The strategic watch is an instrument developed by Cliff Bowman that combines perceived values and prices of goods and services. Thus, it allows companies to set their competitive strategies.
The concept of a strategic watch is also known as the “customer matrix” and was developed by Cliff Bowman. This teacher and student of market dynamics tried to create a useful tool when offering alternative strategies to organizations willing to be competent.
Throughout their history, companies seek to offer their products and services to customers more competitively than their rivals. As a result, another main objective is the search for new potential clients in order to progressively acquire a better position in a sector or market.
The use of the strategic clock helps these firms to find the most efficient relationship between the value that consumers perceive of those products or services and the price to pay for them in the market.
In this way, the matrix is based on various combinations between values and perceived prices, so that, depending on the situation of these points, different strategic routes are chosen to follow. This, in relation to the needs of each company in question to be competitive in the market.
Types of strategies
Depending on the possible combinations, there are up to 8 possible competitive options in the matrix:
- Low price strategies (costs): This would be the number 1 position, known as “without filigree”, corresponding to those products or services characterized by a low price and perceived value. Therefore, companies that apply this strategy target customers who do not care too much about perceived quality. In contrast, position 2, known as ‘low prices’, includes other routes with a somewhat higher perceived value for buyers. Companies that base their operation on low cost can be included in this section.
- Hybrid strategies oriented towards value for money: We would be in point 3, known as the “hybrid” strategy and we would talk about low-priced products or services, but which offer a certain point of differentiation that can sometimes respond to large marketing campaigns or emotional factors. The companies that apply it are very familiar with the tastes and needs of consumers to keep costs down.
- Strategies of higher perceived added value aimed at product differentiation: Already in position 4, with the name of “differentiation”, it consists of the strategy of offering a different product at a relatively high price, as in the case of established companies years ago and with a loyal customer. Likewise, in point 5, we find «segmented differentiation», where goods or services are of high added value and high price, very typical of companies that are committed to high differentiation, or even luxury. In this last point, the role of segmentation makes special sense when defining the market strategy.
- Strategies least recommended from the competitive point of view oriented to failure: They are usually strategies that are said to lead to failure, as in position 6 where the price of a product rises without increasing its quality. Regarding strategy 7, it is only feasible in monopoly conditions, where the only producer is able to raise its price above what would be charged in a competitive market. Finally, option 8 is to offer low perceived value merchandise at a price that the public will consider high. Taken together, these last three do not appear to be the most recommended competitive routes.