I believe that there is an accompanying change—one that is easy to miss, but equally essential. It isn’t just that businesses use more software, but that, increasingly, a business is defined in software. That is, the core processes a business executes—from how it produces a product, to how it interacts with customers, to how it delivers services—are increasingly specified, monitored, and executed in software. This is already true of most Silicon Valley tech companies, but it is a transition that is spreading to all kinds of companies, regardless of the product or service they provide.JAY KREPS, Confluent – https://www.confluent.io/blog/every-company-is-becoming-software/
Once you open your mind to the possibility that there are laws of marketing, it’s easy to see what they are. In truth, they are obvious. We have been studying what works in marketing and what doesn’t for more than 25 years. What we have found is that programs that work are almost always in tune with some fundamental force in the marketplace.
The first desktop laser printer was introduced by a computer company, Hewlett-Packard. Today the company has 5 percent of the personal computer market and 45 percent of the laser printer market.
The first minivan was introduced by Chrysler. Today Chrysler has 10 percent of the car market and 50 percent of the minivan market.
The law of the mind follows from the law of perception. If marketing is a battle of perception, not product, then the mind takes precedence over the marketplace.
The problem is getting the idea or concept into the prospect’s mind.
Apple’s problem in getting into its prospects’ minds was helped by its simple, easy-to-remember name. On the other hand, Apple’s competitors had complicated names that were difficult to remember. In the early days, five personal computers were in position on the launching pad: Apple II, Commodore Pet, IMSAI 8080, MITS Altair 8800, and Radio Shack TRS-80. Ask yourself, which name is the simplest and easiest to remember?
Only by studying how perceptions are formed in the mind and focusing your marketing programs on those perceptions can you overcome your basically incorrect marketing instincts.
For example, the three largest-selling Japanese imported cars in America are Honda, Toyota, and Nissan. Most marketing people think the battle between the three brands is based on quality, styling, horsepower, and price. Not true. It’s what people think about a Honda, a Toyota, or a Nissan that determines which brand will win. Marketing is a battle of perceptions.
Would Harley-Davidson be successful if it launched a Harley-Davidson automobile? You might think it would depend on the car. Quality, styling, horsepower, pricing. You might even believe the Harley-Davidson reputation for quality would be a plus. We think not. Its perception as a motorcycle company would undermine a Harley-Davidson car—no matter how good the product
The antidrug forces should do the same—focus on a single powerful word. What the campaign ought to do is make drugs what cigarettes are today, socially unacceptable. One word that could do this is the ultimate down word, loser. Since drug usage causes all kinds of losses (of job, family, self-esteem, freedom, life), a program that said “Drugs are for losers” could have a very powerful impact, especially on the recreational user, who is more concerned with social status than with getting high. The law of focus, a marketing law, could help solve one of society’s biggest problems.
A company can become incredibly successful if it can find a way to own a word in the mind of the prospect.
What won’t work in marketing is leaving your own word in search of a word owned by others.
The essence of marketing is narrowing the focus. You become stronger when you reduce the scope of your operations. You can’t stand for something if you chase after everything.
everybody stands for quality. As a result, nobody does.
What researchers never tell you is that some other company already owns the idea. They would rather encourage clients to mount massive marketing programs. The theory is that if you spend enough money, you can own the idea. Right? Wrong.
What’s the maximum number of rungs on a ladder? There seems to be a rule of seven in the prospect’s mind. Ask someone to name all the brands he or she remembers in a given category. Rarely will anyone name more than seven. And that’s for a high-interest category.
According to Harvard psychologist Dr. George A. Miller, the average human mind cannot deal with more than seven units at a time. Which is why seven is a popular number for lists that have to be remembered. Seven-digit phone numbers, the seven wonders of the world, seven-card stud, Snow White and
it’s sometimes better to be No. 3 on a big ladder than No. 1 on a small ladder.
Successful marketers concentrate on the top two rungs. Jack Welch, the legendary chairman and CEO of General Electric, said recently: “Only businesses that are No. 1 or No. 2 in their markets could win in the increasingly competitive global arena. Those that could not were fixed, closed, or sold.” It’s this kind of thinking that built companies like Procter & Gamble into the powerhouses they are. In 32 of its 44 product categories in the United States, P&G commands the No. 1 or No. 2 brands.
The customer believes that marketing is a battle of products. It’s this kind of thinking that keeps the two brands on top: “They must be the best, they’re the leaders.”
You must discover the essence of the leader and then present the prospect with the opposite. (In other words, don’t try to be better, try to be different.) It’s often the upstart versus old reliable.
As a product gets old, it often accrues some negative baggage. This is especially true in the medical field.
Volkswagen was so successful that it began to think it could be like General Motors and sell bigger, faster, and sportier cars. So it swept up whatever models it was making in Germany and shipped them all to the United States. But unlike GM, it used the same brand, Volkswagen, for all of its models. “Different Volks for different folks,” said the advertising, which featured five different models, including the Beetle, the 412 Sedan, the Dasher, the Thing, and even a station wagon. Needless to say, the only thing that kept selling was the “small” thing, the Beetle. Well, Volkswagen found a way to fix that. It stopped selling the Beetle in the United States and started selling a new family of big, fast, expensive Volkswagens. Now you had the Vanagon, the Sirocco, the Jetta, the Golf GL, and the Cabriolet. It even built a plant in Pennsylvania to build these wondrous new cars. Unfortunately for Volkswagen, the small-car category continued to expand. And since people couldn’t buy a long-lasting, economical VW, they shifted to Toyota, Honda, and Nissan.
Unless you know what to look for, it’s hard to see the effects of line extension, especially for managers focused on their next quarterly report. (If a bullet took five years to reach a target, very few criminals would be convicted of homicide.) The same thing that happened to Miller happened to Michelob. Three years after the introduction of Michelob Light, regular Michelob peaked in sales and then declined 11 years in a row. Today the four Michelob flavors combined (regular, light, dry, and classic dark) sell 25 percent fewer barrels than Michelob alone did in 1978, the year Michelob Light was introduced.
Does a sale increase a company’s business or decrease it? Obviously, in the short term, a sale increases business. But there’s more and more evidence to show that sales decrease business in the long term by educating customers not to buy at “regular” prices.
Aside from the fact that you can buy something for less, what does a sale say to a prospect? It says that your regular prices are too high. After the sale is over, customers tend to avoid a store with a “sale” reputation.
In a narrow sense, line extension involves taking the brand name of a successful product (e.g., A-1 steak sauce) and putting it on a new product you plan to introduce (e.g., A-1 poultry sauce). It sounds so logical. “We make A-1, a great sauce that gets the dominant share of the steak business. But people are switching from beef to chicken, so let’s introduce a poultry product. And what better name to use than A-1. That way people will know the poultry sauce comes from the makers of that great steak sauce, A-1.” But marketing is a battle of perception, not product. In the mind, A-1 is not the brand name, but the steak sauce itself. “Would you pass me the A-1?” asks the diner. Nobody replies: “A-1 what?” In spite of an $18 million advertising budget, the A-1 poultry launch was a dismal failure.
For a new brand to succeed, it ought to be first in a new category (chapter 1: The Law of Leadership). Or the new brand ought to be positioned as an alternative to the leader (chapter 9: The Law of the Opposite). Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable line extension approach. The antidote for line extension is corporate courage, a commodity in short supply.
Invariably, the leader in any category is the brand that is not line extended. Take baby food, for example. Gerber has 72 percent of the market, way ahead of Beech-Nut and Heinz, the two line-extended brands.
Eveready was the long-time leader in batteries. But new technology arrived—as it does in most industries. The first technology to change the battery business was the heavy-duty battery. What would you call your heavy-duty battery if you had the No. 1 name in batteries? You’d probably call it the Eveready heavy-duty battery, which is what Eveready did. Then the alkaline battery arrived. Again, Eveready called its alkaline battery the Eveready alkaline battery. It seemed to make sense. Then P.R. Mallory introduced a line of alkaline batteries only. Furthermore, the company gave the line a better name: Duracell. The power of the sacrifice for Duracell was in being able to put the “long-lasting battery” idea in the mind of the prospect. Duracell lasts twice as long as Eveready, said the advertising.
There are three things to sacrifice: product line, target market, and constant change.
The full line is a luxury for a loser. If you want to be successful, you have to reduce your product line, not expand it.
Marketing is a game of mental warfare. It’s a battle of perceptions, not products or services.
Eveready was forced to change the name of its alkaline battery to “the Energizer.” But it was too late. Duracell had already become the leader in the battery market.
Too often a company attempts to emulate the leader. “They must know what works,” goes the rationale, “so let’s do something similar.” Not good thinking. It’s much better to search for an opposite attribute that will allow you to play off against the leader. The key word here is opposite—similar won’t do.
Marketing is a battle of ideas. So if you are to succeed, you must have an idea or attribute of your own to focus your efforts around. Without one, you had better have a low price. A very low price.
You can’t predict the size of a new attribute’s share, so never laugh.
A single trip to any McDonald’s should be enough to find another attribute that McDonald’s owns: “kids.” This is indeed the place to which kids drag their parents, and McDonald’s has the swing sets to prove it. This sets up an opportunity vividly demonstrated by the Coke and Pepsi battle. If McDonald’s owns kids, then Burger King has the opportunity to position itself for the older crowd, which includes any kid who doesn’t want to be perceived as a kid. That generally works out to be everyone over the age of 10 (not a bad market).
So it may come as a surprise to you that one of the most effective ways to get into a prospect’s mind is to first admit a negative and then twist it into a positive. “Avis is only No. 2 in rent-a-cars.” “With a name like Smucker’s, it has to be good.” “The 1970 VW will stay ugly longer.” “Joy. The most expensive perfume in the world.” What’s going on here? Why does a dose of honesty work so well in the marketing process? First and foremost, candor is very disarming. Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best. Especially in an advertisement.
When you admit a negative, the prospect will give you a positive.
Marketing is often a search for the obvious. Since you can’t change a mind once it’s made up, your marketing efforts have to be devoted to using ideas and concepts already installed in the brain. You have to use your marketing programs to “rub it in.” No program did this as brilliantly as the
15. The Law of Candor
The explosive growth of communications in our society has made people defensive and cautious about companies trying to sell them anything. Admitting a problem is something that very few companies do.
When a company starts a message by admitting a problem, people tend to, almost instinctively, open their minds. Think about the times that someone came to you with a problem and how quickly you got involved and wanted to help. Now think about people starting off a conversation about some wonderful things they are doing. You probably were a lot less interested.
One final note: The law of candor must be used carefully and with great skill. First, your “negative” must be widely perceived as a negative. It has to trigger an instant agreement with your prospect’s mind. If the negative doesn’t register quickly, your prospect will be confused and will wonder, “What’s this all about?”
Next, you have to shift quickly to the positive. The purpose of candor isn’t to apologize. The purpose of candor is to set up a benefit that will convince your prospect.
When the financial people took over, the marketing programs collapsed. Their interest was in the numbers, not the brands. The irony is that the numbers went south, along with the brands. It’s hard to find that single move if you’re hanging around headquarters and not involved in the process.
Successful generals study the battleground and look for that one bold stroke that is least expected by the enemy. Finding one is difficult. Finding more than one is usually impossible.
Unless you write your competitors’ plans, you can’t predict the future.
Good short-term planning is coming up with that angle or word that differentiates your product or company. Then you set up a coherent long-term marketing direction that builds a program to maximize that idea or angle. It’s not a long-term plan, it’s a long-term direction.
Research does best at measuring the past. New ideas and concepts are almost impossible to measure. No one has a frame of reference. People don’t know what they will do until they face an actual decision.
The classic example is the research conducted before Xerox introduced the plain-paper copier. What came back was the conclusion that no one would pay five cents for a plain-paper copy when they could get a Thermofax copy for a cent and a half.
You got into the mind first. You narrowed the focus. You preempted a powerful attribute.
Successful programs are not built on fads, they’re built on trends.
If you were faced with a rapidly rising business, with all the characteristics of a fad, the best thing you could do would be to dampen the fad. By dampening the fad, you stretch the fad out and it becomes more like a trend.
Elvis Presley’s manager, Colonel Parker, made a deliberate attempt to restrict the number of appearances and records the King made. As a result, every time Elvis appeared, it was an event of enormous impact.
One way to maintain a long-term demand for your product is to never totally satisfy the demand.
Here is the bottom line. First get the idea, then go get the money to exploit it.
You can “share” your idea by franchising it. Tom Monaghan was able to put Domino’s Pizza on the map by pursuing an aggressive program of franchising his home delivery idea.
The answer is simple: Spend enough. In war, the military always errs on the high side. Do you know how many rations were left after Operation Desert Storm? A lot. So it is in marketing. You can’t save your way to success.
he more successful marketers front load their investment. In other words, they take no profit for two or three years as they plow all earnings back into marketing.
Our actions may be impeded . . . but there can be no impeding our intentions or dispositions. Because we can accommodate and adapt. The mind adapts and converts to its own purposes the obstacle to our acting.
“When you worry, ask yourself, ‘What am I choosing to not see right now?’ What important things are you missing because you chose worry over introspection, alertness or wisdom?”
The trick to forgetting the big picture is to look at everything close up. —CHUCK PALAHNIUK
half the companies in the Fortune 500 were started during a bear market or recession.
Those who survive it, survive because they took things day by day—that’s the real secret.
it is often in that desperate nothing-to-lose state that we are our most creative.
Sports psychologists recently did a study of elite athletes who were struck with some adversity or serious injury. Initially, each reported feeling isolation, emotional disruption, and doubts about their athletic ability. Yet afterward, each reported gaining a desire to help others, additional perspective, and realization of their own strengths. In other words, every fear and doubt they felt during the injury turned into greater abilities in those exact areas.
In the chaos of sport, as in life, process provides us a way.
Okay, you’ve got to do something very difficult. Don’t focus on that. Instead break it down into pieces. Simply do what you need to do right now. And do it well. And then move on to the next thing. Follow the process and not the prize.
The process is about doing the right things, right now.