Strategy
Blog
DEENES
  1. Home
  2. Principles
  3. Positioning
70Principle · Group 9 · Anchor principle

Positioning

Strategic positioning and trade-offs

“An advantage arises only when you clearly choose one way of being better than others and deliberately give up other things for it.”

Positioning answers the question of how you differ from others, and for whom.

Group 9: Markets and OrganizationsT6 Business Strategy
Go to the in-depth section ↓
A triangle with three corners, in the middle a dot that pulls on three lines at once and trembles without moving. A second dot runs decisively into one corner, dropping small dots along the way, and grows gold there.
In short

An advantage arises only when you clearly choose one way of being better than others and deliberately give up other things for it.

What it’s about: Positioning answers the question of how you differ from others, and for whom. Michael E. Porter describes three basic routes: offering things more cheaply than anyone else, offering something customers value as unique, or serving a narrow group better than anyone who tries to serve everybody. If you try to be everything to everyone, you are no one’s first choice.

In depth

The principle in detail

Three steps through the principle: grasp it, place it, put it to work. Open each topic on its own.

The core messageCore statement and 3 clarifications
In essence

Every position requires its own processes, its own costs and its own culture. If you pursue two at once, you end up, in Michael E. Porter’s words, “stuck in the middle.”

It does not say
That the middle always fails. Whether low cost and distinctiveness exclude each other is disputed.
It does not say
That a position holds forever. If you fail to review it even though the market has shifted, you lose it.
It also says
A position that is only claimed and not lived out day to day is no position.
The explanationA good position is clear, fits your own strengths and is reviewed regularly.

The heart of this choice is giving things up. A good position is clear, fits your own strengths and is reviewed regularly.

The question

Where do you want to be better than others, and what will you deliberately leave out to get there?

The signs3 signs when you heed it · 3 when you overlook it
When you heed it
  • Your team can say in one sentence what it stands for.
  • New requests are checked against this position, and some are turned down.
  • What you leave out is spelled out.
When you overlook it
  • You respond to every new group until your profile blurs.
  • You are decent everywhere and nowhere the first choice.
  • The position is in the mission statement but not in the calendar.
The backgroundTradition T6 Business Strategy
  1. 1980
    OriginMichael E. Porter

    Competitive Strategy

  2. 1981
    SupplementedAl Ries and Jack Trout

    Positioning

  3. 1996
    Developed furtherMichael E. Porter

    What Is Strategy?

  4. Tradition T6
    TraditionBusiness Strategy

    Michael E. Porter, Richard P. Rumelt, Henry Mintzberg, Clayton M. Christensen, W. Chan Kim and Renée Mauborgne

    See the tradition on the Origin page
Read more: the full background

From Michael E. Porter’s book “Competitive Strategy” (1980), sharpened in his article “What Is Strategy?” (1996). Supplemented by Al Ries and Jack Trout, “Positioning” (1981).

The research4 sources: 4 theories · 1980–1996 · with limitations of the research
4 sources1980–1996 period4 theories
Strength of evidence
  1. weak
  2. moderate
  3. strong

The distinction between the basic routes is influential and widely used in research; the disadvantage of the middle is disputed and not consistently confirmed by empirical studies.

  1. 1980
    Theory
    Michael E. Porter

    “Competitive Strategy”: three generic strategies (cost leadership, differentiation, focus); if you don’t clearly choose one, you end up “stuck in the middle.”

  2. 1981
    Theory
    Al Ries and Jack Trout

    “Positioning”: positioning as the place an offering occupies in the customer’s mind.

  3. 1988
    Theory
    Charles W. L. Hill

    Differentiation can also lead to lower costs through higher volumes; low cost and distinctiveness do not necessarily exclude each other.

  4. 1996
    Theory
    Michael E. Porter

    “What Is Strategy?”, Harvard Business Review: strategy means choosing a unique position, making trade-offs and fitting activities together; better processes alone are not a strategy.

Where the research reaches its limits
  • W. Chan Kim and Renée Mauborgne counter with the blue ocean: it is precisely the combination of low cost and high value that can create new markets.
  • Positioning remains important, but the three routes are not laws of nature.
  • The core statement says “only”: the sources do not prove that an advantage never arises without giving something up.
Read more: what research shows

The principle goes back to Michael E. Porter. In “Competitive Strategy” (1980), he describes three generic strategies (cost leadership, differentiation and focus) and the danger of getting stuck in the middle between them. In 1996, he sharpened the idea in his article “What Is Strategy?”: strategy means choosing a unique and valuable position, making trade-offs deliberately and fitting activities together. Independently of this, Al Ries and Jack Trout popularized the term in marketing as the place an offering occupies in the customer’s mind. The evidence is mixed: in 1988, Charles W. L. Hill argued that differentiation can also lower costs through higher volumes, and empirical studies do not consistently find companies that combine both at a disadvantage.

The related principles04 Kernel of Good Strategy · 07 Concentration of Force · 72 Blue Ocean · 73 Core Competence
Kernel of Good StrategyConcentration of Force

To go deeper, see 04 Kernel of Good Strategy (the guiding policy that says what you do and what you don’t) and 07 Concentration of Force (bringing your means to bear on one point)

Core Competence

73 Core Competence links the position to what you are particularly good at

Blue Ocean

72 Blue Ocean stands in tension with this principle, seeking to dissolve the choice between cost and value

Read more: the full text

To go deeper, see 04 Kernel of Good Strategy (the guiding policy that says what you do and what you don’t) and 07 Concentration of Force (bringing your means to bear on one point); 73 Core Competence links the position to what you are particularly good at. 72 Blue Ocean stands in tension with this principle, seeking to dissolve the choice between cost and value.

The action steps5 things you can actually do
  1. Decide with your team where you want to be better than others: on price, in distinctiveness or for a particular group.

  2. Write down what you will give up for it, and say so openly.

  3. Align processes, costs and habits with this one choice.

  4. Check new requests against the position before you say yes.

  5. Review the position regularly: does it still fit your strengths and the needs of the people you are there for?
The reflection questions3 questions: What does your team stand for, in one sentence, and would your people say the same sentence?
  1. What does your team stand for, in one sentence, and would your people say the same sentence?
  2. What do you deliberately give up, and whom have you told?
  3. What was the last request you accepted even though it blurs your profile?

Take your time with one question. Write down your answer – or talk it over with someone you trust.

To finish
The picture to rememberThe animation once more, with an explanation
  1. A triangle with three corners, in the middle a dot that pulls on three lines at once and trembles without moving
  2. A second dot runs decisively into one corner, dropping small dots along the way, and grows gold there
Strategy Check

What do you give up?

Get your profile across all 12 groups in about 10 to 15 minutes.

Start the Strategy Check
In context

Group 9: Markets and Organizations

Guiding question: How does an organization win in the long run?

Stage 3 of 5: Choose the path

  • Anchor principle of the group

    A lasting advantage starts with deciding how an organization is different and better; value chain, core competence and resources are the sources of that advantage, and the other principles show how it changes.

    The other 11 principles in the group build on it.

  • TraditionBusiness Strategy

    Michael E. Porter, Richard P. Rumelt, Henry Mintzberg, Clayton M. Christensen, W. Chan Kim and Renée Mauborgne

Where the 92 principles come from: eight traditions of strategy, from classical war theory to dealing with uncertainty.

More about the origin

Background: WEGVISOR’s own selection from the strategy literature · More about the origin

Examples

The principle in practice

From the different spheres of society.

BusinessFamily

Aldi, the Albrecht Brothers and Positioning

In 1962, the brothers Karl and Theo Albrecht open their first discount store in Dortmund. They opt for a single position, low prices, and subordinate everything to it: a narrow range, simple stores, few staff.

Positioning
Media

Axel Springer, the Bild Newspaper and Positioning

On June 24, 1952, the first issue of Bild appears, soon selling for 10 pfennigs. Axel Springer does not build it as a better newspaper but as a completely different one: big pictures, big letters, for a mass readership. The position is so unambiguous that it explains both its success and the criticism it attracts.

Positioning
Faith

Willow Creek, Bill Hybels and Positioning

In 1975, Bill Hybels and Dave Holmbo found a church near Chicago that is aimed not at churchgoers but at people with no connection to church. This clear choice of target group shapes everything: the venue, the music, the order of service and the structure of the church.

Positioning
Business

Movie: You’ve Got Mail

In Nora Ephron’s 1998 comedy, a small children’s bookstore runs up against a big bookstore chain that opens around the corner. Behind the love story lies a clear lesson about Positioning: a niche holds only if the big player cannot simply offer the same advantage on the side.

Positioning
FAQ

Questions about Positioning

What does the principle of Positioning say?

You have to choose one way of being better than others: cheaper, clearly different or entirely geared to one group. If you want everything at once, you get stuck in the middle and have no clear advantage anywhere.

Where does the principle come from?

It comes from Michael E. Porter, who described it in 1980 in “Competitive Strategy” and developed it further in 1996 in his article “What Is Strategy?” In marketing, Al Ries and Jack Trout popularized the term from the perspective of customer perception.

What are some examples?

In 1962, Aldi chose cost leadership; in 1952, the Bild newspaper chose a mass readership; in 1975, Willow Creek chose people with no connection to church.

How well is Positioning supported by research?

Evidence: moderate – the distinction between the basic routes is influential and widely used in research; the disadvantage of the middle is disputed and not consistently confirmed by empirical studies.

Your next step

Make strategy effective – together with WEGVISOR

Reading changes how you think. Applying changes your results. Choose how you want to continue.

Request Strategy Coaching

We will get back to you personally.

You came from: Positioning.