Jarel Vargas (MM 3-2) Legal and Ethical Aspects of Marketing (MARK 2043)

The 22 Immutable Laws of Marketing

From the book “The 22 Immutable Laws of Marketing”

By Al Ries and Jack Trout

Law 1 (law of leadership)

Being first in the market is better than having a better product.

Examples:

 we all remember who first flew over Atlantic or who was the first man on the moon but
almost no-one knows who was the second
 Heineken was the first imported beer in USA and still is No. 1 imported beer
 same for Miller Lite, first domestic light beer

Being first doesn't matter if the idea/product is not good.

In other words: being first gives you very big advantage over competition but doesn't guarantee
success. It doesn't matter that you're first to market if no-one needs your product or if your
product is very bad. Computer industry has counter-examples (first spreadsheet isn't the
dominant spreadsheet, first word processor isn't the dominant word processor) so you can
overcome first-mover advantage, but it's very hard and requires the leader to make big mistakes.

Law 2 (law of category)

It's hard to gain leadership in a category with a lot of competition.

It's better to create a productin new category.

Category doesn't have to be radically different, e.g. if there's dominant player in imported beer
you can become the first to import light beer. If you can't be the first to fly over Atlantic, you can
still be the first woman to fly over Atlantic.

Law 3 (law of mind)

It's not important to be first in the market but first in the mind of consumers.
One way to get mind-share is to out-advertise earlier competitor.

Law 4 (law of perception)

Marketing is not about products (their features or quality) but about perceptions (how people
perceive products).

Reality doesn't exists. What we call "reality" is just a perception of reality that we create in our
minds.

Honda is a leading Japanese car manufacturer in US but only third in Japan (after Toyota and
Nissan). If the quality of the car was the most important thing it should have the same position in
all markets.

In Japan people perceive Honda as a manufacturer of motorcycles.

Marketing should be focused on changing the perception.

I have mixed feelings about this. You can't separate perception from reality too much. You can
market Honda Civic as luxury car. BMW is marketed as luxury car but it's also superior to
Honda Civic.

Law 5 (law of focus)

The most powerful concept in marketing is owning a word in the prospect's mind.

Owning in this context means that if people hear or see this word they usually connect it with a
company that "owns" this word. IBM owns "computer". FedEx owns "overnight".

You can't take somebody else's word

This only applies to biggest companies, not small or medium-sized businesses.

Law 6 (law of exclusivity)

It's fruitless to try to take over a word that is already owned by a competitor.

Burger King tried to own word "fast" which was already owned by McDonald. They failed
miserably.
FedEx tried to take over "worldwide" from DHL.

Law 7 (law of the ladder)

Marketing strategy depends on your position in the market.

No. 2 company uses different strategy than No. 1 or 3.

Avis was No. 2 in car rental and when they advertised as "finest in rent-a-cars" they had losses
because their marketing wasn't credible (you can't be "finest" being No. 2).

They turned profit when they switched to "Avis is only No. 2 in rent-a-cars. So why go with us?
We try harder".

Then they had another disastrous marketing campaign when they started claiming "Avis is going
to be No. 1".

I agree with the premise (kind of marketing depends on your position in the market). However
the book says very little about what kind of strategy one should use in a given position (except
for a few examples).

Law 8 (law of duality)

In the long run, every market becomes a two-horse race. McDonald & Burger King. Coca-Cola
& Pepsi. Nike & Reebok. Crest & Colgate.

There are many counter-examples to this (movie studios, car companies). Also, how knowing
this helps marketing person? There's little a marketer can do about the position of his company in
the market. The only conclusion I can make is that if I were a marketing person and worked for
No. 3 company, I should quit and apply for a job in No. 2 or 1.

Law 9 (law of opposite)

If you're shooting for second place, your strategy is determined by the leader.

Leverage the leader's strength into a weakness.

Don't try to be better than the leader, try to be different.

E.g. Pepsi marketed itself as a "choice for the new generation" when faced with Coca-cola's "old
and established" brand.

Sounds correct although doesn't apply to those who do have ambitions to overtake the leader
(e.g. Excel killed Lotus 1-2-3 by being a better spreadsheet, not a different spreadsheet).

Law 10 (law of division)

Over time a category will split into two or more categories.

E.g. computers started as a single category but broke up into mainframes, workstations, personal
computers, laptops etc.

Cars started as a single category but divided into luxury cars, sport cars, RVs, minivans etc.

Companies often don't understand that and instead think that categories are combining, believe in
synergy.

Leader can maintain dominance by addressing emerging categories with new brand names
instead of using brand name successful in one category in a new category.

E.g. when Honda wanted to go up-market it created a new brand, Acura.

Law 11 (law of perspective)

Marketing effects take place over an extended period of time. It's a mistake to sacrifice long-term
planning with actions that improve short-term balance sheet.

E.g. a sale increases short-term profits but in the long-term educates people not to buy for regular
price, therefore decreasing long-term profits.

Law 12 (law of extension)

There's an irresistible pressure to extend the equity of the brand and it's a mistake.

Instead one should create new brands to address new markets/products.

Here authors predict (in 1993) that Microsoft will fail because they use this unhealthy strategy of
extending their brand to new products. 14 years later and Microsoft is still going strong.
Law 13 (law of sacrifice)

You have to give up something in order to get something. There are three things to sacrifice:

 product line
 target market
 constant change

Law 14 (law of attributes)

For every attribute, there is an opposite, effective attribute.

You can't own the same word as the competition. You have to find another word to own, another
attribute.

Law 15 (law of candor)

When you admit a negative, the prospect will give you a positive. Candor is disarming. It's ok to
admit, as Avis did, that "Avis is only No. 2 in rent-a-cars".

Law 16 (law of singularity)

In each situation, only one move will produce substantial results.

People tend to think that success is the result of a lot of small efforts well executed, that working
harder is a way to success.

In marketing the only thing that works is a single, bold stroke.

Law 17 (law of predictability)

Unless you write your competitors' plans, you can't predict the future.

You don't know the future, you don't know what your competition will do so you have to build
your company and marketing strategies to be flexible, to be able to quickly respond to changing
situation.

Law 18 (law of success)

Success often leads to arrogance, and arrogance to failure.

Don't be arrogant, drop the ego, be objective.

Law 19 (law of failure)

Failure is to be expected and accepted.

Drop things that don't work instead of trying to fix them.

Don't punish for failures. If you do, people will stop taking risks.

Law 20 (law of hype)

The situation is often the opposite of the way it appears in the press.

The amount of hype isn't proportional to success. Often failed products are heavily hyped.

Law 21 (law of acceleration)

Successful programs are not built on fads but on trends.

Law 22 (law of resources)

Without adequate funding an idea won't get off the ground. You need a lot of money to market
your ideas.

On one hand you can read it as a "don't fool yourself" advice. On the other hand authors promote
indiscriminate spending of money on advertising without mentioning that sometimes
advertisement doesn't pay. It seems obvious that you should never spend more on marketing that
you can hope to get out of it from increased revenues, yet the books never says that. It just
asserts that you need to spend a lot on marketing. A suspicious advice coming from people who
sell marketing.
 Buy.ology

By Martin Lindstrom

Lindstrom claims that market research is nothing but unreliable and misleading. He
maintains that “how we say we feel about a product can never truly predict how we behave”. As
a result the book is set out in a series of experiments conducted to prove, disprove or explore
theories surrounding what drives consumers to buy (or not to buy).The brain is deceptive. Using
an experiment conducted on 32 smokers from around the world, fMRI results indicated that
when shown a slideshow of images of cigarette packet health warnings, a “craving spot” within
subjects’ brain was actually stimulated. This experiment, despite almost all subjects claiming
they were affected by the health warnings, produced results which suggested they weren’t. The
warnings apparently had no effect on putting people off smoking, instead increased their desire
to. This, the first of a series of examples, demonstrates that what we say we think or feel, is often
not mirrored by our brain. Apparently the billions spent on health campaigns are actually helping
the tobacco industry – 10 million cigarettes are sold every minute. We may think we understand
why we buy but looking closely at our brain suggests very differently. Fundamentally we rarely
have rational control over why we buy some products and not others: our brain subconsciously
chooses for us. Traditional marketing methods no longer work and the reasons we think we buy
are deceptive. Neuromarketing is the new key tool which will “revolutionize” marketing
strategies in the future and help us understand the science behind why we buy. “Buyology” and
how we understand our brain’s response to advertising is the key to why we buy.Product
placement doesn’t work: We have to be emotionally engaged in what we see. Product
Integration, however, does work to an extent – if continuously brought up, focused on and
emphasized subtly. Also if only competing against a few others. Subliminal messaging is
everywhere and still highly effective. The effectiveness of a company’s logo is dying and the
future lies in mirror neurons and logo-free advertising. Traditional researches methods (e.g
market research and focus groups) are misleading and can no longer help determine what
consumers really want. Only a fraction of the brain is exposed in consumers’ rational thought of
a product. A scientific link between brands and world religion’s exists, and emotional attachment
stimulates us to buy. In an overwhelming advertising world of billboards, TV, mobile phone,
internet and magazine, we are highly over stimulated. This causes us to shut-down part of our
brains to protect it from the onslaught of advertisements. Thus visual stimulation alone in
marketing is not enough; the combination of senses (sight, sound, and smells) is the most
effective, although the senses must compliment or they are received negatively. Neuromarketing
is the key to predicting future consumer desires and advertising success. Predictions are that in
the future, companies will be able to test an ad, TV show or product’s likely success on a sample
of the population before wasting millions on producing a product which may never sell.