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MARKETING STRATEGY
In the spring of 2004, I debated Sergio Zyman, author of the foreword to this book. We conducted a debate in Boston entitled Marketing Mayhem on the importance of smart strategy vs. big ideas. It was billed as Sergio Zyman “the Armani-wearing Mexican” versus Doug Hall, “the Jimmy Buffet–wearing Canadian.”
I defended the power of big ideas and stated that when “gurus” like Sergio bring their strategic tablets down from their lofty mountains, nothing happens until they’re translated—if they can be translated at all—into a customer-relevant big idea.
Sergio defended the power of marketing strategy and argued that without strategic discipline, “touchy-feely” creativity is a waste of time.
Following numerous jabs and pokes, including a healthy discussion on Sergio’s strategic misfortune introducing “New Coke,” we came to the conclusion that no matter how hard we tried to defend our singular positions, STRATEGY and the IDEA are of EQUAL importance.
Great strategy not translated into a compelling marketing message is just as ineffective as a great message that lacks strategic discipline.
In effect, great marketing is about “whole-brain” thinking. It’s a blend of left-brained strategic discipline with a right-brained big idea.
The Scientific Advice and Practical Ideas on the following pages will cause you some anxiety. They will challenge your established beliefs. That’s GREAT! It means I’m making progress on my mission to incite a revolution in your marketing thinking.
With respect to my friend Sergio Zyman, this first chapter focuses on Marketing Strategy.
In this chapter you will find Scientific Advice and Practical Ideas on 1.) the fundamentals of smart strategic thinking, 2.) selecting target audiences, 3.) naming—the single most important decision you make as a marketer, and 4.) advice and ideas on marketing plans.
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SCIENTIFIC
ADVICE
WHEN IT COMES TO DRIVING NEW PRODUCT TRIAL RATES AND CORRESPONDING SUCCESS RATES, YOU HAVE THREE DISTINCT STRATEGIC OPTIONS
A monumental study involving 239 new products and 3,500 consumers tracked over 52 weeks identified three distinct strategies for achieving success in generating trial of new initiatives. As the leader of your organization, you need to make a commitment to one and focus your organization’s energy.
1. Be Bold and Brave!: New products offering a major point of difference generate above-average trial rates. Interestingly, the research finds a U-shaped distribution. You can succeed with a low price and little uniqueness or by being Dramatically Different. Moderate levels of uniqueness are the least successful. At this level of uniqueness, customers are asked to make a change in their behavior for no good reason. To be successful with a uniqueness strategy, the uniqueness must be big enough and bold enough to be worth the hassle of changing.
2. Spend! Spend! Spend!: Spending MORE MONEY does work. The research found direct relationships between new product trial rates and 1.) higher average advertising spending, 2.) higher levels of feature, display, and distribution, and 3.) lower average price. The challenge with this strategy is to balance the investment relative to the longer-term return.
3. The Original Wal-Mart Strategy: The third approach is to attack the market where there is little competition. New products generated greater trial when introduced into 1.) categories with fewer existing brands, 2.) less existing advertising spending, and 3.) less intense competitive reactions. This is the Wal-Mart strategy. Wal-Mart focused their initial expansion in small towns to avoid strong competition. And as Sam Walton said, “There was much, much more business out there in small-town America than anybody, including me, had ever dreamed of.” When they achieved skill and scale in distribution and merchandising they were then ready to compete in the major metro markets.
PRACTICAL IDEAS
Leverage Courage: Dramatic Differences in products and services can occur only when management has the courage to direct resources on the discovery and development of true new-to-the-world inventions. Courage is a necessity because with real R&D, there is a risk of failure. Fortunately the rewards are also spectacular. To the courageous go higher trial rates, sales, profit margins, and government-granted monopolies in the form of patents.
Combine Resources to Create a SURGE in Spending: American distance runner Frank Shorter used a SURGE strategy to win the 1972 Olympic Marathon. “At nine miles, the front pack slowed going around a hairpin turn,” he explained. “My momentum carried me to the front. I put down my head and ran to get away just as I had on the playgrounds of my youth. In track races, if you’re willing to take the risk, you can throw in surprise surges. If you train to do this, you can recover more quickly than the opposition. You keep doing it until no one covers the next surprise surge and you win. The surge lasted almost eight miles. At 17 miles I slowed down to let my body recover, but I didn’t look behind.” Shorter destroyed his opponents through the use of a SURGE of energy. Think: How can you create a SURGE in spending that will break the “will” of your competition? Can you “borrow” marketing money from other divisions within your company or partner with other small businesses for a joint marketing effort to create a SURGE in spending?
Have Patience: Unlike Target and others who went to small towns only after having saturated the big cities, Wal-Mart took the opposite approach. It entered the small markets—the low-potential markets—first, then went to the BIGGEST MARKETS. Can you do the same? Can you first enter a more minor channel of distribution, sell some, learn a lot, and make improvements in your offering, your marketing, and your plan?
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SCIENTIFIC
ADVICE
THE EASIEST WAY FOR YOU TO IMMEDIATELY IMPROVE YOUR MARKETING RESULTS IS BY MAKING DECISIONS BASED ON A 60/40 WEIGHTING OF PURCHASE INTEREST AND UNIQUENESS
The value of uniqueness as a driver of marketing success is well known. Uniqueness sets off a chain reaction of benefits. When your offering is unique, it’s easier to get distribution and awareness. Your trade customers have a real reason to stock products that are genuinely new, as opposed to simply another variation of the same old stuff. When you’re really new and different, it’s easier to make a profit, as customers have no viable alternative. And with no direct competitor, you don’t have the downward pricing pressure that commodity markets experience.
To dramatically improve your ability to select between two new product options, consider BOTH customer purchase interest and uniqueness.
Research comparing customers’ initial purchase intentions and perceptions of uniqueness with actual marketplace behavior found that a weighting of 60 percent of customers’ purchase intention score and 40 percent of uniqueness perception score is most
