Positioning of financial services for competitive advantage

Abstract

The financial services sector is becoming increasingly competitive. Deregulation allows formerly nonoverlapping financial institutions to compete. To survive and succeed, financial institutions must develop strong positions. A position summarizes the distinctive competence that a company seeks to convey to the marketplace to establish its competitive advantage. In this article, Christopher Easingwood and Vijay Mahajan describe a number of positioning attempts in the financial services sector. They are guided by two central objectives. The first is to show how the special characteristics of services give rise to eight different positioning possibilities for financial services organizations. These positions present a range of potential options from which the manager may choose. For instance, an “extra service” position is one option, a “performance” position is another. The second objective is to demonstrate the use of the positioning framework, with examples taken from the insurance sector to provide illustrations rather than a complete picture of insurance positioning. The article concludes with a number of recommendations. For instance, financial institutions should avoid overcrowded positions and occupy underexploited positions. If accepted, these recommendations should help the financial services executive develop a competitive positioning strategy.