The most successful companies are the ones with the highest-quality products and biggest marketing budgets, right? Wrong. While quality products and large cash reserves certainly help, they don’t determine a company’s success. In this 1993 book, marketing experts Al Ries and Jack Trout outline the 22 laws that govern what works and what doesn’t in marketing. Ries and Trout spent more than 25 years studying the best-known (and many little-known) brands to discover which strategies lead to success and which lead to failure. Through their research, they discovered common principles that they’ve distilled into these 22 immutable laws.
(Shortform note: For added context, we’ve renumbered the laws and grouped them into six themes:
The first four laws of marketing focus on how to be the top choice within your market. In every major product category, there’s one brand that immediately comes to consumers’ minds. For chocolate, it’s Hershey’s. For cellophane tape, it’s Scotch tape. The most successful brands are those that are considered the defaults in their categories. Use the following laws to make sure your product is consumers’ first choice.
People remember firsts, and companies that are first to enter their markets are typically more successful than those that follow, even if the latecomers have better products. Furthermore, the first entrants in a particular market tend to remain the market leaders over time, even if late entrants have higher-quality products.
If you have a great product but another company was already first in that market, create a new category in which you are first. You don’t have to entirely change your product—just find something that sets it apart. For example, when Charles Schwab opened a brokerage firm, instead of competing with existing firms, he made his the first discount brokerage firm.
Although Law #1 states that you need to be the first in the marketplace, Law #3 amends that principle: Above all, you need to be first in consumers’ minds—when consumers think of the product you sell, they should immediately think of your brand. Being first in the market merely gives you a head start to get into the public’s mind.
In the battle for prospective customers’ minds, you must fight not only to be first in mind but also best in mind. Contrary to popular belief, your most potent weapon in marketing is not the quality of your product, but rather the public’s perception of your product. Simply put, perception is reality: No matter what research and performance tests reveal, your marketing will only be successful if consumers believe that your product is the best. Build your marketing plan around the way people form perceptions by using some of the laws we’ll discuss later (such as laws #8 and #15). Marketing manipulates people’s perceptions and, thus, their realities.
The marketing laws in the second category address the importance of focusing your marketing message. In order to get consumers to notice and remember your product, you need to broadcast a unique, focused message that sets you apart from your competitors. Marketing with a focused message for a specific audience gets the most traction. Use these laws to define your product in a way that’s concise and appealing to customers.
To create a powerful, lasting perception in the mind of the public, you need to center your marketing plan around a single word. This word should sum up the primary message you want consumers to remember about your brand—whether it’s “reliability,” “affordable,” or “service.” A successful marketing strategy can create a universal association between your word and your product. For example, Mercedes built its success on the word “engineering” by boasting state-of-the-art features and innovations. When choosing a word, consider these tips:
When you choose your word, make sure that none of your competitors is already using it. The goal is to create an undeniable association between the word and your brand, and you can’t achieve that if another firm is using the same word. Even if you have a lot of money to throw at the marketing campaign, you can’t co-opt a word that another company is already using. In fact, if you try, you could end up strengthening their message, because you’ll be emphasizing the importance of that word, which is already linked with that brand.
When choosing the word for your brand, first determine the attribute that customers value most in this product. For example, in the toothpaste market, the most important attribute is the ability to fight cavities. If another brand has already successfully claimed the top attribute, move on to the next-best, opposite attribute—for example, “whitening” or “fresh breath.” While “cavities” and “whitening” aren’t strict opposites, they appeal to different desires, one being medical and the other aesthetic. If you try to claim an attribute that’s similar to your competitor’s, you’ll merely end up in their shadow (more on this in Law #10).
The next category of marketing laws explain how markets generally behave and how to use that insight to inform your marketing strategy. Every company wants to be a market leader, but few companies can be. Be aware of your position in the market, and use that to inform your message to consumers. These laws explain how to leverage your position for more effective marketing.
If you’re not the market leader, know your position in the market and acknowledge it in your advertising. Every product category has a hierarchy of brands. Think of this as a ladder: The market leader is on the top rung, and each descending rung is occupied by the next-best-selling brand. If you’re on the second rung, be honest about it in your marketing. Consumers know where you are on the ladder, and they’ll only accept marketing messages that align with that truth—otherwise, they’ll disregard your entire message.
Avis used this law effectively when it was trailing behind Hertz in the rental car market. When Avis first launched a campaign that called itself the “Finest in rent-a-cars,” it failed because the message didn’t resonate as true. By contrast, the company went from losing money to making money when it changed its marketing campaign to say, “Avis is only No. 2 in rent-a-cars. So why go with us? We try harder.” The company acknowledged its position and gave consumers a reason to choose it anyway.
When a product category is new, the ladder may have many rungs as new companies join the fray and compete for customers. But eventually, every market whittles down to just two top brands, while all their competitors fight for the crumbs. Depending on how quickly the market evolves, it may take years or decades to turn into a two-company race—and it’s critical to your business that you secure and maintain one of the top two spots in your market.
To secure a second-place spot on your market ladder, turn the market leader’s strengths into weaknesses. Don’t try to out-do your competitor at what it does best—instead, embody the opposite. For example, you could be the affordable alternative to the luxury option. Consumers naturally tend to either be attracted to the most popular brand or repelled by it. Stake a claim on the market share that’s looking for something different by pointing out how your product is different and why that makes it better. For example, while Coca-Cola had an unparalleled claim as the old, established cola option, Pepsi positioned itself to be the fresh alternative for the younger generation.
While focusing your message is important, so is focusing your product offerings. If you concentrate your effort on positioning your product as the best (or one of the best) in its category and building a marketing campaign around that product, consumers will know what to expect from your brand. By contrast, if you change your offerings or your strategy, your customers won’t know what to expect—and they’ll turn to a more familiar alternative. Use the following laws to maintain your consistency.
Over time, as the number of companies in a market shrinks, the category tends to divide into more specific categories—for example, what was once a single “computer” category eventually divided into mainframes, minicomputers, personal computers, laptops, and notebooks. If a market leader wants to enter one of these emerging categories, it needs a new brand name for that category. Customers have come to associate the existing brand name with a specific attribute (Law #5), so the company needs a different brand name to link to an appropriate word for the new category.
Like many things in life, when it comes to marketing, the short-term effects of an action can be the opposite of the long-term effects. Smart marketers must resist being swayed by short-term benefits and diligently consider the long-term effects of their actions. For example, Miller High Life had seen its sales grow significantly each year until it introduced Miller Lite. Five years after launching Miller Lite, sales for Miller High Life had nearly tripled—but then sales steadily declined for the following 13 years, falling below where they’d been before launching the light beer.
When you have a successful product in one category, resist the temptation to launch additional products in other categories under the same brand name. This is called line extension, and while it seems like a logical way to extend the success you’ve already built, it actually confuses customers and weakens your brand strength. The credibility you build in one market doesn’t necessarily transfer to other product categories. If you try to be everything to everyone, you’ll end up being nothing to anyone. For example, when 7-Up created new flavors and diet versions of the drink, its market share more than halved from 5.7 percent to 2.5 percent.
As many of these laws illustrate, it takes discipline and sacrifice to run a successful marketing campaign. Specifically, there are three areas where it’s essential to sacrifice certain products, messages, and ideas in order to maintain a narrow, targeted focus:
Aside from the details of your marketing campaign—such as your word and your primary message to consumers—be strategic with your overarching tone and approach. Use these laws to consider the big picture of your marketing plan.
When competing brands and consumers call out something negative about your product, acknowledge it and turn it into a positive. If you try to deny the negative—especially when it’s a widely acknowledged fact—you’ll lose credibility. The challenge is to find a way to show that the negative attribute implies other positive attributes. For example, Scope mouthwash claimed “good-tasting” as an attribute because it was common knowledge that its competitor, Listerine, had an awful taste. In response, Listerine embraced the negative with the tagline, “The taste you hate twice a day.” This implied that the product’s terrible taste must mean it’s a powerful germ killer, and it encouraged customers to use the product despite its taste because it was good for them.
In marketing, the only way to make headway against your competitors is to focus on finding opportunities to make a bold move that makes a big impression. Your competitor may have just one weak spot, and you should direct all of your energy toward exploiting it. Such opportunities may be few and far between, but when you find them, capitalize on them. This means that your company’s top managers need to be on the front lines, aware of what’s happening in the marketplace, and intricately involved in the marketing process so that they can be ready to seize opportunities when they arise.
Marketing plans are often based on some assumptions about the future, but there’s an inherent risk of these plans backfiring if competitors do something unexpected, such as introducing a disruptive innovation. No matter how closely you watch the market and how thoroughly you study market research, there’s no way to accurately predict the future unless you’re also writing your competitor’s plans. Instead, come up with a short-term plan—a shorter scope requires less forecasting and fewer chances of disruption from unpredictability—accompanied by a long-term direction to guide your future plans:
While the laws we’ve discussed so far will help you craft your overall marketing plan and message, these final laws address more general advice about how to approach your business.
No matter how brilliant your idea is, you need money in order to successfully market it. Marketing is about getting your product or service into the minds of consumers, and you need money not only to reach them in the first place but also to stay in their minds. Marketing is a constant—and expensive—battle. Even household names like Procter & Gamble and General Motors spend billions each year to stay in consumers’ minds.
Failure is inevitable. To be successful in business means to expect and embrace failure. If you embrace failure:
When the media creates a lot of hype about a company or a new product, it’s usually a poor predictor of success. When companies are doing well, they don’t need to manufacture excitement because it exists organically. By contrast, when companies are struggling—or when they’re taking a chance on an iffy new product—that’s typically when they start holding press conferences and reaching out to media outlets. If a competing brand is getting a lot of media hype, don’t base your decisions on the assumption that your competitor is on the rise.
It’s critical to know the difference between fads and trends, because fads can hurt your business while trends can create long-term success:
Beware of investing in fads. Although fads can be profitable, their short lifespan can cause more harm than good for the company. By the time an organization has set up the staff, manufacturing, and distribution necessary, the fad is over. If you’re already selling a product that becomes a fad, the best thing to do is to dampen the fad by limiting the supply, which will sustain demand for the product. Ideally, you want to dampen the fad so much that it converts into a trend.
Be wary that that success doesn’t cause your downfall:
The most successful companies are the ones with the highest-quality products and biggest marketing budgets, right? Wrong. While quality products and large cash reserves certainly help, they don’t determine a company’s success. In reality, there are laws that govern what works and what doesn’t in marketing. A beautifully constructed airplane that doesn’t adhere to the laws of physics won’t get off the ground, and neither will a cleverly designed product that breaks the laws of marketing.
Authors Al Ries and Jack Trout are marketing experts who spent more than 25 years studying marketing successes and failures. Through their research, they discovered common principles that they’ve distilled into 22 laws that lead to success. Each of the following chapters is devoted to explaining one of these laws and illustrating the principle with anecdotes about well-known brands such as IBM and Honda. This is one of several books that Ries and Trout have authored on marketing, including Marketing Warfare, Positioning: The Battle for Your Mind, Horse Sense, and Bottom-Up Marketing. (Shortform note: This book was published in 1993, before the Internet and social media altered the way companies market and consumers shop.)
Although these laws have been proven time and again, many reputable companies and advertising firms continue to violate them, albeit to their detriment. If you try to apply these laws at your company, be warned that you will likely face pushback from colleagues and higher-ups who wrongly believe that:
(Shortform note: For added context, we’ve renumbered the laws and grouped them into six themes:
The first four laws of marketing focus on how to be the top choice within your market. In every major product category, there’s one brand that immediately comes to consumers’ minds. For chocolate, it’s Hershey’s. For cellophane tape, it’s Scotch tape. The most successful brands are those that are considered the defaults in their categories. Use the following laws to make sure your product is consumers’ first choice.
Do you know who piloted the first solo flight across the Atlantic Ocean? Charles Lindbergh. Do you know who flew the second flight across the Atlantic? If not, you’re not alone. People remember firsts—whether it’s the first person to walk on the moon or the first company to offer a new product. For this reason, companies that are first to enter their markets are typically more successful than those that follow, even if the latecomers have better products. Furthermore, the first entrants in a particular market tend to remain the market leaders over time. In fact, the rankings of the top-selling companies in an industry tend to match the order in which they launched their products—the innovator has the highest sales, the second entrant is behind them, and so on.
Humans are wired to prefer things that are familiar. When a new product hits the shelves and consumers eagerly adopt it, they become familiar with and attached to that particular product. In other words, the first brand available typically becomes the default for that product. The most successful brands actually become synonymous with the product itself—for example, people often refer to tissues as Kleenex, even though Kleenex is the name of a specific brand of tissues (case in point, Kleenex was the first brand of facial tissues). The same goes for Xerox, Jell-O, Q-tips, Velcro, and Band-Aid.
Despite this law and case after case of proof, companies are often tempted to wait to enter a market until another firm has tested the market and proven that it’s viable. However, this approach puts later entrants in a difficult position: By the time latecomers enter the market, they face the formidable task of trying to wrest consumers away from the brand they’ve become comfortable with. Even if these companies used the extra time to develop higher-quality products, consumers typically prefer the devil they know over the one they don’t. At the end of the day, successful marketing doesn’t depend on the actual quality of a product, but rather consumers’ perception of the product (more on this in Law #4). (Shortform note: Read our summary of The Innovator’s Dilemma for more about how innovative companies balance the risks and rewards of establishing emerging markets.)
If you have a great product but another company was already first in that market, create a new category in which you are first. You don’t have to entirely change your product—just find something that sets it apart. For example, if someone else is already selling the first electric razor, make your product the first electric razor for curly hair. When Charles Schwab opened a brokerage firm, instead of competing with existing firms, he made his the first discount brokerage firm.
Once you’ve established a new category, promote the product instead of your brand. Convince people with curly hair that they need a razor made specifically for them—one that can solve their specific problems. Then, when you’ve convinced consumers that they need this product, they’ll naturally buy it from you because you’re the first (or possibly the only) one selling it.
Although Law #1 states that you need to the first in the marketplace, Law #3 amends that principle: Above all, you need to be first in consumers’ minds—when consumers think of the product you sell, they should immediately think of your brand. Being first in the market merely gives you a head start to get into the public’s mind.
Although being the first entrant in a market gives you the opportunity to be first in people’s minds, it also carries responsibility to convince people that they need this product to begin with. You can have a revolutionary product, but it’s not worth much if you can’t convince anyone to buy it. There are examples throughout history of companies that were first to market with a product but failed to establish a need for it:
In the battle for prospective customers’ minds, you must fight not only to be first in mind but also best in mind. Contrary to popular belief, your most potent weapon in marketing is not the quality of your product, but rather the public’s perception of your product. Simply put, perception is reality: No matter what research and performance tests reveal, your marketing will only be successful if consumers believe that your product is the best. Have you ever tried to get someone to change her mind about something she was absolutely convinced was true? You can throw every fact at the person and, still, if someone is convinced that something is true, then it is—at least, it’s true in her mind, and that’s all that matters.
These are just two examples that illustrate how perception trumps product quality:
This isn’t just true in marketing—in all areas of life, people assume that their perception of reality is the truth. In fact, there is no objective truth; the only truths are those that people perceive. People think that reality exists outside their minds, but the only reality is the one they create within their minds. Your prospective customers have their own truths, and you’ll be hard pressed to sway them with facts about how your product is better than your competitor’s. Instead, build your marketing plan around the way people form perceptions. Marketing manipulates people’s perceptions and, thus, their realities.
People’s individual perceptions are also influenced by other people’s perceptions. This is the “everybody knows” principle—as in, everybody knows that Japanese cars are higher quality than American-made cars. Consumers often base their buying decisions on common knowledge and hearsay, even if they haven’t had any personal experience with the product. Furthermore, the “everybody knows” principle is even stronger than firsthand experience. In other words, shoppers who have used a product interpret their experiences to align with what “everybody knows.” For example, since Japanese cars are better quality, if you had a reliable American car, it must have been purely good luck.
Consider how you could leverage the laws of first entry, first in mind, and perception to improve your position in the market.
In your product category, which brand is the first in mind in your market?
How early or late did you enter your market? How are you positioning your brand as a result?
If you were to create a new category for your product or service, what could it be?
How do consumers’ perceptions of the market leader’s product compare with their perceptions of your product?
What perception do you want consumers to have of your product?
The marketing laws in the second category address the importance of focusing your marketing message. In order to get consumers to notice and remember your product, you need to broadcast a unique, focused message. Marketing with a focused message for a specific audience gets the most traction. Use these laws to define your product in a way that’s concise and appealing to customers.
To create a powerful, lasting perception in the mind of the public, you need to center your marketing plan around a single word. This word should sum up the primary message you want consumers to remember about your brand—whether it’s “reliability,” “affordable,” or “service.” A successful marketing strategy can create a universal association between your word and your product. The word can relate to various aspects of your product or service:
When choosing a word, consider these tips:
If you’re the market leader, you’ve got it easy: The market leader’s word is often the product category (as discussed in Law #1). In other words, the brand name serves as a generic name for the category. For example, Saran Wrap has become a generic name for cellophane. By comparison, Mercedes couldn’t claim the word “car,” so the company built its success on the word “engineering” by boasting state-of-the-art features and innovations.
When you choose your word, make sure that none of your competitors is already using it. The goal is to create an undeniable association between the word and your brand, and you can’t achieve that if another firm is using the same word. Even if you have a lot of money to throw at the marketing campaign, you can’t co-opt a word that another company is already using. In fact, if you try, you could end up strengthening their message, because you’ll be emphasizing the importance of that word, which is already linked with that brand.
Sometimes marketers break this rule because extensive market research reveals that customers overwhelmingly value one particular attribute, so they use that word despite the fact that their competitor has already claimed it. Burger King fell into this trap: Research showed that the most valued trait in a fast-food restaurant was being fast, but McDonald’s had already claimed “fast.” Burger King forged ahead with the tagline “Best food for fast times,” and it backfired, leading to a significant downturn and eventual sale of the company.
When choosing the word for your brand, first determine the attribute that customers value most in this product. For example, in the toothpaste market, the most important attribute is the ability to fight cavities. If another brand has already successfully claimed the top attribute, move on to the next-best, opposite attribute. If you try to claim an attribute that’s similar to your competitor’s, you’ll merely end up in their shadow. Instead, establish yourself as the go-to alternative for those who don’t want the other guy’s attribute (more on this in Law #10).
Once you choose your attribute, emphasize its value in order to increase your market share. Although consumers may have prioritized the market leader’s attribute in the past, the tides can turn in your favor. For example, Gillette built its dominance as the market leader of razor blades by boasting high-tech, durable razors and cartridges. When a small French startup started marketing the opposite—disposable razors—it went against what Gillette’s sales proved customers wanted. However, despite the past success of durable razors, disposable razors grew to dominate the razor blade industry overall. Gillette wisely knew better than to rest on its laurels, and it launched its own Good News disposable razor that became the market leader.
Reflect on how effectively you’re using the laws of focus and chosen attributes in your marketing.
What word have you chosen for marketing your product or service? If you don’t have a single word, what’s your main marketing message?
If you don’t have a single word, how could you boil your message down to a word?
How does your word compare to your competitors’ words? (For example, does another brand have a similar word? Do your competitors’ words address the same aspect, such as the targeted audience or services offered?)
Reflect on the word you’ve chosen. How important do you think this attribute is to your customers, and why?
The next category of marketing laws explain how markets generally behave and how to use that insight to inform your marketing strategy. Every company wants to be a market leader, but few companies can be. Be aware of your position in the market, and use that to inform your message to consumers. These laws explain how to leverage your position for more effective marketing.
While it’s ideal to be first in consumers’ minds, you can still have an effective marketing strategy if you’re not the market leader—the key is to know your position in the market and acknowledge it in your advertising. Every product category has a hierarchy of brands. Think of this as a ladder: The market leader is the first in the public’s mind and has the highest market share, and so it’s on the top rung. The product that’s second in consumers’ minds and has the second-highest market share is on the next rung, and each descending rung is occupied by the next-best-selling brand.
Each rung on the ladder generally has twice as many sales as the rung below and half as many as the rung above. The number of rungs on your market ladder depends upon whether you offer a high-interest or low-interest product or service because consumers want more options for the products they care most about. High-interest products:
Meanwhile, low-interest products have fewer rungs and include items that:
If you’re on the second rung, be honest about it in your marketing. Consumers know where you are on the ladder, and they’ll only accept marketing messages that align with that truth—otherwise, they’ll disregard your entire message. For example, in the rental car market, Hertz was on the top rung, Avis was on the second, and National on the third. When Avis first launched a campaign that called itself the “Finest in rent-a-cars,” it failed because the message didn’t resonate as true. By contrast, the company went from losing money to making money when it changed its marketing campaign to say, “Avis is only No. 2 in rent-a-cars. So why go with us? We try harder.” The company acknowledged its position and gave consumers a reason to choose them anyway.
When a product category is new, the ladder may have many rungs as new companies join the fray and compete for customers. For example, in 1969, Coca-Cola had 60 percent of the cola market share, Pepsi-Cola had 25 percent, and Royal Crown cola claimed 6 percent. At this point, companies on the third and fourth rungs are fairly well-positioned and can make impressive profits (even with just 6 percent of the market share).
However, eventually, every market whittles down to just two top brands, while all their competitors fight for the crumbs. In the process, the market leader loses market share, the second-place brand gains market share, and remaining competitors lose ground. For example, by 1991, Coca-Cola had 45 percent of the market share, Pepsi-Cola had 40 percent, and Royal Crown had just 3 percent. Depending on how quickly the market evolves, it may take years or decades to turn into a two-company race. During that period, companies that hold the third rung in their category are in a tough position: They either have to reach the second-place spot, or they risk getting edged out entirely.
If you’re looking at your ladder and want to claim your spot on the second rung, you need to find ways to turn the market leader’s strengths into weaknesses. This principle expands on Law #7, which says that if your competitor has already centered its marketing campaign around the most-valued attribute in your category, choose an attribute that sets you apart. Don’t try to out-do your competitor on what it does best—instead, embody the opposite. This often takes the form of an old, well-established market leader versus a newer startup. Consumers naturally tend to either be attracted to the most popular brand or repelled by it, so stake a claim on the market share that’s looking for something different. By doing this, you make your product the only alternative to the market leader, minimizing your competition with the companies on lower rungs and securing your position in the market when it inevitably narrows to just two primary brands.
In order to establish your brand as the opposite of the market leader, point out how your product is different and why that makes it better. In other words, your marketing strategy has to hinge on painting the market leader in a negative light. For example, in the fine china market, second-rung Royal Doulton ran an ad pointing out that the market leader, Lenox, actually manufactured its china in New Jersey, while Royal Doulton produced real china from England. Your attack on the market leader must be consistent, otherwise you risk losing your second-place spot to a company on a lower ladder rung.
Reflect on your position on your market ladder and how this is reflected in your marketing.
Think about your market ladder. Which rung are you on?
How does your marketing message acknowledge your position on the ladder?
If your marketing message doesn’t currently address your position, how could you change your message so that it does?
How do or can you distinguish yourself from your competitors?
While focusing your message is important, so is focusing your product offerings. If you concentrate your effort on positioning your product as the best (or one of the best) in its category and building a marketing campaign around that product, consumers will know what to expect from your brand. By contrast, if you change your offerings or your strategy, your customers won’t know what to expect—and they’ll turn to a more familiar alternative. Use the following laws to maintain your consistency.
Over time, as the number of companies in a market shrinks, the category tends to divide into more specific categories. For example, what was once a single “computer” category eventually divided into mainframes, minicomputers, personal computers, laptops, and notebooks. Even popular music evolved from one general category into the multiple categories, including jazz, R&B, dance, latin, country, and pop. Each new category then develops its own hierarchy of brands. If a market leader wants to enter one of these emerging categories, it needs a new brand name for that category. Although it seems logical to extend the same, successful brand name to a new product, doing so confuses customers and hurts the company’s credibility (more on this in Law #13). Customers have come to associate the existing brand name with a specific attribute (Law #5), so the company needs a different brand name to link to an appropriate word for the new category.
For example, Volkswagen found success with its Beetle in the small car category, but the company flailed when it tried to extend its dominance to categories for bigger and faster cars with the Vanagon, the Cabriolet, and the Scirocco—all under the Volkswagen brand. As a result, Volkswagen lost a huge portion of its market share. By contrast, when Honda decided to enter the luxury car market, it created the Acura, which allowed Honda to maintain its existing dominance while Acura developed a distinct reputation in its own category. Ultimately, Honda and Acura became the market leaders in two different categories.
Like many things in life, when it comes to marketing, the short-term effects of an action can be the opposite of the long-term effects. For example, when stores promote price cuts, their sales jump in the short term, but in the long term, they suffer because customers learn to wait for a sale instead of buying items at their regular prices. Smart marketers must resist being swayed by short-term benefits and diligently consider the long-term effects of their actions. Companies benefit more from longevity than from short-lived sales boosts.
Top beer companies Budweiser, Miller, and Coors endured long-term sales declines after chasing the light beer craze and introducing light versions of their products. Miller High Life had seen its sales grow significantly each year until it introduced Miller Lite. Five years after launching Miller Lite, sales for Miller High Life had nearly tripled—but then sales steadily declined for the following 13 years, falling below where they’d been before launching the light beer. Michelob faced a similar fate, with the sales of all of its offerings (including the original as well as the light beer) eventually dropping lower than the sales the original Michelob had brought before the company introduced the light version.
The beer companies in the last example lacked long-term perspective in one particular effort: line extension. Line extension is when a company with a successful product in one category tries to extend its success by launching additional products in other categories under the same brand name. For example, Heinz tried to leverage its position as the market leader in ketchup by introducing Heinz baby food. If you just thought, “Heinz baby food?!” then you demonstrated exactly why line extension doesn’t work. The credibility you build in one market doesn’t necessarily transfer to other product categories.
As Law #5 dictates, focusing your marketing message is critical because it creates a connection in consumers’ minds between your product and a single characteristic. Alternatively, if you try to be everything to everyone, you’ll end up being nothing to anyone. The same goes for your products: You’ll be more successful creating a strong association between your brand and a single product, and you’ll dilute the power of that association if you tether more products to the brand name. Put another way, the public can only hold one association in their heads—and if you try to claim more associations, they lose any connection to your brand entirely.
Market leaders seldom have line extensions:
Despite the perils of line extension, companies violate this law more than almost any other in this book because line extension happens almost effortlessly:
As many of these laws illustrate, it takes discipline and sacrifice to run a successful marketing campaign. Specifically, Specifically, there are three areas where it’s essential to sacrifice certain products, messages, and ideas in order to maintain a narrow, targeted focus:
1) Product line: As discussed in Law #13, more products and services do not equal more profits because they dilute customers’ association with your brand. Customers are more likely to come to you if they know they can unequivocally rely on you for one thing than if you offer a smattering of everything.
For example, Federal Express dominated domestic shipping because the company focused on overnight service. As long as Federal Express claimed to be the leader of overnight service, it thrived. However, when the international shipping market expanded, Federal Express bought an international cargo firm to try to compete with companies like DHL, the market leader in international shipping. In doing so, Federal Express made two critical errors: It abandoned its focus on being the leader in overnight domestic service, and it didn’t replace “overnight” with a new association. Within two years, the company’s efforts to offer international shipping had cost the organization $1.1 billion.
2) Target market: Marketers mistakenly assume that targeting a wider audience in their ad campaigns will expand their customer base. However, your marketing target (the audience your marketing message is meant to resonate with) is not your customer base (the people who buy your products). Focus leads to success. The most successful brands target a very specific demographic in their marketing—and that success leads to a much more diverse customer base. Targeted messages are more successful in general, which raises a brand’s profile in the market, leading to a larger customer base.
For example, even though smokers were predominantly men, cigarette companies have often featured both men and women in their ads, hoping to attract more women to their products. By contrast, Marlboro not only targeted men, but it used images of the manliest type of men: cowboys. As a result, Marlboro became the international market leader for cigarettes—and in the United States, the company led in sales among both men and women.
3) Constant change: Resist the temptation to constantly change your marketing strategy in an attempt to follow the changing market. If you change often, you’ll lose focus and weaken the association you’ve created in the public’s mind. Instead, stick to the strategy that has been serving you well. For example, White Castle has offered the same square sliders for almost 100 years—in fact, the fast food chain didn’t even add a cheeseburger to its menu until more than 40 years after its founding. And the strategy worked well: White Castle trailed just behind McDonald’s in revenues at the time this book was published.
Evaluate whether you’re being disciplined about your offerings or if you’re trying to be everything to everyone.
How many products or services do you sell under the same brand name?
If you sell more than one product under the same brand name, when did you launch the line extension and how has it affected your total sales?
Are your sales matching your projections? Why or why not?
Who is your target audience for your marketing, and who is your customer base? If they are different, how do you account for the differences?
Aside from the details of your marketing campaign—such as your word and your primary message to consumers—be strategic with your overarching tone and approach. Use these laws to consider the big picture of your marketing plan.
Despite all your effort to choose an attribute and connect it with your brand, you can’t help it if your competitors attach a different, negative attribute to your name. However, all is not lost: When competing brands and consumers call out something negative about your product, acknowledge it and turn it into a positive. Just as you need to acknowledge your position on the market ladder (Law #8), you must acknowledge widely held beliefs about your product—especially negative ones. Whereas people are often skeptical of positive claims, when companies make negative admissions about their products, the public generally accepts them as facts.
If you try to deny the negative—especially when it’s a widely acknowledged fact—you’ll lose credibility. The challenge is to find a way to show that the negative attribute implies other positive attributes. For example, Scope mouthwash claimed “good-tasting” as an attribute because it was common knowledge that its competitor, Listerine, had an awful taste. That put Listerine in a tough position: If the company tried to deny that the product tasted bad, it would lose credibility with consumers. Instead, the firm embraced the negative with the tagline, “The taste you hate twice a day.” This implied that the product’s terrible taste must mean it’s a powerful germ killer, and it encouraged customers to use the product despite its taste because it was good for them.
This strategy has saved numerous companies from crises, but it must be used carefully. Consider these two caveats:
In marketing, the only way to make headway against your competitors is to focus on individual, impactful strikes. The cumulative effect of countless small efforts won’t move the needle much—instead, focus on finding opportunities to make a bold move that makes a big impression. Your competitor may have just one weak spot, and you should direct all of your energy toward exploiting it. Such opportunities may be few and far between, but when you find them, capitalize on them. This means that your company’s top managers need to be on the front lines, aware of what’s happening in the marketplace, and intricately involved in the marketing process so that they can be ready to seize opportunities when they arise.
At the time of this book’s publication, Coca-Cola was marketing Coca-Cola Classic as well as New Coke—and the company was struggling to keep its lead over Pepsi. Ad campaigns tried different slogans, from “We have a taste for you” to “Catch the Wave” to “You can’t beat the feeling.” The firm needed to make a bold move to regain its footing. When it came down to it, Coca-Cola’s only ammo was its strong association with the phrase the “Real Thing.” The brand hinged on being the original cola, and the authors suggest that the only way to reclaim that position was to drop New Coke and put all its effort into promoting Coca-Cola Classic as the Real Thing.
Marketing plans are often based on some assumptions about the future, but there’s an inherent risk of these plans backfiring if competitors do something unexpected, such as introducing a disruptive innovation. No matter how closely you watch the market and how thoroughly you study market research, there’s no way to accurately predict the future unless you’re also writing your competitor’s plans. In fact, market research can often lead you in the wrong direction, because it focuses only on what’s worked well in the past and has no way of predicting the future.
Naturally, you don’t want to walk into the future blindly, or wind up winging it every step of the way, so there are ways to create flexible, more reliable plans:
Most importantly, come up with a short-term plan and a long-term direction. Your short-term marketing plan is built around a word or concept that sets your brand apart from the competition; the shorter scope requires less forecasting and fewer chances of disruption from unpredictability. Meanwhile, your long-term marketing direction creates a program that builds upon that word or concept, which provides guidance for future short-term plans without committing to concrete details that could be upended.
Consider how effective your overall marketing strategy is.
What is a negative attribute that is commonly acknowledged about your product?
How have you or how could you turn that negative into a positive?
What’s the last bold marketing strike you’ve made against a competitor, and what was the outcome?
How could you alter your overall marketing plan to create a short-term plan that is angled in a long-term direction?
While the laws we’ve discussed so far will help you craft your overall marketing plan and message, these final laws address more general advice about how to approach your business.
If you have a great idea and you’re ready to apply these laws and watch your business take off, take a step back. No matter how brilliant your idea is, you need money in order to successfully market it. Marketing is about getting your product or service into the minds of consumers, and you need money not only to reach them in the first place but also to stay in their minds. Marketing is a constant—and expensive—battle. Even household names like Procter & Gamble and General Motors spend billions each year to stay in consumers’ minds.
Leverage your idea to find funding. You could:
If your customers are other businesses, you’ll still need a sizable budget but it will be considerably less than you’d need for a product or service aimed at the general public. And if you’re a large company that already has a big budget, use it. Being frugal won’t earn you sales, so invest in marketing and follow the laws we’ve discussed.
Failure is inevitable. Sometimes it’s small and manageable, sometimes it’s massive and devastating. To be successful in business means to expect and embrace failure. Not every problem needs to be resolved—sometimes you just need to recognize a failure and cut your losses. Xerox could have saved itself $2 billion and decades of struggles if it had accepted its failure in the computer market and stuck with copiers. If you embrace failure:
Foster a company culture that accepts the possibility of failure:
When the media creates a lot of hype about a company or a new product, it’s usually a poor predictor of success. When companies are doing well, they don’t need to manufacture excitement because it exists organically. By contrast, when companies are struggling—or when they’re taking a chance on an iffy new product—that’s typically when they start holding press conferences and reaching out to media outlets.
There are countless examples of innovations that the press predicted would be instant successes, but that ultimately flopped or took years to catch on. One example is the picturephone, which debuted at the 1964 New York World’s Fair. The picturephone—later called the videophone—was essentially a telephone attached to a television. AT&T tried promoting the technology in the 1970s, ‘80s, and ‘90s with little success. (Shortform note: The technology supporting videotelephony improved over the course of the 1990s and 2000s, ultimately resulting in the ubiquitous video chatting platforms available today.)
It’s critical to know the difference between fads and trends, because fads can hurt your business while trends can create long-term success:
Beware of investing in fads. Although fads can be profitable, their short lifespan can cause more harm than good for the company. By the time an organization has set up the staff, manufacturing, and distribution necessary, the fad is over. If you’re already selling a product that becomes a fad, the best thing to do is to dampen the fad by limiting the supply. If you flood the market, soon everyone will own the product and the excitement will be gone. On the other hand, if you restrict supply, the product will remain in demand. Ideally, you want to dampen the fad so much that it converts into a trend.
For example, Cabbage Patch Kids dolls became a fad after they were introduced in 1983. The manufacturer, Coleco Industries, capitalized on the hype and produced Cabbage Patch games, clothes, pens, and pencils. By 1988, the fad had passed and Coleco filed for bankruptcy. However, Hasbro acquired Cabbage Patch Kids and sustained sales—albeit at lower levels than during their heyday—with a more measured approach.
You’ve worked hard, stayed focused, grown in the market, dodged your competitors’ negative attacks, and gained huge success. Now you have to be wary that that success doesn’t cause your downfall. Consider the cautionary tale of Digital Equipment Corporation (DEC) founder Kenneth Olsen, who built the $14 billion company from the ground up by becoming the leader in minicomputers. Olsen’s success caused him to overestimate his industry wisdom and dismiss some of the most impactful computer innovations of the time—the personal computer, open systems, and reduced instruction set computing (RISC). (Shortform note: In the late 1970s, Olsen said, “There is no reason for any individual to have a computer in his home." He was forced to retire as president of DEC in 1992.)
Success can alter the dynamics that brought the company success in the first place:
Use the previous laws to reflect on whether you’ve developed the mindset necessary for enduring success.
If you haven’t launched your business yet, how much funding do you think you’ll need, and how did you come up with that number?
How have you or could you create a company culture that encourages people to take risks and learn from their mistakes?
If your product or service aligns with a trend, what are the signs that this is a lasting trend and not merely a short-lived fad?
What is one policy you can implement now to safeguard your company against some of the dangers of success?