Marketing Wiz;

Most companies focus too much on the mousetrap and not enough on the mousetrap buyer, says this one-man conglomerate with a sharp eye for new business opportunities.

Tweet

To visit James R. McManus at his office in Westport, Conn., you fly into Bridgeport on Business Express, the commuter airline owned by his company, Marketing Corporation of America (MCA). A driver meets you at the airport and whisks you to MCA's spacious headquarters in an old, converted warehouse developed by MCA's real estate subsidiary. McManus greets you in his office. Near his desk is a stack of personal-computer programs -- including Andrew Tobias's best-seller. Managing Your Money -- all created by MCA's software division. After the interview and a brief tour of the premises, you head off for lunch at a local restaurant called Tanglewoods, one of 18 upscale eateries owned and operated by MCA's restaurant division. On the way, you pass MCA's Saab dealership, the largest in the Northeast.

MCA may be the first INC. 500 company (#325 in 1982) to grow into a conglomerate. Aside from its airline, real estate, software, restaurant, and automotive ventures, the company provides market research and consulting to a host of Fortune 500 clients. It also owns the country's largest distributor of newspaper coupons, operates one of America's fastest-growing advertising agencies, and manages a $66-million venture capital partnership that makes early-stage investments in consumer-oriented companies. Last January, it announced the creation of its newest subsidiary, a magazine publishing group.

Behind this empire stands McManus, MCA's founder and chairman. He's an exfarm boy from Wisconsin who honed his marketing skills as a brand manager for Procter & Gamble Co. Unhappy working under the constraints of a large, publicly owned company, he set out on his own, eventually founding MCA in 1971 with $25,000 in savings and a $50,000 loan. Today, with 12 divisions in addition to the original market-consulting service, MCA is a $400-million operation.

McManus spoke about his company, his success, and his unorthodox management techniques with INC. editors George Gendron and Bo Burlingham.

INC.: Here's a situation faced by lots of companies. They have come up with one great product, developed it, marketed it well, and built themselves a nice little busainess. And now they are faced with the question, "What's the second act?" And they have enormous difficultly figuring it out. You have managed to create a company that seems to have one second act right after another -- software, airlines, coupons, and advertising. What's the secret?

McMANUS: The typical approach -- and the thing that gets people in trouble right from the start -- is that they say: "I have this particular factory making these mousetraps, with this particular sales force and customer base, and this particular financial structure. What other things can I do with these that are related?" And it's the classic situation of a product in search of a market. We've avoided that in all of our thinking from day one. Our business is defining markets -- quantifying consumer behavior and identifying consumer needs -- and then matching people and skills with money in order to fill those needs.

INC.: OK, say I have a very successful mousetrap company. Does that mean I hire XYZ Marketing Corp. to tell me that people are, all of a sudden, very concerned with, say, gum disease, and we ought to get into the business of selling gum massagers? How do I know I can make massagers?

McMANUS: It's not an issue of whether you can make it, it's whether you can sell it. If you can't make something yourself, you can get it from somebody who does. As an example, we're not expert at making software disks. But we identified the market for a particular kind of software, found a subcontractor from which we could buy the disks, then packaged them ourselves. And it's worked out extremely well for us.

INC.: It sounds too easy.

McMANUS: Easy? I don't know. But it wasn't complicated. It got started because we were working for IBM, helping them to market the personal computer. That was, and in a sense still is, our bread-and-butter business, marketing consulting. Anyway, this was three years ago, and IBM didn't have a personal computer on the market yet; they were way behind Apple and Commodore and Radio Shack. And our recommendation was that they not distribute the PC through the Big Blue sales force, but in fact that they go through a retail network of distributors that could offer customer service and product follow-up and support. As it turned out, it was a pretty good suggestion. But in the process, we also discovered something else that was very interesting. I like to call it the Singer Sewing Machine Syndrome. And by that I mean that all those people outside the office who already had PCs, 90% of them very quickly wound up in the closet. Less than 10% of the owners were using their PC at least once a month. So back we went to IBM, and we said there is a bigger problem out there than just the hardware -- it's that the software is too difficult to use. So we said, "Let us help you develop some software."

INC.: You just happened to have a programmer in the building?

McMANUS: Well, in fact, we did -- a guy who had created the processing capability for the whole instant lottery game that many of the states now use. That was a business we'd been in, but we had long since decided to get out of that category. Anyway, this programmer was still with us, and within a very short time, he was able to develop a fabulous kind of software. And the most significant feature about it is that when you take it home, there is no manual. It's all user-friendly. If you get stuck, you hit a key and it gives you the answer. And if that doesn't help you, we give you an 800 number and you call in and you talk to Miss Computer Genius, who will answer your question and really work with you until you get things the way you want them. And people just loved that feature. In fact, we made the mistake at first of putting our own regular telephone number on the pagkage somewhere, in addition to the 800 number, and we were averaging about 1,500 calls an hour on our regular phone at one point. It was like a lonely hearts club -- you're sitting there all alone at night, trying to get this damn machine to work, and you want a friend. And so we have closed the gap, and come up with a product totally outside the realm of anything we'd done before.

 1 | 2 | 3 | 4  NEXT