Because Porter’s article was written in 1996, let’s go back to 1996 and imagine you need an oil change for your Honda Accord (remember, in 1996 people still drove cars to the office to get to work).
One option is to make an appointment at your local Honda dealership. When you drop off your car, you’ll sit in an air-conditioned lobby with lots of nice magazines, free coffee, and germ-delivery devices intended for children called “toys”. The customer service is top notch. While you’re there, they’ll do a multi-point inspection, offer to change your brake pads with genuine Honda® parts, and remind you to come back for your transmission flush at 60,000 miles. And why not, sure, take a look at the new inventory of vehicles on the showroom floor. Check out that one with an optional 6-disc CD changer. oooOOOooo.
The strategy behind this option is one of needs-based positioning because it’s serving broad needs of a few customers. Broad needs? The dealership will offer any auto service you need plus give you the convenient option of purchasing a new car. Only a few customers? Put it this way: you’re not going to drive to the Honda dealership to get the oil changed on your Ford Explorer. Just Hondas, thank you.
Another option is to head over to Jiffy Lube. It’s pretty much a get-in-and-get-out sort of place and relatively cheap. Oh, and they only do oil changes and a handful of other services. The customer service is fine, but if you need any complex maintenance, you’ll need to go somewhere else. And the lobby isn’t very accommodating, which is fine, because you’re not going to be there very long.
This strategy behind this option is called variety-based positioning—not because it’s offering a variety of products!—because it’s serving few needs of many customers (it’s the customers that have variety, not the product). Few needs? Oil changes plus a few other services. Many customers? Doesn’t matter what car you drive, come on in.
Another option is to head to Mike’s Japanese Motorsports. Mike’s is like any traditional auto-shop, except that they only work on Japanese cars. They offer to “tune your driving machine to its optimal level of performance ” They still take about as long as the dealership and offer a full range of services. The parking lot looks like it belongs in the set of a movie about cars that are both fast and furious. You suspect the quality is better and there’s no worry of being tempted to check out the new cars with their fancy (optional) 6-disc CD changers. Oh, and shops like Mike’s only really exist in big cities.
This strategy behind this position is called access-based positioning, which is serving the broad needs of many customers in a narrow market. Broad needs? Mike’s can do any kind of maintenance you want. Many customers? Sure thing, all Japanese cars, not just Hondas. Narrow market? Oh right, probably only those with “motorsports” needs, which is going to be restricted to bigger cities.
Why do we care about positioning?
“Having defined positioning, we can now begin to answer the question, ‘What is strategy?’ Strategy is the creation of a unique and valuable position, involving a different set of activities…. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance.”
By choosing a strategic position, we’re consciously choosing not to be all things to all people.