Business Strategy and Strategic Positioning Models Made Easy

Without uncovering what your strategic position is going to be, you will find it difficult to gain a competitive advantage.  And without a competitive advantage, competing and finding success in business will always be a struggle.  

So in this article, I’d like to talk about the three types of strategic positions.  Knowing what they are will help you see how you can position your business.  Deciding which one you want to use to position your business will make a huge difference to everything that follows, so keep reading to uncover the three types of strategy positions and an example at the end in which I run an example through them all to demonstrate the differences.

You see, business strategy is basically the head of your business.  And all your sales, marketing, operations, financial management, culture, decision-making and more are all defined based on what your business strategy is.  And that is why it’s so important to be absolutely clear on what your strategy is.  If you’re not 100% clear, then what ensues is a brand that isn’t in line with the business offer, or sales and marketing strategies that don’t reach the right audiences or don’t have the necessary messaging, business operations that don’t support the overall objective of the business, and plenty more misalignment and gaps across the business.  

And the most important part of your business strategy is your strategic positioning.  

Sometimes it helps to get some business strategy examples around what types of business strategies or models exist, so you can get those creative juices flowing.  So let’s dive in.  

As I mentioned at the start of this article, there are 3 types of strategic positioning models:

1. A business that provides a niche product/service to a large customer base
2. A business that provides a broad product/service to a specific target audience
3. A business that provides a broad product/service to an underserved market or audience

These can be used as standalone models, or combined to form a hybrid.  Let’s look at each one of these in more detail, and then I’ll run an example through all three strategic positioning models to demonstrate the differences between them.  

Business Strategy #1: Providing a niche product/service to a large customer base

In this type of strategy model, your focus is your niche product/service.  

Your Ideal Customer Avatar is likely to be defined by a need or a life stage or an experience.  This is in contrast to ICAs that are defined as personas or detailed descriptions of specific types of people.  

In this type of business strategy model, you’re looking to differentiate yourself via your product.  You might offer the highest quality product/service of that type, or be the business that provides the most value to your customers, or you could be the one with the best customer experience.  These are just some examples of differentiation within this type of business strategy.  

Business Strategy #2: Providing a broad product/service to a specific target audience

In this type of strategy model, your focus is on the audience you serve.  Your business is built around this specific type of customer.  You create a product or service with that customer in mind.  

Your Ideal Customer Avatar in this instance would be based on the audience.  You will craft the ICA around the similarities of that specific audience.  

In this type of business strategy, you’re differentiating your business from others in your industry by targeting a very specific type of customer.  Your products will be created with that customer in mind.  What that means is that if your ideal customer avatar doesn’t need a feature or a service, you won’t include it in your offer.  

Business Strategy #3: Providing a broad product/service to an underserved market or audience

In this type of strategy model, your focus is on finding those underserved markets or audiences, and providing them with products or services that are otherwise unavailable to them.  

Your Ideal Customer Avatar in this instance would be based on the criteria that makes them underserved.  For example, if your ICA is market-specific, your business might be bringing a product or service to small towns or villages or even entire countries where they are not available.  If your ICA is audience-specific, your business might be making a product or service available to a specific demographic or socioeconomic group that currently doesn’t have access to that type of product or service.  

In this type of business strategy, you’re differentiating your business by being the first and only  – whether you’re the only provider in a specific market or region, or the only business to create a product or service for a specific type of market.  

Now you might be thinking – this sounds a lot like the previous strategic position.  And yes, it does sound the same, but here’s the difference:  For this type of positioning, you will need to understand why no one else has ventured into the space before you, and develop a business model that overcomes those challenges.  If your business idea is to bring an exercise class to Kenya, then you need to understand why this hasn’t been done before and how you can make exercise classes work as a business in that market.  There are barriers that will have made this particular business idea unappealing to others before you.  So find out what they are and see if you have ideas to overcome them.  The thing is, if you are able to overcome them, you may very well have started the journey along a solid business strategy.   

Examples of the Business Strategy and Positioning Models

To demonstrate the differences between the three business strategy models, I’ve created an example business below and I’ve run it through all three business models so you can see how the business strategy changes.  

The example business: Let’s say you have a real estate business.  The main objective of your business is to help people find homes to buy or rent.  

Now let’s run your business through each of the three types of strategic positions and see how it changes the business.

A niche product/service to a large customer base

If you were to transform your business to this type of strategic position, you would start by choosing a subset of the real estate market that you can do better than everyone else.  For example, you could have a real estate business that specializes in selling homes that were distress sales.  

This type of business strategy would work best for you and your business if you were able to support it with the business infrastructure required to make this niche product or service as efficient and effective as possible.  What would you be doing around distress sales that a real estate agency that has a wider portfolio wouldn’t be able to do, because they wouldn’t be able to spend as much time on this niche product as you can?  

As you can see, your business is differentiated based on a niche product or service which has a broad customer base – people looking to buy homes.  You are competitive because you are able to deliver more value across that niche product/service than a competitor who has a wider range of products and therefore isn’t able to enhance their offer around this niche.   

A broad product/service to a specific target audience

If you were to transform the business to this type of strategic position, then we’d change the product/service up to match.  Let’s say the specific target audience we’re looking to serve are “first-time buyers” (note that this could have been anything – “high wealth”, “low income”, “expats”, etc).  

When you hone in on the target audience, you’ll realize that your product/service offering will have to change to match their needs.  In fact, you’ll find that your product/service offering will become wider, not narrower.  A first-time buyer will most likely be looking for a low-mid range home and possibly a smaller one (1-2 bedrooms).  By doing some research, you may find more information such as areas that first-time buyers are more (or less) interested in.  Or perhaps you’ll find that first-time buyers tend to be within a certain age group.  Since you’ve narrowed down the audience to “buyer”, you know that your business doesn’t need to have any rentals available.  

And lastly, because you’re looking to serve a specific target audience, you’re now able to add some services that would be valuable to them, such as a financial advisor session if they would like help with budgeting or mortgaging.  You could also have other services that they might be interested in that would make the purchase journey easier.  If you are able to, you could partner up with furniture stores to offer discounts.  You could reach out to contractors and also partner with them to provide your customers with options for making changes to their new homes at preferential rates.  As you learn more about your Ideal Customer, these additional products/services will come to you.   

A business that provides a broad product/service to an underserved market or audience

Now let’s move onto the third strategy model.  In this strategy, you’re looking at serving an underserved market or audience.  So perhaps you choose to build your model around providing real estate services to low-income families.  

Again, you’ll find that it makes business sense to adjust your products and services in line with the needs of your target audience.  You may reduce your service prices, knowing that you’ll capture a larger share of the market.  You might choose to increase revenue streams by offering end-to-end services, just as in the example above.  But the real differentiating factor will arise out of understanding what makes working with your underserved audience different to working with the general market.  Once you understand their needs (and what they don’t need), you’ll design your business around that. 

Why it’s important to build your strategy from the start

Having gone through the examples above, I hope that you’re able to see that your strategic position has an impact on everything else in your business – from who your customers will be to what products and services you’ll sell to how your business will operate and more.  It is a worthwhile investment to take some time to consider your position before you begin building your business.  And if you’re already in business and struggling, now is as good a time as any to revisit your business strategy and strategic position and really carve out something unique.