Business
leaders are over-educated. Never have I seen so much advice offered to
executives about how to do things right. There are hundreds of business
management books and over 2000 titles alone in marketing.
So why are we having such difficult economic times? Why did Detroit
almost drive off a cliff? Why did the banks need bailing out? Why are
some corporate legends such as Kodak, Nokia, Yahoo, Johnson &
Johnson, Sears, Budweiser and even General Electric having problems?
Sure, you can point to the dramatic increase in global competition which
makes mistakes so costly. But there are books about how to deal with
competition and I even wrote one of them. (Marketing Warfare.) One can
only say “It’s a puzzlement.”
While there are a few shining examples of brilliant leadership, there aren’t enough.
If you study this paradox, the best you can do is categorize the most
popular mistakes. So rather than get into the psychology of “Denial”
or a study of “Why?”, it makes more sense to lay out what are the traps
that keep people from doing the right thing, despite all this advice.
Avoid these mistakes and bad things won’t happen.
The “Me-too” Mistake.
Many people believe that the basic issue in marketing is convincing
the prospect that they have a better product or service. They say to
themselves, “We might not be first but we’re going to be better.”
That may be true, but if you’re late into a market space and have to
do battle with large, well-established competitors, then your marketing
strategy is probably faulty. Me-too just won’t cut it.
Consider the efforts of Pepsi in the lemon-lime category. Even though
supermarket soda aisles were overcrowded and sales growth was flat,
Pepsi launched Sierra Mist, a competitor to Sprite and 7Up. This is
after two failed prior attempts (Slice and a product called “Storm”).
Their introductory strategy was, what else, a “better” soda. Dawn
Hudson, Pepsi’s senior vice president of strategy and marketing, boasted
in the Wall Street Journal that Sierra Mist will have a “cleaner,
lighter, more refreshing lemon-lime.”
Well, not surprisingly, that didn’t work out as planned. Today,
Sierra Mist doesn’t make the top ten soft drinks and they have moved
away from lemon-lime to “Natural” and flavors like cranberry. Good luck.
Another disadvantage of being a me-too is that the name of the first
brand to market often becomes generic. Xerox, Kleenex, Coke, Scotch
tape, Gore-Tex, Krazy Glue and Q-tips all have an enormous advantage
over competitive me-too products.
If the secret of success is getting into the prospective customer’s
mind first, which strategy are most companies committed to? The
better-product strategy. Benchmarking is a popular subject in the
business management field. Touted as the “ultimate competitive
strategy,” it involves comparing and evaluating your company’s products
against the best in the industry. It’s an essential element in a process
often called “total quality management” (TQM).
Benchmarking doesn’t work because regardless of a product’s objective
quality, people perceive the first brand to enter their mind as
superior. When you’re a me-too, you’re a second-class citizen. Marketing
is a battle of perceptions, not products.
The “What are You Selling?” Mistake
This may surprise you, but I have spent a good bit of my time over
the years figuring out exactly what people are trying to sell. Defining
the product category in a simple, understandable way is essential.
Companies, large and small, often have a tough time describing their
product, especially if it’s a new category and a new technology. Or
else, they describe the product in confusing terms that doom the effort
right out of the gate.
The positioning of a product in the mind must begin with what the
product is. We sort and store information by category, your chances of
getting into his or her mind are slim to none.
When faced with the tough task of coming up with a name for what
you’re selling, start with a simple analysis of how the new product
works, then try to use those words to describe it. When the automobile
was born, it was christened a “horseless carriage". “Cable television”
accurately describes how that system works.
The biggest marketing successes come with basic, powerful explanations of the product being offered.
Prince revolutionized the tennis racquet business with “oversized racquets.”
Orville Redenbacher shook up the popcorn market with ‘gourmet popping corn.”
All these categories were quickly and easily understood. Customers
knew what the companies were selling and how the products were really
different.
There are times when you can adjust the explanation of what you’re
selling to improve your chances of success. A valve company called
Keystone was selling what they called a “quarter-turn critical service
valve.” While this was an accurate description that reflected how the
valve worked, it sure wasn’t easy to figure out what they were selling.
When I took a closer look inside the brochure that described this
product, I discovered that this was simply a “zero leakage valve.” That
was a lot more exciting way to describe what they were selling.
A similar change in focus happened at General Mills during a
discussion on how to increase the sales of their famous line of
“Helpers” (hamburger, chicken, and tuna). They were traditionally sold
as “extenders” that made meat go farther. This decidedly downmarket
concept isn’t a powerful idea in and of itself, especially when times
are good.
Another way to look at this product is that all the different
variations end up as a casserole of one sort or another. Because General
Mills sells hundreds of millions of dollars worth, you could also say
that these Helpers are “America’s favorite way to make a casserole.” And
they have 57 flavors and many Betty Crocker recipes to support this
concept.
Appetizing casseroles cut across all income groups. (Hey, Martha
Stewart makes them.) Even the American Institute of Cancer Research
recommends them as a way to incorporate a wider variety of nutritious
food into a single dish.
The key to making Hamburger Helper a bigger brand is coming up with a better expression of what they’re selling.
The “Truth Will Out” Mistake
The failure to understand the simple truth that marketing is a battle
of perceptions trips up thousands of would-be entrepreneurs every year.
Marketing people are preoccupied with doing research and “getting the
facts.” They analyze the situation to make sure the truth is on their
side. Then they sail confidently into the marketing arena, secure in the
knowledge that they have the best product and that ultimately the best
product will win.
It’s an illusion. There is no objective reality. There are no facts.
There are no best products. All that exists in the world of marketing
are perceptions in the minds of customers or prospects. The perception
is the reality. Everything else is an illusion.
Most marketing mistakes stem from the assumption that the marketer is
fighting a product battle rooted in reality. What some marketing people
see as the natural laws of marketing are based on a flawed premise that
the product is the hero of the marketing program and that companies win
or lose based on the merits of the product. Which is why the natural,
logical way to market a product is invariably wrong.
The “Other Guy’s Idea” Mistake
It’s bad enough to launch a me-too product but equally problematic is
a me-too idea: Two companies cannot own the same concept in the
prospect’s mind.
When a competitor owns a word or position in the prospect’s mid, it is futile to attempt to own the same idea.
Volvo has preempted the concept of “safety.” Many other automobile
companies, including Mercedes-Benz and General Motors, have tried to run
marketing campaigns based on safety. Yet no one except Volvo has
succeeded in getting into the prospect’s mind with a safety message.
Another massive marketing effort aimed at someone else’s word can be
found in bunny land – to be specific, the pink Energizer bunny that is
trying to take the
long-lasting concept away from Duracell. No
matter how many bunnies Energizer throws into the fray, Duracell will
still be able to hang onto the word long-lasting. Duracell got into the
minds of customers first and preempted the concept. Even the “Dura” part
of the name communicates it.
Researchers Can Mislead You
What often leads big companies down this booby trapped lane is that
wonderful stuff called research. Armies of researchers are employed,
focus groups conducted, questionnaires tabulated – and what comes back
in a three-pound report is a wish list of attributes that users want
from a product or service. So if that’s what people want, that’s what we
should give them.
What’s the biggest problem people have with batteries? They go dead
at the most inconvenient times. So what’s the number one battery
attribute? Long-lasting life, of course. If long lasting is what people
want, that’s what we should advertise. Right? Wrong.
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.
Some years ago Burger King started down this slippery slope from
which it has never quite recovered. A market study showed that the most
popular attribute for fast food was “fast” (no big surprise there). So
Burger King did what most red-blooded marketers do. It turned to its
advertising agency and said, “If the world wants fast, our advertising
should tell them we’re fast.”
The “We’re Very Successful” Mistake
Success often leads to arrogance and arrogance to failure. When
people become successful, they tend to become less objective. They often
substitute their own judgment for what the market wants.
As their successes mounted, companies like General Motors, Sears, and
IBM became arrogant. They felt they could do anything they wanted in
the marketplace. Success leads to trouble.
Digital Equipment Corporation brought us the minicomputer. Starting
from scratch, DEC became an enormously successful $14 billion company.
DEC founder Kenneth Olsen’s success made Ken such a believer in his own
view of the computer world that he pooh-poohed the personal computer,
then open systems, and, finally reduced instruction set computing
(RISC). In other words, Ken Olsen ignored three of the biggest
developments in the computer category. (A trend is like the tide – you
don’t fight it.) DEC is no longer with us.
The bigger the company, the more likely it is that the chief
executive has lost touch with the front lines. This might be the single
most important factor limiting the growth of a corporation. All other
factors favor size. Marketing is war, and the fist principle of warfare
is force. The larger army, the larger company, has the advantage.
But the large company gives up some of that advantage if it cannot
stay focused on the marketing battle that takes place in the mind of the
customer. Small companies are mentally closer to the front than big
companies. That may be one reason for their rapid growth in the past
decades. They haven’t been tainted by success.
The “Everything for Everybody” Mistake
When you
try to be all things to all people, you inevitably wind up in trouble.
Better advice comes from one manager who said, “I’d rather be strong
somewhere than weak everywhere.”
This kind of “all things” thinking leads to what is called “line extension.”
In a narrow sense, line extension involves taking the brand name of a successful product (e.g., A1 Poultry Sauce).
It sounds so logical. “We make A1, 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 then A1. That way people will know the poultry sauce comes from
the makers of that great steak sauce, A1.”
But marketing is a battle of perception, not product. In the mind, A1
is not the brand name, but the sauce itself. “Would you pass me the A1
please?” asks the diner. Nobody replies: “A1 what?”
Needless to say, the A1 poultry launch was a dismal failure.
The “Live by the Numbers” Mistake
Big companies are in a bind. On the one hand, Wall Street is staring
at them asking, “How much are your sales and profits going to grow next
month, next quarter, next year?” On the other hand, an endless number of
competitors are staring at them saying, “We’re not going to let you
grow if we can help it.”
So what happens? The CEO lies to Wall Street and then turns around to
tell the marketing people what is expected in terms of profit and
growth. They in turn scramble back to their offices and try to figure
out how to make those unreasonable numbers.
Brash predictions about earnings growth often lead to missed targets,
battered stock, and even creative accounting. But worse than that, they
lead to bad decisions.
As panic sets in, upper management falls into the line extension, or
the everything-for-everybody trap to drive the numbers up. Rather than
staying focused on being strong somewhere, they opt for being weak
everywhere. Their only hope is that they will be promoted before it all
hits the fan.
The “Not Attacking Yourself” Mistake
Much has been written about the likes of DEC, Xerox, AT&T, and
Kodak and their efforts to move from slow-growth to high growth
businesses. When this is exacerbated, companies are faced with what have
been called disruptive technologies: DEC faced the desktop computer
revolution; Xerox, the surge in laser printing; and Kodak, digital
photography.
Transforming a company when the underlying technology changes is no
easy task. First of all, Wall Street is upset because lots of
shareholder money starts to disappear in efforts that earn very little
in return.
Traditional customers are often alienated as the sales force’s
attention becomes diffused by new ventures. The internal folks become
very uncomfortable with all this change in the air.
Though difficult, leaders have no choice in this matter. They must
find a way to move to that better idea or technology, even if it
threatens their base business. If they don’t, their future will be in
question, especially as that technology is improved and picks up
momentum.
The “Not Being in Charge” Mistake
When the CEO or high-level management doesn’t take charge of
strategy, things rarely go well. In today’s rough-and-tumble world,
marketing strategy is too critical to be left to middle-level
management. That’s why David Packard of Hewlett Packard fame once said,
“Marketing is too important to be left to the marketing people.” After I
make that “you’re in charge” speech to general managers or CEOs, they
often tell me that they don’t want to undermine their employees. They
want to give them the responsibility they were promised.
That’s all well and good for morale, but I encourage them to think the Navy way.
When a naval vessel has a problem, the ultimate responsibility is not
that of the young officer who had the conn when the accident occurred.
It’s the captain of the ship who must answer to that board of inquiry.
And chances are, his career is in trouble.
In today’s world, it’s the CEO who has to answer to the board when things go bad.
These day it’s your job on the line so you better take charge. To do
that you must be like Steve. I’m talking about Steve Jobs who was
without a doubt, the best marketing CEO in the business. Whether it’s
design, advertising, branding or PR, you knew that he was involved. He
made sure those bad things never happened at Apple.
