My personal summary of the book, “The 22 Immutable Laws of Marketing,” by Al Ries & Jack Trout
Over the years I’ve read so many books on marketing. Many of them are good, but trendy. They are the flavor of the month. But this book is timeless. I read it early in my career and have never found anything close to it. It has strongly influenced my work over the years and this is my version of a book report or Cliffs Notes. I hope it will inspire you to get the book and read it for yourself.
1. The Law of Leadership
It’s better to be first than it is to be better.
Most people believe the job of marketing is to convince consumers that you have a better product or service. Not true. The basic job of marketing is creating a category you can be first in. It’s easier to get into the mind first than to convince someone you have a better product than the one that did get there first.
For example, ask yourself who was the first person to fly the Atlantic Ocean solo (Charles Lindbergh). Now, what’s the name of the second person to do it? No one remembers. It was Bert Hinkler. He was a better pilot, flew faster, and consumed less fuel. He was the superior pilot in every way, yet no one has ever heard of him.
Unfortunately, most companies take the Bert Hinkler approach to marketing. They wait until the market develops and jump in with a “better” product. In today’s competitive environment, a me-to product or service has little hope of becoming the leader. The leading brand in any category is almost always the first brand into the prospect’s mind: Hertz in rent-a-cars, Coca-Cola in cola. Jeep was the first four-wheel-drive off-road vehicle, Gillette was the first safety razor, and Tide was the first laundry detergent. All are leading brands.
In fact, many first brands maintain their leadership because the brand name becomes the generic name:
- We make Xerox copies, regardless of the brand of the machine.
- We ask for a Kleenex, no matter what name is on the box.
- Do you ask for cellophane tape or Scotch tape?
- What about Band-Aid, Fiberglas, Formica, Jello, Krazy Glue, Q-tips, Saran Wrap, and Velcro? All leading brands that were the first in their category.
The better-product strategy rarely creates a leader. The secret of success is getting into the prospect’s mind first.
2. The Law of the Category
If you can’t be first in a category, set up a new category you can be first in.
If you didn’t know who was the second person to fly the Atlantic Ocean solo, you may think you won’t know the third person to do so, but you do. Amelia Earhart. But Amelia isn’t known as the third person to fly the Atlantic Ocean solo, she’s known as the first woman to do so.
If you didn’t get into the prospect’s mind first, find a new category you can be first in. When launching a new product or service the first question isn’t, “How is it better than the competition?” But, “What category is it first in?”
Charles Schwab didn’t open a better brokerage firm, he opened the first discount broker.
Why is this important? Everyone talks about why their brand is better. Consumers are on the defensive. But everyone has an open mind when it comes to categories. We are interested in what’s new.
Therefore, don’t promote the brand. Promote the category.
3. The Law of the Mind
It’s better to be first in the mind than to be first in the marketplace.
The world’s first personal computer was the MITS Altair 880. Du Mont invented the first commercial television set. Duryea introduced the first automobile. Hurley introduced the first washing machine. All are gone.
Does this disprove the law of leadership? No, but the law of the mind modifies it. Being first in the mind is everything in marketing. Being first in the marketplace is important only to the extent that it allows you to get in the mind first. If marketing is a battle of perception, not product, then the mind takes precedence over the marketplace.
The conventional solution to the problem is money. That is, the resources to design and build product or service organizations plus the resources to hold press conferences, attend trade shows, and run advertising campaigns. This gives rise to the perception that the answer to all marketing questions is the same: money. Not true. More money is wasted on marketing than on any other human activity (except government activity, of course).
You can’t change a mind once a mind is made up. The single most wasteful thing you can do in marketing is try to change a mind.
Xerox was the first in copies and then tried to get into the computer business. Twenty-five years and $2 billion later, Xerox is nowhere in computers.
Apple got off the computer ground with $91,000 contributed by Mike Markkula. In the early days, five personal computers were in position on the launching pad: Apple II, Commodore Pet, ISMAI 8080, MITS Altair 8800, and Radio Shack TRS-80. In the battle of the mind ask yourself, which name is the simplest and easiest to remember?
4. The Law of Perception
Marketing is not a battle of products or services, it’s a battle of perceptions.
Many people think the best product will win. It’s an illusion.
Marketing people are preoccupied with doing research and getting the facts. They analyze the situation to make sure truth is on their side. Then they sail confidently into the marketing arena, secure in the knowledge they have the best product and that ultimately the best product will win.
It’s an illusion. There are no best products. All that exists in the world of marketing are perceptions in the minds of the consumer.
A perception that exists in the mind is often interpreted as a universal truth. People are seldom, if ever, wrong. At least in their own minds.
The three largest-selling Japanese imported cars in America are Honda, Toyota, and Nissan. Most people think the battle between the three brands is based on quality, styling, horsepower, and price. Not true. It’s what people think about Honda, Toyota, and Nissan that determines which brand will win. The same cars are also sold in Japan. If marketing were a battle of products, you would think the sales order would hold true for both countries. But in Japan, Honda is nowhere near the leader. There, Toyota sells more than four times as many automobiles in Japan as Honda does.
If you told friends in New York you bought a Honda, they might ask you, “What kind of car did you get? A Civic? An Accord? A Prelude?” If you told friends in Tokyo you bought a Honda, they might ask you, “What kind of motorcycle did you buy?” In Japan, Honda got into consumers’ minds as a manufacturer of motorcycles, and apparently, most people don’t want to buy a car from a motorcycle company.
The fact is, the products are the same in both countries, but the perception in customers’ minds are different.
5. The Law of Focus
The most powerful concept in marketing is owning a word in the prospect’s mind.
A company can become incredibly successful if it can find a way to own a word in the mind of the prospect. Not a complicated or invented word. The simplest words are best.
It’s the ultimate marketing sacrifice. Narrow your focus to a single word or concept that you can own in the customer’s mind. For example, if you say the words copier, chocolate bar, and cola, the four most associated words are Xerox, Hershey’s, and Coke.
If you’re not a leader, then your word has to have a narrow focus. Even more important, however, your word has to be “available” in your category. No one else can have a lock on it. The most effective words are simple and benefit-oriented. No matter how complicated the product, no matter how complicated the needs of the market, it’s always better to focus on one word or benefit rather than two or three or four.
The essence of marketing is narrowing the focus. You become stronger when you reduce the scope of your operations. You can’t stand for something if you chase after everything.
6. The Law of Exclusivity
Two companies cannot own the same word in the prospect’s mind.
When a competitor owns a word or position in the prospect’s mind, it is futile to attempt to own the same word.
Despite the disaster stories, many companies continue to violate the law of exclusivity. You can’t change people’s minds once they are made up. What often leads marketers down this booby-trapped lane is that wonderful stuff called research. Armies of researchers are employed, focus groups conducted, questionnaires tabulated—and what comes back in a three-pound report is a wish list of attributes that users want from a product or service. So if that’s what people want, that’s what we should give them.
Many people have paid the price for violating the law of exclusivity.
7. The Law of the Ladder
The strategy to use depends on which rung you occupy on the ladder.
While being first in the prospect’s mind ought to be your primary marketing objective, the battle isn’t lost if you fail. There are strategies to use for No. 2 and No. 3 brands.
For each category, there is a product ladder in the mind. On each rung is a brand name. Your marketing strategy should depend on how soon you got into the mind and consequently which rung of the ladder you occupy.
Marketing people often talk about the “three leading brands” in a category as if it were a battle of equals. It almost never is. The leader inevitably dominates the No. 2 brand and the No. 2 brand inevitably smothers No. 3.
For each category, there is a product ladder in the mind. On each rung is a brand name. Your marketing strategy should depend on how soon you got into the mind and consequently which rung of the ladder you occupy.
8. The Law of Duality
In the long run, every market becomes a two-horse race.
Early on, a new category is a ladder of many rungs. Gradually, the ladder becomes a two-rung affair.
In mouthwash, it’s Listerine and Scope. In hamburgers, it’s McDonald’s and Burger King. In sneakers, it’s Nike and Reebok. In toothpaste, it’s Crest and Colgate. When you take the long view of marketing, you find the battle usually winds up as a titanic struggle between two major players—usually the old reliable brand and the upstart.
Back in 1969, there were three major brands of a certain product. The leader had about 60 percent of the market, the No. 2 brand had a 25 percent share of the market, and the No. 3 brand had a 6 percent share. The law of duality suggests that these market shares are unstable. Furthermore, the law predicts that the leader will lose market share and the No. 2 will gain.
Twenty-two years later, the leader dropped to 45 percent of the market. The No. 2 brand has 40 percent, and No. 3 has 3 percent. The products are Coco-Cola, Pepsi-Cola, and Royal Crown cola, respectively, but the principles apply to brands everywhere. The brand in the most dangerous position and that suffered the most was Crown Royal. In a maturing industry, third place is a difficult position to be in.
Successful marketers concentrate on the top two rungs. When you’re No. 3, it’s better to carve out a profitable niche category (The Law of Focus).
9. The Law of the Opposite
If you’re shooting for second place, your strategy is determined by the leader.
In strength there is weakness. Wherever the leader is strong, there is an opportunity for a would-be No. 2 to turn the tables.
If you want to establish a firm foothold on the second rung of the ladder, study the firm above you. Where is it strong? And how do you turn that strength into a weakness? You must discover the essence of the ladder and then present the prospect with the opposite. In other words, don’t try to be better, try to be different.
Coca-Cola is a 100-year-old product. It is the old, established brand. However, using the law of the opposite, Pepsi-Cola reversed the essence of Coca-Cola to become the choice of a new generation: the Pepsi Generation.
When you look at consumers in a given category, there seem to be two kinds of people. There are those who want to buy from the leader and there are those who don’t want to buy from the leader. A potential No. 2 has to appeal to the latter group. By positioning yourself against the leader, you take business away from all the other alternatives to No. 1.
Too many potential No. 2 brands try to emulate the leader. This usually is an error. You must present yourself as the alternative. No. 2 can’t afford to be timid. When you give up focusing on No. 1, you make yourself vulnerable not only to the leader but to the rest of the pack.
10. The Law of Division
Over time, a category will divide and become two or more categories.
Like an amoeba dividing in a petri dish, the marketing arena can be viewed as an ever-expanding sea of categories. A category starts off as a single entity (computers, for example). But over time, the category breaks up into other segments (mainframes, minicomputers, workstations, personal computers, laptops, notebooks, tablets, etc.).
Each segment is a separate, distinct entity. Each segment has its own reason for existence. And each segment has its own leader, which is rarely the same leader as the leader of the original category.
The way for the leader to maintain its dominance is to address each emerging category with a different brand name. Companies make a mistake when they try to take a well-known brand name in one category and use the same brand name in another category.
11. The Law of Perspective
Marketing effects take place over an extended period of time.
If you visit almost any bar on a Friday night, you’d swear that alcohol was a stimulant. Chemically, alcohol is a strong depressant. But in the short term, by depressing a person’s inhibitions, alcohol acts like a stimulant.
Many marketing moves exhibit the same phenomenon. The long-term effects are often the exact opposite of the short-term effects. Does a sale increase a company’s business or decrease it? Obviously, in the short term, a sale increases business. But there’s more and more evidence to show that sales decrease business in the long term by educating customers not to buy at “regular” prices. After the sale is over, customers tend to avoid a store with a “sale” reputation.
The same is true with line extension. In the short term, line extension invariably increases sales. The beer industry clearly illustrates this effect. In the early seventies, Miller High Life was barreling along with sales increases averaging 27% a year. Then Miller got greedy and in 1974 introduced Miller Lite. In the short term the two Millers could coexist: the blue-collar beer (High Life) and the yuppie beer (Lite). For the next five years, Miller High Life’s annual sales almost tripled. But the long-term effects were grim. From a high 23.6 million barrels in 1979, Miller High Life declined 13 years in a row to just 5.8 million barrels in 1991. Once started, the decline is almost impossible to stop.
12. The Law of Line Extension
There’s an irresistible pressure to extend the equity of the brand.
By far the most violated law is the law of line extension. One day a company is tightly focused on a single product that is highly profitable. The next day the same company is spread thin over many products and is losing money.
Take IBM. Years ago when IBM was focused on mainframe computers, the company made a ton of money. Today IBM is into everything and barely breaking even. In addition to selling mainframe computers, IBM has marketed personal computers, pen computers, workstations, midrange computers, software, networks, telephones, you name it.
When a company becomes incredibly successful, it invariably plants the seeds for its future problems. When you try to be all things to all people, you wind up in trouble. Instead of being strong somewhere, you become weak everywhere.
In a narrow sense, line extension involves taking the brand name of a successful product (e.g., A-1 steak sauce) and putting it on a new product you plan to introduce (e.g., A-1 poultry sauce). It sounds so logical. A-1 is a great steak sauce that gets the dominant share of the steak business. But people are switching from beef to chicken, so let’s introduce a poultry sauce. And what better name to use than A-1. That way people will know the poultry sauce come from the makers of that great steak sauce, A-1. But marketing is a battle of perception, not product. In the mind, A-1 is not the brand name, but the steak sauce itself. “Would you pass me the A-1?” Asks the diner. Nobody replies: “A-1 what?”
In spite of an $18 million dollar advertising budget, the A-1 poultry launch was a dismal failure. In spite of evidence that line extensions don’t work, companies continue to pump them out. Here are some examples:
- Ivory soap. Ivory shampoo?
- Life Savers candy. Life Savers gum?
- Bic lighters. Bic pantyhose?
- Chanel. Chanel for men?
- Tanqueray gin. Tanqueray vodka?
- Coors beer. Coors water?
- Heinz ketchup. Heinz baby food?
- USA Today. USA Today on TV?
- Adidas running shoes. Adidas cologne?
- Pierre Cardin clothing. Pierre Cardin wine?
- Levi’s blue jeans. Levi’s shoes?
More is less. The more products, the more markets, the more alliances a company makes, the less money it makes.
Less is more. If you want to be successful today, you have to narrow the focus in order to build a position in the prospect’s mind.
For many companies, line extension is the easy way out. Launching a new brand requires not only money but also an idea or concept. For a new brand to succeed, it ought to be first in a new category (The Law of Leadership). Or the new brand ought to be positioned as an alternative to the leader (The Law of the Opposite). Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable line extension approach.
The antidote for line extension is corporate courage, a commodity in short supply.
13. The Law of Sacrifice
You have to give up something in order to get something.
The law of sacrifice is the opposite of the law of line extension. If you want to be successful today, you should give something up. There are three things to sacrifice: product line, target market, and constant change.
The world of business is populated by big, highly diversified generalists and small, narrowly focused specialists. If line extension and diversification were effective marketing strategies, you’d expect to see the generalists riding high. But they’re not. Most of them are in trouble.
The generalist is weak. Take Kraft, for example. Everybody thinks Kraft is a strong brand name. In jellies and jams, Kraft has 9% of the market. But Smucker’s has 35%. Kraft means everything, but Smucker’s only makes jelly and jam. In mayonnaise, Kraft has 18% of the market. But Hellmann’s has 42%.
Target market extension is another temptation. Where is it written that you have to appeal to everybody? There seems to be an almost religious belief that the wider net catches more customers, in spite of many examples to the contrary.
Finally, the third sacrifice: constant change. Where is it written that you have to change your strategy every year at budget review time? White Castle has never changed its position. A White Castle today not only looks the same as a White Castle did 60 years ago, it also sells the same “frozen sliders” at unbelievably low prices. Would you believe the average White Castle does more than $1 million a year in revenues? (That’s more than Burger King and not too far behind McDonald’s).
Good things come to those who sacrifice.
14. The Law of Attributes
For every attribute, there is an opposite, effective attribute.
As the Law of Exclusivity shows, you can’t own the same word or position that your competitor owns. You must find your own word to own. You must seek out another attribute. Too often a company attempts to emulate the leader. The rationale is that they must know what they’re doing. Not good thinking.
It’s much better to search for an opposite attribute that will allow you to play off against the leader. The key word here is opposite—similar won’t do.
Since Crest owned cavities, other toothpastes avoided cavities and jumped on other attributes like taste, whitening, and breath protection. Marketing is a battle of ideas. So if you are to succeed, you must have an idea or attribute of your own to focus your efforts around. Without one, you had better have a low price. A very low price.
15. The Law of Candor
When you admit a negative, the prospect will give you a positive.
Though it goes against human nature to admit a problem, one of the most effective ways to get into a prospect’s mind is to first admit a negative and then twist it into a positive.
“Avis is only No. 2 in rent-a-cars.”
“With a name like Smucker’s, it has to be good.”
“The 1970 VW will stay ugly longer.”
“Joy. The most expensive perfume in the world.”
Candor is very disarming. Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best. Especially in advertising.
Scope entered the mouthwash market with a “good-tasting” mouthwash, thus exploiting Listerine’s truly terrible taste. Listerine couldn’t tell people that its taste wasn’t all that bad. Instead, Listerine brilliantly invoked the law of candor: “The taste you hate twice a day.” Not only did the company admit the product tasted bad, it admitted that people actually hated it. (Now that’s honesty.) The set up the selling idea that Listerine kills a lot of germs. The prospect figured that anything that tastes like disinfectant must indeed be a germ killer. A crisis passed with the help of a heavy dose of candor.
Honesty is the best policy.
16. The Law of Singularity
In each situation, only one move will produce substantial results.
Many marketing people see success as the sum total of a lot of small efforts beautifully executed. They think they can pick and choose from a number of different strategies and still be successful as long as they put enough effort into the program.
Whether you try hard or try easy, the differences are marginal. History teaches that the only thing that works in marketing is the single, bold stroke. Furthermore, in any given situation there is only one move that will produce substantial results. Finding one is difficult. Finding more than one is usually impossible.
To find that singular idea or concept, marketing managers have to know what’s working and what isn’t. They have to be involved. Because of the high cost of mistakes, management can’t afford to delegate important marketing decisions. When the financial people take over, the marketing programs collapse. Their interest is in the numbers, not the brand.
It’s hard to find that single move if you’re hanging around headquarters and not involved in the process.
17. The Law of Unpredictability
Unless you write your competitor’s plans, you can’t predict the future.
Implicit in most marketing plans is an assumption about the future. Yet marketing plans based on what will happen in the future are usually wrong.
This often brings up the debate about long-term vs. short-term planning. Most of corporate America’s problems are not related to short-term marketing thinking. The problem is short-term financial thinking. Most companies live from quarterly report to quarterly report. That’s a recipe for problems. Companies that live by the numbers, die by the numbers. When you chase the numbers, you make decisions that erode and compromise the brand. In doing so you weaken the company.
Good short-term planning is coming up with that angle or word that differentiates your product or company. Then you set up a coherent long-term marketing direction that builds a program to maximize that idea or angle. It’s not a long-term plan, it’s a long-term direction.
No one can predict the future with any degree of certainty. Nor should marketing plans try to.
18. The Law of Success
Success often leads to arrogance, and arrogance to failure.
Ego is the enemy of successful marketing. Objectivity is what’s needed.
When people become successful, they tend to become less objective. They often substitute their own judgment for what the market wants.
Success is often the fatal element behind the rash of line extensions. When a brand is successful, the company assumes the name is the primary reason for the brand’s success. So they promptly look for other products to plaster the name on. Actually, it’s the opposite. The name didn’t make the brand famous. The brand got famous because you made the right marketing moves. In other words, the steps you took were in tune with the fundamental laws of marketing. You got into the mind first. You narrowed the focus. You preempted a powerful attribute.
Actually, ego is helpful. It can be an effective driving force in building a business. What hurts is injecting your ego into the marketing process. Brilliant marketers have the ability to think like a prospect thinks. They put themselves in the shoes of their customers. They don’t impose their own view of the world on the situation. (Keep in mind that the world is all perception anyway, and the only thing that counts in marketing is the customer’s perception.)
Like kings, chief executives rarely get honest opinions from their ministers. So how do you get the bad news as well as the good? Especially when the CEO’s time is taken up with too many unimportant activities.
Marketing is too important to be turned over to an underling. If you delegate anything, you should delegate the chairmanship of the next fund-raising drive (The vice president of the United States, not the president, attends the state funerals.) The next thing to cut back on are the meetings. Instead of talking things over, walk out and see for yourself. As Gorbachev told Reagan, “It is better to see once than to hear a hundred times.”
Small companies are mentally closer to the front than big companies. They haven’t been tainted by the law of success.
19. The Law of Failure
Failure is to be expected and accepted.
Too many companies try to fix things rather than drop things.
Admitting a mistake and not doing anything about it is bad for your career. A better strategy is to recognize failure early and cut your losses.
Marketing decisions are often made first with the decision maker’s career in mind and second with the impact on the competition or the enemy in mind. There is a built-in conflict between the personal and the corporate agenda. This leads to a failure to take risks. (It’s had to be first in a new category without sticking your neck out.) When the senior executive has a high salary and a short time to retirement, a bold move is highly unlikely. Even junior executives often make “safe” decisions so as to not disrupt their progress up the corporate ladder. Nobody has ever been fired for a bold move they didn’t make.
In some American companies, nothing gets done unless it benefits the personal agenda of someone in top management. This severely limits the potential marketing moves a company can make. An idea gets rejected not because it isn’t fundamentally sound but because no one in top management will personally benefit from its success.
If a company is going to operate in an ideal way, it will take teamwork, brand loyalty, and a self-sacrificing leader.
20. The Law of Hype
The situation is often the opposite of the way it appears in the press.
When things are going well, a company doesn’t need the hype. When you need the hype, it usually means you’re in trouble.
No soft drink has received more hype than New Coke, introduced in 1985. By one estimate, New Coke received more than $1 billion worth of free publicity. Add to that the hundreds of millions of dollars spent to launch the brand, and New Coke should have been the world’s most successful product. It didn’t happen. Less than 60 days after the launch, Coca-Cola was forced to come back with the original formula, now called Coca-Cola Classic. Classic outsold New about 15 to 1. New Coke was eventually discontinued in 2002.
History is filled with marketing failures that were successful in the press. Hype is largely a game of predictions, which violates the law of unpredictability. No one can predict the future, not even a sophisticated reporter for the Wall Street Journal.
For the most part, hype is hype. Real revolutions don’t arrive at high noon with marching bands and coverage on the 6:00 evening news. Real revolutions arrive unannounced in the middle of the night and kind of sneak up on you.
21. The Law of Acceleration
Successful programs are not built on fads, they’re built on trends.
A fad is a wave in the ocean, and a trend is the tide. A fad gets a lot of hype, and a trend gets very little.
Like a wave, a fad is very visible, but goes up and down in a big hurry. Like the tide, a trend is almost invisible, but it’s very powerful over the long term.
A fad is a short-term phenomenon that might be profitable, but a fad doesn’t last long enough to do a company much good. Furthermore, a company often tends to gear up as if a fad were a trend. As a result, the company is often stuck with a lot of staff, expensive manufacturing facilities, and distribution networks. When a fad disappears, a company often goes into a deep financial shock.
If you are faced with a rapidly rising business, with all the characteristics of a fad, the best thing you can do is to dampen the fad. By dampening the fad, you stretch the fad out and it becomes more like a trend. You see this in the toy business. Some owners of hot toys want to put their hot toy names on everything. The result is that it becomes an enormous fad that is bound to collapse. When everybody has a Ninja turtle, nobody wants one anymore.
Forget fads, And when they appear, try to dampen them. One way to maintain a long-term demand for your product or service is to never totally satisfy the demand.
But the best, most profitable thing to ride in marketing is a long-term trend.
22. The Law of Resources
Without adequate funding an idea won’t get off the ground.
If you have a good idea and think that all you need is a little marketing help, this law will be a dose of cold water.
Even the best idea in the world won’t go very far without the money to get it off the ground. Inventors, entrepreneurs, and assorted idea generators seem to think that all their good ideas need is professional marketing help.
Nothing could be further from the truth. Marketing is a game fought in the mind of the prospect. You need money to get into the mind. And you need money to stay in the mind once you get there. You’ll get further with a mediocre idea and a million dollars than with a great idea alone.
Some entrepreneurs see advertising as the solution to the problem of getting into prospect’s minds. Advertising is expensive. It cost $9,000 a minute to fight World War II. It cost $22,000 a minute to fight the Vietnam War. A 30-second commercial on the NFL Super Bowl will cost you $7 million.
An idea without money is worthless. Competition is fierce.
Here’s the bottom line if you are a small company. First get the idea, then go get the money to exploit it.
What about rich, larger companies? Spend enough. You can’t save your way to success.
