Positioning

Refusals make a business cheaper to run and easier to trust. In-N-Out’s menu has stayed largely unchanged since 1948, and its restaurants use no microwaves, heat lamps or freezers, so each order is made fresh. Costco’s short list of fast-selling sizes is what lets it turn inventory quickly and live on a 10.92% gross margin. In both cases the narrow offer is what pays for the promise.

A position is also harder to copy than a best practice. Rivals can adopt better technology or tighter operations, but copying a position means giving something up. Continental Airlines watched Southwest succeed and launched Continental Lite: no meals or first class, more frequent departures, lower fares, faster gate turns. It kept full service on other routes, with travel agents, a mixed fleet, baggage checking and seat assignments. Porter’s verdict was that a position is not sustainable without trade-offs; an airline cannot serve meals and turn planes in 15 minutes at once.

The unhappy customers are evidence that the position is real. Vanguard, in Porter’s account, deliberately gives up the chance of extraordinary performance in any one year for good performance in every year, and it discourages rapid buying and selling because trading drives up costs. An investor chasing last year’s winner is disappointed by design.

Finally, a position lets people who never meet the strategist make the same decision. When a sales team wonders whether to offer a discount, or a product team whether to add a feature, the answer comes from who the company has chosen to disappoint.

Positions erode by accretion. Maytag built its name on durable washers and dryers, then extended into refrigerators and cooking products and bought Jenn-Air, Hoover, Admiral and Magic Chef, brands with different positions. Sales grew from $684 million in 1985 to a peak of $3.4 billion in 1994. Return on sales fell from 8–12% in the 1970s and 1980s to under 1% on average between 1989 and 1995. Dealers and customers had asked for the wider line, which is what Porter meant by the growth trap.

They also break when a company disappoints the wrong people. In 2012 J.C. Penney’s new chief executive, Ron Johnson, dropped coupons and most sales events for everyday low prices and added trendier brands to attract younger, wealthier shoppers. Fiscal 2012 sales fell 24.8% to $12.985 billion. The Associated Press reported that once-loyal customers strayed and that new ones did not replace them. The board removed Johnson in April 2013, after 16 months.

Southwest’s own reversal shows the third failure, a position that the customers it defined stop supporting. Its September 2024 research found that 80% of its customers wanted assigned seats. CBS News reported that Southwest had estimated bag fees at $1.5 billion a year in revenue against $1.8 billion in business lost from loyal customers. It announced assigned seating in July 2025, with first flights on January 27, 2026. Whether a Southwest with seat assignments and bag fees is still a distinct position will show in the results, not the announcement.