints (latest tech. use of drones to deliver products)

11. Cont;
 Innovation Positioning Strategy- changing or innovating the business models to
make a company more competitive, this requires changing or bringing new value
propositions, services and production processes. Ways of innovation include;
-Imitation- little innovation done on already existing propositions
-Market-based strategy innovation – diversification n new market segments
-Technology-based innovation – new mgnt. processes and tech.
-Market and technology-based innovation- creating new markets with help of tech
 Product positioning strategy -differentiate products to communicate the product
attributes to the target market.
 Brand Positioning Strategy- a way of establishing consumer perceptions, involving
the company’s characteristics and products in comparison to its competitors

12. Cont;
 Competitive Pricing Strategy- Competitive pricing is setting the price of a
product or service based on what the competition is charging especially on
similar products.
 Competitive Positioning Strategy- defining how you’ll “differentiate” your
offering and create value for your market. It’s about carving out a spot in the
competitive landscape, putting your stake in the ground, and winning mindshare
in the marketplace – being known for a certain “something.”
-Market profile: -Size, competitors, stage of growth
-Customer segments: -Groups of prospects with similar wants & needs
-Competitive analysis:- Strengths, weaknesses, opportunities and threats in the
landscape
-Method for delivering value: -How you deliver value to your market at the
highest level

13. #END
QUESTIONS??