My empirical research drew on a database that enabled us to relate perceived market position to return on capital employed. We discovered, to no one’s surprise, that high cost with low quality was not often a successful strategy. And low cost with high quality yielded the highest profits. Of course it did. But were you better off with low cost, low quality, or high cost and high quality, or being stuck in the middle with medium quality and medium cost? All produced similar returns.
A product offering is very rarely a sustainable source of competitive advantage because it can readily be imitated. What really matters is enjoying a competitive advantage in the market position you choose — and that typically involves matching your market position to the distinctive underlying resources and capabilities of your business. Waitrose, Aldi and Lidl are not the beneficiaries, and Tesco and Sainsbury’s not the victims, of any verity of business strategy other than the eternal one; the best strategy is to be good at whatever it is you do.