Positioning on a multi-attribute landscape

Paper highlights

Managers choose policies—product architecture, operations, pricing, and other interdependent activities—but markets reward the product attributes those policies produce. This paper builds a model that keeps those two spaces separate. It asks how policy interdependence and trade-offs among product attributes jointly determine which market positions are viable.

The distinction matters because an operationally efficient position need not attract any customers once rivals are present. It also means that firms can look different in policy space while occupying similar market positions, or use similar policies and end up far apart in the attributes customers see.

How the model works

The model combines an NK landscape of interdependent business policies with an explicit market containing heterogeneous consumers and competing products. Firms choose policies, those policies generate performance on two product attributes, and consumers choose among the resulting positions.

Main results

• Not every position on the efficient frontier is competitively viable; neighboring offers can leave an efficient position with no customers.
• Greater policy interdependence can reduce the number of viable positions, contrary to the common result from single-dimension NK models.
• The relationship between strategic heterogeneity and visible positioning heterogeneity depends on how strongly policies interact.
• Trade-offs between product attributes often shape market shares and industry concentration more than policy interdependence does.

Why it matters

• Strategy connects three problems: choosing policies, producing product attributes, and occupying a position customers prefer to rivals.
• A product can be technically efficient yet commercially empty because nearby competitors dominate it for relevant customers.
• Firms with different activity systems can still produce offers that customers see as close substitutes.

How to use this paper

Cite this for

• A model that separates policy space from product-attribute and market-position space.
• The joint role of policy interdependence, consumer trade-offs, and competition in positioning.
• Evidence from a formal model that operationally efficient positions need not be competitively viable.

Useful for teaching

• Why activities, product attributes, and customer choice should not be collapsed into one map.
• How a technically strong position can lose demand once nearby rivals are included.
• How interdependence and attribute trade-offs shape strategic and visible heterogeneity differently.

Careful claim

The model shows that positioning depends on two mappings–from policies to attributes and from attributes to consumer choice–so interdependence does not always increase visible differentiation or market viability.

Abstract

Competitive positioning is a central, yet understudied, topic in strategy. Understanding positioning requires understanding two distinct mappings: how underlying policies are transformed into positions, and how positions are transformed into market performance. A complete treatment of positioning requires incorporating organizational design in the presence of policy interdependence; consumer choice in the presence of trade-offs among multiple product attributes; and competitive interactions among firms. We develop a model that integrates these elements.

We show that in a multi-attribute setting trade-offs have critical, nonmonotonic effects on a range of strategy questions including: the relationship between positions that are operationally efficient and those that remain viable in the face of competition as well as the concentration of market share in the industry. Of particular import are implications for firm heterogeneity. We show that increases in business policy interdependence can decrease positioning heterogeneity among firms in an industry, depending on the nature of trade-offs. We also show that the relationship between strategy heterogeneity and positioning heterogeneity is moderated by the extent of policy interdependence.

Other links

• SSRN preprint

Last updated 2026-06-21