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After determining marketing objectives, the next step in bottom-up marketing is to select a competitive tactic and develop it into a strategy. Keep the following principles in mind when selecting a tactic:

  1. Tactics are not company-oriented. Choosing a tactic that fits the needs of a business strategy is the biggest drawback of top-down thinking in marketing. Xerox bought a computer company (Scientific Data Systems) simply because it could fulfill the company's strategy of providing customers with complete office automation equipment. This was a billion-dollar mistake; customers already had too many computer companies to choose from: IBM, Digital Equipment, Wang, to name a few.

Nine out of ten new products are introduced to fill a gap in the company's product line, not a gap in the market. This may be why nine out of ten new products fail. If the company's goals are misdirected, it may bring some internal benefits, but externally (in the market), it can lead to disastrous consequences.

  1. Tactics should not be customer-oriented. The great mystery of marketing is that the competition is always waged in the name of "serving the customer."

Many marketers live in a dream world, naively believing that the market is pure and undeveloped, that it is merely a two-player game between the company and its customers. Under this illusion, a company designs a product or service to attract customer demand, then dreams of reaping a bountiful harvest through marketing. In reality, there is no pure market; real market competition and marketing take place in a market composed of a large number of competitors and consumers who are attracted to them to varying degrees. A market competition also consists of two parts: retaining your existing customers while trying to win over other customers from your competitors.

What about new products? Of course, when you launch a new product that fills a gap in the market, you always think there is a vast untouched market waiting for you. But that may not be the case. Before Sony introduced the Betamax VCR, what was the VCR market like? It was empty, of course. Sony estimated its potential market based on the number of TV owners, but that wasn't the case; in fact, there was no guarantee that every one of them would buy a VCR.

Despite all the talk about attracting customer demand in undeveloped markets, most marketers prefer to sell products in existing markets and compete with strong rivals.

  1. The special case of flanking attack By flanking attack, we mean introducing a new variety of product with a significant difference. A typical flanking attack is from a price standpoint, attacking with high or low prices. For example, Mercedes-Benz attacks Cadillac from the high-price flank; Volkswagen attacks Chevrolet from the low-price flank. Orville Redenbacher's gourmet popcorn attacks Happy Time popcorn from the high-price flank.

Flanking attacks are very effective. Unfortunately, many marketers oppose this approach, believing it carries some risk and at best can only capture undeveloped markets, such as the high-priced popcorn market before Orville Redenbacher. However, it must be noted that you cannot have it both ways; you cannot enjoy the advantages of operating in an undeveloped market while also reaping the benefits of a developed market.

  1. Tactics should be competitor-oriented. Not long ago, Delta Airlines decided to offer "triple mileage" vouchers to members of its "frequent flyer" club, including new members. It seemed like a good idea, sure to attract a lot of new business for Delta. But at the same time, this new practice also attracted American Airlines, United Airlines, Pan Am, TWA, and Eastern Airlines. In fact, all of Delta's competitors joined in and offered the same vouchers. As a result, no one benefited except the frequent flyers. Delta's approach was not a competitor-oriented tactic because it could be quickly imitated.

But when Burger King launched its "broiled, not fried" campaign, McDonald's couldn't immediately abandon its fried foods and put them in ovens. Doing so would require a huge expenditure. Speed is an important factor to consider when choosing a tactic. If competitors cannot quickly imitate your tactic, you have time to win customers with your product first. Most airline passengers don't know that Delta first introduced the "triple mileage" concept because Delta didn't have enough time to establish the concept in customers' minds before competitors jumped in. "Broiled, not fried" is a good competitor-oriented tactic because it cannot be quickly imitated, nor can it be imitated on a large scale. When Michelin launched radial tires to attack the American market, it kept Goodyear and Firestone on the defensive for several years. Even the giants of the American tire industry would need several years to invest in equipment to produce such tires and get production lines running.

A tactic must not only stimulate consumers to buy but also stimulate competitors to imitate, yet not be quickly imitated. Only a tactic that can be a sharp knife thrust at competitors is worth considering.

However, most marketing programs include coupons, rebates, and a series of such practices. These are costly and ineffective. If they work, they only stimulate purchases through flattery (like coupons and rebates). At the same time, competitors can imitate your practices at any time. You cannot win by pleasing customers; set aside these practices. Conversely, a tactic that makes one or more of your competitors uncomfortable will certainly bring benefits to your business.

  1. Avoid the "ever-increasing variety" tactic. A common tactic you should try to avoid is "offering more choices." Some companies base their entire marketing program on the idea of "ever-increasing variety." Too much variety prevents you from highlighting features in one variety, gaining an advantage, and penetrating the mind. For example, who invented strawberry ice cream? Because there are so many flavors, no one can answer that question.

Additionally, offering consumers multiple choices has inherent problems. One is confusion; customers may ask, "Which one should I buy?" Another is availability; the more varieties a product has, the more likely a customer's desired variety will be out of stock. For example, when Coca-Cola had only one variety and name, it was hard to imagine a supermarket running out of Coca-Cola. Now Coca-Cola has New Coke, Classic Coke, Special Coke, Cherry Coke, Special Cherry Coke, Caffeine-Free Coke, and Special Caffeine-Free Coke, and shortages occur.

Multiple choices make the purchase decision complex and difficult. Does Chevrolet's 10 models (a confusing array of bodies and engines) bring any convenience to customers buying a Chevy? General Motors once boasted that it combined various options in various ways, and you could order thousands of different Chevrolets. Yet more than half of new Chevrolets are bought by dealers and stored on showroom floors, and customers' choice is merely to buy the one with the coating and wax (just a few), isn't it?

  1. When you compete with yourself. When your product dominates the market, you may sometimes deliberately become your own competitor. In this case, you introduce different varieties to attack your existing products. If done well, you can "have your cake and eat it too."

The best example is Gillette. Its Blue Gillette single-edge blade dominated the single-edge razor market. Later, Gillette introduced the Trac II twin-blade razor to attack its own existing product. The Trac II ad said, "Twin blades shave better than single blades." The single blade referred to was Gillette's own Blue Gillette. Later, Gillette introduced the Atra, the first adjustable twin-blade razor, targeting its own Trac II. The Atra adjustable twin-blade ad said, "Why shave with a fixed twin-blade?" Gillette enjoys over 50% market share, typically relying on its multi-brand renewal strategy. When it introduced the Trac II, Gillette held 55% of the razor market (for wet shaving), and now, despite strong competition from Schick, Bic, Wilkinson, and others, it still effectively holds two-thirds of that market share.

Please do not confuse Gillette's tactic with Coca-Cola's industry expansion and variety increase. Coca-Cola's seven beverage varieties are all sold under the Coca-Cola name, causing confusion in the minds of potential buyers. In contrast, each Gillette product, especially the key Trac II and Atra, has its own brand name, reducing confusion.

Of course, in fact, both Trac II and Atra packaging have the word "Gillette" in small print. The Gillette name plays a role in product sales; at least it tells people where to reorder. For the same reason, Chevrolet cars are marked "GM," but the primary brand is still Chevrolet.

  1. Simplicity is better than complexity. Although humans admire complexity, most people are unwilling to spend time understanding complex things. Therefore, simple concepts are easier to promote; people find them easier to understand and remember. However, some companies often present products in a dizzyingly complex way rather than selling what customers want in a simple manner.

A few years ago, Xerox, to regain its lost reputation in the office automation market, launched a wave of promotions for its new products. It rented the Vivian Beaumont Theater at Lincoln Center in New York and complexly arranged its office automation systems on stage, seemingly flaunting its technology. As a result, the exhibition was impressive but did not attract the press or people's interest because it was too complex and difficult to deal with. What made Xerox do such a thing? It was typical top-down thinking; they imagined shaping an image of Xerox as a major producer in the office automation industry to expand its market influence.

A new laser printer-copier was buried by this complex presentation. If presented simply as "a computer printer that is also a copier," it would have been more effective than Xerox's complex computer-linked presentation.

A good example proving the value of simplicity: a radio station, seeking a way to differentiate itself from competitors, found that people wanted the latest weather information as quickly as possible. So it chose a tactic: increase the frequency of weather reports during each broadcast. Then the station went on TV to promote its frequent and timely reporting. It achieved remarkable results, defeating competitors with a tactic that couldn't be simpler. Why didn't competitors imitate it? Of course, they would. But the station set a precedent; if it needed to quickly establish the concept or method in people's minds, it had an absolute advantage.

  1. Different, not necessarily better. When you compete with a product that has an obvious advantage in all aspects, you can forget about marketing because it won't help. For example, the "914" plain paper copier was clearly superior to 3M and Kodak's thermal copiers. As expected, such thermal copiers were eliminated one by one, just as jet aircraft eliminated piston-engine aircraft in the aviation market. If you use your thermal copier to compete with electrostatic copiers, learning marketing principles is useless, just as learning the principles of war won't help much if you fight an enemy with atomic bombs while you have none.

Fortunately, in real life, products with obvious advantages in all aspects are rare. Is a BMW better than a Volvo? Who says so? They are just different. Volvo builds its strategy around "durability," using the tactic of stacking six Volvos on top of each other. BMW builds its strategy around the concept of "the ultimate driving machine."

BMW's competitor is Mercedes-Benz; both are expensive German cars, but Mercedes is an older brand and leads in engineering. Should BMW compete with better engineering? Can it topple Mercedes with its three-valve combustion chamber patent? It's not easy. "Better" is a subjective concept, hard to form or change, so it's usually best to avoid attacking a competitor's strength. So, what's the difference between a BMW and a Mercedes? The difference is not in the cars themselves but in the drivers. Older people prefer the older, more expensive Mercedes, while younger people prefer the newer, cheaper BMW. Also, younger drivers tend to drive faster. Additionally, one reason younger people prefer BMW is precisely because older people prefer Mercedes. (This is also why the "Pepsi Generation" strategy works.) So, let Mercedes dominate in engineering; BMW has achieved great success by focusing on speed and driving.

Recently, BMW introduced the 7-series to enter Mercedes' market. You see, BMW has begun to diversify its focus, which could ruin its entire product line.

  1. A concept is better than a product. Today's marketing is a competition of concepts, not products. Whether you have a concept or idea to drive your business is an objective measure of an effective tactic. Walter Wriston said, "Throughout America, ideas are the new currency."

A good example of the power of concepts is the computer industry. In IBM's early days, it encountered troublesome competitors in the office automation market, especially DEC, which sold its minicomputers under the slogan "personal operating system." At the other end of the competition, Apple began making progress with its concept called "desktop publishing." This concept captured the imagination of many users and helped it sell a large number of Macintosh computers in the Fortune 1000 market.

If you were an IBM marketing manager, how would you deal with this new competition? Let's look at what IBM did. So far, it has pursued better products, harder sales, and better advertising to regain its once-dominant market. No one does this better than IBM. IBM introduced not one, not two, but a whole generation of PCs—the Personal System/2. It also began advertising its products—not one, not two, but five different computer systems. It sent a large number of salespeople to the market, greatly strengthening its sales force. Even its CEO, John Akers, joined the action; when he met consumer groups, he promised that IBM would be the best listener to their suggestions and complaints. IBM's distinctive advertising campaigns were almost unsurpassed. Yet, so far, all these efforts seem to have done little to stop DEC and Apple from continuing to gain in the office automation market. And while many companies continue to buy Apple's "desktop publishing" systems with great interest, IBM's "personal publishing" system seems to have attracted little attention.

Thus, despite IBM's great strength, to succeed, it clearly has only one action to take. First, IBM must recognize the nature of the competition. From the start, the computer market battle has actually been a battle of concepts. IBM initially introduced the "data processing" concept with mainframes; DEC countered with the "minicomputer" concept, enabling "office automation processing," against the mainframe concept. Later, against IBM's "office" personal computer, Apple introduced the "personal computer" concept for home and school. Other competitors also built their businesses around concepts: Wang with "word processing," Cray with "supercomputers," Tandem with "non-stop processing," and Compaq with small "portable computers."

Every major success has a common feature: they leveraged a concept. IBM failed to objectively summarize its experience in the computer market. Recently, it has not used a concept approach; when pushing its products into the market box by box, it has used a product strategy. You can see this strategy in IBM's advertising, which depicts a range of products and says, "Whatever you want, we have it." The basic tone to customers is: "We will build the best product for you." The weakness of this approach is that customers often don't know what they want, especially in high-tech fields. Customers always buy what they think they should have. So, if they think they should have concepts like "personal operating system" or "desktop publishing," then DEC and Apple get the deal.

The only option for IBM is to compete with its own product concepts against those of its competitors.

  1. The concept of paper. Concepts like "desktop publishing" sometimes create a niche market for other products or services. Materials that previously had to be printed outside the company can now be printed on the desktop; reports and documents that used to take days to print can now be completed in hours. This creates a need for a matching paper market.

Suppose you are a promising young marketer at a large paper company and have noticed this trend. Your boss orders you to find a new brand for its commercial paper. This is quite difficult because there are already a series of competitors in the market, such as Hammermill, Nekoosa, Boise Cascade, Champion, and Mead, with a range of brands. In the market, most of these companies' paper is sold through wholesalers. So, when looking for a tactic, your starting point should be to see what these wholesalers sell. You'll find that their "private label" paper (i.e., paper repackaged with an additional brand) sells better than other manufacturers' brands. You'll also find that some large users of electronic printing (laser printers) buy premium offset paper for their machines. There it is! This is a meaningful competitive angle: launch a high-end flanking brand—ORG paper (Orville Redenbacher Gourmet Paper) specifically for laser printers. This paper has a higher gloss and is opaque, making it especially suitable for important documents. Now, all you have to do is encourage users to use your special paper. Then your job is done, but you already have a concept to leverage, which will bring you greater benefits than selling solely on price and delivery.

  1. Nothing is perfect. Machiavelli once said, "Nothing is perfect." Every positive competitive tactic has its negative aspects. Simply promoting the product positively also has its downsides. So, when promoting a product's advantages, it is equally important to point out its shortcomings. Pointing out shortcomings makes your tactic more credible.

Department stores find that sales are more effective when items are labeled "seconds" or "irregulars." These labels let people know why the goods are low-priced. Pointing out shortcomings in this way often makes them seem like advantages. Some discount stores, for this reason, often call themselves "factory outlet stores." Saying "We have everything our competitors have, but at lower prices" is appalling; people can't help but ask, "What's the catch?" Why? Because of credibility. What does a low-priced product indicate? If you sell a Rolex gold watch for $50 on the streets of New York, you'll see what low price indicates—the watch is fake, stolen, or both. So, when you make a promise, you must also point out what benefit you will receive.

Volkswagen once stated, "In 1970, Volkswagen will continue to use its ugly Beetle shape." From a psychological standpoint, this is a powerful statement. When you admit your shortcomings, people tend to react positively. What people give up by buying a Volkswagen is only its exterior design, and what they get in return is credibility.

  1. "The world's most expensive perfume." This short and catchy advertising phrase is used by Joy perfume. In fact, the high-price tactic is also a way to enhance product credibility. What does a high price indicate?—The product must be worth that much. Perceptually, a high price seems to suggest that the product itself contains some benefit. This is one of the powerful driving factors behind many successful high-price flanking attacks. Mercedes-Benz cars, Absolut vodka, and Grey Poupon mustard are three examples.

Worth mentioning is Absolut vodka. It is 50% more expensive than Smirnoff, yet its sales are growing at an astonishing rate. Over the past four years, sales have quadrupled. Now Absolut ranks fourth in the American vodka market, selling over one million cases annually.

If high prices bring benefits to any product, why not set every product's price higher? Because price and demand are inversely related: the higher the price, the lower the demand. Rolls-Royce cars are valuable, but due to their high price, sales are small because most people can't afford them. You must price according to demand, balancing price and demand. You can sell one million Fords at a low price and make more money than selling a thousand Rolls-Royces at a high price.

Price is just one factor to consider in a tactic; many other factors are worth considering. In a market flooded with small items, you might find a competitive large item; in a product category dominated by women's products, there might be a promising men's product; or you might find a tactic like Sony's pursuit of miniaturization. However, you won't think of a competitive tactic by burying yourself inside your company; you must go to the market yourself to find it.

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Excerpt from "Terminal Sales Visit General Model" September 10, 2015 20:00--21:00

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