Being first matters more than being better.
Just ask Coca-Cola. Better yet, ask Pepsi.
In 2016 the internet is filled to brimming
with white papers and ebooks on how to create an optimal landing page, set up
an inbound marketing funnel, map out an email nurturing campaign, etc.
But we don’t often hear clients asking about
the basics of
marketing. It’s almost as if, in this era of Internet specialization, marketing
has become a series of systems rather than a single conceptual framework.
So, here’s the billion-dollar question: Does
marketing have “rules” that are true whether your audience is online or off?
Over the next few decades, marketing will
evolve in a dramatic fashion; big data is already changing everything. The
Internet of Everything will bring even more variables into the mix. And virtual
reality will change everything yet again.
But, no matter what happens, it’s likely that
the following five rules of marketing will never
change because they are firmly grounded in consumer psychology. And they have
implications for business strategy, product development and, especially,
growth:
1. Being first matters more than
being better.
Whenever a company is “first” in a new
category, as Coke was with carbonated soft drinks, the impression it
makes lasts for generations.
Coca-Cola was founded in 1892. In the 124
years since, countless rival brands have come and gone. Only Pepsi (founded in
1898, only six years after Coke) remains a real competitor. Yet, in 2015, Coke
owned 42.7 percent of the U.S. market for soft drinks, while Pepsi owned
only 31.1 percent.
In other words, that six-year difference in
being “first” in a market still amounts to an 11.6 percent advantage 124
years later. This is true despite the fact that Pepsi actually wins in taste
tests.
Apparently, first impressions last much
longer than you think.
2. If you can’t be first in a
category, create a new one.
In just about every new category that’s ever
been invented, there’s a company that’s first, and there are countless
imitators. But, as with Coke and Pepsi, decades-long competitions eventually
normalize into a two-company race.
That happened in the personal computing
category, with Hewlett-Packard and Dell (28.1 percent U.S. market share
versus. 23.9 precent). And it happened in the automobile industry, with GM and
Ford (17.4 percent vs. 15.3 percent). If you’re third, fourth or
fifth in any of these categories -- good luck.
But is it possible to not be
first or second in a category and still win? Yes, if you create a new category
entirely. You can do that either by specializing in the existing category or
opening a new geographic market.
For example, Apple knew that it wouldn’t be
able to significantly penetrate the worldwide notebook category dominated by HP
and Lenovo (20.7 percent versus 20 percent) because it entered too late.
So, in 2012, it created a new, specialized notebook category: tablets. Today,
Apple is first worldwide in tablets, with 29.6 percent of the market.
3. Perceptions matter more than
products.
It’s human nature to believe that we can
improve on something that’s already on the market by creating a better product
in an existing category. That’s why so many new startups tout a specific
feature that distinguishes them from the trendsetters. These startups usually
disappear.
Consumers probably don't care that you’ve
made a better product. They won’t notice, and you can’t convince them. That’s
why Pepsi beats Coke in taste tests and it doesn’t matter. Quite frankly, if
you’re not first, you’re probably worse in the consumer’s mind.
But, as long as you understand the law of
perceptions, you can work it in your favor even if you aren’t first.
For example, Apple wasn’t first in personal computers,
digital music players or even touch-screen smartphones. Yet it’s
revolutionized each one of those categories because the perception of value is
more important than the facts.
4. When you own a word, you own a
feeling.
Remember all those TV and radio jingles you
heard in the '80s and '90s? McDonald’s has more jingles and slogans than just
about any company on the planet, which is why you don’t remember most of them.
But Folger’s has kept the same slogan (and jingle) since 1908.
Yup, it’s the one you’re thinking of right
now. Why does this matter? Because when you own a word, a phrase, or a
jingle, you effectively own real estate in your consumer’s mind. You own an
invoked feeling, which is priceless.
Nike’s “Just do it” slogan is a great example
of a brand owning a feeling. Nike’s been running “Just do it” commercials and
ads since 1988. Today, when people think of the brand, they think of
lacing up their sneakers and just doing it -- whether that means playing
pickup basketball or buying an expensive pair of kicks.
It’s no surprise, then, that Nike has managed
to surge past former sneaker market leader Adidas. Today, Nike owns 27.2
percent of the global footwear market while Adidas owns just
8.7 percent of the U.S. market.
What’s the Adidas slogan, again?
5. Competing at everything often
means winning at nothing.
Following the first four rules of marketing
can help you become successful. But the fifth rule will help you stay on top.
What happens whenever a company reaches a
certain size? It goes public. And what happens then? Shareholders want it to
keep increasing profits (often unrealistically). Inevitably, the company’s
executives arrive at the same conclusion: The only way to satisfy shareholders
is to extend the brand and create a new line of products.
While this may work in the short run and
skyrocket profits, it almost always leads to the company’s diminishment. That
happened when IBM decided to extend its line beyond mainframe computers. It
also happened when GM decided to make all its cars look the same. Foreign
automakers like Toyota swooped in for the kill.
Which brings up another observation: Plenty
of successful companies are still successful because of their “first” product
or service, yet they continue to brand everything else under the same name.
Microsoft has a huge software brand but
is only a significant market leader in its first offering: operating systems.
As a brand name, Kraft isn’t the market leader of anything anymore despite
everything it sells. Yet it leads the cream cheese market because it sells that
product under a different label: Philadelphia.
Whenever you try to bucket too many products,
services or ideas under the same brand name, consumers just get confused
and the brand name loses value. People will always associate the name with the
product, perception or feeling that first made it famous. That’s why you’d
be better off branding each new product under a different name, instead.
Can these marketing laws ever be
broken?
Of course they can! As in science, laws are
true only until someone finds a significant exception. But they still matter to
businesses large and small because they’re the best we’ve come up with, given
our present observations. For over 100 years, these laws of marketing have held
true.
So ask yourself:
•
Are you “first” in your
category, or should you create a new category?
•
Do you own a word,
feeling or perception in your consumer’s mind?
•
Are you overextending your
brand or staying focused on your niche?
These are questions all business owners
should be asking themselves far more often. Knowing the answers will save them
a lot of energy, time and money.
Written By: Han-Gwon Lung
Credit: Entrepreneur.com
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