Satellite vs Territorial Decision
A decision matrix for consciously choosing between territorial defense and satellite strategy.
A decision matrix for consciously choosing between territorial defense and satellite strategy. Sometimes the best territorial strategy is no territory - satellite strategy exploits defended territories without defensive costs.
When to Use Satellite vs Territorial Decision
Use in Phase 4 of territorial strategy (Month 4-6) for at-risk or economically indefensible territories. Also use when entering new markets as challenger or when current DI% exceeds 40%.
How to Apply
Evaluate Defensibility
Assess whether boundaries can be defended. High defensibility: Clear differentiation, high switching costs, strong brand/relationships, network effects, regulatory protection. Low defensibility: Competitors can easily enter, no switching costs, commoditized offering, no network effects.
Questions to Ask
- Do customers have high switching costs?
- Is your offering differentiated?
- Do you have incumbent advantages?
Outputs
- Defensibility rating: High or Low
Assess Strategic Importance
Determine if territory is core or adjacent to strategy. Core: Must control this space for business model to work, losing means losing business. Adjacent: Nice to have, can succeed without controlling, better to exploit than defend.
Questions to Ask
- Must you control this territory for your business model?
- Can you succeed without owning this space?
Outputs
- Strategic importance: Core or Adjacent
Determine Your Position
Assess incumbent versus challenger status. Incumbent: Established presence, existing relationships, brand recognition in territory. Challenger: Late entrant, no existing base, must win customers from incumbents.
Outputs
- Position: Incumbent or Challenger
Apply Decision Matrix
Combine factors to select strategy. High defensibility + Core + Incumbent = DEFEND INTENSIVELY. High defensibility + Core + Challenger = SATELLITE (grow until defensible). High defensibility + Adjacent + Incumbent = DEFEND MODERATELY. High defensibility + Adjacent + Challenger = SATELLITE. Low defensibility + Core = REDEFINE TERRITORY. Low defensibility + Adjacent = SATELLITE or EXIT.
Outputs
- Strategic choice: Defend Intensively, Defend Moderately, Satellite, Redefine, or Exit
Monitor Satellite Saturation
If choosing satellite strategy, monitor for saturation. Market share ceiling: 15-30%. Competitive response trigger: 20-25% penetration. Complexity trap: resist SKU/service expansion. Inter-satellite competition: >30% combined satellite share compresses returns.
Questions to Ask
- Have you exceeded 20% penetration triggering incumbent response?
- Are you competing more with other satellites than with territory holders?
Outputs
- Satellite sustainability assessment