Marketing Warfare
The marketing concept states that a firm's goal should be to identify and profitably satisfy customer needs. In Marketing Warfare Al Ries and Jack Trout argue that marketing is war and that the marketing concept's customer-oriented philosophy is inadequate. Rather, firms would do better by becoming competitor-oriented. If the key to success were to introduce products closest to those wanted by customers, then the market leader simply would be the firm that performed the best market research. Clearly, much more is required.
To illustrate their point, Ries and Trout compare marketing to a football game. If a team simply identifies the goal line and moves the ball towards it without regard to the competing team, they most likely will be blocked in their effort. To win the game, the team must focus its efforts on outwitting, outflanking, or over-powering the other side. This is the case in football, war, and marketing, according to Marketing Warfare. Because of the importance of the competition faced by the firm, a good marketing plan should include an extensive section on competitors.
2500 Years of War
There is much that marketers can learn from military strategy. Ries and Trout tell the story of several famous battles in history that illustrate lessons of warfare. These battles range from Marathon in 490 B.C. when the Greeks used the phalanx to defeat the more numerous Persian invaders, to the Normandy invasion of the second world war.
The lessons from these famous battles illustrate the concepts of planning, maneuvering, and overpowering the opposing side. These principles are relevant not only to warfare, but also to marketing. In Marketing Warfare, Ries and Trout quote Karl von Clausewitz and apply his principles to marketing.
The Principle of Force
There's a saying that it is easier to get to the top than to stay there. Ries and Trout disagree, arguing that once at the top, a company can use the power of its leadership position to stay there.
All other things equal, an army with a larger number of troops has an advantage over smaller armies. A larger vehicle has an advantage over a smaller vehicle in a collision. When several companies enter a new market, the one with the larger sales force is likely to become the leader. The larger company has the resources to outnumber smaller competitors. It can advertise more, perform more R&D, open more sales outlets, etc.
This is not to say that smaller companies do not stand a chance. Rather, smaller companies must recognize the principle of force and attempt to win the battle by means of a superior strategy, not by brute force.
Some managers may believe that they can overcome a larger competitor through superior employees. Ries and Trout maintain that while it may be possible to assemble a small group of star performers, on a larger scale the employee abilities will approach the mean.
Another argument is that a better product will overcome other weaknesses. Again, Ries and Trout disagree. Once consumers already have in their minds that a product is number one, it is extremely difficult for another product, even if superior, to take over that number one place in the consumer's mind.
The way to win the battle is not to recruit superior employees or to develop a superior product. Rather, Ries and Trout argue that to win the battle, a firm must successfully execute a superior strategy.
The Superiority of the Defense
An entrenched defense that is expecting an attack has an advantage that can only be overcome by an overwhelmingly larger attacker. For example, a defensive position that is in a trench or foxhole will be shielded from the attackers, and the attackers will suffer many more casualties than the defenders. For this reason, the attackers require a much larger force to overcome the defensive positions.
The same is true in marketing warfare. Many companies with insufficient resources have tried unsuccessfully to attack a leader. A study was made of 25 brands that held the number one position. Sixty years later, 20 of those 25 brands still held the number one position. It is very difficult to overtake the market leader.
The element of surprise helps the attacker, but when the market leader is large the attackers also must be large, and the logistics of launching a large scale attack or a large promotional campaign are such that the element of surprise is difficult to maintain and the defensive position becomes yet more difficult to upset. When the defenders are taken by surprise, it usually is because they ignored warnings or did not take them seriously.
The New Era of Competition
Increasingly, one hears marketing terms that are borrowed from the vocabulary of military strategy. From "launching a breakthrough campaign" to the "cola wars", the analogy between marketing and warfare is evident.
As in military strategy, it is unwise for a firm to publicly state deadlines for its victory. Deadlines often are missed, and the firm loses credibility in the propaganda war if it fails to live up to a prediction. Politicians who are wise to this rule tend to make their campaign promises vague. Publicly stated marketing promises should be vague for the same reason.
Firms also should avoid the trap of thinking that if they work hard enough, they will succeed in their attack. Ries and Trout argue that it is strategy and not hard work that determines success. In warfare, when a battle turns to hand-to-hand combat, the advantage resulting from the strategic plan no longer exists. In marketing, a firm achieves victory through a smarter strategy, not by spending longer hours with meetings, reports, memos, and management reviews. When management declares that it is time to "redouble our efforts", then the marketing battle has turned to hand-to-hand combat and is likely to end in defeat.
The Nature of the Battleground
In military warfare, a battle often is named after the geographic location where it took place - for example, The Battle of Waterloo. Ries and Trout argue that marketing battles do not take place in geographic areas, nor in stores. Rather, marketing battles take place in the mind of the consumer.
Before a military battle, the battlefield usually is mapped and studied in great detail. In marketing, market research traditionally has served this function. However, Ries and Trout propose that the most important information is to know which positions are held by which companies in the mind of the consumer. In other words, who holds the high ground.
In military warfare, mountains and higher altitude areas represent strong positions and often are used to present a strong defense. In marketing warfare, the question is one of who holds the mountains in the consumer's mind. For example, in the U.S., Kleenex holds the facial tissue mountain since it is the number one facial tissue in the minds of most consumers and many consumers consider the word "Kleenex" to be synonymous with facial tissue.
Mountains often are segmented and competitors may launch different brands each targeting a specific segment. General Motors successfully attacked Ford's market leadership when it launched Chevrolet, Pontiac, Oldsmobile, and Buick, each targeting a specific segment of the automobile market. Too often, the leader responds by attempting to counterattack in each segment, only to fail and even to lose its original leadership position.
The Strategic Square
Ries and Trout discuss four strategies for fighting a marketing war:
- defensive
- offensive
- flanking
- guerrilla
A firm's market share relative to that of competitors determines which strategy is appropriate. There often is a significant market share gap between two competitors such that each has approximately a factor of two more market share compared to the next weaker competitor. Because of this large gap, the principle of force plays an important role in the choice of each firm's strategy. For this discussion, assume that there are four firms and each is approximately twice the size of the next closest to it.
In such an environment, each of the four firms has different objectives:
- Number 1 firm: market domination
- Number 2 firm: increased market share
- Number 3 firm: profitable survival
- Number 4 firm: survival
According to Ries and Trout, the main competitor of the market leader that holds the majority of market share is not one of the other firms in the industry, but rather, the government. If the market leader attempts to grow larger, then anti-trust issues will be raised. If a major market leader wins the marketing war and causes the next largest firm to exit the market, then the government may take steps to break up the firm that is dominating the market. Consequently, the best strategy for such a firm is a defensive one.
The number two firm's best strategy is an offensive attack on the market leader if there is a large gap between the number two firm and number three. The reason is that the gaining of market share from the number three firm is unlikely to make a large impact on the much larger number two firm. However, there are potentially significant rewards if market share can be gained from the dominant firm.
The number three firm is too small to sustain an offensive attack on a larger firm. Its best strategy often is to launch a flanking attack, avoiding direct competition, for example, by launching a product that is positioned differently from those of the larger firms.
The smallest firm probably does not have sufficient resources to launch any type of sustained attack. If it launched a flanking product, a larger competitor likely would launch a similar one and would have the resources to win more customers. The smallest firm would do best to pursue a guerrilla strategy, identifying a segment that is large enough to be interesting to the small firm but not large enough to attract competition from any of the larger firms.
On the mountains in the mind of the consumer (see The Nature of the Battleground discussed previously), the high ground at the top of the mountain is owned by the market leader. The number two firm's offensive battle would seek to gain high ground from the leader. The leader's defensive battle involves coming down from the top to fight off offensive attacks. The number three firm's flanking attack would go around the mountain. The smallest firm's guerrilla tactics involve its going under the mountain.
Principles of Defensive Warfare
A defensive strategy is appropriate for the market leader. Ries and Trout outline three basic principles of defensive marketing warfare:
- Defensive strategies only should be pursued by the market leader. It is self-defeating for a firm to pretend that it is the market leader for the purpose strategy selection. The market leader is the firm who has attained that position in the mind of the consumer.
- Attacking yourself is the best defensive strategy. Introducing products better than your existing ones preempts similar moves by the competition. Even if the new product has less profit margin and may reduce short-term profit, it accomplishes the more important long-term goal of protecting the firm's market share.
- The leader always should block strong offensive moves made by competitors. If the leader fails to do so, the competitor may become entrenched and permanently maintain market share.
A classic example of a well-executed defensive block was that of Johnson & Johnson when Bristol-Meyers decided to launch Datril to compete directly with Johnson & Johnson's successful Tylenol brand. Datril was to be priced 35% lower than Tylenol.
Johnson & Johnson learned of Datril before its launch, and informed Bristol-Meyers that it was cutting the price of Tylenol to match that of Datril. Johnson & Johnson even extended credits to its distribution channels to make the price cut effective immediately. This move was intended to prevent Bristol-Meyers from advertising Datril as a lower-priced alternative to Tylenol. However, Bristol-Meyers responded by accelerating the launch of the television advertising campaign. Finally, Johnson & Johnson countered by convincing the television networks not to run the Datril ads since they no longer could truthfully claim that Datril was priced lower than Tylenol. Johnson & Johnson's efforts were successful and Datril achieved less than a 1% market share. Tylenol sales soared on the publicity and lower prices.
Legal issues are an important factor in a market leader's strategy. Successfully attacking the competition and winning raises anti-trust issues. Attacking oneself is less risky from an anti-trust perspective. It also is preferable to expand vertically rather than horizontally into new markets since laws prevent a firm from using its monopoly in one market to develop a competitive advantage in another.
Finally, once there is marketing peace and the brand has affirmed its dominance, it can grow its sales by growing the market. For example, Campbell's Soup can run ads to increase soup consumption in general (e.g. "Soup is good food.") since it enjoys such a large share of all soup sales.
Principles of Offensive Warfare
An offensive strategy is appropriate for a firm that is number 2 or possibly number 3 in the market. However, in some cases, no firms may be strong enough to challenge the leader with an offensive strategy. In such industries, the market leader should play a defensive strategy and the much smaller firms should play a flanking or guerrilla one.
Ries and Trout present the following three principles of offensive strategy:
- The challenger's primary concern should be the strength of the leader's position, not the challenger's own strengths and weaknesses.
- The challenger should seek a weakness in the leader's strength - not simply a weakness in the leader's position.
- Attack on as narrow a front as possible. Avoid a broad attack.
The strength of the leader's position is of primary importance because the leader has the top position in the mind of the consumer, and it is this position that must be attacked.
A weakness in the leader's strength must be found. Simply attacking any weakness is insufficient. For example, the leader may charge a premium price and the price may appear to be a weakness. However, the leader may in fact have large profit margins and may be willing to lower the price as much as necessary to defend its position. The leader usually has the resources to defend against an attack against its weaknesses, whereas there may be weaknesses inherent in the leader's strengths that cannot be defended.
There often is a flip side to the leader's strength that can serve as the target of the challenger's attack. For example, a leader may be so successful that it is crowded with customers, and the challenger then can exploit that success by offering a better customer experience. For example, Avis Rent a Car once advertised, Rent from Avis. The line at our counter is shorter. Sometimes the weakness in the leader's strength arises from the fact that it has a major investment in assets that cannot be readily adapted. A more flexible challenger can use this fact to its advantage.
The challenger should attack on as narrow a front as possible. Generally, this means one product rather than a wide range of products. The reason for keeping the attack narrow is the principle of force; a narrow attack allows the challenger to concentrate its resources in the narrow area, and in that area may present more force than the leader. Many number two and number three companies ignore this principle and try to increase market share by broadening their product lines to compete in more areas, often with disastrous consequences. FedEx made this mistake in its early years by offering a wide array of transit times such as overnight, 2-day, and 3-day delivery. FedEx became successful only when it began to focus on the next-day delivery market and won that position in the mind of the consumer using the slogan, when it absolutely, positively has to be there overnight.
A narrow attack is particularly effective when the leader has attempted to be all things to all people with a single product. In that situation, a challenger can identify a segment within the leader's market and offer a product that serves only that segment. The challenger then stands a chance of winning a position in the consumer's mind for that more narrow class of product.
Principles of Flanking Warfare
A flanking attack is not a direct attack on the leader, but rather, an attack in an area where the leader has not established a strong position. Ries and Trout present the following three flanking principles:
- A flanking move is best made in an uncontested area. The product should be in a new category that does not compete directly with the leader and should be the first to target the segment.
- A flanking move should have an element of surprise. Surprise is important to prevent the leader from using its enormous resources to counter the move before it gains momentum. Test marketing should be minimized to maintain the element of surprise. In the earlier example of Datril vs. Tylenol, Johnson & Johnson first learned of the impending launch of Datril from Bristol-Meyers' localized test marketing of Datril.
- Follow-through (pursuit) is equally as important as the attack itself. The firm should follow-through and focus on solidifying its position once it is established before competitors launch competing products. Too often, management turns its attention to the products that are not performing well rather than strengthening the position of the winners. If the firm does not have the resources to strengthen its newly won position, then perhaps it should have used a guerrilla strategy instead of a flanking one.
A flanking move does not require a totally new product. Instead, the product only needs to be different enough to carve its own position. Ries and Trout offer the following examples of product variations on which to base flanking moves:
- Low price - for example, Budget Rent a Car successfully flanked Hertz and Avis. Others such as Dollar and Thrifty followed, but Budget was ahead of the game and was able to solidify its position.
- High price - customers tend to use price as a measure of quality. Orville Redenbacher's Gourmet Popping Corn and Haagen-Daz super-premium ice cream are examples of products that successfully positioned themselves in the high-price category. The higher profit margins allow the firm to follow through and solidify its position.
- Small size - Sony with portable electronics and Volkswagen wth automobiles successfully won the position of small size. Volkswagen lost its position as it attempted to broaden its line to all sizes of cars.
- Large size - for example, the Prince oversized tennis racquet.
- Distribution - the product itself may not be substantially different but new distribution channels may be used. For example, Timex distributed its watches in drugstores and Hanes distributed L'eggs pantyhose in supermarkets using innovative packaging and displays.
- Product form - for example, Close-Up was the first gel toothpaste and Softsoap was the first liquid soap.
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