Definition | A company uses a better business model that rivals can’t copy without harming their own business. |
Benefit | Lower costs and/or higher prices due to more valuable product. |
Barrier | Cannibalization of existing business. |
The author, Hamilton Helmer, defines counter-positioning as the following:
"A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business."
Many investors misunderstand this specific moat. Counter-positioning is a type of moat or advantage that allows new entrants to disrupt established companies by adopting a radically different business model that incumbents either can’t or won’t replicate.
This article will walk you through the mechanics of counter-positioning, why it works, and real-world examples that illustrate its power. Understanding Counter-Positioning will help you understand business, moats, and strategies better.
Understanding counter-positioning
Counter-positioning is not about doing the same thing better; it’s about doing something fundamentally different. In essence, it involves introducing a business model that offers superior value to customers but comes at a cost to incumbents if they try to adopt it.