e x e C u t I v e

f o r u m

MarKetING: too IMPortaNt to Be LeFt to tHe MarKetING PeoPLe

Jack Trout
eter drucker, the father of modern management, once wrote that the purpose of a business is to generate new customers, and only two functions do that: marketing and innovation. all other business functions are expenses. that piece of advice has since been ignored by business leaders, with only a few exceptions. today, when top management is surveyed, their priorities in order are finance, sales, production, management, legal, and people. Missing from the list: marketing and innovation. When one considers the trouble that many of our business icons have run into in recent years, it is not easy to surmise that druckers advice would have perhaps helped the management to avoid the problems they face today. Ironically, david Packard of Hewlett-Packard fame once observed, Marketing is too important to be left to the marketing people. But as the years rolled on, rather than learning about marketing and innovation, executives started to search for role models instead of marketing models.
34 leader to leader

tom Peters probably gave this trend a giant boost with the very successful book he co-authored, In Search of Excellence. as defined in that book, however, excellence didnt equal longevity; many of the role models offered there have since foundered. In retrospect, a better title for the book might have been In Search of Strategy. a very popular method-by-example book has been Built to Last by Jim Collins and Jerry Porras. In it, they write glowingly about Big Hairy audacious Goals that turned the likes of Boeing, Wal-Mart, General electric, and IBM into the successful giants they have become. the companies that the authors of Built to Last suggest for emulation were founded from 1812 (Citicorp) to 1945 (Wal-Mart). these firms didnt have to deal with the intense competition found in todays global economy. While there is much you can learn from their success, they had the luxury of growing up when business life was a lot simpler. as a result, these role models are not very useful for companies today.

Nothing brings this to light more than when you study what I call the tale of two Companies. Its the story of General electric versus United technologies. one has had terrible marketing. the other has had good marketing. a recent article in the New York Times (November 12, 2009) titled as G.e. Struggles, a rival Steps Up should be compulsory reading for all management people everywhere. Its the story of two companies that are sprawling industrial corporations with portfolios in aerospace, power, and infrastructure. Its the story of United technologies versus General electric. Its also a case study in marketing the right way and the wrong way. Its about what should be done to run a multiplebusiness company. and what shouldnt be done. Lets start with the shouldnt. General electric invented electricity, which is certainly a nice start. It was created out of a combination of eight firms controlling 90 percent of the market. (those were the good old monopoly days.) With that kind of start its no wonder that its leaders fell in love with their name and their logo. as the years rolled on we saw a massive amount of line extension. Ge became what people call a megabrand. It was General electric everything whether it was light bulbs, jet engines, nuclear power plants, locomotives, medical devices, or even money, as the conglomerate bet big on finance via General electric Credit. and, as you know, that bet hasnt worked out very well. Whats a General electric? Its a messy unfocused conglomerate. If youve read any of my many books or that of my former partner, al ries, youve noticed that we have always been voices crying in the wilderness about the perils of line extension. Why? Because the arrival of a specialist in a category will do enormous damage to a fuzzy, line-extended brand. My books have endless examples, so I wont go there. United technologies is the exact opposite of General electric. It has assembled a powerful portfolio of wellpositioned specialist brands that are powerhouses in their respective categories. You have Carrier, the inventor of air conditioning. You have Sikorsky, the inventor of

Whats a General Electric? Its a messy unfocused conglomerate.

helicopters. You have Pratt and Whitney jet engines, Norden electronics, and otis, the king of elevators. and rather than bet on things like mortgages and leasing, its leaders stayed close to their manufacturing knitting. Whats a United technologies? Its an industrial Procter & Gamble with big, powerful brands. How is one doing versus the other? Well, as the New York Times reported, the numbers are there to look at. Last year, United technologies returned 10 times Ges total shareholder return. Go back a decade and investors who rolled their dividends back into United technologies stock have had a 185 percent return while Ges shareholders are down 55 percent. General electric is not a pretty story. today, the conglomerates have a growing legion of competitors coming at them from every corner of the globe. technologies keep changing. the pace of change is faster. It is increasingly difficult for Ceos to digest the flood of information out there and make the right choices. So what is a Ceo to do? the trick to surviving out there is not to stare at the balance sheet but simply to know where you must go to find success in a market. thats because no one can follow you (the board, your managers, your employees) if you dont know where youre headed.

Finding Your Way

How do you find the proper direction? to become a great strategist, you have to put your mind in the mud
summer 2010 35

Step 3: Have the credentials.

Truth will not win out unless it has some help along the way.
of the marketplace. You have to find your inspiration down at the front, in the ebb and flow of the great marketing battles taking place in the mind of the prospect. Here is a four-step process to pursue:

there are many ways to set your company or product apart. the trick is to find that difference and then use it to set up a benefit for your customer. to build a logical argument for your difference, you must have the credentials to support your differentiating idea, to make it real and believable. If you have a product difference, then you should be able to demonstrate that difference. the demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak. Claims of difference without proof are really just claims. For example, a wide-track Pontiac must be wider than other cars. British air as the worlds favorite airline should fly more people than any other airline. Mercedes should have superb engineering. You cant differentiate with smoke and mirrors. Consumers are skeptical. theyre thinking, oh yeah, Mr. advertiser? Prove it! You must be able to support your argument. Its not exactly like being in a court of law. Its more like being in the court of public opinion.

Step 1: Make sense in the context.

arguments are never made in a vacuum. there are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition. What you really want to get is a quick snapshot of the perceptions, not deep thoughts. What youre after are your perceived strengths and weaknesses, and those of your competitors, as they exist in the minds of the target group of customers.

Step 4: Communicate your difference.

Just as you cant keep your light under a basket, you cant keep your difference under wraps. If you build a differentiated product, the world will not automatically beat a path to your door. Better products dont win. Better perceptions tend to be the winners. truth will not win out unless it has some help along the way.

Step 2: Find the differentiating idea.

to be different is to be not the same. to be unique is to be one of a kind. So youre looking for something that separates you from your competitors. the secret to this is understanding that your differentness does not have to be product related. Consider a horse. Yes, horses are quickly differentiated by their type. there are racehorses, jumpers, ranch horses, wild horses, and on and on. But you can look at racehorses and differentiate them by breeding, by performance, by stable, by trainer, and on and on.

Know where you must go to find success in a market.

36

leader to leader

Giving up something can be good for your business.

every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your Web site. Your sales presentations. theres a lot of hogwash in corporate america about employee motivation brought to you by the peak performance crowd, along with their expensive pep rallies. the folks who report to you dont need mystical answers on How do I unlock my true potential? the question they need answered is, What makes this company different?

Target market sacrifice is staying focused on one target segment in a category, which enables you to become the preferred product in that segment. deWalt for professional tools; Pepsi for the younger generation; Corvette for the generation that wants to be young. If you chase another segment, chances are youll chase away your original customers. So there it is in simple terms. Branding is putting a brand in the consumers mind along with its point of difference. the trick is to stay focused on what the brand stands for and not get greedy with it. Its apparent that under Jack Welch General electric was driven by greed or the desire to dazzle Wall Street with financial performance. United technologies was focused on marketing its powerful brands. and the best marketing seems to have won.

The Benefits of Sacrifice

all this leads to the final question, So how do you avoid losing focus and undermining your brand? the answer is simple: Sacrifice. Giving up something can be good for your business. When you study categories over a long period of time, you can see that adding more can weaken growth, not help it. the more you add, the more you risk undermining your basic differentiating idea. Sacrifice comes in three forms. Product sacrifice is staying focused on one kind or category of product. duracell in alkaline batteries, KFC in chicken, Southwest airlines in short-haul air travel. Its the opposite of trying to be everything for everybody. Attribute sacrifice is staying focused on one kind of product attribute. Nordstrom on service. dell on selling direct; Papa Johns Pizza on better ingredients. Your product might offer more than one attribute, but your message should be focused on the one you want to preempt. Its keeping a narrow focus on your story.

Jack Trout is president of Trout & Partners, a worldwide marketing firm with headquarters in Connecticut and offices in 13 countries. With Al Ries he coauthored the marketing classic Positioning. Visit Trout & Partners at www.troutand partners.com. This article is adapted from Trouts latest book, Repositioning: Marketing in an Era of Competition, Change, and Crisis.

summer 2010

37

Copyright of Leader to Leader is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.