Review by: Gaben Chancellor
“The first law of successful marketing is to read and understand this book. It’s powerful in its simple essence and real world application, and is marketing distilled to its basic essence… A ‘must-read’ for serious students and seasoned professionals.”
Many books have been written regarding marketing, advertising and promotion. Most have pretty pictures of successful ad or marketing projects, give great examples of what has gone right or wrong throughout the years, and provide candid personal insights from admen (or people) who have come before us. The 22 Immutable Laws of Marketing is not about pretty pictures and why they sell, though it does gives some very relevant examples of what can go right or wrong. While the examples are a bit outdated (it was written in 1993), the examples are not old enough to be obtuse, and add valuable context to an extremely interesting subject. The difference between this book and other marketing tomes is that the authors adeptly distill the concepts behind the reality, giving the reader a very clear roadmap to modern marketing success through the application of clear and immutable laws. While it was written with a large company perspective, it is important to note that for every big company there was a small company who followed these rules (and often broke some rules) to rise within their market category and thereby the eyes of the consumer.
This article is more than just a review of the book as it contains a distilled summary of the book to give the busy entrepreneur or businessperson a quick taste of its value. I highly encourage anyone who wants his or her business to see greater success to pick a copy up of this book and give it a read. It is small format book with a large font that makes for a fast read, so there really is no excuse not to give it shot. Click on the image to the left to link over to Amazon where you can pick up a copy for cheap. It will probably be the best marketing investment you ever make! Now, on with the summary:
After years of working in marketing, analyzing marketing principles and developing strategic models of marketing based on consumer application, Al Rise and Jack Trout have distilled their findings into 22 simple but basic laws that they feel govern success and failure in the consumer marketplace.
The Law of Leadership
It is almost always better to be first than to be better. While being better than your competitor has its advantages, it cannot compete with being the first to provide a certain type of product. The bottom-line is that it is easier to get into the consumer mind first than try to convince someone your product is better than whoever got there first. Interestingly, this law applies to any product, any brand and any category.
If you doubt this, take a hard look at some examples: Hewlett Packard, first to market with laser printers, and holds a 45% market share today. Gillette was the first safety razor. Tide was the first laundry soap. Gatorade was the first sports drink. Thomas was the first English muffin. The list is long and irrefutable. Strangely, in spite of the facts, most company follow a “better product” strategy, often believing that as they have a product which follows the first leader, they cannot take advantage of this law. So comes into play, the second law.
The Law of the Category
If aren’t first in a category, you can define a new category to be first in. Cheating you say? In business, there are no problems, only solutions, and this is a perfect example. And a perfect example of this law in operation is Amelia Earhardt, the third person to fly the Atlantic solo. Third? So why do we remember her? It is because she was the first woman that we remember her. For a practical marketing example, we look to beer (a nice subject for those who like suds). When Heineken became a big success, Anheuser-Busch faced them with two new products; an imported beer, Carlsburg, and the first high priced domestic beer, Michelob. Carlsburg failed in the US market, while Michelob outsells Heineken two to one.
Yes, you can define your own category thereby being first to market. In fact, repositioning is extremely potent. Dell computers entered an impacted personal computer market and have become a powerful player with dominance in the market. How? They became the first computer company to sell computers by phone. Charles Schwab didn’t just open a better brokerage firm; he opened the first discount brokerage. The mistake is thinking about how to get consumers to prefer your brand. The solution is to forget the brand (for the moment), and consider the category. How do you redefine you marketing position to define yourself as a market leader? Once you have chosen a new category, you then promote that category and you promote your market position.
The Law of the Mind
It is always better to first in the mind of the consumer, than first in the marketplace. While the law of leadership is still true, this law modifies that law because being first in the marketplace allows you to get in the mind first. The advantage and disadvantage of this is the difficulty that is encountered when trying to change a mind. Once a mind is made up, it is very difficult to change it. The single most wasteful thing you can do in marketing is to try and change a mind. And boy, can marketing spend a lot money trying to do just that. Remember, if you are going to try to change a mind, worming your way in is almost useless. You must do it with a ‘bang’. Lastly, remember that certain things about human minds will always be true. Simplicity is one of those. The simpler your company name or sell concept is, the easier it will be to leave an impression in the mind of the consumer.
The Law of Perception
Marketing is not about products, it’s about perceptions. Common belief is that the best product wins. The truth is subtler. All that exists within the world of marketing are perceptions in the minds of the consumer. All else should be considered illusion, and all so-called ‘facts’ should be examined with a critical eye. By studying how perceptions are formed in the prospects mind, and focusing your marketing on those perceptions, you get at the true desires, needs and wants of the consumer. The consumer doesn’t want the best product, but rather, they want the product that they perceive to fill their needs best. People are seldom wrong in their own minds.
Take a look at the three largest selling Japanese imported cars, Honda, Toyota and Nissan. Most marketing executives might state that the battle of those brands pivots on quality, styling, horsepower and price. Wrong. It’s what the consumer thinks about Hundai, Toyota and Nissan that determines which brand will win. Toyota has made great strides lately in the area of hybrid cars, but their recent inability to smoothly handle their recall notice has damaged their consumer perception, dealing a healthy blow to their brand power. Ironically, most of us haven’t experienced the acceleration problem for ourselves, but the media is driving our perception. Even in the face of personal experience, perception will win over product every time.
The Law of Focus
The most powerful concept in marketing is owning a word in the prospect’s mind. One of the most direct paths to success is finding a way to own a word in the prospect’s mind. Not a complex or invented word, but a simple word that everyone already knows. By focusing on a single word, you ‘burn’ your way into the prospects mind. Think about how we identify with the following companies and their words: FedEx – overnight, crest – cavities, Mercedes – engineering, Apple – friendly, BMW – driving, Volvo – safety, Dominos- home delivery.
The most effective words are simple and benefit oriented, though they might also be service related, audience related or sales related. Often, those simple words have much deeper meaning that come with them. A “safe” car seems to imply “better design”, “careful engineering” and a “caring company”. Keep in mind that taking on some other companies’ word will be an uphill battle. In essence, narrow your focus. Your company becomes stronger as you reduce your scope of operations. Also, be prepared to fight your own lawyers as you take on a new word. Trademarking and protecting your word weakens the spread of this word, as you want others to use your word, furthering your brand. Also, once established, you must continue using that word, keeping your focus, or when you don’t, the prospects will fall away.
The Law of Exclusivity
Two companies cannot own the same word It is futile to try and own the word of your competitor. Recalling that human minds are difficult to change, you can imagine what happens when you attempt to seize a word from your competitor. It generally strengthens their ownership of it.
Don’t be fooled by research, focus groups or expensive studies that tell you what the consumer wants, without considering the impact. If what they want is defined by a competitor’s word, they have already seized that ground and you will need to consider an alternative strategy. Research didn’t tell you that a competitor owned the word; just that it was good in the eye of the prospect. Burger King actually hurt its market position by attempting to own the word ‘fast”. McDonald already had seized that word and as Burger King began to promote “Best food for fast times”, McDonalds actually saw a revenue upswing. Many companies have paid the price for violating this law.
The Law of the Ladder
The marketing strategy you use depends on the rung you occupy on the product ladder. Your strategy will change depending on how soon you got into the prospects mind, and thereby on which rung of the ladder you occupy. The higher up the ladder, the better. Avis used this to great advantage. Finding themselves losing money (for 13 years), and behind the market leader, they admitted, “Avis is #2 in rent-a-cars. So why go with us? We try harder”. They had their first year in the black!
And why is this so? The human mind is selective, and uses ladders or graded scales to filter (accept and reject) information. The data that a human mind is most likely to accept is that information that conforms with other known data. If you present you location on the ladder in an honest and accurate fashion, the prospect can file that data in the appropriate location. Over time, we have even discovered that there is a relationship between market share and your position on the ladder. Your company will tend to have twice the market share of the brand below you, and half that of the brand above you. Ironically, the battle of brands in any one market segment is most often very unequal. It is also interesting to note there is a maximum number of rungs in any one ladder. This is because the human mind tends to remember 7 items in any one group, as touted by Harvard psychologist Dr. George A. Miller. He demonstrates that is rare that any one person can name more than 7 directly competitive products. It is not a coincidence that phone numbers are 7 digits, and that there are 7 wonders of the world (never mind the 7 dwarfs).
The ladder is a simple, powerful analogy that can help you with your marketing. Ask yourself; where on the ladder are we in the mind of the prospect? Make sure you deal realistically with the answer to that question.
The Law of Duality
Over the long haul, every market becomes a battle between the top two brands. Early in the game, a ladder has many rungs, but over time, the runs are reduced to two. Kodak versus Fuji. McDonalds versus Burger King. Hertz versus Avis. Listerine versus Scope. While the future is unknown (see the Law of Unpredictably) but marketing and the power of the dollar will trend market competitions toward this kind of face-off. And woe be to the third in line. Console video games today are dominated by Xbox and Playstation3. While the Nintendo Wii is making respectable sales, it is still nowhere near the dominance of the big two players.
Of course, many of the other marketing laws can change the outcome of this seemingly gloomy outlook. In fact, often, the number two spot is not clear cut, with other company being very close to that same level. Remember, the customers believe that marketing is a battle of products. This type of thinking further aids keeping two brands on top, “ They must be the best… as they are both leaders.
The Law of the Opposite
If you are shooting for second place, your strategy is determined by the leader. It is often said that in weakness can be found strength. Wherever the leader is strong, so there is an opportunity to turn the tables. How is your competitor strong, and how can you turn that into a weakness? Instead of being better, be different. Coke is a 100-year-old product, established and market leading. Pepsi uses the law of opposite to get noticed: “the choice of a new generation”. Fortunately, there are generally two kinds of prospects, those who want to buy from the leader, and those who do not want to buy from the leader. A second rung company can very easily appeal to that group. By positioning yourself against the leader, you take business away from the alternatives! Emulating the leader is a bad idea… you must stand as the alternative.
Returning to beer (still a good subject), we examine Becks beer. On arrival to America, they realized that Heineken was the first imported beer, and Lowenbrau was the first German imported beer. Beck’s became the second largest European beer by positioning in this fashion: “You’ve tasted the German beer that’s most popular in America, now taste the German beer most popular in Germany!” Burger Kings most successful sales years have also come from this positioning, with their claims of “Have it your way”, being positioned directly against the fast food mass manufacturing toted by McDonalds. As a second rung holder, you must position your offerings correctly against the top rung.
The Law of Division
Over time, any one category will divide and become two or more categories. The marketing arena is in a constant state of change, with categories dividing over time as the market progresses. Computers are a great example. Over time, the market broke into segments; mini-computers, mainframes, workstations, personal computers, laptops, notebooks, pen computers, net-books and so on. Need I discuss beer? From the music industry to cars, society and its offerings become more complex and specialized over time, and every segment becomes a separate, distinct entity. Each segment will have its own character, its own leaders and its own ladder. Convergence is an interesting idea that seems to hold no water in the world of capitalism and commerce.
The way for a market leader to combat this process and maintain dominance is to address each emerging category in its own right, and with a new brand name. Honda used this strategy when they wanted to open up the luxary car market, and so was formed Acura, complete with its own brand and dealerships. Honda now sells more Acuras than Volkswagen sells Volkswagens. Divide and conquer has real meaning.
The Law of Perspective
Marketing effects take place over extended periods of time. In fact, long-term effects can often be the exact opposite of short-term effects. Obviously, in the short term, sales increase business by attracting a flurry of sales. In the long term however, evidence indicates that sales actually decrease business by encouraging customers to not buy at ‘regular’ prices. Why? You sale price indicates to the customer that your normal price is simply too high. Ironically, constant sales do not increase business as much as they keep sales from falling off. Big retail winners have ‘everyday low prices’ and minimize specialized sales. A good example is the effect that Lite beer had on the sales of regular Beer (getting thirsty yet?). At first, the existence of this new extension to the product lines (see next point, line extension) created an up-tick in sales across multiple beer manufacturers. Over the long haul, the principle brands all sell considerably less. It is critical that you take a long-haul perspective when considering the impact of a new marketing program.
The Law of Line Extension
There is an irresistible pressure to extend the equity of the brand. By far the most violated law of marketing is the law of line extension. Line extension is the almost unconscious tendency for successful brands to release similar and related products. IBM’s wild success in mainframe computers led to marketing personal computers, pen computers, midrange computers, software, networks, telephones and on. From the out of control profits they saw in mainframe computers, they now sell almost everything and barely break even. Success seems to plant the seed for future problems. Microsoft is another great example. Wildly successful at operating systems, they have branched out in a myriad of ways, from game consoles to hardware and a diverse portfolio of software. Their profits have declined steadily and if they do not act to focus their efforts, they could become victim of their own greed.
Sure, it sounds logical. Take something successful and utilize its brand essence to increase your product offerings and bottom-line revenue. This takes us back to the marketing battle of perception. A-1 Steak sauce saw the rise of chicken in the consumer marketplace and moved to adapt, releasing A-1 chicken sauce. It tanked after millions in marketing. The A-1 brand meant ‘steak sauce’ to the consumer! As you might expect, there are almost no line extensions that are market leaders. Despite this, companies cannot resist. Bic Lighters… Bic pantyhose. Tanguery Gin… Tanguery Vodka. Heinz ketchup… Heinz baby food. None of these line extensions went anywhere, and in some cases, the extensions weakened the primary brand, allowing the competitors to consumer greater percentages of their initial market share. Ouch!
So why do so many companies fall prey to this? The law of perspectives tells us why. In the short term, extending a known brand can be a winner, bringing greater sales. In the long term, however, it dilutes the primary brand, while deflecting resources that would have otherwise been used to maintain the primary brand vitality. In the case of line extension, more is less. More products and more alliances mean less money to make. The answer is the opposite I am afraid, as less is more. By narrowing your focus, you build a better brand position in the eye of the prospect. Another reason so many companies fall prey to the temptation of line extension, is that it is much easier to extend an existing asset than having a new idea, and implementing it. The antidote is corporate courage and innovation, both of which are difficult to come by.
The Law of Sacrifice
You have to give up something to get something. Opposite of the line extension law, this law dictates that you can give up something to become more successful. There are three things you can sacrifice; product line, target market and constant change.
To turn around your success, try to reduce your product line, not expand it. A deep product line means more support, more returns, more marketing, and more market confusion. Federal Expresses power arose from owning and commanding a single word, overnight. When it absolutely, positively had to be there overnight, you would call Federal Express. With their success, came purchasing of new companies and extending their lines. They purchased a worldwide air cargo company, and began to falter.
The bottom-line is that the generalist business is weak. Kraft is a powerful brand name, right? They own 9 % of the jelly and jam market. But wait, Smucker’s, a lesser-known brand, owns 35% of that same market. Kraft got smart and branded cream cheese with Philadelphia, owning 70 % of that market.
Sometime sacrifice in a big way can have a great return. Interstate Department Stores was in bankruptcy when it considered sacrifice as a viable option. As toys were its only selling item, it took on a new name “ToysRUs” and dropped all other product lines to become a raging success.
Dropping markets can sometimes be your key. Pepsi was making no strides against Coke until it dropped all markets except the youth market, marketing with names that appealed to that single market like Michael Jackson and Don Johnson. In one generation, they narrowed their market margin to within 10%.
Lastly, sacrifice the need for constant change. If you change your market strategy with every twitch of volatile consumer market, you will find you are wasting time and resources. The best way to maintain a consistent market position is simply not to change in the first place.
The Law of Attributes
For every attribute, there is an opposite, effective attribute. In the Law of Exclusivity, we pointed out that you cannot own your competitors word. You must find your own, which you do by seeking out another attribute. Marketing is a battle of ideas, and to win it, you must have an idea, or attribute of your own to focus your efforts. To further make this a challenge, every product will have more important attributes. For toothpaste, cavity prevention is very important, and a great one to own. If that is taken, you may have to move on to a lesser attribute, dramatize it, and increase your market share through that vehicle. Tooth paste next rung might be ‘tastes good’, ‘whitens teeth’ or ‘freshens breadth’. Own your attribute!
The Law of Candor
When you admit a negative, the prospect will give you a positive. You have heard “think positive”, and probably understand its value. The law of candor flies in the face of this by allowing you to first admit a negative, then twisting to a positive.
The truth is, honesty, or candor, is disarming. Negative statements are accepted as truth. No proof is needed for a negative statement, while positive statements in advertising are often viewed with a skeptical eye. When a company starts by admitting a problem, people tend to instinctively open their mind, and attempt to enter a problem-solving mode. With that mind open, you’re in a position to drive in a positive message, your selling idea. GrapeNuts cereal admitted eating their cereal was a ‘learned pleasure’ and advised trying it for a week. Sales went up 23%. Smuckers admitted, “With a name like Smuckers, it has to be good”. They are the current market leader in jams and jellies.
And now, a word of caution. This approach requires careful application and great skill. Your negative must be widely perceived as negative, and the prospect must agree with your assertion. If they do not, confusion ensues. Next, you must shift quickly to the positive. Don’t apologize, but set up the benefit to be gained immediately.
Maybe this tells us what we knew already; honesty is the best policy!
The Law of Singularity
In each situation, only one move will produce substantial results. It is commonly believed that in marketing, the sum total of a lot of small efforts adds up to success. Often, money is distributed amongst a variety of programs. History disagrees, telling us that a single bold stroke is far more potent. Often, there is a single place the competitor is vulnerable. In marketing, as in life, it is often the unexpected that works the best. Coke could easily invoke this by directly attacking Pepsi’s younger generation, by offering kids ‘the real thing’.
To find your idea, you must carefully study the marketplace, and how your competition is addressing it. You must apply yourself to the problem at the ground level.
The Law of Unpredictability
Unless you write your competitors’ plans, you can’t predict the future. Marketing plans based on what will happen in the future are often flawed. No one has a crystal ball. One the primary reasons that variability is almost guaranteed is there is no way to estimate the strategic response to your moves by the competitor. Another problem is that most corporate decisions are made based on quarterly financial structures. While you can’t predict the future, you can understand trends, and take advantage of change. An example is this nations trend toward better health. A product marketing strategy that plans to take advantage of this has a greater chance of success than otherwise.
The danger of working with trends is extrapolation. Many companies will make the mistake of jumping to conclusions based on a trend. Another mistake is assuming the future will be a replay of the present. Things will be different and if you don’t accommodate for that, you will be sorry. It is also valuable to remember that research only tracks the past, and is never a to be trusted. Had Xerox listened to their research that people wouldn’t pay enough for black and white copys, they wouldn’t be a household name today.
Flexibility is your greatest defense against unpredictable change. It is worthy to note that there is a big difference between ‘predicting’ the future and ‘taking a chance’ on change. No one can predict the future with any degree of certainty, and your marketing plan should be no exception.
The Law of Success
Success often leads to arrogance, and arrogance to failure. Ego is the enemy of many things, including marketing. If you can look at your challenge with objectivity, the correct solution will be easier to arrive at. Unfortunately, success will often lead to less objectivity. The ego replaces objectivity with personal opinion, rather than continuing to drive marketing decisions on what the market wants.
When a brand is successful, a company ego will assume that the name is what created the success. The reaction is to slap their name on line extensions. Wrong! The name did not create the success. The marketing of the product created the success. The more you identify with the brand, the more likely it is that you will fall into this trap. Brilliant marketers think like their prospects, and allow their ego to take a secondary position.
The Law of Failure
Failure is to be expected and accepted. Too many companies attempt to fix things rather than accept their failure, and simply drop them. A better strategy is to recognize failure early and cut your losses. If Xerox had recognized that computer sales were not working, they could have saved years of effort that went nowhere. Wal-Mart has seen great success as the ranks of management are encouraged to recognize that nobody hits the target every time. Management is not punished for occasional failures, but encouraged to keep trying. Learn to accept the inevitability of failure and your company can more easily see those things that should be terminated before too much time or resources are wasted.
The Law of Hype
The situation is often the opposite of the way it appears in the press. When a company is doing well, it probably doesn’t need hype. When you need hype, it probably means you are in trouble. No soft drink has ever received more hype than New Coke. It is estimated that they received over 1 billion dollars worth of free publicity. Add that to the marketing dollars spent and you would think it would be a raging success. As we know, it went nowhere.
Forget the front page. You want to know where things are going, look in business section and the back page for the small stories of that perform according to the laws of marketing. Look for the items which are first to market, and take their time to establish a market. Capturing the imagination of the people is not as important as revolutionizing a market… and to that, hype is not required. For the most part, hype is just that, hype. Real revolutions arrive unannounced in the night, sneaking up on you.
The Law of Acceleration
Successful programs are not built on fads, but rather they are built on trends. Like a wave, a fad is very visible but goes up and down in a hurry. Like a tide, a trend is almost invisible but grows powerful over time. Over the short term, a fad can be profitable, there is a fast fall-off to nothing. Over the long haul, a trend grows steadily with no fall-off. A successful program takes advantage of the trends, not the fads.
There is an interesting paradox. If you find a business taking off rapidly, the best thing you can do is dampen the fad. By doing this, you stretch it out, making it more like a trend. The best, most profitable thing to ride in marketing is a long-term trend.
The Law of Resources
Without adequate funding an idea won’t get off the ground. The best idea on the planet will go nowhere without money to fund the creation and marketing. The bottom line is that you need money to get into the consumer mind, and you need money to stay there. The unfortunate truth is that you will get further with a mediocre idea and a million bucks than you will with a good idea alone. The real question for most businesses is how much do they have to give away to get the success they desire? The bottom-line is that money makes the marketing world go.
Regardless of how you apply these laws to your marketing challenges, they will help your business find its way through the complexities of marketing positioning, promotion and advertising. There are two valuable things to remember:
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