Companies like Avis and Seven-Up found viable alternative positions to marketing leaders.
But most companies don’t want to be an also-ran, successful or not. They want to be a leader like Hertz or Coke.
So how do you get to be the leader? Actually it’s quite simple. Remember Charles Lindbergh and Neil Armstrong?
You just get there firstest with the mostest.
History shows that the first brand into the brain, on the average, gets twice the long-term market share of the No. 2 brand and twice again as much as the No. 3 brand. And the relationships are not easily changed.
The leader brand in category after category outsells the number two brand by a wide margin. Hertz outsells Avis, General Motors outsells Ford, Goodyear outsells Firestone, McDonald’s outsells Burger King, General Electric outsells Westinghouse.
Many marketing experts overlook the enormous advantages of being first. Too often they attribute successes like Kodak and IBM and Coke to “marketing acumen.”
Yet when the shoe is on the other foot, when a marketing leader isn’t first in a new category, the new product is usually an also-ran.
Coca-Cola is a gigantic company compared with Dr. Pepper. Yet when Coke introduced a competitive product, Mr. Pibb, even the immense resources of the Atlanta giant couldn’t put much of a dent in Dr. Pepper’s sales. Mr. Pibb remains a poor second.
IBM is a much bigger company than Xerox and has awesome resources of technology, work force, and money. Yet what happened when IBM introduced a line of copiers competitive with those of Xerox?
Not much. Xerox still has a share of the copier market several times that of IBM.
And supposedly Kodak was going to cream Polaroid when the Rochester colossus got into the instant camera business. Far from it. Kodak managed to take only a small share, at the expense of a substantial loss in its conventional camera business.
Almost all the advantages accrue to the leader. In the absence of any strong reasons to the contrary, consumers will probably select the same brand for their next purchase as they selected for their last purchase. Stores are more likely to stock the leading brands.
The larger, more successful companies usually have the first pick of outstanding college graduates. In fact, they usually attract more and better employees.
At almost every step of the way, the leading brand has the advantage.
On an airplane flight, for example, the airline will often stock one brand of cola, one brand of ginger ale, one brand of beer, etc.
On your next flight, see if the three brands aren’t Coke, Canada Dry, and Budweiser, the three leading brands of cola, ginger ale, and beer.
It’s true that in some categories the two leading brands run neck and neck.
What’s equally true is that these categories are inherently unstable. Sooner or later, you can expect one brand to get the upper hand and open a lead which eventually will reach a stable 5 to 3 or 2 to 1 ratio.
Consumers are like chickens. They are much more comfortable with a pecking order that everybody knows about and accepts.
Hertz and Avis.
Harvard and Yale.
McDonald’s and Burger King.
When two brands are close, one or the other is likely to get the upper hand and then dominate the market for years to come.
Between 1925 and 1930, for example, Ford and Chevrolet were locked in a head-to-head battle. Then Chevrolet took the lead in 1931.
In the model years since, including dislocations caused by depression and wars, Chevrolet has lost the lead only four times to Ford.
The time for extra effort is clearly when the situation is in doubt. When neither side has a clearcut superiority. Winning the battle for sales leadership in a single year will often clinch the victory for decades to come.
It takes 110 percent of rated power for a jet to get its wheels off the ground. Yet when it reaches 30,000 feet, the pilot can throttle back to 70 percent of power and still cruise at 600 miles per hour.
Question: Where does the 800-pound gorilla sleep? Answer: Anywhere he wants to.
Leaders can do anything they want to. Short-term, leaders are almost invulnerable. Momentum alone carries them along. (Old wrestling expression: You can’t get pinned when you’re on top.)
For General Motors, Procter & Gamble, and the leaders of this world, the worries are never about this year or next. Their worries are long-term. What’s going to happen 5 years from now? 10 years from now?
Leaders should use their short-term flexibility to assure themselves of a stable long-term future. As a matter of fact, the marketing leader is usually the one who moves the ladder into the mind with his or her brand nailed to the one and only rung. Once there, what should leaders do and not do?
As long as a company owns the position, there’s no point in running advertisements that repeat the obvious. “We’re No. 1” is a typical example.
Much better is to enhance the product category in the prospect’s mind. IBM’s advertising usually ignores competition and sells the value of computers. All computers, not just the company’s types.
Why isn’t it a good idea to run advertising that says, “We’re No. 1”?
The reason is psychological. Either the prospect knows you are No. 1 and wonders why you are so insecure that you have to say so. Or the prospect doesn’t know you are No. 1. If not, why not?
Maybe you have defined your leadership in your own terms and not the prospect’s terms. Unfortunately, that just won’t work.
You can’t build a leadership position on your own terms. “The best-selling under-$1000 high-fidelity system east of the Mississippi.”
You have to build a leadership position in the prospect’s terms.
“The real thing.” This classic Coca-Cola advertising campaign is a strategy that can work for any leader.
The essential ingredient in securing the leadership position is getting into the mind first. The essential ingredient in keeping that position is reinforcing the original concept. Coca-Cola is the standard by which all others are judged. In contrast, everything else is an imitation of “the real thing.”
This is not the same as saying “We’re No. 1.” The largest brand could be the largest seller because it has a lower price, it is available in more outlets, etc.
But “the real thing,” like a first love, will always occupy a special place in the prospect’s mind.
“We invented the product.” A powerful motivating force behind Xerox copiers. Polaroid cameras. Zippo lighters.
Unfortunately, leaders often read their own advertising so avidly they end up thinking they can do no wrong. So when a competitor introduces a new product or a new feature, the tendency is to pooh-pooh the development.
Leaders should do the opposite. They should cover all bets. This means a leader should swallow his or her pride and adopt every new product development as soon as it shows signs of promise.
General Motors spent $50 million to cover the Wankel engine when it was offered to the automotive industry. Money down the drain? Not necessarily.
General Motors probably looks on the $50 million spent to buy a Wankel license as cheap insurance to protect an $84 billion-a-year business.
Suppose the Wankel had become the automotive engine of the future. And Ford or Chrysler had been the first to buy the rights. Where would General Motors be now?
Right where Kodak and 3M are in office copiers. When these two leaders in coated-paper copiers had a chance to cover by buying rights to Carlson’s xerography process, they declined.
“Nobody would pay 5 cents for a plain-paper copy when they could get a coated-paper copy for a cent and a half.” Logical enough. But the essence of covering is protection against the unexpected.
And the unexpected did happen. Haloid took a chance on the Carlson patents, and today the company (successively Haloid Xerox and then Xerox) is a $9 billion giant. Bigger than 3M and only a step behind Kodak. Fortune calls the Xerox 914 plain-paper copier “probably the single most profitable product ever manufactured in the United States.”
And what did Xerox do for an encore?
Almost nothing. The spectacular success of the 914 was followed by one failure after another. Most notably in computers.
“Only when our office copying success has been repeated, not once, but several times,” said the Xerox chairman early on in the company’s diversification game, “can we fairly reach the conclusion that this organization has the kind of power that can be relied upon again and again.”
This is the classic mistake made by the leader. The illusion that the power of the product is derived from the power of the organization.
It’s just the reverse. The power of the organization is derived from the power of the product, the position that the product owns in the prospect’s mind.
Coca-Cola has power. The Coca-Cola Company is merely a reflection of that power.
Outside the cola field, the Coca-Cola Company has to earn its power the hard way—either by getting into the mind first, by establishing a strong alternative position, or by repositioning the leader.
So Coca-Cola’s Mr. Pibb runs a poor second to Dr. Pepper, and all the power of the Coca-Cola Company can’t do much about it.
So, too, with Xerox. The power is in the position that Xerox owns in the mind. Xerox means copier. Xerox owns the copier position because it got into the mind first and then exploited that copier position by a massive marketing program.
But in computers, office duplicators, word processors, and other products, Xerox starts at ground zero. Xerox has obviously tried to duplicate its copier success in other fields. But it has apparently forgotten one essential element of the 914 program. It was the first to fly the plain-paper copier ocean.
Most leaders should cover competitive moves by introducing another brand. This is the classic “multibrand” strategy of Procter & Gamble.
It may be a misnomer to call it a multibrand strategy. Rather it’s a single-position strategy.
Each brand is uniquely positioned to occupy a certain location in the mind of the prospect. When times change, when new products come and go, no effort is made to change the position. Rather a new product is introduced to reflect changing technologies and changing tastes.
In other words, Procter & Gamble recognizes the enormous difficulty of moving an established position. When you have one already established, why change it? It may be cheaper and more effective in the long run to introduce a new product. Even if you eventually have to kill off an old, established name.
Ivory was a soap. It still is. When heavy-duty laundry detergents became available, the pressure was probably on to introduce Ivory Detergent. But this would have meant changing the position of Ivory in the prospect’s mind.
A much better solution was Tide. Now the new detergent concept had a new name to match. And Tide became an enormous success.
And when Procter & Gamble introduced a dishwasher detergent, they didn’t call it Dishwasher Tide. They called it Cascade.
Each leading Procter & Gamble brand has its own separate identity: Joy, Crest, Head & Shoulders, Sure, Bounty, Pampers, Comet, Charmin, and Duncan Hines. Not a Plus, Ultra, or Super in the lot.
So a multibrand strategy is really a single-position strategy. One without change. Ivory has been going strong for 99 years.
What dethrones a leader, of course, is change.
The New York Central Railroad was not only the leading railroad in the twenties, it was also the bluest of blue-chip stocks. Several mergers later, the Penn Central (as it is called today) is an anemic relic with scarcely a trace of its former glory.
American Airlines, on the other hand, is flying high.
The covering move for the New York Central, of course, would have been to open an airline division at an early stage in the game.
“What? You want us to start an airline to take business away from our railroad? Over my dead body we will.”
The pure covering move is often difficult to sell internally. Management often sees the new product or service as a competitor rather than as an opportunity.
Sometimes a name change will help bridge the gap from one era to the next. By broadening the name, you can allow the company to make the mental transition.
Sales Management changed its name to Sales & Marketing Management to encompass the fast-growing function of marketing. At some point in the future the publication could drop the other shoe and change again. To Marketing Management.
From Haloid to Haloid Xerox to Xerox is the general pattern.
You know, of course, how the Kodak Company got its name. From Eastman to Eastman Kodak to Kodak, right?
Well, they haven’t dropped the other shoe yet. So the official name is still the Eastman Kodak Company.
The Direct Mail Association changed its name a number of years ago to Direct Mail-Marketing Association—a recognition of the fact that mail was only one of the ways for a company to do direct marketing.
So recently they changed again, to the Direct Marketing Association.
While a New York Central Transportation Company might not have been a success either, there is plenty of evidence to indicate that people take names very literally. (Eastern Airlines, for example.)
Government agencies are usually very good at the game of broadening the name. The Department of Housing and Urban Development, for example. (It used to be the Housing and Home Finance Agency.) By broadening the name, a government agency can enlarge its scope of operations, increase its staff, and naturally justify a larger budget.
Oddly enough, one agency that missed a bet was the Federal Trade Commission. A broader name would be Consumer Protection Agency, a name that would also take advantage of a current hot topic.
Leaders can also benefit by broadening the range of applications for their products. Arm & Hammer has done a good job in promoting the use of baking soda in the refrigerator.
The Florida Citrus Commission promotes orange juice, the largest-selling fruit drink, for lunch snacks, with meals, etc. “It isn’t just for breakfast anymore,” say the commercials.
Business Week, the leading business magazine, has successfully promoted itself as a good publication for consumer advertising. Today roughly 40 percent of its advertising volume is in consumer products.
Leadership is not the end of a positioning program. It’s only the start. Leaders are in the best position to exploit opportunities as they arise.
Leaders should constantly use the power of their leadership to keep far ahead of the competition.