Michael Porter wrote Competitive Strategy back in 1980, and honestly, the business world hasn't been the same since. He introduced a concept that still keeps CEOs awake at night: being stuck in the middle. It sounds harmless, right? Like being the middle child or sitting in the center aisle at a concert. But in the context of market positioning, it’s basically a death sentence for your profit margins.
You’re not the cheapest. You’re not the best. You’re just... there.
The Brutal Reality of the Strategic Sweet Spot
If you want to win, you have to choose a path. Porter argues there are three "generic strategies" that actually work: Cost Leadership, Differentiation, and Focus. When a company tries to do all of them at once—or fails to commit to any—they end up stuck in the middle. These firms lack the market share or capital investment to play the low-cost game, and they lack the industry-wide differentiation to skip the price war.
It's a recipe for low growth.
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Think about the grocery industry. On one end, you have Aldi. They are the kings of cost leadership. They don’t care about fancy displays or carrying 50 types of mustard. They want you in and out with the lowest receipt possible. On the other end, you have Whole Foods (pre-Amazon acquisition, mostly). They sold an experience, organic exclusivity, and "Asparagus Water." People paid a premium because the brand meant something specific.
Now, look at the mid-tier regional grocery chains that tried to be "kind of cheap" but "sorta nice." Most are gone or struggling. They couldn't compete with Aldi's prices or Whole Foods' aura. They were stuck in the middle.
Why We Fall Into the Trap
It usually starts with a fear of saying "no."
A founder wants to capture the entire market. They think, "If I lower my price a bit, I'll get the budget crowd, but if I add this one premium feature, I'll get the high-end crowd too!" It sounds logical. It feels like growth. But what actually happens is you bloat your overhead with features the budget crowd won't pay for, while simultaneously cheapening your brand so the high-end crowd doesn't trust you.
Efficiency drops. Culture muddies. Marketing becomes a confusing mess of mixed messages.
The Famous Case of British Airways
Let's talk about the 1990s and early 2000s. British Airways (BA) provides a textbook example of the stuck in the middle phenomenon. Historically, BA was the "World's Favourite Airline." They had the prestige, the global routes, and the premium service.
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Then came the low-cost carriers (LCCs) like Ryanair and EasyJet.
Instead of doubling down on their premium identity, BA tried to fight the LCCs on price. They cut the free snacks. They tightened the legroom. They started charging for things that used to be included. But here’s the kicker: their legacy cost structure—unions, expensive airport slots, aging fleets—meant they could never actually be as cheap as Ryanair.
By trying to be a budget airline, they alienated their high-paying business travelers who missed the luxury. They weren't the cheapest, and they were no longer the "best." They were stuck. It took years of painful restructuring and a massive pivot back toward "premium" (and the creation of basic economy tiers that were clearly separated) to find their footing again.
Complexity vs. Clarity
Modern tech companies fall into this too. Look at the smartphone market.
- Apple owns the high-end differentiation. They have the ecosystem and the brand prestige.
- Xiaomi and other budget manufacturers own the cost leadership in emerging markets.
Who struggles? The brands in the $400 to $600 range that don't have a "thing." If you’re buying a phone that isn't the fastest and isn't the cheapest, why are you buying it? If you can't answer that in five words, you’re stuck in the middle.
The Hybrid Strategy Myth
Some people will tell you about "Blue Ocean Strategy" or the "Best-Cost Provider" model. They say you can do both.
And yeah, Toyota did it with the Lexus. They used Toyota's insane manufacturing efficiency (Cost Leadership) to produce a car that rivaled German luxury (Differentiation). But notice what they did: they created a separate brand. They didn't try to sell a $70,000 "Toyota Supreme." They understood that the mental models of consumers don't allow for middle-ground confusion.
How to Tell if You’re Stuck
Honestly, the signs are usually right in front of you.
- Your sales team is constantly asking for "special discounts" to close deals.
- Your R&D department is building features that only 5% of your customers use.
- When customers talk about you, they use words like "fine" or "okay" instead of "cheap" or "amazing."
- Your profit margins are shrinking even as your revenue stays flat or grows slightly.
That last one is the "death spiral." You're working harder for less money because you're fighting a war on two fronts. You're fighting the discount guy on price and the boutique guy on quality. You will lose both fights eventually.
Getting Out of the Mud
Decide.
That’s the only way out. You have to pick a lane and accept the trade-offs.
If you choose Cost Leadership, you have to be ruthless. You cut the perks. You automate everything. You prioritize volume over "customer delight." It's not "mean," it's a strategy. Walmart didn't become a titan by trying to have the prettiest stores; they did it by having the most efficient supply chain in human history.
If you choose Differentiation, you have to be brave. You have to be okay with being "too expensive" for 80% of the market. You invest in design, in customer service, in things that don't necessarily scale but do create an emotional bond with the user.
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Small Business vs. Giants
This isn't just for Fortune 500 companies.
If you're a freelance graphic designer, are you the "fast and cheap" person on Fiverr? Or are you the "strategic brand consultant" who charges $10,000 for a logo? If you try to charge $500 for a logo but spend three weeks on "consulting," you are stuck in the middle. You’re doing high-end work for low-end pay. You’ll burn out in six months.
The Nuance of "Focus"
Porter's third strategy—Focus—is the secret weapon for the "stuck" company.
If you can't be the cheapest in the world, and you can't be the best in the world, be the best for a very specific group of people. This is "Niche Differentiation."
Instead of being a "software for businesses," be "software for independent bookstores in the Pacific Northwest." Suddenly, you aren't competing with Salesforce or Microsoft. You are the only person who understands the specific tax laws and inventory needs of that tiny niche. You aren't stuck in the middle anymore; you’re the king of a smaller hill.
Actionable Next Steps
To figure out where you stand, perform a "Vulnerability Audit" over the next week.
- Analyze your last 10 lost deals. Did you lose them because you were too expensive, or because you lacked a specific feature/prestige? If the answer is "both" across different deals, your positioning is fractured.
- Review your "No" list. If you don't have a list of customers or features you have explicitly said "no" to in the last 90 days, you are almost certainly drifting toward the middle.
- Interview your unhappiest customers. Ask them what they expected versus what they got. If they expected "cheap" and got "complex," or expected "luxury" and got "basic," you have a messaging-reality gap.
- Calculate your "Margin per Complexity" unit. Look at your most expensive features to maintain. Do they actually drive the highest price premiums? If not, kill them. Stop trying to please the high-end with low-end pricing structures.
The middle is a comfortable place to hide, but it's a terrible place to build a business. Pick a side. The market rewards the extremists, not the fence-sitters.