Laws of Leadership 1
- If you’re introducing the first brand in a new category you should always try to select a name that can work generically.
- It’s better to be first than it is to better [product]
- Benchmarking: comparing and evaluating your company’s products against the best in the industry.
- It doesn’t work
- Marketing is a battle of perceptions not products
The Law of Category 2
- If you didn’t get into the prospect’s mind first… Find a new category you can be first in.
- Stop thinking “how is my product better”, but how is it different?
- Prospects have an open mind when it comes to categories not who is better
- When you’re first in a new category, promote the category.
The Law of the Mind 3
- Don’t market to change someone’s mind – ‘Single most wasteful thing’
- People don’t like to change their minds
The Law of Perception 4
- All that exists in the world of marketing are perceptions in the minds of the customer
- People project themselves into area they live or belong within their minds
- Minds of customers or prospects are very difficult to change
- Marketing is a battle of perceptions, not products.
- People base their own buying perceptions on someone else’s perception of reality – “Everybody knows” perception
The Law of Focus 5
- Associate a word with your brand
- If you can’t own your word own a narrowed focus [i.e. from bigger brands]
- It’s always better to focus on one word than 2,3 or 4
- You can’t take someone else’s word
- Don’t try to change/abandon your word
- Narrow the focus and you become stronger
- You can’t narrow the focus with quality or any other idea that doesn’t have proponents for the opposite point of view
The Law of Exclusivity 6
- You can’t change people’s minds once they are made up – what you do is reinforce your competitor’s position by making it’s concept more important.
- What leads marketers down this lane is research. Researchers don’t tell you that someone else already owns the idea.
The Law of the Ladder 7
- For each category, there is a product in the mind. On each rung is a brand name
- You can be successful by relating yourself to the position of other brands in the mind
- Prospects use their ladders in deciding which information to accept and which to reject
- There’s a relationship between market share and your position on the ladder.
- What’s the maximum number of rungs on a ladder? There seems to be a rule of 7 in the prospects mind
- It’s sometimes better to be no.3 on a big ladder than no.1 on a small ladder.
- Before starting any marketing program, deal realistically with your position on the ladder.
The Law of Duality 8
- Marketing is a two game race
- Third place on the ladder is bad news
- Knowing marketing is a two horse race in the long run can help you plan strategy in the short run
- Customer’s want the leading brand, based the naïve assumption that leading brand must be better
The Law of Opposite 9
- Don’t try to be better try to be different
- Study the firm above you – how is it strong? How do you turn that strength into a weakeness?
- Too many no.2 brands copy the leader, you must present yourself as an alternative
- As a product gets old, it often accrues some negative language
- There has to be a ring of truth about the negative if it is to be effective
- Marketing is a battle of legitimacy. The first brand that captures the concept is often able to portray its competitors as illegitimate pretenders
[Note: case study on Burger King vs. McDonald’s p.55]
Law of Divisions 10
- Instead of understanding this concept of division, many corporate leaders hold the naïve belief that categories are combing.
- The way for the leader to maintain its dominance is to address each emerging category with a different brand name.
- Timing is also important, you can be too early to exploit a new category
- It’s better to be early than late. You can’t get into the prospect’s mind first unless you’re prepared to spend sometime waiting for things to develop.
The Law of Perspective 11
- Sales [seasonal] decrease business because they teach customers not to buy at regular prices
- Any sort of couponing, discounts or sales tends to educate customers to buy only when they can get a deal
- Big winners are companies that practice everyday low prices e.g. walmart, Kmart
- Unless you know what to look for, it’s hard to see the effects of line extension especially for managers focused on their next quarterly report
The Law of Line Extension 12
- When a company becomes incredibly successful, it invariably plants the seeds for its future problems
- When you try to be all things to all people you inevitably wind up in trouble
- One reason that line extension is attractive to management is because it can be a winner in the short term – always a loser long term.
- Management is blinded by an intense loyalty to the company or brand
- What does IBM stand for? Used to be “mainframe computers.” Today it stands for everything, which means it stands for nothing
- Launching a new brand requires not only money but also an idea or concept
- Be first in a new category
- Be positioned as an alternative to the leader
The Law of Sacrifice 13
- If you want to be successful tpday, you need to give something up.
- g. Product line, target market, constant change
- The world of business is populated by big, highly diversified generalists and small, narrowly focused specialists.
- There seems to be almost religious belief that the wider net catches more customers, in spite of many examples on the contrary
- Constant change: where is it written that you have to change your strategy every year at budget review time?
- The best way to maintain a consistent position is not to change it in the first place
The Law of Attributes 14
- Too often a company attempts to emulate the leader. “They must know what work” goes the rationale, “so lets do something similar.” Not good thinking
- You must have an idea or attribute of your own to focus your efforts around. Without one you had batter have a low price. A very low price.
- You must try and own the most important attribute
- Your job is to seize a different attribute (to leader), dramatize the value of attribute and thus increase your share
- You can’t predict the size of a new attributes share, so never laugh (Case study p.86)
The Law of Cander 15
- When you admit a negative, your prospect will give you a positive.
- Every negative statement you make about yourself is instantly accepted as a truth
- Marketing is often a search for the obvious
- When a company starts a message by admitting a problem. People tend to almost instinctively open their minds. [Case study p91 on Listerine]
- The Law of Cander must be used carefully and with great skill. Your “Negative” must be widely perceived as a negative. Then, quickly shift to a positive
The Law of Singularity 16
- They seem to think that the best way to grow is the puppy approach – get into everything
- There is only one place where a competitor is vulnerable. And That place should be the focus of the entire invading force. What works in marketing is the same as what works in the military: the unexpected.
The Law of Unpredictability 17
- Failure to forecast competitive reaction is a major reason for marketing failures
- Most corporation’s problems are not related to short-term marketing thinking. The problem is short term financial thinking.
- Companies that live by numbers die by numbers
- Good short term planning is coming up with that word or angle that differentiates your product or company. Then set-up a coherent long-term marketing direction that builds a program to maximise that idea or angle.
- You can get a handle on trends, which is a way to take advantage of change. One example of a trend is America’s growing orientation toward good health
- A company must be flexible enough to attack itself with a new idea. Change isn’t easy, but it’s the only way to cope with an unpredictable future.
- There’s a difference between “predicting” the future and “taking a chance” on the future.
The Law of Success 18
- Ego is the enemy of successful marketing
- When a barnd is successful, the company assumes the names is the primary reason for success. So they promptly look for other products to plaster the name on.
- Result of branding: early success, but long term failure e.g. Donald Trump
- The more you identify with your brand or corporate name the more likely you are to fall into the line extension trap
- The bigger the company the more likely it is the chief Exec has lost touch the front lines
- Cut back on meetings. Go out and see it for yourself. “It’s better to see once than to hear one hundred times.”
The Law of Failure 19
- Too many companies try to fix things rather than drop things
- Recognise failure early and cut your losses
- Teams: It’s a lot easier to live with “We were all wrong” than the devastating “I was wrong.”
- Marketing decisions are often made first with the decision maker’s career in mind and second with the impact on the competition or the enemy in mind.
- It’s hard to be first in a new category without sticking your neck out
The Law of Hype 20
- When things are going well, a company doesn’t need the hype, it usually means you’re in a trouble.
- Capturing the imagination of the market is not the same as revolutionising the market
- The situation is often the opposite it appears in the press
The Law of Acceleration 21
- Successful programs are not built on fads, they’re built on trends
- By dampening the fad, you stretch the fad out and it becomes more like a trend. [Good case study on Barbie vs. ninja turtles p.122]
- Forget fads. And when they appear try to dampen them. One way to maintain a long-term demand for your product is never to totally satisfy the demand
- Most profitbale thing […] long term trend
The Law of Resources 22
- Without adequate funding an idea won’t get off the ground
- Ideas without money are useless […] you have to use your idea to find the money not the marketing help
- The more successful marketers front-load their investment. In other words, they take no profit for two or three years as they plough all earnings back into marketing
- Many companies are “benchmarking” the leader in the category and setting out to “beat their specs”
- So… Management won’t take kindly to any suggestions that will take the emphasis off their better product strategy
- Don’t do any product tinkering (law of sacrifice)
- What word does your company own?
- Accountants will give you a hard time short term
- Line extension is biggest company killer, remain focused
- Management will not take kindly to any efforts to curtail their equity expansions
- If you violate the immutable laws, you run the risk of failure. If you apply the immutable laws, you run the risk of being bad-mouthed, ignored or even ostracised.