Today I’m hosting another marketing guru round-table discussion. Al Ries is a real Marketing, Advertising, and PR Guru. Currently he is co-founder and chairman of Ries & Ries with his partner and daughter, Laura Ries who I interviewed last April.
Along with Jack Trout (see March 8th Post), Ries coined the term “positioning“, as related to the field of marketing, and authored Positioning: The Battle For Your Mind, an industry standard on the subject. Al was selected as one of the most influential people in the field of public relations in the 20th century by PR Week magazine and has written a number of books that have made the BusinessWeek best seller list.
Tom: It’s always interesting for me to hear where business thought leaders like yourself get your own inspiration. What are your favorite business authors, blogs or publications?
Al: I have several thousand books in my personal library and I suppose I have learned something from each of them.
But you can’t be a good marketing consultant by reading books or blogs. I find that my essential reading includes most of the major business magazines and newspapers: The Wall Street Journal, The New York Times, Financial Times, BusinessWeek, Fortune, Forbes and a dozens of other trade and business publications.
A good marketing consultant has to be aware of new trends, ideas and concepts before they get digested and published by others. Innovation is not limited to engineers and scientists. Marketing people can and should be innovative, too.
Furthermore, there is a big difference between common sense and marketing sense. Extensive reading of the business press will help a person develop good marketing sense which may be the exact opposite of common sense.
For example, it’s common sense for a company to “take care of its customers.” That’s why Saturn introduced larger, more expensive vehicles as its customers grew older, had children and became wealthier. But in the process, these moves destroyed the Saturn brand which once was the most successful “entry-level” car. Last year, for example, Saturn with five major product lines sold fewer vehicles than when the company was focused on a single entry-level model.
A good marketing person will follow the Saturn story over the years and ask, Why are Saturn sales falling when the brand itself is expanding?
Tom: Last year I had the pleasure of interviewing your daughter Laura on the blog. You obviously share several perspectives on business and marketing. Which business beliefs/views, if any, are there that you differ on and why?
Al: It astonishes me how much Laura and I see eye-to-eye on when it comes to the principles of marketing. I can’t think of any conceptual idea that we differ on. And if we do, we tend to discuss the issues involved and try to come to a joint conclusion.
Having been a consultant for several decades, I’m convinced that a two-person team is a much better approach than trying to do everything yourself. It’s very helpful to kick ideas back and forth because the originator of an idea tends to lose his or her objectivity in the process. The other half of the team is always there to supply the objectivity.
In developing strategy for a new client, we might shoot ideas back and forth before we arrive at what we believe is the best approach.
Marketing can be divided into two segments: strategy and tactics. While we are in almost total agreement on strategy, we often differ on tactics. Laura has much more experience than I do in the new media, for example, especially the Internet, which is why I generally let her dictate the tactics in this area.
Tom: In your experience, which area of marketing do you feel that marketers have the most trouble with?
Al: Focus. Almost nobody wants to focus; they all want to expand the line, introduce new products, new price segments, new customer segments, etc.
Expansion is the goal of most companies today. That might make sense, but that’s not the way to build a brand.
The way to build a brand is to narrow its focus so it stands for something in the minds of consumers.
Compare an unfocused company like Sony with a focused company like Nintendo. Sony is more than 14 times the size of Nintendo, yet the last time I checked Nintendo was worth more than twice as much as Sony on the stock market. Furthermore, Sony’s net profit margin in the last 10 years is just 1.8 percent.
Nintendo’s new profit margin in the last 10 years is 15.5 percent.
You know Sony is in trouble because it’s now run by an Englishman,Sir Howard Stringer.
Virtually every company that gets in trouble gets in trouble for the same reason. They expanded when they should have contracted.
You can’t stand for something if you put your name on everything.
Tom: What can be done to address this problem more effectively?
Al: I wish I knew. It has to start with the media, though. Until the major business publications devote more space to the “less is more” idea, it will never happen.
So far, however, the major business publications have pretty much ignored the discipline of marketing. BusinessWeek, for example, reviews dozens of management books every year, but I can’t remember the last time the publication reviewed a marketing book.
To celebrate its 75th anniversary Fortune selected the 75 books that will teach you everything you need to know about business. Apparently marketing isn’t one of those things you need to know about business because no marketing book made the list.
The way the marketing discipline is treated in the business media, you might think that marketing is nothing but discounts, deals and coupons.
The essence of marketing, in my opinion, is strategy. Everything else is trivial.
Tom: In a recent study Anderson Analytics conducted marketers seemed to express anxiety with new media stating that they are tired of hearing certain buzz words related to web 2.0 such as social networking, blogging etc. The overall trend among this group of senior executives seems to be to embrace ‘back to marketing basics’ such as customer retention and customer satisfaction. Still several do seem to feel that these new trends are worth keeping an eye on. I think, it seems to signal a certain level of frustration among successful marketers on how to take what they know and apply it in a new environment. What are your thoughts on this? Is web 2.0 and new media over rated or should we be paying even more attention to it?
Al: Marketing is very much like warfare. (As a matter of fact, I wrote a book along with Jack Trout called “Marketing Warfare.)
In marketing, as in warfare, you have strategy and tactics. The strategies never change, but the tactics do. Just like warfare, the tactics of marketing have been evolving.
In World War I, for example, infantry was the key tactical weapon. In World War II, armor was the key tactical weapon.
Today, the key tactical weapon of warfare is air power.
You can’t win a war just by good tactics. You also need a good strategy.In World War II, the German army was probably the world’s best. Yet their strategy was faulty. The day Germany attacked Russia, the war from a strategic point of view was over.
Trying to fight on two fronts is an impossible task. It didn’t work for Napoleon in 1812 and it didn’t work for Adolph Hitler in 1943.
Companies cannot win today just by good tactics. The Internet, blogs, websites, email, etc. are tactical weapons that need to be used to support a good strategic idea. You need both.
Marketing managers should focus their attention on strategy and hire web-savvy individuals to handle the tactical execution of a marketing program.
In my opinion, strategy is 90 percent of a marketing war and tactics are 10 percent. A good strategy and relatively poor tactics will generally be effective, but not the reverse.
Tom: To what degree can/should some of your important branding ideas be applied in this new media environment? Are there any ideas on branding which you have espoused in the past which you now feel have changed?
Al: Years ago, we felt that generic names could make good brand names. Our opinion is now just the reverse. Companies should avoid generic-type names and use strong brand names like Starbucks, Red Bull, iPod, etc.
As far as some of our other branding ideas are concerned, many marketers make a mistake in trying to apply all the ideas rather than be selective. Laura and I wrote a book, The 22 Immutable Laws of Branding, and we received quite a few emails and letters expressing the difficulties that some companies were having in applying these laws.
We later found out that the marketing people were trying to apply all 22 laws to their situations when they should have been applying just one.
The essence of strategic planning is to identify the problem. Not two or three problems. If you try to solve all your problems, you won’t solve any of them. You need to be selective. In other words, focus.
It’s not easy. That’s why we have no hesitation in publishing a book identifying all of our strategic principles. That still leaves a major problem. “Which one of these laws should I apply to my situation?”
Tom: What is your overall opinion on market research?
Al: We have two opinions. Research that asks consumers what they did and why is incredibly helpful. Research that asks consumers what they are going to do can often be taken with a grain of salt.
The more revolutionary the idea, for example, the less likely consumers are going to endorse it. Dietrich Mateschitz launched Red Bull in spite of a totally negative research study.
My ex-wife used to be in the marketing research business. One day she came home and said, Don’t buy Xerox stock. And I said why? She said that she had just worked on a research study of the 914 plain-paper copier and found that no companies were going to buy one.
As it happened, the Xerox 914 went on to become one of the most-profitable new products ever introduced.
We are strong believers in market research that doesn’t ask consumers to forecast their future purchases. When I ran an advertising agency in New York, we used market research for virtually every client, especially semantic differential research.
But with a twist. We were just as interested in what consumers thought about competitive products as well as what they thought about our clients’ products. What we were trying to do was to find an attribute where are client’s brand was strong and competitive brands were weak. When you can do that, you can almost always be assured of a successful marketing program.
And, this is the final twist. It didn’t matter whether the prospect thought the attribute was important or not. As long as our client’s brand was strong and the competition was weak, the strategy always worked.
Tom: From my talk with Laura I know that you and Laura “are not big fans of using market research to predict future behavior”. Still that is something we are frequently asked to do, and something I think we are getting better at. With the rise of consumer generated media, and techniques like text mining which allow us to monitor what is being said about brands and product, do you think this will help make marketing research more effective?
Al: There’s no question the web and text mining will help marketing research companies provide more comprehensive research at reasonable prices. And, as mentioned before, we think that research can be extremely helpful as long as it avoids the issue of “future behavior.”
I believe the critical issue in research is “perception.” As long as market research maps the minds of consumers and measures their perceptions of brands, it’s going to be valuable.
If you can figure out what’s in consumers’ mind, you can usually figure out what they are likely to do more accurately than asking the question directly.
Tom: What do you think we can we do better to serve other parts of marketing and ultimately the customer? Are there any examples/types of market research methodologies that you have been more impressed with?
Al: Your Marketing Trends 2009 report is extremely helpful to us. Any research of this general type is always going to catch our attention.
Management Trends 2009 would also be a good idea, especially since it might illuminate the difference between management’s opinion on a given subject and marketing’s opinion.
I mentioned before our previous use of semantic-differential research. Strangely enough, none of our clients today seem to be using this research technique.
Tom: Thank You so much Al, I very much agree with you about getting into the consumers mind. We’ve been doing this with new projective techniques. The semantic-differential research also sounds very interesting and I’ll definitely be taking a closer look at using it more often.