TO MARKET, TO MARKET!
By
In a military operation, the
objective of the master plan, to put it bluntly, is to have two soldiers ready,
willing and able to fight at a place and moment in time where the enemy has
only one.---Karl Von Clauswitz
Great
quotation! In the military this concept
is obvious. As I wrote in a previous
article, "Attack!.... UHH! No, Circle the Wagons!", this quote is a
simple restatement of the Principle of
Force, which states that in a battle the larger of two opposing forces will
prevail in any contest.
This
sounds great for a military operation, but, how does that concept apply to your
business? More specifically, what does
it mean to your marketing strategy?
There is
more than one way to strategically fight a marketing war. In fact there are four. Knowing which type of marketing warfare to
wage is the first and most important decision you have to make in developing
your strategy.
The right
type of strategy depends on your position within your industry. Knowledge of that position comes from a
situational analysis. (See my August
1992 article, "Know Thine Enemy and
Thyself")
The
situational analysis defines the relative size of the competitors in your
market. As a general rule, most markets
are composed of four sizes of companies:
a large industry leader; one or two secondary companies that are each
approximately 30% to 60% as large as the leader; a few smaller companies; and a
bunch of tiny ones.
They make
up what is known as the
The
company with the largest relative size should choose to fight defensive
warfare. Defensive warfare is not a
passive form of warfare. To be
successful, it is a diligent process of resisting the intentions of the other
companies. Success is measured by its
ability to retain its dominant share of the market.
The
secondary companies should conduct an offensive war against the leader. They have the resources to conduct an
attack. Although it is tempting to go
after the smaller competitors, the smaller companies fight hard to retain the
small shares they have. A better tactic
is to wage offensive warfare against weak points in the leader.
The
smaller companies should avoid the battles of the big boys. The closer they get to the battle, the more
likely they will get trampled. They
should launch flanking attacks into an uncontested area.
A
flanking attack hinges on the ability to create and maintain a separate category
of product that is attractive to the consumer.
This is a process called market segmentation. A flanking action requires you to identify a
segment and then occupy it.
The tiny
companies' only true course of action is guerrilla warfare. They are too small to launch an offensive
attack. They should find a segment of
the market that is small enough that they can dominate it. If they identify a segment that is too large,
they are too small to defend it. Using
the principles of guerrilla warfare, they must be prepared to abandon the
position whenever they are attacked by a competitor who commits more resources
than they can to acquire the position.
In the
American marketplace of today, the news is dominated by the big companies, but
the landscape is dominated by the small companies. From my experience of dealing with a large
variety of industries, I would venture to say that out of 100 companies, one
would be large enough to conduct defensive warfare, two would conduct offensive
warfare, five would perform flanking action and the other 92 companies would be
guerrillas.
In future articles, I will define some specific strategies
for each of the companies occupying positions in the strategic square.