Author Note
This paper was first written in November 1998 and was revised and substantially expanded in May 2026. The original argument and its foundational sources are preserved intact; the revision extends them with nearly three decades of subsequent scholarship in consumer psychology, behavioral economics, branding theory, relationship and experience marketing, and the digital transformation of the marketplace.
Abstract
This paper advances a framework in which customer expectations are treated not as a byproduct of strategy but as a condition of its survival. Expectations are modeled as one stage in a dynamic, self-reinforcing cycle of strategy, positioning, perception, and expectation, in which strategy and positioning function as firm-controlled variables and perception and expectation as market variables the firm can only influence.
When the cumulative strength of negative forces—unmet or severely over-met expectations and an adverse external environment—matches or exceeds the strength of the firm’s strategic position, the firm enters a forced position in which the market, rather than the firm, determines its positioning.
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