In business as in war, the key to victory is picking the right battlefield and concentrating your troops
Here in Boston we celebrate June 17 as Bunker Hill Day. That was the day, in 1775, when some 3,000 British troops under General William Howe marched up Breed's Hill (which raises a question about the battle's name). At the top were a thousand colonials instructed not to fire until they saw the whites of English eyes. The British, of course, won (which raises a question about why we celebrate the day). But not before they had lost nearly one-third of their soldiers.
There are two morals, point out Al Ries and Jack Trout in Marketing Warfare (New American Library, 1986). Don't attack an entrenched position head on. If you have to, make sure you have a lot more troops than the other guy.
Ries and Trout -- proprietors of an unusual New York City advertising agency (see box, "Going by the Book," page 26) -- are hardly the first to draw comparisons between battles and business. But where most corporate warmongers are Rambos in pinstripes, affecting military metaphors in hopes of firing up the troops, these authors aspire to be philosophers of strategy. Their model is Karl von Clausewitz, the thoughtful Prussian general whose 1832 text, On War, is still studied in military academies throughout the world. The rules for success in the marketplace, Ries and Trout argue, are disturbingly like the rules for success in battle laid down by Clausewitz and his fellow theoreticians.
Some are obvious enough. Every good marketing general, for example, appreciates Clausewitz's dictum that the defense has an advantage over the offense, and that maintaining a position in the marketplace is therefore easier than establishing one. What isn't so obvious, always, is the importance of preemptive strikes by those trying to defend a territory. Well-entrenched companies from Western Union to Bethlehem Steel have declined to near-oblivion because they produced the same old products in the same old way as the world changed around them. Compare their behavior with that of a vigorous company like Intel Corp., which since its founding in 1968 has consistently come up with innovations designed to replace its own products.
Small companies, of course, are frequently in the position of challenging rather than defending a dominant market position. To take the offensive against an entrenched opponent, you need what any good army needs -- more troops (the British at Bunker Hill), a decisive technological advantage (tanks against infantry), or a better strategy. Small companies can forget the idea of assaulting a market with superior numbers, and few are lucky enough to develop products with clear technological superiority. So it comes down to marketing wit. One key, say Ries and Trout, is to focus on "inherent" vulnerabilities -- those the defender can't change without undermining its own position.
In its years of fastest growth, for instance, McDonald Corp.'s strongest selling point was its fast, assembly-line delivery system, which required standardized orders. Burger King's "have it your way" campaign, which promised individually prepared burgers, attacked McDonald's precisely where it was most vulnerable. No small fast-food chain, of course, can attack McDonald's or Burger King head on. But now that both of the giants have grown into three-meal restaurants apparently offering everything but fresh lobster, a handful of new chains have begun selling just burgers and fries, or just breakfasts. The inherent weakness they're attacking: the leaders' increasingly fuzzy focus.
Points of attack naturally vary from industry to industry. New stock brokerage firms have prospered on a diet of discount commissions, capitalizing on full-service brokerages' huge fixed costs, which support securities research and other activities. Some small banks have found inherent weak spots in their large competitors, too. They can't compete on the basis of services or loan terms; what they can offer is faster turnaround time, a more personal flavor, and ties to the local community.
Most small companies, Ries and Trout say, are in the position of guerrillas, looking for segments of the marketplace they can attack and hold onto. Seen in that light, what companies do wrong in strategic terms can be as instructive as what they do right. Among the errors listed by the authors, two sound distressingly familiar.
* Failing to consolidate a position. "Without pursuit," Clausewitz remarked, "no victory can have a great effect." Marketing warfare, add Ries and Trout, is filled with stories of short-lived successes. In technology, for example, a small company called Digital Research Inc. developed the first popular operating system for microcomputers, CP/M. Its product was wildly successful, but the company went nowhere. By contrast, Apple Computer Co. marketed the first hot-selling personal computer, and then was almost trampled by IBM Corp. But Apple poured in reinforcements along every possible front -- new-product development, software, advertising, distribution systems, and so forth.
* Acting like a leader. Ries and Trout criticize the propensity of successful guerrillas to diversify too soon. Go back 20 years and look at the auto industry, they suggest, when both Volkswagen and Rolls-Royce were small players by Detroit standards. Both occupied a distinct niche in the marketplace, and both were doing well. But Volkswagen made the fatal mistake of broadening its product line to match a U.S. company's -- "different Volks for different folks," the ads read -- and lost its identity as a maker of small, cheap, reliable cars. Rolls, by contrast, never tried to go beyond its own tiny niche, sensing quite correctly that the name Rolls-Royce could never mean anything but the most luxurious limousines imaginable. The lessons for small competitors in any industry, say Ries and Trout, are plain.
Life, of course, is seldom as simple as a book. The lessons Ries and Trout draw are plain in hindsight, but an executive facing a decision about diversification can be as puzzled as a general in battle. Will the move be a disaster, like Volkswagen's, or will it open another big market and leverage the company's good name? Suppose Donald Burr, who had to leave Texas Air Corp. to start the cut-rate People Express Airlines Inc., had been encouraged to pursue his idea under Texas Air's aegis? Now Texas Air has bought out People; maybe it could have saved a lot of time and money by keeping Don Burr. Sometimes spinning off new products or services is the only way for a company to stay on top of a dynamic market and to hang on to its best people.
The authors also fail to point out that some big companies are finding ways to cover their inherent weaknesses. Look at Campbell Soup Co., which grew to $4.4 billion by marketing standardized products nationwide. Its inherent weakness -- exploited by regional companies for many years -- was its inability to deliver products tailored to the tastes of local consumers. Now Campbell is test-marketing creole soup in the South and red-bean soup in areas with high Hispanic concentrations. Can small companies fight effectively against the new regional marketing efforts of giants such as Campbell? Ries and Trout don't say.
What's important about Marketing Warfare, though, isn't so much the details as the angle of vision: it forces you to consider the challenge of business through the prism of competition. Trout and Ries don't have all the answers. But they have been through the marketing wars themselves, and their military analogies are telling. Like John Wayne, a lot of us tend to shoot first and ask questions later. If strategy is to be the decisive factor in a marketing war, we would be better off reversing the order.