Portrait Of The Ceo As Salesman

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Consumers are not idiots. They want detergents that get their clothes cleaner, not detergents with slicker advertising campaigns. They want cars that are cheaper and more reliable, not cars with marketing images built around the quality hype. Japanese manufacturers have taken over whole segments of the American marketplace, but if you go back 20 years or so, you'll remember that Japanese cars were considered jokes, "little tin boxes" that nobody wanted -- except that they were reasonably well made and represented value for the money. Their marketing campaigns ranged from mediocre to terrible -- if the cars hadn't been good values, the Japanese could have spent their entire gross national product on marketing their cars and it wouldn't have made any difference -- but their products succeeded. And they succeeded because the inherent quality of the product itself will inevitably overwhelm all the marketing expertise in the world.

Why have we ignored this? Because, sad to say, it's a lot easier to differentiate your product through the quality of the marketing than through the quality of the product. To go back to the automobile industry, it's easier to change your advertising campaign than it is to build a better car -- as General Motors well knows. Changing your ads to focus on quality is a snap. Just give your agency a new set of instructions, and it can do the job for you in a week.

I happen to be in a business that almost everyone thinks of as being primarily market driven. And that's no surprise. Most of the major brands of beer out there are virtually indistinguishable -- at least when it comes to taste. After a couple of bottles, even I can't tell the difference between a Budweiser, a Miller, or a Coors. To a great extent these products are differentiated to the consumer solely through marketing. Thus the principal task in selling them is to make the consumer think that there's something implicitly good about becoming, say, a Bud drinker. The beer itself is often the least important element in the equation. You even hear it in the vocabulary. Beer people talk in terms of "users" and "moving product," not drinkers and selling beer. It's not the beer in the bottle that matters, it's what the marketing people lay on top of it.

Today, there are other ways besides advertising to communicate with consumers. Impartial third parties rate everything from cars to chocolate bars. Take beer. The only competition in American brewing is the Great American Beer Festival. Once a year, the Association of Brewers gathers more than a hundred of the best beers from virtually every brewery in the country for a comparative tasting by 4,000 brewers, beer writers, and beer lovers. For three years in a row, Samuel Adams has been picked as the best beer in America. And this has been reported widely in the national press. That has impact. The S&S Pocket Guide to Beer, World Beer Review, and The Wine Advocate all gave Samuel Adams the highest rating for any American lager. Superior products can build a consumer franchise that way. It's getting harder and harder to distract the consumer with mere advertising about quality.

Now I'm a big fan of beer ads myself. They're extremely clever and entertaining; I love the jingles. They make me feel good, make me proud to be an American. I could watch beer ads all night. Just don't ask me to drink the beer, too.

And I'm not knocking marketing people as individuals, either. Many of them are warm, intelligent, and creative. They're some of the business world's best and brightest. I only wish they'd get out and try to sell some of the product they're hyping. It's sort of the same way I feel about lawyers: they may be wonderful people individually, but what value do they really add to the customer?

See, to the consumer -- I'm talking about the person sitting at the bar choosing a beer -- markets don't exist. Market niches don't exist. These are concepts that exist only in the minds of people with a vested interest in promoting them. To me the only reality is beer and people drinking beer. And to that guy sitting at the bar, the bartender's word is more powerful than all the advertising he's ever seen. If the bartender says, "Want my advice? Try a Sam Adams -- it's a helluva good beer," that's more powerful than $500 million worth of advertising. And when people read that Samuel Adams has been picked as the best beer in America, that's credible. Maybe relying on word of mouth means you can't grow too fast, or go national in a year, but believe me, you can build a viable business that way. My company will never be a threat to Anheuser-Busch -- we make as much beer in a week as it makes every 50 seconds -- but that's not why I got into this business in the first place.

A year after I started The Boston Beer Co., I was asked to address the new-ventures club at Harvard Business School. I began by telling my audience that our biggest challenge as a start-up was creating in the customer's mind an image of quality. OK, I said, what do you think we should have done first? Hands went up all over the room. "The first thing you do is get some good market research," one said. "Hire an ad agency," said another. "Find a good public relations firm," offered a third. One person actually said something about convening focus groups so we could "locate the hot buttons for the quality vector." The hot buttons for the quality vector? What the hell is that supposed to mean? As if quality were something that existed independent of the beer itself.

Nobody -- not one of them -- said something on the order of, "If you're trying to create an image in consumers' minds of a better beer, the first thing you do is brew a better beer." Then it was my turn to get riled. I told them this was a perfect example of where American business is today: looking to sell me-too products through better marketing. And I also said, look, in business you have only two ways of surviving: either your product is better than your competitors', or it's cheaper. There's simply no other foundation on which to build a successful business. None. Better or cheaper, take your pick. It's also why I'm convinced that -- right now, anyway -- I have a business and General Motors doesn't. Furthermore, unless GM gets its act together, in 20 years The Boston Beer Co. will be bigger than GM. And it won't be because we've grown, either.

The other great benefit of CEO selling is letting the rest of your organization know what your priorities are. My cofounder, Rhonda Kallman, and I were the only two people in a $3-million business before we had an office or a telephone. When I finally bought that computer, it was because we had the sales volume to support it. Even today, running a $7-million company with 28 employees, I spend about two-thirds of my time selling beer. Most of my meetings are held in bars, and most of my phone work gets done in the car. When people ask me why I don't even have an office, I tell them it's really very simple: I can't sell beer to a desk. Not everyone understands what I'm talking about. But you can bet my uncle does.

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