Other books written by Al Ries and Jack Trout Marketing Warfare Bottom Up Marketing Horse Sense The 22 Immutable Laws of Marketing By Al Ries Focus The 22 Immutable Laws of Branding* The 11 Immutable Laws of Internet Branding* By Jack Trout The New Positioning The Power of Simplicity Differentiate or Die *With Laura Ries Positioning : The Battle for Your Mind Twentieth Anniversary Edition By Al Ries, Chairman Ries & Ries and Jack Trout, President Trout & Partners Ltd. Copyright © 2001, 1981 by The McGraw Hill Companies, Inc.. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0071374612 The material in this eBook also appears in the print version of this title: 0-07-135916-8. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. ("McGraw-Hill") and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hill's prior consent. You may use the work for your own noncommercial and personal use; 5/332 any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms. THE WORK IS PROVIDED "AS IS." McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/ or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise. Dedicated to the second best advertising agency in the whole world. Whoever ther might be. Positioning became a roaring success, the buzzword of advertising and marketing people around the world. Yet the success of the concept had the unintended consequences of pushing Trout & Ries out of the advertising business and into the marketing strategy business. As it turned out, clients didn't want their advertising agencies to be "strategic"; they wanted them to be "creative." The clients would do their own positioning. So be it. We became marketing strategists and never looked back. Contents Introduction Developed by the authors, "positioning" is the first 1 body of thought to come to grips with the problems of communicating in an overcommunicated society Chapter 1. What Positioning Is All About Many people misunderstand the role of communica- 5 tion in business and politics today. In our overcommunicated society, very little communication actually takes place. Rather, a company must create a "position" in the prospect's mind. A position that takes into consideration not only a company's own strengths and weaknesses, but those of its competitors as well Chapter 2. The Assault on the Mind There are just too many companies, too many 11 products, too much marketing noise. The per-capita consumption of advertising in America is $200 per year. Chapter 3. Getting Into the Mind The easy way to get into a person's mind is to be first. 21 If you can't be first, then you must find a way to 9/332 position yourself against the product, the politician, the person who did get there first Chapter 4. Those Little Ladders in Your Head To cope with our overcomunicated society, people 33 have learned to rank products on mental ladders. In the rent-a-car field, for example, most people put Hertz on the top rung, Avis on the second rung and National on the third. Before you can position anything, you must know where it is on the product ladder in the mind Chapter 5. You Can't Get There from Here A competitor has no hope of going head-to-head 43 against the position IBM has established in computers. Many companies have ignored this basic positioning principle and have suffered the consequences Chapter 6. Positioning of a Leader To be a leader, you have to be first to get into the mind 51 of the prospect. And then follow the strategies for staying there Chapter 7. Positioning of a Follower What works for a leader doesn't necessarily work for a 65 follower. An also-ran must find a "creneau" or hole in the mind not occupied by someone else 10/332 Chapter 8. Repositioning the Competition If there are no "creneaus" left, you have to create one 77 by repositioning the competition. Tylenol, for example, re-positioned aspirin Chapter 9. The Power of the Name The most important marketing decision you can make 89 is what to name the product. The name alone has enormous power in an overcommunicated society. Chapter 10. The No-Name Trap Companies with long, complex names have tried to107 shorten them by using initials. This strategy seldom works Chapter 11. The Free-Ride Trap Can a second product get a free ride on the advertising119 coattails of a well-known brand? In the case of AlkaSeltzer Plus and many other products on the market today, the answer is no. Chapter 12. The Line-Extension Trap Line extension has become the marketing sickness of127 the past decade. Why it seldom works Chapter 13. When Line Extension Can Work 11/332 There are cases, however, of successful line extension145 (GE, for example.) A discussion of when to use the house name and when to use a new name Chapter 14. Positioning a Company: Monsanto A case history that illustrates how Monsanto is estab-159 lishing its leadership in the chemical industry with the Chemical Facts of Life program Chapter 15. Positioning a Country: Belgium A case history of Sabena Belgium World Airlines. The171 answer to the problems of a national airline like Sabena is to position the country, not the airline Chapter 16. Positioning a Product: Milk Duds A case history that illustrates how a product with a179 small budget can get into the mind by positioning itself as the long-lasting alternative to the candy bar Chapter 17. Positioning a Service: Mailgram A case history that illustrates why a really new service183 has to be positioned against the old Chapter 18. Positioning a Long Island Bank 12/332 A case history that shows how a bank can successfully191 strike back when its territory gets invaded by its giant neighbors from the Big City Chapter 19. Positioning the Catholic Church Even institutions can benefit from positioning think-199 ing. An outline of the logical steps that should be taken to position the Roman Catholic Church Chapter 20. Positioning Yourself & Your Career You can benefit by using positioning strategy to ad-207 vance your own career. Key principle: Don't try to do everything yourself. Find a horse to ride Chapter 21. Six Steps to Success To get started on a positioning program, there are six219 questions you can ask yourself Chapter 22. Playing the Positioning Game To be successful at positioning, you have to have the229 right mental attitude. You have to become an outsidein thinker rather than an inside-out thinker. This requires patience, courage and strength of character Index 245 Introduction "What we have here is a failure to communicate." How often have you heard that bromide? "Failure to communicate" is the single, most common, most universal reason given for problems that develop. Business problems, government problems, labor problems, marriage problems. If only people took the time to communicate their feelings, to explain their reasons, the assumption is that many of the problems of the world would somehow disappear. People seem to believe any problem can be solved if only the parties sit down and talk Unlikely Today, communication itself is the problem. We have become the world's first overcommunicated society. Each year, we send more and receive less. A New Approach to Communication This book has been written about a new approach to communication called "positioning." And most of the examples are from the most difficult of all forms of communication Advertising. A form of communication that, from the point of view of the recipient, is held in low esteem. For the most part, advertising is unwanted and unliked. In some cases, detested To many intellectuals, advertising is selling your soul to corporate America. Not worthy of serious study 14/332 In spite of its reputation, or perhaps because of it, the field of advertising is a superb testing ground for theories of communication. If it works in advertising, most likely it will work in politics, religion or any activity that requires mass communication So the examples in this book could just as well have been taken from the field of politics, war, business or even the science of chasing the opposite sex. Or any form of human activity which involves influencing the minds of other people. Whether you want to promote a car, a cola, a computer, a candidate or your own career Positioning is a concept that has changed the nature of advertising. A concept so simple people have difficulty understanding how powerful it is. Adolf Hitler practiced positioning. So does Procter & Gamble as well as every successful politician. We got carried away. The "big lie" was never a part of positioning thinking. On the other hand, we got many calls from Washington political strategists for more information about our positioning concepts. Positioning Defined Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person. Perhaps yourself. But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect. A newer definition: "How you differentiate yourself in the mind of your prospect." So it's incorrect to call the concept "product positioning." As if you were doing something to the product itself. 15/332 Not that positioning doesn't involve change. It does. But changes made in the name, the price and the package are really not changes in the product at all. They're basically cosmetic changes done for the purpose of securing a worthwhile position in the prospect's mind. Positioning is also the first body of thought that comes to grips with the problems of getting heard in our overcommunicated society. Thanks to the personal interest of Rance Crain, editorial director of Advertising Age, the magazine ran a three-part series on "positioning" in its April 24, May 1, and May 8, 1972 issues. More than any other single event, this series made positioning famous. It also made a deep impression in our minds about the power of publicity. How Positioning Got Started If one word can be said to have marked the course of advertising in the past decade, the word is "positioning." 16/332 Positioning has become the buzzword of advertising and marketing people. Not only in America, but around the world. Most people think positioning got started in 1972 when we wrote a series of articles entitled "The Positioning Era" for the trade paper Advertising Age. Since then, we have given more than 500 speeches on positioning to advertising groups in 16 different countries around the world. And we have given away more than 120,000 copies of our "little orange booklet" which reprints the Advertising Age articles. Positioning has changed the way the advertising game is being played today Unfortunately, "vagueness" is becoming more prevalent today than "positioning." "We're the third largest-selling coffee in America," say the Sanka radio commercials. The third largest? Whatever happened to those good old advertising words like "first" and "best" and "finest"? The original Avis positioning ad with the most famous last line in advertising history: "The line at our counter is shorter." 17/332 Well, the good old advertising days are gone forever and so are the words. Today you find comparatives, not superlatives. "Avis is only No. 2 in rent-a-cars, so why go with us? We try harder." "Honeywell, the other computer company." "Seven-Up: the uncola." Along Madison Avenue, these are called positioning slogans. And the advertising people who write them spend their time and research money looking for positions, or holes, in the marketplace. But positioning has stirred up interest well beyond Madison Avenue. With good reason. Anyone can use positioning strategy to get ahead in the game of life. And look at it this way: If you don't understand and use the principles, your competitors undoubtedly will. 1 What Positioning Is All About How did a hard-sell concept like positioning become so popular in a business noted for its creativity? In truth, the past decade might well be characterized as a "return to reality." White knights and black eye patches gave way to such positioning concepts as Lite Beer's "Everything you've always wanted in a great beer. And less." Poetic? Yes. Artful? Yes. But also a straightforward, clearly defined explanation of the basic positioning premise. To be successful today, you must touch base with reality. And the reality that really counts is what's already in the prospect's mind. To be creative, to create something that doesn't already exist in the mind, is becoming more and more difficult. If not impossible. The basic approach of positioning is not to create something new and different. But to manipulate what's already up there in the mind. To retie the connections that already exist. Today's marketplace is no longer responsive to the strategies that worked in the past. There are just too many products, too many companies, and too much marketing noise. We had no idea what "too many" really meant. Average supermarket now has 40,000 SKUs or stock keeping units. The question most frequently asked is why. Why do we need a new approach to advertising and marketing? 19/332 The Overcommunicated Society The answer is that we have become an overcommunicated society. The per-capita consumption of advertising in America today is about $200 a year. The $200 per-capita figure was based on a broad definition of advertising. If you count "media expenditures" only, the actual 1972 number was about $110 per person. Today, the comparable number is $880. Truly we live in an overcommunicated society and it's not getting any better. If you spend $1 million a year on advertising, you are bombarding the average consumer with less than a half-cent of advertising, spread out over 365 days. A consumer already exposed to $200 worth of advertising from other companies In our overcommunicated society, to talk about the impact of your advertising is to seriously overstate the potential effectiveness of your message. It's an egocentric view that bears no relationship to the realities of the marketplace. In the communication jungle out there, the only hope to score big is to be selective, to concentrate on narrow targets, to practice segmentation. In a word, "positioning." The mind, as a defense against the volume of today's communications, screens and rejects much of the information offered it. In general, the mind accepts only that which matches prior knowledge or experience. Millions of dollars have been wasted trying to change minds with advertising. Once a mind is made up, it's almost impossible to change it. Certainly not with a weak force like advertising. "Don't confuse me with the facts, my mind's made up." That's a way of life for most people. 20/332 The average person can tolerate being told something which he or she knows nothing about. (Which is why "news" is an effective advertising approach.) But the average person cannot tolerate being told he or she is wrong. Mind-changing is the road to advertising disaster. The folly of trying to change a human mind became one of the most important tenets of the positioning concept. This is the one principle most often violated by marketing people. Literally millions of dollars are wasted every day by companies trying to change the minds of their prospects. The Oversimplified Mind The only defense a person has in our overcommuni-cated society is an oversimplified mind. Not unless they repeal the law of nature that gives us only 24 hours in a day will they find a way to stuff more into the mind. The average mind is already a dripping sponge that can only soak up more information at the expense of what's already there. Yet we continue to pour more information into that supersaturated sponge and are disappointed when our messages fail to get through. 21/332 Advertising, of course, is only the tip of the communication iceberg. We communicate with each other in a wide variety of bewildering ways. And in a geometrically increasing volume. The medium may not be the message, but it does seriously affect the message. Instead of a transmission system, the medium acts like a filter. Only a tiny fraction of the original material ends up in the mind of the receiver Furthermore, what we receive is influenced by the nature of our overcommunicated society. "Glittering generalities" have become a way of life in our over-communicated society. Not to mention that they work. Technically, we are capable of increasing the volume of communication at least tenfold. Already there's talk of direct television broadcasting from satellites. Every home would have 50 channels or so to choose from. Satellite television, of course, has become a big deal and most consumers already have their 50 channels to choose from. Today the talk is about 500 channels in the future. We're not too sure about this prediction. Who needs 500 channels when the average consumer watches no more than 5 or 6 channels? 500 channels? By the time you find something to look at, the show will be over. And there's more to come. Texas Instruments has announced a "magnetic bubble" memory device which can store 92,000 bits of 22/332 information on a single chip. Six times as much as the largest semiconductor memory device now on the market. Terrific. But who is working on a magnetic bubble for the mind? Who is trying to help the prospect cope with complexity that so overwhelms the mind that the average reaction to the wealth of information today is to tighten the intake valve? To accept less and less of what is so freely available? Communication itself is the communication problem. The Oversimplified Message The best approach to take in our overcommunicated society is the oversimplified message. In communication, as in architecture, less is more. You have to sharpen your message to cut into the mind. You have to jettison the ambiguities, simplify the message, and then simplify it some more if you want to make a long-lasting impression. People who depend on communication for their livelihood know the necessity of oversimplification. The positioning concept of the oversimplified message was further developed into our theory of "owning a word in the mind." Volvo 23/332 owns "safety." BMW owns "driving," FedEx owns "overnight," Crest owns "cavities." Once you own a word in the mind, you have to use it or lose it. Let's say you are meeting with a politician whom you are trying to get elected. In the first five minutes, you'll learn more about your political product than the average voter is going to learn in the next five years. Since so little material about your candidate is ever going to get into the mind of the voter, your job is really not a "communication" project in the ordinary meaning of the word. It's a selection project. You have to select the material that has the best chance of getting through. The enemy that is keeping your messages from hitting pay dirt is the volume of communication. Only when you appreciate the nature of the problem can you understand the solution. When you want to communicate the advantages of a political candidate or a product or even yourself, you must turn things inside out. You look for the solution to your problem not inside the product, not even inside your own mind. You look for the solution to your problem inside the prospect's mind. In other words, since so little of your message is going to get through anyway, you ignore the sending side and concentrate on the receiving end. You concentrate on the perceptions of the prospect. Not the reality of the product. "In politics," says John Lindsay, "the perception is the reality." So, too, in advertising, in business and in life. 24/332 But what about truth? What about the facts of the situation? What is truth? What is objective reality? Every human being seems to believe intuitively that he or she alone holds the key to universal truth. When we talk about truth, what truth are we talking about? The view from the inside or the view from the outside? Truth is irrelevant. What matters are the perceptions that exist in the mind. The essence of positioning thinking is to accept the perceptions as reality and then restructure those perceptions to create the position you desire. We later called this process "out-side-in" thinking. It does make a difference. In the words of another era, "The customer is always right." And by extension, the seller or communicator is always wrong. The study of psychology is very useful in understanding how minds work. Advertising is "psychology in practice." It may be cynical to accept the premise that the sender is wrong and the receiver is right. But you really have no other choice. Not if you want to get your message accepted by another human mind. Besides, who's to say that the view from the inside looking out is any more accurate than the view from the outside looking in? By turning the process around, by focusing on the prospect rather than the product, you simplify the selection process. You also learn 25/332 principles and concepts that can greatly increase your communication effectiveness. 2 The Assault on the Mind As a nation we have fallen in love with the concept of "communication." (In some progressive grade schools even "show and tell" is now being called "communication.") We don't always appreciate the damage being done by our overcommunicated society. In communication, more is less. Our extravagant use of communication to solve a host of business and social problems has so jammed our channels that only a tiny fraction of all messages actually get through. And not the most important ones either. The Transmission Traffic Jam Take advertising, for example. With only 6 percent of the world's population, America consumes 57 percent of the world's advertising. (And you thought our use of energy was extravagant. Actually, we consume only 33 percent of the world's energy.) One of the remarkable developments in the last 20 years has been the spread of marketing thinking around the world. In many of the developed countries, advertising volume is approaching U.S. levels. Today, America accounts for less than one-third of the world's advertising volume. 27/332 Advertising, of course, is only a small channel in the communication river. It's now 1,000 books a day. The Library of Congress alone adds 300,000 volumes to its collection each year. Take books. Each year some 30,000 books are published in America. Every year another 30,000. Which doesn't sound like a lot until you realize it would take 17 years of reading 24 hours a day just to finish one year's output. Each new medium did not replace an existing medium. Rather, each medium changed and modified all the previous media. Radio used to be an entertainment medium. Today radio is a news, music and talk medium. Houston alone has 1 85 channels. There are now 12,458 radio stations. There's no sign that this communication assault on the mind is not going to continue far into the future. The average Sunday issue of The New York Times still contains some 500,000 words. Who can keep up? Take newspapers. Each year American newspapers use more than 10 million tons of newsprint. Which means that the average person consumes 94 pounds of newsprint a year. (Roughly the same as their annual consumption of beef.) 28/332 There's some question whether the average person can digest all this information. The Sunday edition of a large metropolitan newspaper like The New York Times might contain some 500,000 words. To read it all, at an average reading speed of 300 words per minute, would take almost 28 hours. Not only would your Sunday be shot, but also a good part of the rest of the week too. How much is getting through? Take television. A medium barely 30 years old. A powerful and pervasive medium, television didn't replace radio or newspapers or magazines. Each of the three older media is bigger and stronger than it ever was. Television is an additive medium. And the amount of communication added by television is awesome. Ninety-eight percent of all American homes have at least one television set. (A third have two or more.) Ninety-six percent of all television households can receive four or more TV stations. (A third can receive ten or more.) The average American family watches television 7 hours and 22 minutes a day. (More than 51 hours a week.) Like motion pictures, the TV picture is really a still picture which changes 30 times a second. Which means the average American family is exposed to some 795,000 television pictures a day. Not only are we being pictured to death, we are being formed to death. Take that Xerox machine down the hall. American business currently has more than 324 billion documents on hand. Each year another 72 billion are added to the pile. (Just to print the forms costs more than $4 billion a year.) 29/332 Down the halls at the Pentagon, copy machines crank out 350,000 pages a day for distribution throughout the Defense Department. Equal to 1,000 good-sized novels. "World War II will end," said Field Marshal Montgomery, "when the warring nations run out-of paper." In spite of the rapid adoption of the personal computer by U.S. businesses, we're still drowning in paper. The average office worker uses 250 pounds of copy paper a year. The "paperless office" seems a long way off. Take packaging. An 8-ounce package of Total breakfast cereal contains 1,268 words of copy on the box. Plus an offer for a free booklet on nutrition. (Which contains another 3,200 words.) The assault on the mind takes place in many different ways. The U.S. Congress passes some 500 laws a year (that's bad enough), but regulatory agencies promulgate some 10,000 new rules and regulations in the same amount of time. The Code of Federal Regulations now contains more than 80,000 pages. And is growing by 5,000 pages a year. At the state level, over 250,000 bills are introduced each year. And 25,000 pass the legislatures to disappear into the labyrinths of the law. Ignorance of the law is no excuse. Ignorance of the lawmakers apparently is. Our legislators continue to pass thousands of laws 30/332 that you can't possibly keep track of. And even if you could, you couldn't possibly remember how a law might differ from one state to another. Who reads, sees or listens to all this outpouring of communication? There's a traffic jam on the turnpikes of the mind. Engines are overheating. Tempers as well as temperatures are rising. In 20 years, most people have learned just one more thing about Jerry Brown. He's now mayor of Oakland, California. Brown, Connally and Chevrolet How much do you know about Governor Jerry Brown of California? Most people know just four things. (1) He's young. (2) He's good-looking. (3) He's dated Linda Ronstadt. (4) He's against big government. Not very much residual effect for the enormous press coverage given a chief executive of the state of California. A man who had four books written about him in a single year. Aside from the governor of your own state, do you know the names of any of the governors of the other 49 states? In the 1980 primaries, Big John Connally of Texas spent $11 million and wound up with one delegate. Whereas virtual unknowns like John Anderson and George Bush wound up with hundreds of delegates. Connally's problem? He was too well known as a wheeler-dealer. "That perception was so deep," said his campaign strategist, "we couldn't have changed it." 31/332 At best, communication in an overcommunicated society is difficult. Yet you are often better off if communication doesn't take place. At least until you are ready to position yourself for the long term. You never get a second chance to make a first impression. What do the following names mean to you: Ca-maro, Caprice, Chevette, Concours, Corvette, Impala, Malibu, Monte Carlo, Monza and Vega? Automobile model names, right? Would you be surprised to learn that these are all Chevrolet models? Chevrolet is the most heavily advertised product in the world. In a recent year, General Motors spent more than $130 million to promote Chevrolet in the United States. That's $356,000 a day, $15,000 an hour. What do you know about Chevrolet? About Chevrolet engines, transmissions, tires? About the seats, upholstery, steering? Be honest. How many Chevrolet models are you familiar with? And do you know the differences between them? 32/332 These nine Chevrolet models for the year 2000 are probably no better known today than the 10 Chevrolet models were in 1972. Because of all this confusion, Chevrolet is now in second place behind Ford. "Baseball, hot dogs, apple pie and Chevrolet." The only answer to the problems of an overcommunicated society is the Chevrolet answer. To cut through the traffic jam in the prospect's mental highway, you must use an oversimplified approach. What this book suggests may seem shocking and immoral to you. (Fortunately, it's not illegal or ineffective.) To cut through the transmission traffic jam, you must use Madison Avenue techniques. Nearly half the jobs in the United States can be classified as information occupations. Virtually no one is immune from the consequences of a deep involvement in our overcommunicated society. And virtually everyone can learn to apply the lessons of Madison Avenue to his or her own life. At home and in the office. No one can predict the future. Add the Internet to the media list. The Internet, in our opinion, will become the greatest of all media with the most impact on our lives. 33/332 The Media Explosion Another reason our messages keep getting lost is the number of media we have invented to serve our communication needs. Today, someone is even trying to put ads on the doors of public bathrooms. There is television. Commercial, cable and pay. There's radio. AM and FM. There's outdoor. Posters and billboards. There are newspapers. Morning, evening, daily, weekly and Sunday. There are magazines. Mass magazines, class magazines, enthusiast magazines, business magazines, trade magazines. And, of course, buses, trucks, streetcars, subways and taxicabs. Generally speaking, anything that moves today is carrying a "message from our sponsor." Even the human body has become a walking billboard for Adidas, Gucci, Pucci and Gloria Vanderbilt. Take advertising again. Just after World War II, the per-capita consumption of advertising in the United States was about $25 a year. Today it's eight times as much. (Inflation accounts for some of this increase, but the volume is also up substantially.) Do you know eight times as much about the products you buy? You may be exposed to much more advertising, but your mind can't absorb anymore than it used to. There's a finite limit to how much you can take in, and advertising, even at $25 a year, was already way over the limit. That one-quart container that sits on top of your neck can hold just so much. 34/332 At $200 per person, the average American consumer is already exposed to twice as much advertising per year as the average Canadian. Four times as much as the average Englishman. And five times as much as the average Frenchman. While no one doubts the advertiser's financial ability to dish it out, there's some question about the consumer's mental ability to take it all in. Each day, thousands of advertising messages compete for a share of the prospect's mind. And make no mistake about it, the mind is the battleground. Between 6 inches of gray matter is where the advertising war takes place. And the battle is rough, with no holds barred and no quarter given. Advertising is a brutal business where mistakes can be costly. But out of the advertising wars, principles have been developed to help you cope with our overcommunicated society. Product development: 29% Strategic planning: 27% Public relations: 16% Research and development: 14% Financial strategies: 14% Advertising: 10% Legal: 3% One of the consequences of this rapid increase in advertising volume is the decline in advertising effectiveness and a rise in the use of public relations as a marketing tool. A recent survey of 1,800 executives by the American Advertising Federation about the importance of various functions shows that public relations is more highly regarded than advertising. The Product Explosion Another reason our messages keep getting lost is the number of products we have invented to take care of our physical and mental needs. Take food, for example. The average supermarket in the United States has some 10,000 individual products or brands on display. 35/332 For the consumer, there's no relief in sight. In fact, the product explosion could get worse. Already in Europe they are building super supermarkets (called hypermarkets) with room for displaying 30,000 to 50,000 products. Supermarkets have gotten a lot bigger in just 20 years. The average supermarket now has some 40,000 individual products or brands on display. Compare that with the speaking vocabulary of the average person, which remains at just 8,000 words. Consider these numbers in terms of product explosion. The packaged-goods industry obviously expects the proliferation to continue. Those scratch marks on the side of most grocery boxes, the Universal Product Code, represent 10 digits. (Your social security number has only 9. And the system is designed to handle more than 200 million people.) 36/332 And this same situation holds in the industrial field. The Thomas Register, for example, lists 80,000 companies. There are 292 manufacturers of centrifugal pumps, 326 builders of electronic controls, to take two categories at random. There are some 450,000 active trademarks registered at the U.S. Patent Office. And 25,000 new ones get added every year. (Hundreds of thousands of products are sold without trademarks too.) In a typical year, the 1,500 companies listed on the New York Stock Exchange introduce more than 5,000 "significant" new products. And presumably a lot more than that were insignificant. Not to mention the millions of products and services marketed by America's 4 million other corporations. Take cigarettes. There are more than 175 brands on the market today. (A vending machine built to hold all these brands might be 30 feet long.) Take drugs. There are some 100,000 prescription drugs on the U.S. market. While many of these are specialized and used almost exclusively by medical specialists, the general practitioner still has a herculean job to keep informed about the multitude of drug products available. Herculean? No, it's an impossible job. Even Hercules himself could not have kept up with more than a small fraction of these drugs. To expect more is to be totally ignorant of the finite capacity of even the most brilliant mind. And how does the average person cope with the product and media explosions? Not very well. Studies on the sensitivity of the human brain have established the existence of a phenomenon called "sensory overload." 37/332 Scientists have discovered that a person is capable of receiving only a limited amount of sensation. Beyond a certain point, the brain goes blank and refuses to function normally. (Dentists have been toying with some of these discoveries. Earphones are placed on the patient, and the sound level is turned up until the sensation of pain no longer is felt.) Thanks to stringent FDA regulations for drug approvals, the number of prescription drugs on the market has not increased very much. Where the real explosion has occurred is in the over-thecounter market. There are now more than 50 varieties of Tylenol. The Advertising Explosion Ironically, as the effectiveness of advertising goes down, the use of it goes up. Not just in volume, but in the number of users. Doctors, lawyers, dentists, accountants are dipping their toes into the advertising pool. Even institutions like churches and government have begun to advertise. (In 1978 the U.S. government spent $128,452,200 on advertising.) Professional people used to consider advertising beneath their dignity. But even to some professionals, dollars are more important than dignity. So to make a bigger buck, doctors, lawyers, dentists, 38/332 optometrists, accountants and architects are starting to promote themselves. Currently there is a raft of legal advertising (Injured? Call 1-800-LAWSUIT) and a raft of advertising by accountants like Arthur Andersen. But Medicare, medicaid, and our tax laws have pretty much driven free enterprise out of the medical profession. They also face stiffer competition. A decade ago, there were 132,000 lawyers in the United States. Today there are 432,000. Compared with 10 years ago, there are 300,000 more lawyers today beating the bushes for business. And now we have the dot.com crowd spilling into the media with endless Wall Street money. And the same thing is happening in the medical profession. Our overcommunicated society is in the process of becoming an overmedicated one too. According to the Congressional Office of Technology Assessment, by the end of the decade the nation might have 185,000 more physicians than it needs. How will these excess doctors find patients to practice on? By advertising, of course. But the professionals who are opposed to advertising say it downgrades their profession. And it does. To advertise effectively today, you have to get off your pedestal and put your ear to the ground. You have to get on the same wavelength as the prospect. In advertising, dignity as well as pride goeth before destruction, and a haughty spirit before a fall. 3 Getting into the Mind In our overcommunicated society, the paradox is that nothing is more important than communication. With communication going for you, anything is possible. Without it, nothing is possible. No matter how talented and ambitious you may be. What's called luck is usually an outgrowth of successful communication. Saying the right things to the right person at the right time. Finding what the NASA people in Houston call a window in space. Positioning is an organized system for finding windows in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances. The Easy Way into the Mind The easy way to get into a person's mind is to be first. You can demonstrate the validity of this principle by asking yourself a few simple questions. What's the name of the first person to fly solo across the North Atlantic? Charles Lindbergh, right? Now, what's the name of the second person to fly solo across the North Atlantic? 40/332 What do these brands have in common? They were all the first brands in the mind in their categories. Today these brands are still the leading brands in their categories. "It's better to be first than it is to be better" is by far the most powerful positioning idea. Not so easy to answer, is it? What's the name of the first person to walk on the moon? Neil Armstrong, of course. What's the name of the second? What's the name of the highest mountain in the world? Mount Everest in the Himalayas, right? What's the name of the second highest mountain in the world? What's the name of the first person you ever made love with? What's the name of the second? The first person, the first mountain, the first company to occupy the position in the mind is going to be awfully hard to dislodge. Kodak in photography, IBM in computers, Xerox in plain-paper copiers, Hertz in rent-a-cars, Coca in cola, General in electric. The first thing you need to "fix your message indelibly in the mind" is not a message at all. It's a mind. An innocent mind. A mind that has not been burnished by someone else's brand. 41/332 What's true in business is true in nature too. "Imprinting" is the term animal biologists use to describe the first encounter between a newborn animal and its natural mother. It takes only a few seconds to fix indelibly in the memory of the young animal the identity of its parent. You might think all ducks look alike, but even a day-old duckling will always recognize its mother, no matter how much you mix up the flock. Well, that's not quite true. If the imprinting process is interrupted by the substitution of a dog or cat or even a human being, the duckling will treat the substitute as its natural mother. No matter how different the creature looks. Falling in love is a similar phenomenon. While people are more selective than ducks, they're not nearly as selective as you might think. What counts most is receptivity. Two people must meet in a situation in which both are receptive to the idea. Both have open windows. That is, neither is deeply in love with someone else. Marriage, as a human institution, depends on the concept of first being better than best. And so does business. If you want to be successful in love or in business, you must appreciate the importance of getting into the mind first. You build brand loyalty in a supermarket the same way you build mate loyalty in a marriage. You get there first and then be careful not give them a reason to switch. 42/332 The Hard Way into the Mind And what if your name is not Charles or Neil or Kleenex or Hertz? What if someone else got into your prospect's mind first? The hard way to get into a person's mind is second. Second is nowhere. What's the largest-selling book ever published? (Also the first book ever printed with movable type?) The Bible, of course. And the second largest-selling book ever published? Who knows? New York is the largest cargo port in the United States. But which one is second? Would you believe Hampton Roads, Virginia? It's true. Bert Hinkler was the second person to fly the Atlantic Ocean solo, but tell the truth, have you ever heard of Bert Hinkler? He left home and his mother hasn't heard from him since. Call home, Bert, your mother is getting worried. (By the way, the second woman to fly the Atlantic Ocean solo was Beryl Markham, another relatively unknown person.) Who was the second person to fly solo across the North Atlantic? (The authors would really like to know the answer to this question. Save your postage: Amelia Earhart was not the second person to fly 43/332 the North Atlantic solo, although she was the first woman to do it. Now then, who was the second woman?) Second can also be successful. Consider those that challenged leaders: Crest vs. Colgate. Fuji vs. Kodak. Avis vs. Hertz. Pepsi vs. Coke. It's No. 3 and No. 4 that have the most serious problems. If you didn't get into the mind of your prospect first (personally, politically or corporately), then you have a positioning problem. In a physical contest, the odds favor the fastest horse, the strongest team, the best player. "The race isn't always to the swift, nor the battle to the strong, but that's the way to bet," said Damon Runyan. Not so in a mental contest. In a mental battle the odds favor the first person, the first product, the first politician to get into the mind of the prospect. In advertising, the first product to establish the position has an enormous advantage. Xerox, Polaroid, Bubble Yum, to name a few more examples. In advertising, it's best to have the best product in your particular field. But it's even better to be first. Love might be wonderful the second time around, but nobody cares who the second person to fly solo across the North Atlantic was. Even if that person was a better pilot. There are positioning strategies to deal with the problem of being number two and number three or even number two hundred and three. (See Chapter 8, "Repositioning the Competition.") But first make sure you can't find something to be first in. It's better to be a big fish in a small pond (and then increase the size of the pond) than to be a small fish in a big pond. 44/332 Amelia Earhart was the third person to fly the Atlantic Ocean solo, but that's not the reason she got famous. She got famous because she was "first." That is, the first woman to do it. "If you can't be first in a category, then set up a new category you can be first in" is the second most powerful positioning idea. Advertising Learns the Lesson The advertising industry learned the Lindbergh lesson the hard way. What the stock market was in the twenties, the advertising business was in the sixties. The go-go sixties, they were called. While it lasted, the exciting "anything goes" years of the sixties were a marketing orgy. At the party, it was "everyone into the pool." Little thought was given to failure. With the magic of money and enough bright people, a company felt that any marketing program would succeed. The wreckage is still washing up on the beach. DuPont's Corfam, Gablinger's beer, the Convair 880, Vote toothpaste, Handy Andy cleaner. The world will never be the same again, and neither will the advertising business. As the president of a large consumer products company said recently, "Count on your fingers the number of successful new national brands introduced in the last two years. You won't get to your pinky." Not that a lot of companies haven't tried. Every supermarket is filled with shelf after shelf of "half successful" brands. The manufacturers of these me-too products cling to the hope that they can develop a brilliant advertising campaign which will lift their offspring into the winner's circle. 45/332 Meanwhile, they hang in there with coupons, deals, point-of-purchase displays. But profits are hard to come by, and that "brilliant" advertising campaign, even if it comes, doesn't ever seem to turn the brand around. No wonder management people turn skeptical when the subject of advertising comes up. And instead of looking for new ways to put the power of advertising to work, management invents schemes for reducing the cost of what they are currently doing. Witness the rise of the house agency, the media buying service, the barter deal. It's enough to drive an advertising person into the soft ice cream business. The chaos in the marketplace is a reflection of the fact that advertising just doesn't work the way it used to. But old traditional ways of doing things die hard. "There's no reason why advertising can't do the job," say the defenders of the status quo, "as long as the product is good, the plan is sound and the commercials are creative." But they overlook one big, loud reason. The marketplace itself. The noise level today is far too high. Messages prepared in the old, traditional ways have no hope of being successful in today's overcom-municated society. To understand how we got to where we are today, it might be helpful to take a quick look at recent communication history. The Product Era Back in the fifties, advertising was in the product era. In a lot of ways, these were the good old days when the "better mousetrap" and some money to promote it were all you needed. 46/332 USPs can be established in other ways. See the just published Differentiate or Die. It was a time when advertising people focused their attention on product features and customer benefits. They looked for, as Rosser Reeves called it, the "Unique Selling Proposition." But in the late fifties, technology started to rear its ugly head. It became more and more difficult to establish that "USP." 47/332 In the fifties, advertising people looked for a unique feature or benefit they could hang their hat on. Then they depended on massive advertising to drive the idea into the mind. The end of the product era came with an avalanche of me-too products that descended on the market. Your "better mousetrap" was quickly followed by two more just like it. Both claiming to be better than the first one. Competition was fierce and not always honest. It got so bad that one product manager was overheard to say, "Wouldn't you know it. Last year we had nothing to say, so we put 'new and improved' on the package. This year the research people came up with a real improvement, and we don't know what to say." These days, the Federal Trade Commission would severely frown on the "new and improved" language unless the company could prove it. In the sixties, advertising people found that reputation or image was more important than any single product feature. The Image Era The next phase was the image era. Successful companies found that reputation, or image, was more important in selling a product than any specific product feature. 48/332 The architect of the image era was David Ogilvy. As he said in his famous speech on the subject, "Every advertisement is a longterm investment in the image of a brand." And he proved the validity of his ideas with programs for Hathaway shirts, Rolls-Royce, Schweppes and others. But just as the me-too products killed the product era, the me-too companies killed the image era. As every company tried to establish a reputation for itself, the noise level became so high that relatively few companies succeeded. And of the ones that made it, most did it primarily with spectacular technical achievements, not spectacular advertising. Xerox and Polaroid, to name two. The Positioning Era Today it has become obvious that advertising is entering a new era. An era where creativity is no longer the key to success. The fun and games of the sixties and seventies have given way to the harsh realities of the eighties. To succeed in our overcommunicated society, a company must create a position in the prospect's mind. A position that takes into consideration not only a company's own strengths and weaknesses, but those of its competitors as well. Advertising is entering an era where strategy is king. In the positioning era, it's not enough to invent or discover something. It may not even be necessary. You must, however, be first to get into the prospect's mind. 49/332 IBM didn't invent the computer. Sperry-Rand did. But IBM was the first company to build a computer position in the mind of the prospect. In the seventies, advertising people quickly adopted positioning tactics, which involved the search for a position to occupy in the prospect's mind that was not taken by another brand. What Amerigo Discovered The Sperry-Rand of the fifteenth century was Christopher Columbus. As every schoolchild knows, the man who discovered America was poorly rewarded for his efforts. Christopher Columbus made the mistake of looking for gold and keeping his mouth shut. Amerigo Vespucci didn't. The IBM of the fifteenth century, Amerigo was five years behind Christopher. But he did two things right. 50/332 It didn't take long for the advertising industry to jump on the positioning bandwagon. This ad ran in the United Kingdom a month after the Ad Age articles appeared. No credit to us, of course. First, he positioned the New World as a separate continent, totally distinct from Asia. This caused a revolution in the geography of his day. Second, he wrote extensively of his discoveries and theories. Especially significant are the five letters of his third voyage. One (Mundus Novus) was translated into 40 different languages over a 25-year period. Before he died, Spain granted him Castillian citizenship and gave him a major state post. As a result, the Europeans credited Amerigo Vespucci with the discovery of America and named the place after him. Christopher Columbus died in jail. 51/332 Michelob was not the first high-priced beer to get inside the beerdrinker's mind. Heineken was. So Michelob used the Amelia Earhart strategy. Heineken was the first high-priced imported beer, so Michelob became the first high-priced domestic beer. Unfortunately, Michelob dropped "First class" for things like "The night belongs to Michelob." Too bad. Michelob could have been one of the two or three best-selling domestic brands of beer. What Michelob Discovered The great copywriters of yesterday, who have gone to the big ad agency in the sky, would die all over again if they saw some of the campaigns currently running. Take beer advertising, for example. In the past a beer copywriter looked closely at the product to find a copy platform. And he or she found product features like "real-draft" Piels and "cold-brewed" Bailan tine. And even further back a beer copywriter searched for just the right words to paint a picture of quality, taste and appetite appeal. "Just a kiss of the hops." "From the land of sky blue waters." 52/332 "Real gusto in a great light beer." Today, however, poetry in advertising is as dead as poetry in poetry. One of the biggest advertising successes of recent times is the campaign for Michelob. The brand was launched with a campaign that is as poetic as a stop sign. And just as effective. "First class is Michelob" positioned the brand as a premiumpriced American-made beer. In only a few years, Michelob has become one of the largest-selling beers in the United States. At premium prices too. Was Michelob the first premium-priced domestic beer? No, of course not. But Michelob was the first to build the position in the beer-drinker's mind. What Miller Discovered Notice how the poetry in that famous Schlitz slogan hides the positioning. "Real gusto in a great light beer." Did anyone out there in the neighborhood bar and grill believe that Schlitz was any lighter than Bud-weiser or Pabst? No, the Schlitz slogan made as much sense to the Billy Carters of this world as the lyrics in an Italian opera. But over at the Miller Brewing Company, they apparently asked themselves what would happen if they really positioned a beer as a light beer. So Miller introduced "Lite" beer. And the rest is history. A runaway success that spawned a host of me-too brands. Including, 53/332 ironically, Schlitz Light. (Presumably to be promoted as: "Real gusto in a great light-light beer.") Positioning isn't everything. Lite beer was a brilliant positioning success, but a legal disaster. Miller found that they couldn't legally own the "light" name in the beer category, so the "Lite" name had to be changed to "Miller Lite" to differentiate the brand from the dozens of other light beers on the market. The Lite lesson: Don't give your brand a generic name. Miller then proceeded to muck-up its light brand with other "Lights" such as Genuine Draft Light and Miller Lite Ice. Now Bud Light is in first place. For many people or products today, one roadway to success is to look at what your competitors are doing and then subtract the poetry or creativity which has become a barrier to getting the message into the mind. With a purified and simplified message, you can then penetrate the prospect's mind. For example, there's also an imported beer whose positioning strategy is so crystal-clear that those old-time beer copywriters probably wouldn't even accept it as advertising. "You've tasted the German beer that's the most popular in America. Now taste the German beer that's the most popular in Germany." This is how Beck's beer effectively positioned itself against Lowenbrau. 54/332 Advertising like this is making Beck's beer popular in America too. Sales keep going up year after year. Lowenbrau, on the other hand, gave up the struggle and became a domestic brand. "America's favorite German beer" has helped Beck's remain a leading brand of imported beer. Unfortunately, Beck's, a German beer, is stuck with an English name while Heineken, a Dutch beer, is blessed with a German name. The name of your brand is just as important as its positioning, maybe even more important. And if the oldtimers are confused by today's beer advertising, what would they think of the TWA campaign: "The only widebodies we fly are the ones people prefer most. The 747 and the L-1011." (In other words, no DC 10s.) A long way in both concept and execution from that classic airline campaign, "Fly the friendly skies of United." Strange things have been happening in American advertising. It's becoming distinctly unfriendly. And more effective. 4 Those Little Ladders in Your Head To better understand what your message is up against, let's take a closer look at the ultimate objective of all communication: the human mind. Like the memory bank of a computer, the mind has a slot or position for each bit of information it has chosen to retain. In operation, the mind is a lot like a computer. But there is one important difference. A computer has to accept what you put into it. The mind does not. In fact, it's quite the opposite. As a defense mechanism against the volume of today's communications, the mind rejects information that doesn't "compute." It accepts only that new information which matches its current state of mind. It filters out everything else. The more we studied the human mind, the more we saw the relationship between the mind and the memory bank of a computer. To put a new brand into the mind, you have to delete or reposition the old brand that already occupies the category. A computer works in exactly the same way. 56/332 You See What You Expect to See Take any two abstract drawings. Write the name Schwartz on one and the name Picasso on the other. Then ask someone for an opinion. You see what you expect to see. Ask two people of opposite persuasion, say, a Democrat and a Republican, to read an article on a controversial subject. Then ask each one if the article changed his or her opinion. "You taste what you expect to taste." Thirteen years after we wrote those words, Coca-Cola introduced New Coke, a major marketing disaster. Their own research illustrates the folly of trying to "improve" on the taste of the real thing. In blind taste tests, consumers preferred New Coke almost three to one over the original formula. When they were able to see what they were drinking, however, consumers preferred the brand now called Coca-Cola Classic more than four to one. You'll find that the Democrat gets out of the article facts to support one point of view. The Republican gets out of the same article facts to support the opposite point of view. Very little mind changing takes place. You see what you expect to see. 57/332 Pour a bottle of Gallo into an empty 50-year-old bottle of French Burgundy. Then carefully decant a glass in front of a friend and ask for an opinion. You taste what you expect to taste. Blind taste testings of champagne have often ranked California brands above French ones. With the labels on, this is unlikely to happen. You taste what you expect to taste. Were it not so, there would be no role for advertising at all. Were the average consumer rational instead of emotional, there would be no advertising. At least not as we know it today. One prime objective of all advertising is to heighten expectations. To create the illusion that the product or service will perform the miracles you expect. And presto, it does. But create the opposite expectation and the product is in trouble. The introductory advertising for Gablinger's beer created a feeling that because it was a diet product, it would taste bad. And sure enough, the advertising worked! People tried it and were easily convinced that it did taste bad. You taste what you expect to taste. An Inadequate Container Not only does the human mind reject information which does not match its prior knowledge or experience, it doesn't have much prior knowledge or experience to work with. In our overcommunicated society, the human mind is a totally inadequate container. 58/332 According to Harvard psychologist Dr. George A. Miller, the average human mind cannot deal with more than seven units at a time. Which is why seven is a popular number for lists that have to be remembered. Seven-digit phone numbers, the Seven Wonders of the World, seven-card stud, Snow White and the Seven Dwarfs. "The Magical Number Seven" was the title of Miller's article, which appeared in the March 1956 issue of The Psychological Review. In his article, Dr. Miller pointed out a number of famous sevens, including the seven notes of the musical scale and the seven days of the week. Ask someone to name all the brands he or she remembers in a given product category. Rarely will anyone name more than seven. And that's for a high-interest category. For low-interest products, the average consumer can usually name no more than one or two brands. Try listing all ten of the Ten Commandments. If that's too difficult, how about the seven danger signals of cancer? Or the four horsemen of the Apocalypse? Today you have to remember alarm codes, social security, e-mail, fax, calling card and PIN number. Digits are crowding out words. In one newspaper survey, 80 out of 100 Americans couldn't name a single member of the President's Cabinet. Said a 24-year-old musician, "I don't even think I could name the Vice President " If our mental storage bowl is too small to handle questions like these, how in the world are we going to keep track of all those brand names which have been multiplying like rabbits? Thirty years ago the six leading cigarette companies between them offered the American smoker 17 different brands. Today they sell 176. 59/332 There are now over 10 million websites, 250,000 software titles and some 4 million book titles. Each year 77,000 new book titles are added to the pile. (At least this is an old one.) "Modelitus" has struck every industry, from automobiles to beer to zoom lenses. Detroit currently sells almost 300 different models in a bewildering variety of styles and sizes. Mavericks, Monarchs, Montegos, Monzas. Let's see, is it a Chevrolet Monza or a Mercury Monza? The public is confused. To cope with complexity, people have learned to simplify everything. When asked to describe an offspring's intellectual progress, a person doesn't usually quote vocabulary statistics, reading comprehension, mathematical ability, etc. "He's in seventh grade" is a typical reply. Simple Saturn, the only automobile brand in America that came in one model only, became very successful. For a number of years, the average Saturn dealer sold more cars than any other dealer. Then what did they do next? You guessed it. They introduced a larger model, the "L" series, "The next big thing from Saturn." People can often remember positioning concepts better than names. A man suffering from brain damage might recognize and refer to his "oldest daughter," even though he might not be able to recall her name. 60/332 This ranking of people, objects and brands is not only a convenient method of organizing things, but also an absolute necessity to keep from being overwhelmed by the complexities of life. The Product Ladder To cope with the product explosion, people have learned to rank products and brands in the mind. Perhaps this can best be visualized by imagining a series of ladders in the mind. On each step is a brand name. And each different ladder represents a different product category. Some ladders have many steps. (Seven is many.) Others have few, if any. A competitor that wants to increase its share of the business must either dislodge the brand above (a task that is usually impossible) or somehow relate its brand to the other company's position. Yet too many companies embark on marketing and advertising programs as if the competitor's position did not exist. They advertise their products in a vacuum and are disappointed when their messages fail to get through. For every product category, a prospect tends to have a ladder like this one in his or her mind with the leader on the top rung, No. 2 61/332 on the second rung and No. 3 on the third rung. The number of rungs can vary. Three is the most typical. Seven is probably the maximum. (The rule of seven.) Moving up the ladder in the mind can be extremely difficult if the brands above have a strong foothold and no leverage or positioning strategy is applied. An advertiser who wants to introduce a new product category must carry in a new ladder. This, too, is difficult, especially if the new category is not positioned against the old one. The mind has no room for what's new and different unless it's related to the old. One category has no rungs on the ladder. (Caskets.) People just don't want to remember any casket names, although there is a leading brand. (Batesville.) That's why if you have a truly new product, it's often better to tell the prospect what the product is not, rather than what it is. The first automobile, for example, was called a "horseless" carriage, a name which allowed the public to position the concept against the existing mode of transportation. Words like "offtrack" betting, "lead-free" gasoline and "tubeless" tire are all examples of how new concepts can best be positioned against the old. 62/332 This is the car rental ladder in the typical prospect's mind. Even a customer who rents from Avis or National will generally have this same ladder in his or her mind. People rent from Avis not because the company is on the top rung in their car rental ladder, but in spite of the fact that Avis is not the leader. "Why go with us? We try harder." The "Against" Position In today's marketplace the competitor's position is just as important as your own. Sometimes more important. An early success in the positioning era was the famous Avis campaign. Hertz, on the other hand, has made a living by reminding us who is on the top rung. "There's Hertz and there's not exactly." The Avis campaign will go down in marketing history as a classic example of establishing the "against" position. In the case of Avis, this was a position against the leader. "Avis is only No. 2 in rent-a-cars, so why go with us? We try harder." For 13 years in a row, Avis lost money. Then they admitted that they were No. 2 and Avis started to make money. The first year Avis made $1.2 million. The second year, $2.6 million. The third year, $5 million. Then the company was sold to ITT. Avis was able to make substantial gains because they recognized the position of Hertz and didn't try to attack them head-on. To better understand why the Avis program was so successful, let's look into the mind of the prospect and imagine we can see a product ladder marked "rent-a-cars." 63/332 On each rung of the product ladder is a brand name. Hertz on top. Avis on the second rung. National on the third. Many marketing people have misread the Avis story. They assume the company was successful because it tried harder. Not at all. Avis was successful because it related itself to Hertz. (If trying harder were the secret of success, Harold Stassen would have been President many times over.) As an indication of how far the advertising business has come in its acceptance of comparative ads, Time magazine originally rejected the "We try harder" line as being too competitive with Hertz. Other magazines followed the Time lead. So the account executive panicked and agreed to change the line to "We try damned hard." (A curse word presumably being less offensive than a comparative word.) Only after the ad was canceled did Time change its mind and agree to accept the original version. (The account executive was fired.) Shortly after the positioning book was published, the Federal Trade Commission invited us to Washington, DC to comment on their pending regulation banning the use of "hanging comparisons." According to the proposed regulation, you couldn't say, "We try harder." You would have to say whom you tried harder than. We pointed out that the poetry of the Avis slogan resided in the fact that the reader added the thought: "than Hertz." The best headline for an advertisement is always incomplete. The best headlines always let the reader supply a word or phrase to complete the idea. That's what makes an advertisement "involving." Establishing the "against" position is a classic positioning maneuver. If a company isn't the first, then it has to be the first to occupy the No. 2 position. It's not an easy task. 64/332 But it can be done. What Avis is doing in rent-a-cars, Burger King is doing in fast foods and Honeywell is doing in computers. Honeywell has left the computer business. Hewlett-Packard is now No. 2. (But no one knows it, which is an H-P mistake.) The "Uncola" Position Another classic positioning strategy is to worm your way onto a ladder owned by someone else. As 7-Up did. The brilliance of this idea can only be appreciated when you comprehend the enormous share of mind enjoyed by Coke and Pepsi. Almost two out of every three soft drinks consumed in the United States are cola drinks. By linking the product to what was already in the mind of the prospect, the "uncola" position established 7-Up as an alternative to a cola drink. (The three rungs on the cola ladder might be visualized as: One, Coke. Two, Pepsi. And three, 7-Up.) 7-Up was fighting a two-front war. The colas were on one front and Sprite was on the other. The uncola campaign was brilliant, but they ultimately lost the battle to Sprite which is now the leading lemon-lime brand. Many things went wrong with 7-Up, including inconsistent advertising, line extension (remember 7-Up Gold?) and a failure to do the obvious thing with the uncola campaign. They told the soft-drink consumer what 7-Up was not. They should have also told the consumer what 7-Up was. 65/332 With uncola positioning, sales really took off. Since the 1968 uncola unveiling, annual net sales of the Seven-Up Company increased from $87.7 million to over $190 million. Today 7-Up is the world's third largest-selling soft drink. To prove the universality of positioning concepts, McCormick Communications took beautiful-music radio station WLKW, an also-ran in the Providence (Rhode Island) market, and made it number one. Their theme: WLKW, the unrock station. To find a unique position, you must ignore conventional logic. Conventional logic says you find your concept inside yourself or inside the product. Not true. What you must do is look inside the prospect's mind. You won't find an "uncola" idea inside a 7-Up can. You find it inside the cola drinker's head. The F.W.M.T.S. Trap More than anything else, successful positioning requires consistency. You must keep at it year after year. Yet after a company has executed a brilliant positioning coup, too often it falls into what we call the F.W.M.T.S. trap. "Forgot what made them successful." Shortly after the company was sold to ITT, Avis decided it was no longer satisfied with being number two. So it ran ads saying, "Avis is going to be No. 1." That's advertising your aspirations. Wrong psychologically. And wrong strategically. 66/332 Avis was not destined to be No. 1 unless it could find a weakness in Hertz to exploit Furthermore, the old campaign not only related No. 2 Avis to No. 1 Hertz on the product ladder in the prospect's mind, but also capitalized on the natural sympathy people have for the underdog. The new campaign was just conventional brag-and-boast advertising. Be honest. In the last 20 years, Avis has run many different advertising campaigns. "The wizard of Avis." "You don't have to run through airports." But what is the single theme that leaps into your mind when someone mentions Avis? Of course, "Avis is only No. 2, etc." Yet Avis in the last few years has consistently ignored the only concept it really owns in the mind. Someday when National Rent-A-Car passes Avis in sales, Avis will appreciate the value of the No. 2 concept it lost. If you want to be successful today, you can't ignore the competitor's position. Nor can you walk away from your own. In the immortal words of Joan Did-ion, "Play it as it lays." Another advertiser that fell into the F.W.M.T.S. 67/332 The prospect looks at an advertisement like this and thinks, "No, you're not."trap was 7-Up. With the "uncola" campaign, the company successfully positioned its 7-Up drink as an alternative to Coke and Pepsi. But the current campaign says "America is turning 7-Up." This advertisement is a typical example of the inconsistent approach used by 7-Up over the years. 7-Up now has half the share of market-leader Sprite. (America was definitely not turning 7-Up.) 68/332 America is doing no such thing. Seven-Up is also advertising its aspirations. No different conceptually than the "Avis is going to be No. 1" campaign. And no more effective. 5 You Can't Get There from Here There's an old story about a traveler who asked a farmer for directions to a nearby town. The farmer replied, "Well, you go down the road for a mile, turn left at the fork. No, that won't work." "You turn around and drive for half a mile till you hit a stop sign, then turn right," the farmer continued. "No, that won't work either." After a long pause, the farmer looked at the confused traveler and said, "You know what, son, you can't get there from here!" That just happens to be the fate of many people, politicians and products today. They happen to be in a position where "they can't get there from here." America is not turning 7-Up. Avis is not going to be No. 1. Wishing won't make it so. And neither will massive amounts of advertising. The "Can Do" Spirit Refuses to Die In many ways our country's Vietnam experience was a typical example of American "can do" spirit. Anything is possible if only you try hard enough. But no matter how hard we tried, no matter how many soldiers and how much money we poured in, the problem could not be solved by an outside force. Forget 48-year-olds. Today's high-tech CEOs are in their twenties and thirties. The first article ever written on positioning appeared in the July 1969 issue of Industrial Marketing magazine. Even today people ask us, "How does positioning apply to business-to-business products as opposed to consumer ones?" When we tell them that positioning started as an industrial concept, 70/332 they don't believe us. Why? It doesn't match the perception in the mind that all good advertising ideas start in the consumer area. Lesson: Don't fight perceptions with facts. Perceptions will always win. We couldn't get there from here. In spite of hundreds of Vietnam examples to the contrary, we live in a "can do" environment. Yet many things are not possible, no matter how hard you try. Take the 55-year-old executive vice president who is never going to get the top job. When the chief executive retires in a few years at age 65, the board appoints a 48-year-old successor. The 55-year-old is out of phase for the president's job. To have a chance for promotion, he or she must be at least a decade younger than the current holder. In the battle for the mind, the same thing often happens to the product that's out of phase. Today a company can have a great product, a great sales force, a great advertising campaign and still fail miserably if it happens to be in a position in which "you can't get there from here." No matter how many millions it is prepared to spend. And the best example is what happened to RCA in the computer business. The Handwriting on the Wall In 1969 we wrote an article for Industrial Marketing magazine using RCA as one of the prime examples. Entitled "Positioning Is a Game People Play in Today's Me-Too Marketplace," the article pulled no punches. It named names and made predictions. All based on the rules of a game called positioning. (It was the first time 71/332 anyone had used the word "positioning" to describe the process of coping with the mental position that a larger, more established competitor occupies.) One prediction, in particular, turned out to be strikingly accurate. As far as the computer industry was concerned, we wrote, "A company has no hope to make progress head-on against the position that IBM has established." This is the head-to-head advertisement that RCA ran in The Wall Street Journal and other business publications. For many years some people thought that a positioning ad was one that mentioned a competitor in the headline. Not necessarily true. Positioning has nothing to do with whether you mention a competitor or not. It has to do with "considering" competitive strengths and weaknesses before you launch a marketing campaign. The operative word, of course, was "head-on." And while it's possible to compete successfully with a market leader (the article suggested several approaches), the rules of positioning say it can't be done "head-on." Back in 1969 this raised a few eyebrows. Who were we to say that a powerful, multibillion-dollar company like RCA couldn't find happiness in the computer business if it so desired? So as 1970 rolled around, it was full speed ahead at RCA. The incredible story was told in the pages of the business press. 72/332 "RCA fires a broadside at No. 1," said the headline of an article in the September 19, 1970, issue of Business Week. "RCA goes head-to-head with IBM," said the headline of a news item in the October 1970 issue of Fortune. "RCA computer push is head-on slash at IBM," said the headline of a story in the October 26, 1970, issue of Advertising Age. And just to make sure there was no mistaking the company's intentions, Robert W. Sarnoff, chairman and president, made a prediction that by the end of 1970, RCA would be in a "firm No. 2 position" in the computer industry. Pointing out that his company had already invested "far more to develop a strong position in the computer industry than we have ever put into any previous business venture," including color TV, Mr. Sarnoff said that the goal had been development of a solid profit position in the early seventies. GE's Jack Welch has all but killed that wishful "can do" stuff. It's one or two or you're out. The "Can Do" Spirit Dies Less than a year later, the roof fell in. "The $250 million disaster that hit RCA," said the headline of a story in the September 25, 1971, issue of Business Week. 73/332 After GE and RCA folded their computer lines, we came back with an article in the November 1971 issue of Industrial Marketing magazine. The article lit a fire under the positioning concept and generated many requests for reprints and more information. That's a lot of dough. Someone figured out that if you took that much money in one-hundred-dollar bills and put it on the sidewalk in Rockefeller Center, the stack would go right past Bob Sarnoff's window on the 53rd floor of the RCA Building. Those were bad times for computer manufacturers. In May 1970, after years of unprofitable computer operations, General Electric threw in the sponge by selling the mess to Honeywell. With two major computer manufacturers folding one right after another, the urge to say "I told you so" was irresistible. So later in the year 1971, we came back with "Positioning Revisited: Why Didn't GE and RCA Listen?" (The article appeared in the November 1971 issue of Industrial Marketing.) How do you advertise and market against a company like IBM? The two positioning articles made some suggestions. 74/332 How to Go Against an IBM The computer business has often been referred to as "Snow White and the Seven Dwarfs." Snow White has established a position unrivaled in the history of marketing. These were the seven computer companies unlucky enough to have to compete with IBM in mainframe computers. Which company did the best? None of the above. The winner and ultimately the second largest computer company in the world was Digital Equipment Corp. DEC used the Amelia Earhart approach. They created the minicomputer, a new category they could be first in. In recent years we've been over at IBM working on the problems of how to replace the concept of "mainframe computers" with an up-to-date position. Our recommendation was to pursue "integrated computing" as their position. Who else can better put all the pieces together? IBM has 60 percent of the computer business versus less than 10 percent for the largest of the dwarfs. How do you go against a company with a position like IBM? 75/332 Well, first you have to recognize it. Then you don't do the thing that too many people in the computer field try to do. Act like IBM. A company has no hope to make progress head-on against the position that IBM has established. And history, so far, has proved this to be true. The small companies in the field probably recognize this. But the big companies seem to think they can take their strong positions against IBM. Well, as one unhappy executive was heard to say, "There just isn't enough money in the world." You can't get there from here. "Fight fire with fire" is the old cliché. But as the late Howard Gossage used to say, "That's silly. You fight fire with water." A better strategy for IBM's competitors would be to take advantage of whatever positions they already own in the minds of their prospects and then relate them to a new position in computers. For example, how should RCA have positioned its computer line? Many companies only get one chance in life. Take the right fork and become enormously successful. Take the wrong fork and wither and die. RCA took the wrong fork and ended up as a secondary brand at General Electric. This is the fork they should have taken. The irony is that communications have become the real growth market for computers of all types. Currently IBM, 76/332 Sun Microsystems and other computer companies are pouring most of their marketing resources into the battle to dominate the Internet, the ultimate communication network. NCR succumbed to the siren song and went head to head with IBM. They almost died. Today they are back to "transactions." Our 1969 article made a suggestion: "RCA is a leader in communications. If they positioned a computer line that related to their business in communications, they could take advantage of their own position. Even though they would be ignoring a great deal of business, they would be establishing a strong beachhead." Take NCR, a company with a strong position in cash registers. NCR has made great progress in the computer business by concentrating its efforts on retail data entry systems. Computerized cash registers, if you will. Where the situation is hopeless, however, the effort in finding a valid position is probably wasted. Much better to concentrate on other areas of a company's business. As Charlie Brown said, "No problem is too big to run away from." In truth, outright failure is often preferable to mediocre success. An also-ran can easily be tempted to think that the answer to the problem is trying harder. A company stuck with a losing position is not going to benefit much from hard work. The problem is not what, but when. The extra effort, if it is going to be of much help, should be applied early to establish the precious posture of product leadership. With it, everything is possible. Without it, the going is going to be rough indeed. (As the Eskimo remarked, the lead dog is the only one who enjoys a change of view.) 77/332 Smith and Jones at General Electric One example might help illustrate the principle. Two gentlemen had their eyes on the top job at General Electric. One was named Smith. The other was named Jones. Smith was your typical "can do" corporate executive. So when he was given the computer operation to run, he accepted the assignment with relish. Jones, on the other hand, was realistic. He knew that GE hadn't gotten into the computer business early enough to dominate it. At this late stage of the game, it was going to cost the company too much to catch up to IBM. If it ever could. After Smith failed to turn the computer business around, Jones got a chance to participate. He recommended that General Electric get out of the computer business, which it eventually did by selling the operation to Honeywell. That's one reason why Reginald H. Jones wound up as chief executive of the General Electric Company. And J. Stanford Smith wound up at International Paper. What we left out of the story was that J. Stanford Smith was the head of the industrial advertising and sales promotion department of General Electric, where both of us started our careers. We knew Stan Smith extremely well. He was perhaps the most brilliant marketing person we have ever known. If Smith couldn't save GE computers, nobody could. This made a deep impression on both of us. You often find yourself in situations where "you can't get there from here." In a nutshell, the hierarchy in the computer business is duplicated in almost every other industry. Invariably, every industry has a strong leader and a host of also-rans. IBM in computers, Xerox in copiers and General Motors in automobiles. 78/332 If one can understand the role of positioning in the computer industry, then one can transfer this knowledge to almost any other situation. What works for computers will also work for cars and for colas. Or vice versa. 6 Positioning of a Leader Companies like Avis and Seven-Up found viable alternative positions to marketing leaders But most companies don't want to be an also-ran, successful or not. They want to be a leader like Hertz or Coke. So how do you get to be the leader? Actually it's quite simple. Remember Charles Lindbergh and Neil Armstrong? You just get there firstest with the mostest. Establishing Leadership History shows that the first brand into the brain, on the average, gets twice the long-term market share of the No. 2 brand and twice again as much as the No. 3 brand. And the relationships are not easily changed. Look at the intensive marketing battle being fought between Pepsi-Cola and Coca-Cola. In spite of years of successful marketing moves by the Pepsi challenger, who leads the cola race? Why CocaCola, of 80/332 These are the leading brands in 25 different categories in the year 1923. By the turn of the century, 77 years later, only three brands had lost their leadership. (Eveready, Manhattan, Palmolive.) This is the power of being a leader. Leadership alone is your most effective marketing strategy. Hertz is fine. GM is faltering. Firestone has blown a tire. Westinghouse is gone. It's getting tougher out there. 81/332 course. For every six bottles of Coke sold, Pepsi manages to sell only four. And so it goes. The leader brand in category after category outsells the number two brand by a wide margin. Hertz outsells Avis, General Motors outsells Ford, Goodyear outsells Firestone, McDonald's outsells Burger King, General Electric outsells Westing-gone. Many marketing experts overlook the enormous advantages of being first. Too often they attribute successes like Kodak and IBM and Coke to "marketing acumen." Coca-Cola keeps trying. Currently they are trying to take their PowerAde sports drink against Gatorade. Who will win this battle? Gatorade, of course. The Failures of Leaders Yet when the shoe is on the other foot, when a marketing leader isn't first in a new category, the new product is usually an also-ran. 82/332 Coca-Cola is a gigantic company compared to Dr. Pepper. Yet when Coke introduced a competitive product, Mr. Pibb, even the immense resources of the Atlanta giant couldn't put much of a dent in Dr. Pepper's sales. Mr. Pibb remains a poor second. For every six bottles of Dr. Pepper sold, Coca-Cola manages to sell only one bottle of Mr. Pibb. IBM is much bigger than Xerox and has awesome resources of technology, manpower and money. Yet what happened when IBM introduced a line of copiers competitive with Xerox? Not much. Xerox still has a share of the copier market 10 times that of IBM. And supposedly Kodak was going to cream Polaroid when the Rochester colossus got into the instant camera business. Far from it. Polaroid's business actually increased while Kodak managed to take only a small share. At the expense of a substantial loss in Kodak's conventional camera business. Almost all the material advantages accrue to the leader. In the absence of any strong reasons to the contrary, consumers will probably select the same brand for their next purchase as they selected for their last purchase. Stores are more likely to stock the leading brands. The larger, more successful companies usually have the first pick of outstanding college graduates. In fact, they usually attract more and better employees. At almost every step of the way, the leading brand has the advantage. On an airplane flight, for example, the airline will often stock one brand of cola, one brand of ginger ale, one brand of beer, etc. 83/332 On your next flight, see if the three brands aren't Coke, Canada Dry and Budweiser. The three leading brands of cola, ginger ale and beer. What makes a leader? Followers, of course. Leaders should not try to drive their competitors out of business. They need them to create a category. Polaroid made a serious mistake by suing Kodak and driving them out of the instant photography business. Both companies lost out. Leadership is your best "differentiator." It's the collateral for your brand's success. The Instability of Equality It's true that in some categories the two leading brands run neck and neck. What's equally true is that these categories are inherently unstable. Sooner or later, you can expect one brand to get the upper hand and open a lead which eventually will reach a stable 5 to 3 or 2 to 1 ratio. Consumers are like chickens. They are much more comfortable with a pecking order that everybody knows about and accepts. 84/332 This thinking is what later led us to the "law of duality." In every category, there are two brands which will ultimately dominate the category. Chevrolet and Ford, Coke and Pepsi, Budweiser and Miller, Duracell and Energizer, Sotheby's and Christie's. God and the Devil. Hertz and Avis. Harvard and Yale. McDonald's and Burger King. When two brands are close, one or the other is likely to get the upper hand and then dominate the market for years to come. Between 1925 and 1930, for example, Ford and Chevrolet were locked in a head-to-head battle. Then Chevrolet took the lead in 1931. In the model years since, including dislocations caused by depression and wars, Chevrolet has lost the lead only four times. The time for extra effort is clearly when the situation is in doubt. When neither side has a clear-cut superiority. Winning the battle for sales leadership in a single year will often clinch the victory for decades to come. It takes 110 percent of rated power for a jet to get its wheels off the ground. Yet when it reaches 30,000 feet, the pilot can throttle back to 70 percent of power and still cruise at 600 miles per hour. 85/332 Strategies for Maintaining Leadership Question: Where does the 800-pound gorilla sleep? Answer: Anywhere he wants to. Leaders can do anything they want to. Short-term, leaders are almost invulnerable. Momentum alone carries them along. (Old wrestling expression: You can't get pinned when you're on top.) For General Motors, Procter & Gamble and the leaders of this world, the worries are never about this year or next. Their worries are long-term. What's going to happen five years from now? Ten years from now? (Short-term, the only problem is the government. The motto of a leader ought to be: Keep pushing till you hear from the Feds.) Leaders should use their short-term flexibility to assure themselves of a stable long-term future. As a matter of fact, the marketing leader is usually the one who moves the ladder into the mind with his or her brand nailed to the one and only rung. Once there, what should leaders do and not do? What Not to Do As long as a company owns the position, there's no point in running ads that scream, "We're No. 1." Much better is to enhance the product category in the prospect's mind. Notice IBM advertising usually ignores competition and sells the value of computers. All computers, not just the company's types. Why isn't it a good idea to run advertising that says, "We're No. 1"? 86/332 The reason is pyschological. Either the prospect knows you are No. 1 and wonders why you are so insecure that you have to say so. Or the prospect doesn't know you are No. 1. If not, why not? Maybe you have defined your leadership in your own terms and not the prospect's terms. Unfortunately, that just won't work. We've had second thoughts about what leaders should not do. You always have new prospects coming into the marketplace who don't know what brand is the leader. Therefore leaders like Heineken should probably always run advertising to communicate their leadership. Unfortunately, Heineken dropped their line "America's No. 1 imported beer," and ultimately lost their leadership to Corona Extra. Leadership, however, should always be communicated with a certain amount of humility. You can't build a leadership position on your own terms. "The best-selling under-$l,000 high-fidelity system east of the Mississippi." You have to build a leadership position in the prospect's terms. There are two basic strategies that should be used hand in hand. They seem contradictory but aren't. 87/332 Why Coke doesn't continue to use "The real thing" is beyond us. "Always Coke" was just wishful thinking. The current theme "Coca-Cola Enjoy" is childish. Every product that gets into the mind first is perceived by the customer as the real thing. IBM in mainframe computers, Heinz in ketchup, Goodyear in tires and, of course, Coca-Cola in cola. When you are perceived as the real thing, you have also repositioned every other brand as an imitation. "The real thing" is perhaps the most powerful, most emotional advertising slogan ever invented, yet the Coca-Cola Company uses it sparingly, if at all. A pity. Rubbing It In "The real thing." This classic Coca-Cola advertising campaign is a strategy that can work for any leader. The essential ingredient in securing the leadership position is getting into the mind first. The essential ingredient in keeping that position is reinforcing the original concept. The standard by which all others are judged. In contrast, everything else is an imitation of "the real thing." This is not the same as saying "We're No. 1." The largest brand could be the largest seller because it has a lower price, it is available in more outlets, etc. 88/332 But "the real thing," like a first love, will always occupy a special place in the prospect's mind. "We invented the product." A powerful motivating force behind Xerox copiers. Polaroid cameras. Zippo lighters. Covering All Bets Sometimes it's hard to do. Unfortunately, leaders often read their own advertising so avidly they end up thinking they can do no wrong. So when a competitor introduces a new product or a new feature, the tendency is to pooh-pooh the development. Leaders should do the opposite. They should cover all bets. This means a leader should swallow his or her pride and adopt every new product development as soon as it shows signs of promise. Too often, however, the leader doesn't wake up until it's too late. General Motors spent $50 million to cover the Wankel engine when it was offered to the automotive industry. Money down the drain? Not necessarily. GM probably looks on the $50 million spent to buy a Wankel license as cheap insurance to protect a $66 billion business. (That's right, General Motors' sales in 1979 were $66,311,200,000.) Suppose the Wankel had become the automotive engine of the future. And Ford or Chrysler had been the first to buy the rights. Where would General Motors be now? Right where Kodak and 3M are in office copiers. When these two leaders in coated-paper copiers had a chance to cover by buying rights to Carlson's xerography process, they declined. "Nobody would pay five cents for a plain-paper copy when they could get a coated-paper copy for a cent and a half." Logical 89/332 enough. But the essence of covering is protection against the unexpected. And the unexpected did happen. Haloid took a chance on the Carlson patents, and today the company (successively Haloid Xerox and then Xerox) is a Leaders should take chances like Microsoft did with its Bob software, a product for the unsophisticated computer user. It failed, but what if a competitor had tried something similar and succeeded? Our experience is that most leaders suffer from hardening of the entrepreneurial arteries. They're too concerned with what the media might say if a new product failed. Yet the media is most sympathetic when you admit you made a mistake. Look at the great stories Coca-Cola received when they admitted that New Coke was a miscue. 90/332 Today, of course, Xerox is much bigger than Kodak, which made the mistake of getting into pharmaceuticals and a host of other products. We later developed this line of thinking into the notion of the power of focusing. Over a 20-year period Xerox lost several billion in computers. Another expensive lesson in the dangers of losing focus. $5 billion giant. Bigger than 3M and only a step behind Kodak.Fortune calls the Xerox 914 plain-paper copier "probably the single most profitable product ever manufactured in the United States." And what did Xerox do for an encore? Almost nothing. The spectacular success of the 914 was followed by one failure after another. Most notably in computers. Power from the Product "Only when our office copying success has been repeated, not once, but several times," said the Xerox chairman early on in the company's...
Purchase answer to see full attachment