This is a bonus book that wasn’t originally on my list, but through several recommendations on the TF Show I purchased it and over the weekend read through it. Its a really short book at only 130 pages, but the principles in the book are really solid. Below is the summary, but, like any book make sure you buy it and read it in full. It is worth your time and money. Whether or not these are laws could be debated, more like guidelines. I would also say that the authors didn’t spend too much time digging into the details, but gave some recurring examples. As someone without a strong marketing background, I found a lot of value in it and a bunch of key takeaways. I do believe the authors ignore all other facets of running a business in this book, not arguing that they shouldn’t since this is a marketing book, but they do not say anything about major quality issues at auto makers, or other decisions the companies made that may have also led to their downfall. 100% of the blame is based on changing the marketing strategy… Anyways, here they are:
- Law of Leadership- Being first to market is better than having the best product in the market. The examples in the book talked about the first man to fly across the Atlantic: Charles Lindbergh, who was the second? Who cares? Other examples of this are in Heineken as the first import beer and still the leading import, Miller Lite as the first domestic light beer, etc. The idea is to be first vs. being the best product. I think there are a ton of counter examples of this law. But in general, as long as the leader doesn’t completely suck, and doesn’t screw up the other laws they should be able to hold their lead.
- Law of Category- If you cannot be the first in the market, be the first in the subcategory. Nobody remembers the second person to cross the Atlantic, but almost everyone knows the first woman to cross the Atlantic. Since it is in a new category, you are able to become the leader. It doesn’t have to be drastically different either, if Heineken is the leader in imported beer, become the leader in imported light beer (Amstel light).
- Law of Mind- It is more important to be first in the mind of the consumer than it is to be first in the market. The iPad wasn’t the first tablet computer, but it is the first one to come to mind, so much that it has even become a generic name for tablet computers. The authors argue that the single most wasteful thing you can try to do is change the mind. The example in the book is the Apple II computer vs. the competition which all had really difficult to remember names (MITS Altair 8800). The iPad is a very similar scenario here.
- Law of Perception- The biggest fallacy of marketing is that it is about the best product. It’s not. The only tihng that is important is whether you can get your product perceived to be the best. “Truth is nothing more or less than one expert’s perception” And who is this qualified expert? someone who is perceived to be an expert in the mind of everyone else (social proof). Viewed another way, if you are perceived as one thing you will have difficulty selling something else. Honda is known in Japan as a motorcycle company, in the United States it is perceived as a car company. This is one of the biggest takeaways I had from this book, and I think it only really means anything for similar quality products. You can only hold up a perception if you can live up to it. If you look at Apple products, they are perceived to be of the highest quality. Whether or not they are actually the best products is objective since there are really good products from competitors out there.
- Law of Focus- The basic idea here is that you want to “own” an idea in your prospect’s mind. FedEx Owns the word “Overnight”, Lexus owns “perfection” (persuit of perfection), Statefarm insurance (good hands), etc. you get the picture. the idea is that you can get your product associated with that word in your category. One warning from the author is that you never want to use the word “quality” as your focus word. Everyone uses it, so it falls flat, obviously you want to have high quality, and I am not just going to take your word for it. While you could argue that this is only relevant to the largest companies in the world that could possibly own a word. But it is a bit more specific than that, you are trying to own a word in the context of your industry/category. For example, you look at Gorilla Glue, their website is http://www.gorillatough.com – they are using the word tough associated with strong gorillas to plant in your mind that it is going to have a strong bond. Ford also owns the word “tough” but in the context of trucks “Built Ford Tough”.
- Law of Exclusivity- Only one company can own a word (related to the law of focus). Burger King for example tried to own the word “fast” that was already owned by McDonalds, and it failed miserably. FedEx tried to take “Worldwide” from DHL. I think the key here for exclusivity is that you are talking about your competitors only. As I menitoned above, it doesnt matter if Gorilla Glue and Ford both use Tough because they are going after different markets.
- Law of the Ladder- You need to know your place in the market. Known as the “ladder” in this book, if you are #1 in the market, you would market yourself differently than if you are no. 2 or 3. Avis, for example was No. 2 in car rental when they advertised “finest in rental cars” which failed because their marketing wasn’t credible (they were #2 so they must not be the finest). Then they switched to “Avis is only No. 2 in rent-a-cars. So why go with us? We try harder” (this also plays in with the law of Candor #15). After this successful campaign they switched to “Avis is going too be No. 1” which failed miserably since people don’t care about the company’s ambitions to be # 1. This is a pretty interesting one. They are saying your strategy should be based on where you are positioned in the market. The problem is that outside of a couple examples they really don’t say how to do it in any given position. Let’s say I am # 3 in the market, I could market myself as more agile, more customer oriented, “not stuck behind the bureacracy of a big company”. I am sure it is extremely specific to each situation, but a few rules of thumb would have been nice from the book.
- Law of Duality- In a long term view of the Law of the Ladder, the ladder will eventually be all about two main players. Coke vs. Pepsi. Burger King vs. McDonalds. Apple vs. Samsung. Energizer vs. Duracell… etc. It usually consists of the old reliable brand and an upstart. If you are a weak No. 3 you could have carved out a profitable niche instead of competing with the big dogs (law of focus). If you look at the Domestic automobile industry, it once was 531 companies, and now it is between GM and Ford, with Chrysler’s future uncertain (at the time of printing). The author ends the chapter with a note: “The customer believes marketing is a battle of products. It is this kind of thinking that keeps the two brands on top: “They must be the best, they’re the leaders”Law of Opposite. While there are some good examples, I would argue against the author on this one. It seems like there are a lot of 3-5 rung ladders. An argument could probably be made that the Pareto rule applies here. 20% of the companies make up 80% of the profits, as I know this is true for many of these highly competitive markets.
- Law of the Opposite- If you are shooting for 2nd place, your strategy is going to be determined by whoever the leader is. Ask yourself where the leader is strong, and how can you turn that into a weakness? Market to the people who ‘don’t want to buy from the leader’ – dig into the individual aspect of your product. A recent example I can draw from is the Google Android commercial: “be together, not the same.” Which pulls at the motives of people to be themselves and express themselves, don’t just blindly follow the leader (Apple). It is a bit ironic, however, since Android is the leader, and you could probably associate the word “android” with someone who does the exact opposite of what they are advertising… but I digress. There were a couple of good examples of this strategy in the book: Beck’s beer repositioned themselves “You’ve tasted the German beer that’s most popular in America. Now taste the German beer that’s the most popular in Germany”. Which was an effective marketing tool. “Marketing is often a battle for legitimacy. The first brand that captures the concept is often able to portray its competitors as illegitimate pretenders”
- Law of Division- Over time, a category will divide and become two or more categories. Computers can be split into “mainframes” and “minis”; “minis” can be split into workstations and personals… etc. The same thing with cars- sports, compact, SUV, etc. One thing that GMC did years ago in order to maintain dominance in different markets is split its name up. There is Chevy, Pontiac, Olds, Buick, Cadillac, etc. Each one is going after a different target market with the different trim levels to match the customer. They will even often use similar engineering platforms. The thing is that nobody is going to see a Chevy as a luxury car that can compete with a Mercedes or the similar brand. This isn’t line extension (see law 12) but rather matching brands with quality levels and customer perspective (law 13)
- Law of perspective- Marketing takes place over an extended period of time. Sales for example have a long term negative effect since they create a short term buying trend, but long term customer expectation of what prices ‘should’ be. For example look at Art Van Furniture, where every weekend is the biggest sale of the year. Or JC Penney, where their sales are an expectation and any effort to change that gets the customers to ditch them. For retail, you want to practice “everyday low prices” like Wal-Mart. “In the short term, overeating satisfies the psyche, but in the long term it causes obesity and depression.” You see an impact from line extensions (law 12) basically that in the short term line extensions increase sales. Take Miller High Life, fueled by “Miller Time” in the 70’s when it introduced Miller Lite. But after a few years of growth, Miller High Life went from 8.6M to 26.2 M to just 5.8 M barrels over the course of 12 years. Then Miller Genuine Draft was introduced, which undermined Miller Lite. If you look across the beer industry, this has happened to Michelob, Coors, and Budweiser. You would argue that Light beer has just taken over the market, but it is not true since Light beer only accounts for 31% of the market. It is all about focus. While I can see the argument here, it seems like there is not enough data here to make this a law. I would be interested to know the other macroeconomic data that coincides with the examples since I might have a hard time pinning it all on line extension. But what do I know.
- Law of Extension- This is pretty much the climax of the book. The idea is that there is an immense pressure to extend the equity of your brand. Take 7-Up for example: cherry, diet, diet cherry, gold, diet gold… etc. This is the most violated law in the book. What it ultimately comes down to is Focus, you are distracting your prospect with a bunch of shiny objects when you really only want them to buy the main attraction. The authors also point out how they predicted Microsoft to run into the same issues as the rest of the companies. In retrospect it obviously worked out well for MSFT, but if we deep dive into some of the reasons we can probably learn something. It would be interesting to look at their history with antitrust issues. MSFT was able to position themselves as a one-stop shop for everything you needed as a suite. I believe this is why they were so successful. People didn’t want to have to buy a spreadsheet, word processing, etc. application depending on what they wanted to do. The concept behind this Law is that you would rather be strong in one place than weak everywhere. Marketing is a battle of perception, not product. Line extensions almost never work, if you look at baby food there is one brand Gerber, that has 72% of the market. It is way ahead of Beech-Nut and Heinz, which are both line-extended brands. The author argues that when you extend a line you lose focus, and that more is less, or put a different way “Full-speed ahead in all directions“. What does IBM stand for? It used to stand for mainframe computers, now it stands for everything, which means it stands for nothing. If you look at Apple iPhone vs. Samsung which has probably 30 phones in addition to its flagships there is no focus for Samsung. How do you succeed? “Launching a new brand requires not only money, but also an idea or concept. For a new brand to succeed, it ought to be first in a new category. Or the new brand ought to be positioned as an alternative to the leader. Companies that wait until a new market has developed often find these two leadership positions already pre-empted. so they fall back on the old line extension approach.”
- Law of Sacrifice- You have to give up something in order to get something. There are three things to sacrifice: product line, target market, and constant change. From a marketing point of view, focus 100% of your efforts on one service. In the case of FedEx, they put the word overnight into the minds of their prospects. Who do you go to when you need something delivered overnight? FedEx, thats who. The author says that the generalists are weak. Kraft, for example only has 9% of the market share for jams and jellies while Smucker’s has 35%. Why? Its because that is all Smucker’s makes. In mayo, Kraft has 18% of the market while Hellmann’s has 42%. Why are department stores failing? Because they are places that sell everything (JCP, Sears, Macy’s). The key for retail is a narrow focus, and in-depth stock. Pepsi’s strategy was to sacrifice all of their markets except the teenage market, which helped them close the gap. Why? Because the target is not the market! The 50 year old guy who wants to think he’s 29 will drink pepsi. The final thing you can sacrifice is constant change. You do not need to change your strategy every year at budget review time. Look at White Castle, they have not changed in 60 years and the average White Castle does more than $1M in revenue (more than BK, not far behind McD)
- Law of Attributes- Back to the focus on words… For every attribute, there is an opposite, effective attribute. If Crest owns the word cavities, you can own whitening, freshens breath, etc. The authors also say that you need to be open ot new attributes that may pop up. An example is Gillette, who was selling high tech razorswhen the disposable razor blade came into the market. Gillette was able to dominate the disposable razor market, which has since dominated the razor blade business. “Moral: you can’t predict the size of a new attribute’s share, so never laugh”
- Law of Candor-When you admit a negative, the prospect will give you a positive. Listerine is the tast you hate twice a day. Candor is very disarming (see summary from Never Eat Alone and How to Win Friends and Influence people for more evidence on this). If you make a negative comment on yourself it is taken as truth, while saying positive things about yourself are viewed as dubious at best. People do not always trust the advertisement that is trying to sell you something. “Marketing is often a search for the obvious. Since you can’t change a mind once its made up, your marketing effors have to be to devoted to using ideas and concepts already installed in the brain”. The trick to this actually working is that your negativ must be widely perceived as a negative, then you have to quickly shift to a positive. In other words set up the benefit that will convice your prospect.
- Law of Singularity- In each situation, only one move will produce substantial results. This is all about strategy and how you position yourself. The authors say “finding one is difficult. finding more than one is usually impossible”. In military, it is called “The line of least expectation”. What works in marketing also works in the military: the unexpected. That is why flanking moves work so well in marketing. Take the Auto market- the Japanese came in with cars on the low end like Toyota, Datsun, and Honda. The Germans came in with the high end superpremium cars like Mercedes and BMW. GM was under pressure to pull in its top and bottom lines. Then GM started making many of its midrange body styles look a like which opened room for Ford. Now GM is weak across the board.
- Law of Unpredictability- Unless you write your competitors plans, you cannot predict the future. Most marketing plans have assumptions about the future, which are usually wrong. How do you expect to predict your market three years in advance? What you need to focus on is the trends, which is a way to take advantage of change. At the time of writing, they use the example of healthier foods as a trend (25 years later it still is). Ask yourself what are the market trends you are seeing? You also need to realize that you may need to make sacrifices on profitable product lines. Take Apple for example – they sacrificed the iPod when they introduced the iPhone. Then they canabalized the Mac when introducing the iPad. However, it has allowed them to become the largest company in the world.
- Law of Success- “ego is the enemy of successful marketing. Objectivity is what is needed” Success leads to arrogance, which leads to failure. Donald trump’s strategy was to put his name on everything, which led to line extension after line extension. Steaks, wine, univeristy, condos, etc. which led to his downfall and $1.3B in debt at the time of the books publishing. People wrongly believe that the name is the reason for success, when it is the opposite. The name got famous because you made the right marketing moves. You got int he mind first, narrow focus, powerful attribute, etc. this is why Donald trump had early success but long term failure. “Marketing is war, and the first principle of war is the principle of force. The larger army, the larger company has the advantage. but the larger company gives up some of that advantage if they cannot keep focused on the mind of the customer”. If you are the CEO, you need to get honest opinions of what is happening, people are always going to tell you what they think you want to hear.
- Law of Failure- Failure is to be expected and accepted. It is better to recognize failure early and cut your losses. Xerox should have dropped computers years before they did. IBM should have dropped copiers years before they did. Sam Walton’s “Ready, Fire, Aim” strategy allows a company to fail fast and allow for constant tinkering in the process. People aren’t punished if their experiments fail. The idea is that nobody ever got fired for a bold move they didn’t make. Look at 3M, who developed the Post-it notes has a policy that you should spend a certain amount of their time on developments.
- Law of Hype- The situation is often the opposite of the way it appears in the press. This is an interesting one, that you can see with wearable tech, internet of things, virtual reality, etc. at this point in time they are all hype from the media as these emerging technologies are still unknown. An example from the book is “new coke” which received an estimated $1B in free publicity, yet Coca Cola Classic had to be reintroduced as the original formula just 60 days later. Things like the Videotext, automated factory, personal helicopter were all hyped up, but never actually came to be viable business solutions. If you contrast the Tucker 48 with when the first Toyota came to the U.S. there was no hype about Toyota, which went on to be a huge success in the United States. What you need to realize is that they hype isn’t really about the product, it is about the disruption of the inducstry it is goin into. The videophone isn’t about the videophone at all, it is about how it will disrupt the business travel industry. The personal helicopter is about how roads in the future will be obsolete. “real revolutions don’t arrive at high noon with marging bands and coverage on the 6:00pm news. Real revolutions arrive unannounced in the middle of the night and kind of sneak up on you.”
- Law of Acceleration- Successful programs are not built on fads, they’re built on trends. Beware of the hype, look for trends. Fads are like Beanie Babies, Pokemon, Pokemon Go (released two months ago, was hugely successful, but now we are hearing people are stopping their usage), etc. The thing about it is that once everone has a product, nobody wants it any more. “The Barbie doll is a trend. When Barbie was invented years ago, the doll was never heavily merchandised into other areas. As a result, the Barbie has become a long-term trend in the toy business.” The authors suggest something here: “one way to maintain a long-term demand for your product is to never totally satisfy the demand. The best, most profitable thing to ride in marketing is a long term trend.”
- Law of Resources- Without adequate funding, an idea won’t get off the ground. Remember that you are fighting the battle in the mind of your prospect, and you will typically have to spend most of your resources up front in order to plant the idea in their mind. One thing to do is something like Shark Tank, or a smaller company that is already established, then persuading the merits of your idea. The other sources of money are a bit comical and not too helpful: marry into, divorce, find it at home (rich dad), or share your idea as in franchising. The answer at the end of the day is that you need to spend enough. A lot of companies will front load their investment, and plow all earnings back into the marketing. This book was written before social media, which is a powerful force for marketing in the social media age.
Overall I would say the book was missing some nuts and bolts, but it was a good quick read that I feel was worth the time to read it. It does a good job of introducing some more contrarian principles of marketing that you probably would find everywhere. I have very little marketing background, but it seems like there are few companies following all of these since they can be a bit counter-intuitive.