Choosing a unique position, however, is not enough to guarantee a sustainable advantage. A valuable position will attract imitation by incumbents, who are likely to copy it in one of two ways.First, a competitor can reposition itself to match
the superior performer. J.C. Penney, for instance,has been repositioning itself from a Sears clone to a more upscale, fashion-oriented, soft goods retailer.A second and far more common type of imitation is straddling. The straddler seeks to match the benefits of a successful position while maintaining its existing position. It grafts new features, services, or technologies onto the activities it already performs.For those who argue that competitors can copy any market position, the airline industry is a perfect test case. It would seem that nearly any competitor could imitate any other airline’s activities.Any airline can buy the same planes, lease the gates, and match the menus and ticketing and baggage handling services offered by other airlines.
Continental Airlines saw how well Southwest was doing and decided to straddle. While maintaining its position as a full-service airline, Continental also set out to match Southwest on a number of point-to-point routes. The airline dubbed the new service Continental Lite. It eliminated meals and first-class service, increased departure frequency, lowered fares, and shortened turnaround time at the gate. Because Continental remained a full-service airline on other routes, it continued to
use travel agents and its mixed fleet of planes and to provide baggage checking and seat assignments. But a strategic position is not sustainable unless
there are trade-offs with other positions. Trade-offs occur when activities are incompatible. Simply put, a trade-off means that more of one thing necessitates less of another. An airline can choose to serve meals – adding cost and slowing turnaround
time at the gate – or it can choose not to, but it cannot do both without bearing major inefficiencies.Trade-offs create the need for choice and protect
against repositioners and straddlers. Consider Neutrogena soap. Neutrogena Corporation’s variety based positioning is built on a “kind to the skin,”residue-free soap formulated for pH balance. With a large detail force calling on dermatologists, Neutrogena’s marketing strategy looks more like a drug company’s than a soap maker’s. It advertises in medical journals, sends direct mail to doctors, attends medical conferences, and performs research at its own Skincare Institute. To reinforce its positioning, Neutrogena originally focused its distribution on drugstores and avoided price promotions.Neutrogena uses a slow, more expensive manufacturing process to mold its fragile soap.In choosing this position, Neutrogena said no to the deodorants and skin softeners that many customers desire in their soap. It gave up the largevolume potential of selling through supermarkets and using price promotions. It sacrificed manufacturing efficiencies to achieve the soap’s desired attributes. In its original positioning, Neutrogena made a whole raft of trade-offs like those, trade-offs
that protected the company from imitators.Trade-offs arise for three reasons. The first is inconsistencies in image or reputation. A company known for delivering one kind of value may lack credibility and confuse customers – or even undermine its reputation – if it delivers another kind of value or attempts to deliver two inconsistent things at the same time. For example, Ivory soap,with its position as a basic, inexpensive everyday soap would have a hard time reshaping its image to match Neutrogena’s premium “medical” reputation. Efforts to create a new image typically cost
tens or even hundreds of millions of dollars in a major industry – a powerful barrier to imitation.Second, and more important, trade-offs arise from activities themselves. Different positions(with their tailored activities) require different product configurations, different equipment, different employee behavior, different skills, and different management systems. Many trade-offs reflect in flexibilities in machinery, people, or systems.The more Ike a has configured its activities to
lower costs by having its customers do their own assembly and delivery, the less able it is to satisfy customers who require higher levels of service.
However, trade-offs can be even more basic. In general, value is destroyed if an activity is over designed or under designed for its use. For example,
even if a given salesperson were capable of providing a high level of assistance to one customer and none to another, the salesperson’s talent (and some of his or her cost) would be wasted on the second customer. Moreover, productivity can improve
when variation of an activity is limited. By providing a high level of assistance all the time, the salesperson and the entire sales activity can often achieve efficiencies of learning and scale.