Book Summary: Marketing Warfare-1 by Al Ries and Jack Trout

Marketing Warfare -1

Written by Al Ries and Jack Trout in 1986, Marketing Warfare has been an international bestseller. This pair is attributed to many bestsellers including the marketing classic, Positioning. The summary is from the 2003 Tata McGraw-Hill Edition.

The book is spread across 16 chapters dealing with various marketing strategies drawing parallel with the strategies used in warfare. The authors start the book by acknowledging the role of Karl von Clausewitz, a retired Prussian general and his book, On War written in 1832.

The summary of the book has been divided into two parts –

·         Marketing Warfare -1, is the summary of the theories and concepts that are explained by the authors in the first 10 chapters

·         Marketing Warfare -2, is the summary of chapters 11 to 16 where the authors have explained the theory through real-life examples of marketing wars

* Example not in the book but has been added to give Indian perspective to the concept.

Introduction & Chapter 1 – 2,500 years of war

The age-old definition of Marketing to be customer oriented needs a revamp with the changing times. Surging competition and higher commoditization of products and services are leaving little differentiation for the firms to increase their market share. Almost everyone is becoming customer-oriented.

The need of the hour is to be competition-oriented. Find flaws in competitor’s offering and attack there. For example, DEC identified weaker presence of IBM in smaller computers and attacked that segment. Burger King’s attack on McDonalds with its “broiling not frying” campaign.

The authors point out a research claiming that out of last 3,438 recorded years, only 268 years didn’t see any war. The author goes on explain briefly various wars starting from Marathon in 490 B.C. to War at Sedan in 1940.

Be obsessed with competition

Chapter 2 – The Principle of Force

Fundamentally, it’s far easier to stay at the top than getting to the top, unlike the myth “It’s easier to 

get on to the top but difficult to stay there”. The leader can take the advantage of the “Principle of Force”. This is because the bigger company naturally has a bigger advertising budget, a bigger research department, more sales outlet and bigger sales force etc.

The author points out two fallacies which people think, can overpower the principle of force –

·         Fallacy of better people: We have better people than competitor, so what if our numbers are small?

·         Fallacy of better product: Our product is better. This is more of perception and amusements.

The more, the better.

Chapter 3 – The superiority of the defense

The authors suggest that defense is always a better strategy. US lost Vietnam on offense and won South Korea in defense. Attack makes glamour, while defense make history. For example, RCA and GE went up against IBM, which left them with heavy losses.

Always have a strong defense strategy. And do not get enchanted by the offense.

Chapter 4 – The new era of competition

Marketing promises should be as vague as political ones. This helps in maintaining the credibility. For example, When Douglas Arthur claimed “I shall return” without mentioning a date and he returned, this was enough to maintain his credibility. On the other hand, when Hitler promised to take Stalingrad and could not take it, he lost his credibility.

Be vague in promise to take advantage of the ambiguity

Chapter 5 – The new era of competition

Marketing battles are not fought in supermarkets and stores. Rather, they are fought inside the customer’s mind. Just like in military warfare, the marketer needs to study the battleground (customer’s mind), the enemy’s position (Competitor’s space in mind) and favorable areas of the terrain (favorable perception in the mind).

Advantage positions are like mountains in battlefield. Example, for instant noodle mountain, Maggi is on top, for car, Maruti Suzuki is on top*.

But Segmentation has changed the concept. Segmentation allows to slice the mountain into small terrains and challenge the leader on those terrains where he is weak. Example, Syska LED in lightening solutions. Not trying to claim the lighting mountain, it sliced the mountain into LEDs and Non-LEDs and then claimed the LED mountain with its offering*.

Understand what is in the consumer’s mind and try to take a strong ground, if not on mountain then a smaller terrain

Chapter 6 – The Strategic Square

In any given market each company has a different goal, different resources at hand and different strengths. Obviously, the each company should have a different marketing strategy*.

The biggest player – Maruti Suzuki – Protect Market Share – Defensive Warfare

The challenger – Hyundai – Gain Market Share – Offensive warfare against the weak points of the leader (Premium SUV segment, premium hatchback segment)

The follower with bigger share – Tata Motors – Profitable Survival – Flanking attack against all (Create new categories and offer products for them and stand ground in those categories. For example, Compact Sedan category, Pick up Category)

The follower with smaller share – Nissan Motors – Survival – Guerrilla warfare – Pick a smaller segment big enough to be profitable but small enough for others to bother (Nissan Micra with its bright colored cars)

·         Offensive Marketing Warfare – Go through the mountain head on

·         Defensive Marketing Warfare – Come down the mountain to stop competitor’s moves

·         Flanking Marketing Warfare – Go around the mountain. Inexpensive and effective

·         Guerrilla Marketing Warfare – Go under the mountain to secure a small territory for self

Know your strengths and situation and adopt the best suited strategy for self

Chapter 7 – Principles of Defensive Warfare

Three basic principles of defensive marketing are –

·         Only the market leader should think of playing defensive

o   ‘The’ market leader, not ‘a’ market leader (As per customers and market share)

·         The best defensive strategy is to have the courage to attack yourself

o   Apple brings out its own newer better product which hurt the sales of its existing products. This may hurt sales in short term but adds huge profit for long-term

·         Strong competitive moves must be blocked in time

o   You may not always be the first one to create something new, but you should be able to adopt and adapt fast. Migraine Mountain – Tylenol (J&J) vs Datril (Bristol-Myers. Datril tried eating up Tylenol share by reducing prices which was effectively blocked by Tylenol by matching the price right at the momen hence not allowing any advantage to Datril.

Know who you are, be ready to challenge yourself and be vigilant to block competitive moves in time

Chapter 8 – Principles of Offensive Warfare

Three basic principles of offensive marketing are –

·         The main consideration is the strength of the leader’s position

o   No matter how strong is the No.2 company in an attribute but it cannot win if the leader is also strong in that attribute. Leader owns a position in the customer’s mind. Before you make your position in the customer’s mind, you must take away the leader’s position. It’s not enough for you to succeed, others must fail too.

·         Find a weakness in the leader’s strength and attach at that point

o   Weakness that grows out of strength. “Rent from Avis, our lines are shorter” finds a weakness (longer lines) in the strength (more cars given for rentals) of the leader, Hertz. Radio Advertising Bureau highlighted TV’s high expense for advertising to put across strength of Radio.

·         Launch the attack on as narrow a front as possible

o   When you attack on a narrow front (Just one product or one category), you put The Principle of Force from Chapter 2 to work. You negate the resource weakness of yours against the leader as you are only focusing on a small area with full force through local superiority.

It must however be kept in mind that Defender has always the better chance of coming victorious and hence the offensive warfare should be as meticulously planned as possible.

Know your competitor (leader) well, find a weakness in its strength, launch the attack on a narrow front with the aim to increase your marketing share while hurting leader’s

Chapter 9 – Principles of Flanking Warfare

Flanking is the most innovative way to fight a marketing ware. Three basic principles of flanking marketing are –

·         A good flanking move must be made in an uncontested area

o   The flanking move must out you in a new category in some way or other, while need not always be a new product. In case of launching a new product, segmentation helps in identifying new categories. DEC flanked IBM by launching mini computers. Ujala flanked Robin Blu by launching a liquid based indigo, hence by creating a new category*.

·         Tactical surprise ought to be an important element of the plan

o   By its nature flanking attack is a surprise attack which essentially puts the competitor in a fix with limited room to do something immediately. In case of Tylenol and Datril, the flank by Datril was not successful because Tylenol got to know about the flank attached Datril was planning, well in time.

·         The pursuit is just as critical as the attack itself

o   Once the attack has been made, it is important to quickly identify the advantage points and reinforce them, while abandon the failures. The success through flanking must be built stronger and must lead to more such attacks in future, instead of becoming an isolated one time blitzkrieg

Flanking can be achieved through various ways apart from a new product in a new category –

·         Flanking with low price – Easiest one, as the market is already there and aware of the product. Offer lower prices by cutting costs in areas where customers won’t notice

·         Flanking with high price – For specific products where higher price reflects quality or establish the self-esteem. For example, jewelry and lifestyle products*

·         Flanking with smaller size – Chip based products reaching to compact sizes everyday

·         Flanking with bigger size – Cheater’s racquet (oversized) by Prince Manufacturing

·         Flanking with distribution – Avon cosmetics was the first company to use door-to-door channel. Xiaomi used online flash-sales in India to create hype around its products*.

·         Flanking with product form – Launch of toothpaste to counter tooth powder segment

·         Flanking with lower calories – Much debated these days, products are flanking set leaders by launching products with lower calorie content while chiding the leader products

Before making a flank attack, select the category carefully taking in cognizance the leader’s thoughts and future plans. Production time helps you understand the time you may have at your hand before others in the industry copy your products.

Find an uncontested area in the market, maintain surprise element in the attack and continue the pursuit once successful with the flank attack to build on the advantage

Chapter 10 – Principles of Guerrilla Warfare

Guerrilla warfare is conducted through tactical attacks creating advantage for the smaller player to survive in the land of Giants. Three basic principles of flanking marketing are –

·         Find a segment in the market small enough to defend

o   The area could be small geographically or volume or any other aspect, which is difficult or unattractive for the larger company to attack. Considering the importance of size, the Guerrilla Company tries to fight in a small area hence having its limited resources concentrated in a small area, by being a big fish in a small pond. Beardo in Men’s beard grooming market*. Rolls Royce is a true guerrilla in the luxury automobile segment, which is a small segment and other companies including the market leader, GM, will not want to attack it in that segment due to smaller size and possible resistance.

·         No matter how successful you become, never act like a leader

o   Guerrillas should work in form of lean organizations with flat structures to give themselves the agility they need in market to react to any attack from the other competitors and more so for the guerrilla techniques of war they thrive on.

·         Be prepared to bug out at a moment’s notice

o   A guerrilla doesn’t have resources to waste on a lost cause. Be ready to abandon a post if it gets hot. Being small also helps in decision making in these scenarios as there is not much of internal disturbance when areas and actions are abandoned, unlike in case of bigger companies.

Guerrillas can be based upon –

·         Geographic Guerrillas – Attack on a limited geographic are with full concentration

·         Demographic Guerrillas – Attack on a limited demographic profile. For example, Snapchat for a particular age group

·         Industry Guerrillas – Attack on specific industries. For example, targeting a particular industry only, to sell its products or services out of expertise or synergy

·         High-end Guerrillas – Specific to big ticket items in one or more areas

Most companies fall in the Guerrilla companies and hence should undertake Guerrilla warfare for their marketing. In a simple break up, out of the 100 companies in an industry, 1 should play defense, 2 should play offense, 3 should flank and 94 should be guerrillas.

Find a small segment to defend, don’t act like a leader and be agile enough to bug out when needed

Marketing Warfare -1 Summary Ends Here.

Book Summary: Marketing Warfare-2 by Al Ries and Jack Trout

Written by Al Ries and Jack Trout in 1986, Marketing Warfare has been an international bestseller. This pair is attributed to many bestsellers including the marketing classic, Positioning. The summary is from the 2003 Tata McGraw-Hill Edition.

The book is spread across 16 chapters dealing with various marketing strategies drawing parallel with the strategies used in warfare. The authors start the book by acknowledging the role of Karl von Clausewitz, a retired Prussian general and his book, On War written in 1832.

The summary of the book has been divided into two parts –

·         Marketing Warfare -1, is the summary of the theories and concepts that are explained by the authors in the first 10 chapters

·         Marketing Warfare -2, is the summary of chapters 11 to 16 where the authors have explained the theory through real-life examples of marketing wars

* Example not in the book but has been added to give Indian perspective to the concept.

Chapter 11 – The cola war

In order to check the validity of the principles of marketing warfare the author looks at the cola industry which reflected the warfare between Atlanta based Coca Cola and New York based Pepsi.

Case: Coca Cola Executives considered the shape of the 6.5 ounce bottle as strength and got it patented. Pepsi used the flanking principle by finding the weakness in the competitors strength by launching a 12 ounce bottle and advertising heavily that the consumers can but 12 ounces of Pepsi-cola at the same one nickle for which they were buying 6.5 ounce of Coca Cola.

Coca Cola should have followed the defensive principle – To be courageous enough to attack yourself.

Since Coca Cola was a long entrenched drink (strength of Coca Cola) with more people from the middle aged generation drinking Coca Cola, Pepsi flanked Coca Cola by making its strength as its weakness by promotion its drink with “Pepsi Generation” alluding to the youth to be different than the older generation drinking Coca Cola.

Coca Cola’s best comeback to Pepsi’s attacks was its “The real thing” campaign which essentially dubbed everything else, including Pepsi, as a copy of Coca Cola.

Royal Crown, another Cola player, flanked Pepsi and Coca Cola both by bringing in Diet Rite, a low calori cola drink. Neither of the bigger players were in a position to bring in diet cola immediately. Hence, Diet Rite became the largest selling diet cola. However, the company didn’t follow the flanking rule – Pursuit is as important as attack. Instead of focusing on its hero product Diet Rite, the company divided its resourced between Diet Rite and the less successful Royal Cola, hence giving away the advantage to its rivals.

The Pepsi challenge was one of the biggest strategic move in mid 70s. This made Coca Cola commit its biggest mistake. It changed its formula to make Coca Cola sweeter as was Pepsi. This undermined its “Real Thing” position, a self-goal. This move led to a backlash among the consumers and Coca Cola had to bring back its original formula with the name “Classic Coke”.

The learning is, never try to change the perception of the consumer. So even when the taste test showed that people preferred the sweeter new coke over the Classic Coke, when it came to buying, perception was strongly biased towards Classic Coke.

Chapter 12 – The beer war

While Budweiser and Schlitz were engaged in a sea saw battle, Heineken came to the US as the first imported beer after the war. It followed the “pursuit is important as attack” strategy and continued spending lot of money on the brand building exercise in the country.

Lowenbrau became the talk of the town with its attractive bottle and advertisement that compared it with champagne. However, it should have adopted the offensive principle by finding a weakness in leader’s strength, which in this case was Heineken beer being an imported one. However, it was imported from Holland, not Germany. Holland is not known for making beer, Germany is. 

Lowenbrau could have crafted its communication around this. Once this was established, the strategy to keep the attack as narrow as possible must be adopted by not having too many positioning and stick to the one strong area.

The launch of Miller Lite was a great example of Marketing warfare on three different aspects –

•          Uncontested area – No one was talking about the light beers that time
•          Tactical surprise – Miller managed to kept this close and caught the competition by surprise
•          The pursuit – Once Miller got a hold of the light beer market, it never let go the advantage and spend huge money to maintain the position

However, Miller made a mistake. While they were promoting the Miller Lite, there was not much difference between the cans for Miller High Life and Miller Lite and with Lite’s publicity Miller High Life’s sales started falling. Two products with similar or same name should not be made available in the market at the same time.

Chapter 13 – The burger war

In 1984, McDonald’s spend a quarter of a billion dollars towards advertising. It was an undisputed leader and there was not much comeptitoin will Burger Kinf entered the scnee. Burger King came up as challenger and used the “find weakness in strength” rule. While McDonals was able to churn out more and inexpensive burgers fast, the strength has a weakness. There was no customization possible.

Burger King came up with “Have it your way” hence flanking the advantage that McDonald’s had.  Later again, Burger king flanked McDonald’s by its “Broiling not Frying” campaign which put the leader in a spot.

Another chain, Wendy’s came up with adult-size burgers targeting the adults and creating a differentiation by flanking the competition on the offering side.

Another chain that uses the rule meant for guerrilla which is “No matter how successful you are, never act like a leader”, is White Castle. It is successful in its own right by serving specific kind of burgers and not getting in to egg muffins or whoppers. They know they are successful in making burgers which are called ‘Slider’ by the loyal customers and they stick to that.

Chapter 14 – The computer war

IBM is the undisputed leader in the computer market. Digital Equipment Corporation or DEC flanked IBM by selling smaller computers while IBM sold big computers with software. IBM here committed a mistake of “Not blocking the competitive moves by a competitor”. This helped DEC thrive in the micro-computer market which IBM could not make a stronghold in.

But later, DEC made a mistake and didn’t attack itself to move from the small computers to the personal computers category and hence laid open the entry for other players in this segment which later became a huge one. This costed dearly to DEC. IBM flanked DEC this time by launching a personal computer.

However, in 1984 tried to flank IBM by launching three personal computers for different needs. This was a weak strategy because a challenger should attack on a very narrow front to gain advantage. DEC could not focus it strength on one aspect and hence lost out.

Once IBM got the market stronghold, they efficiently executed the leader’s defensive strategy of attacking itself. It continuously brought products that were better and superior to its own products hence staying ahead of the curve and not giving its competitors a chance to flank it.

Chapter 15 – Strategy and Tactics

Strategy should follow tactic. Achievement of Tactical result should be the only function of the strategy else, the strategy is faulty. Unlike work of art, strategies should not be judged on their creativity and intelligence but rather on its effectiveness at the point it meets the customer and the competition.

The tanks and artillery of marketing is advertising. One should know how and when to use it. Some of the important aspect of marketing warfare are –

•          Strategy is important to win a war even with ordinary tactics
•          Strategy directs tactics – A good strategy must lead to efficient tactics
•          Single point attack – At any given point one objective should dominate strategic plans
•          Attack and Counter-attack – A good marketing strategy anticipates the competitor’s moves and is ready to defend its own
•          Use of reserves – Be judicious on what can be used or consumed to achieve what benefits

Chapter 16 – The marketing general

Karl von Clausewitz had said that intelligent people need not make a good general. Below are the qualities a marketing general should be –

•          Flexible
•          Have mental Courage
•          Bold
•          Knowing the facts
•          Should know the rules

Strategy and timing are the Himalayas of strategy, rest everything is catskill.

BibLibBoo

Books are magical. Aren't they?

One of the greatest regrets i have is that i started reading very late. Reading a book is always a pleasant experience, isn't it?

The uncertainty of the book meeting your expectation is equally tantalizing and the pursuit is much more fun than the ending.

However, there are times when you really want to know about a book before you lay your hands on it, or to have a concise version of the book in front of you to just get a hang of it, before you decide to dedicate a portion of your life to it!

So here is an amateur attempt at review and summary of books which i have read.

I think it will be fun for me. Hope the same for you!

Cheers,
Tapish

PS: Oh yeah, BibLibBoo is nothing but a compound word made of first three letters of the words Biblio, Liber and Book, meaning 'book' in Greek, Latin and English respectively.