Market Power Structure Framework
Positioning within a market
The Market Power Structure Framework is a tool for understanding the power dynamics within a market. It consists of a grid with established and new markets on one axis and established and new products on the other. The framework helps companies position themselves within the market and navigate the complex web of relationships between market makers, suppliers, and customers.
- Companies must establish relationships with market makers to succeed.
- The power structure of a market is determined by the relationships between companies.
- New entrants can disrupt the power structure by introducing new products or services.
- Identify the Market MakersDetermine which companies are currently dominating the market and understand their relationships with suppliers, customers, and other market players.Pro tipUse industry reports, market research, and social network analysis to identify key market makers.WarningBe aware that market makers may not always be obvious, and it's essential to look beyond surface-level relationships.
- Assess the Power StructureAnalyze the power dynamics within the market, including the relationships between market makers, suppliers, and customers.Pro tipUse tools like social network analysis or market mapping to visualize the power structure.WarningBe cautious of assuming that the power structure is static, as it can shift rapidly in response to changes in the market.
- Position Your CompanyDetermine the best position for your company within the market, taking into account your strengths, weaknesses, and goals.Pro tipConsider using the Market Power Structure Framework to identify potential positions, such as the Old Guard, Explorers, or Barbarians.WarningBe aware that positioning is not a one-time event, but rather an ongoing process that requires continuous monitoring and adjustment.
- Establish RelationshipsBuild relationships with market makers, suppliers, and customers to establish your company's position within the market.Pro tipUse strategic partnerships, joint ventures, or other collaborative arrangements to build relationships.WarningBe cautious of over-reliance on a single relationship, as this can create vulnerability to changes in the market.
Visioneer, a company that makes a scanner for PCs, is an example of a company that successfully positioned itself within the market by establishing relationships with market makers and suppliers.
Intel, a company that faced significant backlash from the Internet community over its handling of a mathematical error in its Pentium processor, is an example of a company that failed to understand the power dynamics within the market.
The framework was developed by Geoffrey A. Moore, a renowned marketing expert, as a way to help companies succeed in the rapidly changing technology landscape of Silicon Valley. Moore recognized that traditional marketing approaches were no longer effective in the face of intense competition and rapid innovation, and he developed the Market Power Structure Framework as a more nuanced and dynamic approach to market analysis and positioning.