Marketing: Staying Ahead of the Pack

Last Updated Jun 19, 2007 2:48 PM EDT

Most managers believe the basic issue in marketing is convincing a prospective customer that you have a better product or service. The basic issue in marketing is creating a new category that's yours first.

Marketing is not a battle of products, it is a battle of perceptions. To win this battle, you have to become the leader in a category. Prospects assume the leader must be better because "everybody knows the better product or service will win in the marketplace." How do you become the leader? You launch a new category—a new category in which you can be first. It doesn't have to be a big technological advance. Sometimes the simple ideas are the easiest to get into the consumer mind, which is where the marketing battle is won.

What You Need to KnowAre marketing principles different for smaller versus larger companies?

The principles are exactly the same. Trouble is, a small company usually manages to stay small by ignoring these principles. Every large company was once a small company that became large—through good marketing. The biggest mistake people at a small company can make is thinking of themselves as a small company instead of thinking of themselves as a big company in its gestation period.

What makes a market leader into a leader?

Invariably, the leader in the category got to be the leader by being the first brand in a new category. Some examples:

  • Coca-Cola, the first cola.
  • Dell, the first personal computer sold direct.
  • Domino's, the first home delivery pizza chain.
  • Gatorade, the first sports drink.
  • Red Bull, the first energy drink.

What big companies introduced these brands? None. They were all started by small entrepreneurs like Tom Monaghan of Domino's and Dietrich Mateschitz of Red Bull.

Some people call this leadership phenomenon the "first mover" advantage. But it's actually the "first minder" advantage. That is, the brand that gets into the consumer's mind first is the winner, not the brand that was first in the category. Du Mont made the first television set; Hurley, the first washing machine; Red Rock, the first cola. The MITS Altair 8800 was the first personal computer. But these and many other "first" brands failed to work their way in to the minds of consumers—they failed in marketing.

If you weren't first in your category and you can't win by being better, what can you do?

Start a new category you can be first in. Marketing is more a battle of categories than it is a battle of products. Winning companies categorize what they do, not in terms of being better, but in terms of being different.

When Procter & Gamble introduced Tide many years ago, they could have called the product a "new, improved" soap. But Tide was made from synthetic materials rather than the fats and lye found in traditional cleaning products like Ivory, Oxydol, and Rinso. Tide could have been called a synthetic soap, but that would have nailed the brand to the soap category. So Procter & Gamble called Tide "the first detergent," a totally new category, and even today Tide is the leading brand of detergent in the United States.

What to DoCreate a New Category You Can Be First In

Here's a classic example: When Michael Dell set up the Dell Computer Corporation, he could have sold his "better" products through conventional computer stores. Instead he launched the first brand of personal computer sold direct by phone. Dell became the world's largest selling brand of personal computer and still doesn't sell any computers through conventional computer stores.

Get the Launch Right

Before you launch (or re-launch) a product or service, ask yourself:

  • What is the name of the category? Not a name that you might like, but a name the industry gives the category.
  • What is the brand name of the leader in the category? Not necessarily the sales leader, but the brand that customers perceive to be the leader.

If there is no dominant brand, or at least not a dominant brand in the mind of most prospects, jump right in with your product or service and try to quickly establish your leadership. Do everything you can to seize the leadership position before someone else does. Promote your brand as the leading brand—in your marketing material, on your Web site, wherever your product names appears. People assume the better product or service will win in the marketplace. Therefore, if you are the leader, you must have the better product.

If there's already an entrenched brand, then move on and set up a new category you can be first in. Two cautions:

  • If you are reintroducing an existing product or service, give it a new name so people don't think back to its previous version.
  • Don't try to create a name for the new category. Only the industry and the media can do that. Launch your new brand with publicity and get the media to establish the category name for you.
What to AvoidYou Fail to Establish a New Category or Product Sector

Most companies refuse to even consider the possibility of a new category because "there's no market." Of course, there's no market. If there were, it wouldn't be a new category! You have to move forward with confidence that you can win acceptance for a new category. Remember that a new category doesn't necessarily represent a difficult, technological advance. Soapsoft, the first liquid soap, was a big commercial success, but the process of making it was simple.

You Use an Existing Name for the New Product Sector

Miller Lite, the first light beer, was a big success, but ultimately paid a big penalty for it. Instead of creating a new brand to match the new category, the company used a line extension name, which robbed sales from its regular beer brand (Miller High Life) and caused it to lose light beer leadership to the competition. When you venture into a new category, you must have a new product name.

You Fall into the "Better Product" Trap

A small company is more likely than a large one to believe that it can win because its product is better. Larger companies tend to have more seasoned marketing professionals, who focus on advertising, distribution, packaging, display, and other sophisticated ways to hype sales. It's the small company entrepreneur who believes deeply in the superiority of his or her product that is most likely to bet the ranch on this strategy.

However, unless you are already the leader, your "better product" will not prevail in the marketplace. You must be perceived as the leader in the customer's mind.

Where to Learn MoreBooks:

Griffiths, Andrew. 101 Ways to Market Your Business: Building a Successful Business with Creative Marketing. Allen & Unwin, 2007.

Tvede, Lars, Peter Ohnemus, Robert Montgomery. Marketing Strategies for the New Economy. Wiley, 2001.

Walker, Orville C., John Mullins, and Harper W Boyd. Marketing Strategy: A Decision Focused Approach. McGraw-Hill/Irwin, 5th ed., 2005.

Web Sites:

American Marketing Association: www.marketingpower.com

Seth Godin's Blog: http://sethgodin.typepad.com