---
title: "Twenty-Two Laws to Keep You Ahead of Your Competitors"
description: "This article outlines twenty-two marketing laws, such as the Law of Leadership, the Law of Category, and the Law of Perception, emphasizing that being first in the consumer's mind is more important than being first in the market. It provides examples from companies like Heineken, IBM, and Coca-Cola to illustrate these principles."
author: "New Distribution"
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published: "2014-08-01"
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# Twenty-Two Laws to Keep You Ahead of Your Competitors

> This article outlines twenty-two marketing laws, such as the Law of Leadership, the Law of Category, and the Law of Perception, emphasizing that being first in the consumer's mind is more important than being first in the market. It provides examples from companies like Heineken, IBM, and Coca-Cola to illustrate these principles.

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**1. The Law of Leadership (It's better to be first than to be better)**
1. In any product category, the leading brand is inevitably the one that first enters the minds of potential consumers. After World War II, Heineken was the first imported beer brand to establish a foothold in the United States. Forty years later, 425 imported beers were sold in the U.S. It's certain that one of them must taste better than Heineken. Yet today, Heineken still holds a 30% market share, ranking first in imported beer sales.
2. Not every "first" is guaranteed to win; some "first" ideas are just bad ideas and thus cannot succeed. Frosty Paws, the first dog food ice cream, is an unsuccessful example. Although puppies like this ice cream, their owners believe that letting the dog lick the plate is already satisfying enough.
3. Pioneering brands often maintain their leadership because one reason is that their name often becomes synonymous with the product category. Xerox was the first name for plain paper copiers, and as a result, it became the generic term for all plain paper copiers. People standing in front of Ricoh, Sharp, or Kodak copiers would ask, "How do I make a Xerox copy?"

**2. The Law of Category (If you can't be first in a category, create a new category to be first in)**
1. If you can't be the first to enter the minds of potential consumers, don't be discouraged. Look for a new category you can enter first. IBM achieved great success in the computer field as the first company in computers, while DEC was the first in minicomputers.
2. There are many ways to be first. Dell entered the fiercely competitive personal computer market by pioneering telephone marketing of computers. Today, Dell is a $900 million company.

**3. The Law of Mind (It's better to be first in the mind than first in the market)**
1. Being first in the consumer's mind is better than being first in the market. IBM was not the first in the mainframe computer market, but through extensive marketing efforts, IBM was the first to make consumers remember its name and won in the early computer market.
2. Once a perception is formed in people's minds, you cannot change it. Xerox was the first in the copier market, then it tried to enter the computer market. After 25 years of trying and investing $2 billion, Xerox remains a nobody in computers. The most futile thing in marketing is trying to change people's perceptions.

**4. The Law of Perception (Marketing is not a product war, but a perception war)**
1. Perceptions in people's minds are often taken as universal truth; marketing is a competition of perceptions. Honda sells the same cars in the U.S. as in Japan, but consumers' perceptions differ. In the U.S., people see Honda as a car, and it's the best-selling Japanese car. In Japan, people see Honda as a motorcycle, and Honda's car sales are only a quarter of Toyota's.
2. You will taste the foods you are willing to taste. The soft drink marketing is a perception war, not a taste war. Coca-Cola conducted 200,000 taste tests, finally "proving" that New Coke tasted better than Pepsi, and Pepsi better than traditional Coke (now called Classic Coke). But the research-proven best-tasting New Coke ranked third, while the research-proven worst-tasting Classic Coke ranked first.

**5. The Law of Focus (The most powerful concept in marketing is to own a word in the prospect's mind)**
1. The leader owns a word that represents the entire category. Smart leaders further consolidate their position. Heinz owns the word "ketchup." But it further separated the most important attribute of ketchup. The slogan "The thickest ketchup in the West" allowed the company to preempt the thickness attribute. Owning the word "thick" has kept Heinz at a 50% market share.
2. Nothing lasts forever. Someday, a company must change its word. For many years, Lotus was synonymous with "1-2-3" and "spreadsheets." But as the spreadsheet market became increasingly competitive, Lotus reorganized and focused on a concept called "groupware." Lotus was the first software company to successfully launch a groupware product. Eventually, it will own a second word in the prospect's mind.

**6. The Law of Exclusivity (Two companies cannot own the same word in the prospect's mind)**
1. When your competitor already owns a word in the prospect's mind, it's futile to try to own the same word. Volvo owns "safety." Many other car companies, including Mercedes-Benz and General Motors, have tried safety-based marketing campaigns. But no company other than Volvo has been able to enter the prospect's mind with the safety concept.
2. Once a perception is formed in people's minds, you cannot change it. In fact, you often elevate your competitor's position by making the concept more important. Federal Express has moved beyond "overnight" and is now trying to replace DHL's "global" concept. If it merely tries to own the same word, Federal Express will not succeed.

**7. The Law of the Ladder (The marketing strategy you adopt depends on which rung you occupy on the ladder)**
1. For each product category, consumers have a product ladder in their minds. Each rung has a brand. Take the car rental industry: Hertz was first in the consumer's mind, so it occupies the top rung. Avis is second, and National is third. The leading brand is necessarily far ahead of the second, and the second is necessarily ahead of the third.
2. According to research by Harvard psychologist Dr. George A. Miller, the average person cannot handle more than seven things at once. That's why many things in memory are associated with seven. In toothpaste brands, the seven easily recalled are Crest, Colgate, Aquafresh, Close-Up, Aim, Ultra Brite, and Sensodyne.

**8. The Law of Duality (In the long run, every market becomes a two-horse race)**
1. Competition often evolves into a battle between two main rivals—usually one is a trusted old brand, the other is an upstart. In 1969, Coca-Cola had 60% market share, Pepsi had 25%, and third-place Royal Crown had 6%. Twenty-two years later, Coca-Cola's share dropped to 45%, Pepsi rose to 40%, and Royal Crown fell to 3%. Coca-Cola and Pepsi became the two main rivals in the cola market.
2. Understanding that marketing is a two-horse race helps you plan short-term strategies. Often there is no clear second brand in the market. How the situation evolves depends on the marketing skills of the competitors. In a mature industry, the third position is the hardest to hold, as with Royal Crown.

**9. The Law of the Opposite (If you're aiming for second place, your strategy is determined by the leader)**
1. If you want to build a company with a solid foothold on the second rung, study the company at the top... then present yourself as the opposite in the prospect's mind. Coca-Cola is a century-old brand. Pepsi went against the grain and positioned itself as the choice of the new generation. If older people drink Coke and younger people drink Pepsi, who will drink Royal Crown?
2. Sometimes you can't be merciful to your competitors. The Law of the Opposite requires you to constantly promote your competitor's weaknesses so that potential consumers quickly recognize the problem. Stolichnaya vodka simply pointed out that American vodkas like Crown, Samovar, and Wolfschmidt originated in Hartford (Connecticut), Schenley (Pennsylvania), and Lawrenceburg (Indiana), respectively, labeling them "fake Russian vodka." Stolichnaya is produced in Leningrad (St. Petersburg, Russia), so only it is genuine Russian vodka.

**10. The Law of Division (Over time, a category will divide into two or more categories)**
1. A category always starts as a single entity, e.g., computers. But over time, the category splits into several segments: mainframes, minicomputers, workstations, personal computers, laptops, notebooks, and pen computers.
2. If a company tries to create a well-known brand in one category and then uses that brand for other product areas, it makes a mistake. Volkswagen's Beetle was a big winner. Then it shipped all models made in Germany to the U.S. But all models used one brand name: Volkswagen. As a result, Volkswagen sales declined steadily.

**11. The Law of Perspective (Marketing effects manifest over a long period)**
1. The long-term effects of many marketing activities are often the opposite of short-term effects. In the short term, promotions can increase sales. But increasing evidence shows that in the long run, promotions only reduce sales because they teach consumers not to buy at "regular" prices.
2. In the short term, line extensions undoubtedly increase sales, but in the long run, they always lead to a decline in sales of one product or another. Miller Lite beer was very successful and peaked five years after Miller High Life was introduced, but then it began a 13-year decline. And after the introduction of Miller Genuine Draft five years later, Miller Lite also began to decline.

**12. The Law of Extension (There is always an irresistible pressure to extend the brand's product line)**
1. When a company achieves remarkable success, it often sows the seeds of future trouble. Microsoft is the leader in PC operating systems, but it wants to expand into new product categories and compete across the entire software industry, from mainframes to minicomputers, from operating systems for information engineering rooms to charting programs for executives. No one in the software industry has been able to handle such complex risks—although IBM tried and failed.
2. In the long run, in the presence of intense competition, line extension strategies almost never work. The leaders in any category are those brands without line extensions. Despite evidence that line extensions don't work, companies continue to do them, such as Life Savers gum and Pierre Cardin wine.

**13. The Law of Sacrifice (You have to give up something to get something)**
1. If you want to succeed, you must cut back, not expand, your product line. Interstate Department Stores went bankrupt. The company decided to focus on the only product that made money: toys. It decided to rename the toy stores "Toys "R" Us." Today, Toys "R" Us holds 20% of the U.S. retail toy market and is highly profitable. Many retail chains have imitated the Toys "R" Us model and succeeded.
2. Sacrificing a target market can also lead to success. Old tobacco ads... invariably showed both men and women. However, Philip Morris focused only on men. And further focused on the man's man—the cowboy. That brand is Marlboro. Today, Marlboro has the largest tobacco sales in the world. In the U.S., Marlboro is the best-selling tobacco brand among both men and women.
3. The Law of Sacrifice is the opposite of the Law of Extension. Today, if you want to succeed, you should give up something.
4. Good luck always comes to those who know how to sacrifice.

**14. The Law of Attributes (For every attribute, there is an opposite, effective attribute)**
1. You cannot predict how much market share a new attribute will capture, so never laugh at it. Gillette, the world's strongest razor blade manufacturer, is a case in point. Gillette centered on high-tech razor blades and handles. When BIC introduced disposable razors, Gillette didn't laugh; instead, it introduced the "Good News" disposable razor. Today, Gillette's Good News dominates the disposable razor category.
2. Look for an opposite attribute that can position you against the leader. Since Crest toothpaste already owns "cavity prevention," other toothpaste brands should avoid that word and choose other attributes, such as Aim for whitening teeth and Close-Up for fresh breath.

**15. The Law of Candor (Admit a negative, and the prospect will find a positive)**
1. One of the most effective ways to get into the prospect's mind is to admit a negative and turn it into a positive. Candor disarms the prospect. Volkswagen declared, "The 1970 Volkswagen will be ugly for a while." Prospects think, "An ugly car must be reliable."
2. When a company starts admitting its flaws, people often can't help but pay attention to the product. Several years ago, Scope entered the mouthwash market with "Tastes good," which exposed Listerine's bad taste. Listerine wisely invoked the Law of Candor: "The taste you hate twice a day." Prospects might think, "Anything that tastes like disinfectant must really kill germs." Due to its high candor, Listerine survived the crisis.

**16. The Law of Singularity (In each situation, only one action will produce substantial results)**
1. History tells us that the only thing that works in marketing is the singular, bold stroke. Coca-Cola fought on two fronts with Classic Coke and New Coke. Coca-Cola had to painfully drop New Coke because its existence hindered the company from effectively using its only weapon: the "real thing" concept. Coca-Cola should invoke the Law of Focus, re-adopt the "real thing" concept, and use it against Pepsi.
2. The strategies that work in marketing are the same as in military: surprise.

**17. The Law of Unpredictability (Unless you're writing your competitors' plans, you can't predict the future)**
1. When you can't predict the future, you can use trends to your advantage. Today, Americans are increasingly health-conscious. This trend opens doors for many new products, especially healthy foods. Recently, the "Healthy Choice" frozen vegetables achieved great success, an example of a product leveraging a long-term trend.
2. Research is indeed the best way to measure the past. But new ideas and concepts are almost impossible to measure because people lack a reference framework for the future. The classic case is Xerox's research before launching the plain paper copier. The research concluded that people would only use 1.5 cents for plain paper copying. Xerox ignored the report, and the rest is Xerox's success story.

**18. The Law of Success (Success often leads to arrogance, and arrogance leads to failure)**
Arrogance is the enemy of successful marketing. When people succeed, they often become less objective. Ken Olsen, founder of Digital Equipment Corporation, was so convinced by his success that he believed his views on computers were correct, and he dismissed personal computers, open systems, and even RISC. In other words, he ignored three of the biggest growth opportunities in the computer industry. Today, Ken has left the competitive stage.

**19. The Law of Failure (Failure is predictable and acceptable)**
Too many companies try to adjust or improve when they encounter problems, rather than give up. Wal-Mart's huge success provides another way for companies to handle failure. At Wal-Mart, no one is punished for failed experiments. Wal-Mart differs from other large companies because it seems not to have contracted the "personal career" disease that can infect any company.

**20. The Law of Hype (The situation is often the opposite of what the media hype suggests)**
When a company's situation is improving, it doesn't need hype. When you need hype, it usually means you're in trouble. No soft drink got more hype than New Coke. Some estimated that New Coke received over $1 billion in free publicity. Plus, the huge investment Coca-Cola made to launch New Coke should have made it the most successful product in the world. But it wasn't. Within 60 days of launching the new brand, Coca-Cola was forced to bring back the original formula, now called Classic Coke. Today, Classic Coke outsells New Coke 15 to 1.

**21. The Law of Acceleration (Successful marketing programs are based on trends, not fads)**
Coleco's Cabbage Patch Kids entered the market in 1983 and became hugely popular. Hundreds of Cabbage Patch products flooded toy stores. Two years later, Coleco's sales reached $776 million. After that, Cabbage Patch Kids sales plummeted. Forget fads; when they appear, try to suppress them. In marketing, the best and most profitable approach is to ride long-term trends.

**22. The Law of Resources (Without adequate funding, a good idea won't become reality)**
You need money to get your idea into the prospect's mind; once there, you need money to keep it there. An idea without financial support is worthless. Many large companies invest heavily in their brands. Procter & Gamble and Philip Morris each spend over $2 billion annually on advertising; General Motors spends $1.5 billion.

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