ATTACK!...UHH! NO, CIRCLE THE WAGONS!
By
Would feel
confident hearing a general say this in the middle of a heated battle? Does your business market strategy convey the
same level of logic and decisiveness? Do
you know anything about military strategy?
If you are the only
supplier to a market segment and the barriers for entry by another company are
formidable, I offer my congratulations.
You can stop reading here. The
rest of you, may continue.
The fundamentals of
modern marketing strategies, surprisingly enough, emanate from Sun Tzu, a
Chinese general of 2,500 years ago, and from Karl Von Clausewitz, a Prussian
general of the early 1800's. It took us
modern thinkers a long time to understand that their teachings applied as much
to business competition as to military warfare.
Marketing, as we
know it today, evolved from the 1920's.
Business was "production oriented." Henry Ford popularized the production line
concept during the period where "You can have any color you want, as long
as it's Black." Almost overnight,
production capacities exceeded demand.
Businesses
discovered advertising. Advertising
experts of the time advised that mass advertising would create the mass demand
that made mass production profitable.
After World War II,
companies recognized that customers had their own thoughts on what they
needed. Companies became
"customer-oriented." The
experts of this era were those involved in marketing research.
Today, all
companies are customer oriented. Marketing research and advertising are still
necessary weapons for your arsenal.
However, knowing what your customer wants isn't enough, if you have a
dozen other companies knowing the same thing.
The demise of
American Motors was not due to lack of knowledge about the customers needs.
American Motor's problem was General Motors, Ford, Chrysler and all of the
imports.
To survive in
today's competitive market place, you must "competitor
oriented." You must know your
competitor's and your own strengths and weaknesses, i.e. intelligence
gathering. Knowing this will allow you to
launch a marketing attack against their weak points.
Whether you like it
or not, your competitors are your "enemies." You will have to learn how to attack and
flank their positions, how to defend your own positions and when to wage
guerrilla warfare.
Sun Tzu and von
Clausewitz, each in his own way, teach us the importance of two fundamentals:
The PRINCIPLE OF FORCE is a simple
recognition that the larger of two opposing forces will prevail in any
contest. This is the most fundamental
principle of warfare. Big fish eat
little fish. Big armies beat little
armies. In a head-on collision, a
If this principle
is true and you are a smaller company, why don't you just close up shop and run
for the hills? You'll never win.
Aha! There is still hope. If you think about the principle, you come to
the realization that, if you pick your battles, you only fight when you have
gathered a superior force at a strategic point.
One of the keys is to find a weaknesses in the
other side's strength and attack at that point.
Recognition of this
principle can lead to different strategies.
General Schwatzkopf didn't commit his land
troops in the Gulf war. until he had amassed a larger
army. He then attacked the Iraqi defense
at specific points.
The North
Vietnamese in the Vietnam War picked a successful strategy of guerrilla warfare
to combat the superior strength of the
Avis attacked the
strength of Hertz by advertising, "Rent from Avis. The line at our counter is shorter."
Short of shooting its customers, Hertz had trouble countering this strategy.
The PC compatible
manufacturers used a flanking strategy of low prices to attack IBM.
Rolls-Royce is a
high-priced guerrilla. They dominate the
market for cars costing more than $100,000
The SUPERIORITY OF DEFENSE is an awareness
of the increased strength of a defensive position. Attacking forces generally
like to have a superiority of 3 to 1 at the point of attack in a "open field."
In attacking a defensive position, you need minimum superiority of 6 to
1.
If you want to
steal a competitor's customer, you must be prepared to out-spend them by this
ratio to get the account. By the same
token, consider the costs of taking care of your own customer's problem versus
the costs of finding a new one.
Charging a
defensive position makes heroes, but they usually die. General Patton was quoted, "Now I want
you to remember that no bastard ever won a war by dying for his country. He won it by making the other dumb bastard
die for his country."
Another strategy
that evolves from this principle is that undefended territories are easily
taken. This is the whole concept of
market segmentation, or niche strategies.
In some future
planned articles, I will cover strategies you may consider based on your
relative size in the market place. In
the interim, two excellent books are available.
The Art of War by Sun Tzu, edited and with a foreword by James Clavell; and Marketing Warfare by Al Ries and Jack Trout should be added to your business
library.
In summary, today's
marketing concept involves recognition of the inherent conflict between
corporations. The objective is to win
the war. You can't win if you don't
understand the strategies.