Marketing warfare by Al ries and Jack

trout
Chapter 1

Definition of marketing: human activity at satisfying needs and wants through an exchange
process.

1) Identifying customer needs

2) Conceptualizing those needs in terms of an organization capacity to produce
3) Communicating that conceptualization to the appropriate laws of power in the
organization
4) Conceptualizing the consequent output in terms of the customer needs earlier identified
5) Communicating that conceptualization to the customer

Is this what marketing is all about ? The victory belongs to the side that does a better job of
marketing research?

Clearly something is wrong. When American motors ignores customer needs the company is
much more successful. The jeep, the product borrowed from the military, is a winner. American
motors passenger cars are losers.

Today every company is customer oriented. Knowing what the customer wants isn't too helpful
if a dozen other companies are already serving the same customer's wants. American motors
problem is not the customer. Problem is general motors , ford , Chrysler , and the imports.

Becoming the competitor oriented:

To be successful today , a company must become competition oriented. It must look for the
weak points in the positions of its competitors and then launch Market attacks against those
weak points. Many Marketing stories illustrate this.

Example : when everyone losing against IBM, DEC made millions by exploiting IBM by small
computers.

The marketing plan of the future

Develop the list of competitive weakness and strengths as well as a plan of action to either
exploit or defend against them.

Successful marketing campaigns will have to plan like military campaigns.

Companies will have to learn how to attack and flank their positions and how to defend their
positions. And how and when to wage guerrilla warfare. They will need better intelligence on
how to anticipate competitive moves.

On the personal level , successful marketing people will have to exhibit many of the same
virtues that make a great military general - courage, loyalty, and perseverance.

Marketing is like a football: you have to when to defend and offend.

The true nature of marketing involves the conflict between the competition. Not satisfying
human needs and wants.

Chapter 2 The principle of force :

Take aways:
● Force is an important factor for both war and marketing
● Better people fallacy
● Better product fallacy
● Important questions to ask ? If you're so smart , how come you are not rich ?

It's a myth : it's easier to stay on the top than to get there. The leader , King of the hill, can take
advantage of the principle of force. The law of the jungle. The big fish eat the small fish. The big
company beats the small company.
The mathematics of a marketing melee:

Given a virgin territory the company with a larger sales force is likely to wind up with a larger
share of the market.

The bigger company can afford a bigger advertising budget, sales force, and sales outlets. No
wonder the rich get richer and poorer get poorer.

The better people fallacy

Surely in a marketing war quality is a factor is a factor as well as quantity.

It is but the superiority of force is overwhelming advantage that it overcomes most quality
differences.

What's wrong with hiring better people? Nothing but the larger the company, the more likely it is
that the company has average people. The difference between winners and losers is seldom
people. It is almost always a strategy.

Management books argue that ,hire best people and build best strategy. A better approach is to
build an better strategy, which will than attract better people.

The better product fallacy

" The single most wastful thing you do in marketing today is to try to change a human mind.
Once a mind is Changed . Its impossible to change."

What is the truth ? Truth is a perception thats inside the mind of the prospect. It may not be your
truth. But it's a only truth you can work with. You have to accept that truth and then deal with it.

Important questions: if you're so smart , how come you are not rich ?

"If you are so smart, how come you are not rich? That's a tough question to answer. In a
Marketing war you can't win just by being right "

There's the illusion. Of course that over long run , the better product will win. But history, military
and marketing is written by winners not the losers.

Chapter 3 : The superiority of the defense

" The defensive form of war is in itself stronger than the offense "
In an open field a firefight between two squads is rapidly decided in favor of the larger unit (
Power of force ). But what happens when one of the two squads is on defense ? How does this
change the mathematics of the situation?
This 👆 corresponds to the difficulty of making "conquest sales " that is , taking business away
from an established competitor is usually much more difficult than getting business from a
previously uncommitted prospect.

The fruit of victory:

Why fight an offensive war at all if defense is so attractive? The paradox is the fruit of victory. If
you can win a marketing battle and become the leading brand in a given category, you can
enjoy that victory for a long time. Simply because you can now play defense , the stronger form
of warfare.

The survey of 25 leading brands from the year 1923 proves this point. Sixty years later , 20 of
those brands were still in first place. Four were in second place and one was in fifth place. In six
decades, only 5 out of 25 brands lost their leadership. Four were in second place and one was
in fifth place.

Examples: Ivory in soap, Campbell in soup, coca cola in soft drinks.

Don't be a hero :
Heroism is a disease among too many marketing people eager to do or die for their company. If
you approach the subject of marketing warfare looking for ways to cover yourself with marketing
glory , this is wrong book.

Nothing in marketing is so pathetic as the charge of the light brigade. RCA and GE against IBM
in computers. Exxon and lanier against IBM in automation. Western union against everybody in
electronic mail.

There are no heros at IBM. No medals of honor awarded posthumously. Winners may be hard
to admire , but as most losers will tell you , love is no consolation for having lost.

Friction favors the defense:

One of the reasons the defensive form of warfare is so is the difficulty of launching a surprise
attack.

In theory," says Clausewitz, "surprise promises a great deal. In practice, it generally strikes fast
by the friction of the whole machine."

In theory, the 1916 battle of the Somme was going to be a surprise attack. But after moving a
million men into position and waiting a week for the artillery to do its job, the Allies were left with
little surprise.

The larger the operation, the less the surprise. A small company might be able to surprise a big
company with a new product. But ford is unlikely to pull any fast ones on Genral motors. The
friction of the whole machine gets in the way.

When you look at case histories of leaders who were taken by surprise, you usually find they
had ample warning leaders get overrun when they ignore those warnings or pooh pooh efforts of
the competition.

An attack takes time :

In marketing attack, the bottleneck is communication. Getting a market message across to

millions of customers can take months or years.Be alart for potential risks from any direction.

Chapter 4 The new era of competition

Take aways :

1 ) read lots of business newspapers. Read about wars .

2 ) Find Ads : learn from them
3 ) business is about competition
4) Promises - think like politician
5) The reality is different in marketing conflict - is not about hard work

Unkept promises should be as vague as political ones. Otherwise they will erode the
effectiveness of your faces.

Example : when Hitler promised to take Stalingrad and failed. He lost more than his military
reputation. He also his " master of propoganda" image.

Reality:

Competitiveness Is not only aggressiveness. And aggressiveness is not "more". More product,
more meetings , more report.

Especially more hard work. Somehow we feel better about success if we have to work hard to
achieve it.

Example
Chapter 5 The nature of the battleground

The real question is " where , where is the terrain ? Where are the marketing battles being
fought ?

"A mean and ugly place: hold the marketing " high ground" and the need to avoid a "well
trenched " competitor. Where is the high ground? Where iare the trenches ? "

If you want to go out and do battle with your competitor, it's helpful to know where to go.

Marketing battles are not fought in the customer's office or in the supermarkets or the
drugstores of America. Those are only distribution points for the merchandise whose brand
selection is decided elsewhere.

Marketing battles are not fought in places like Dallas, Detroit, or Denver. At least not in the
physical sense of a city or a region.

Marketing battles are fought in a mean and ugly place. A place that's dark and damp with much
unexplored ter- ritory and deep pitfalls to trap the unwary.

Marketing battles are fought inside the mind. Inside your own mind and inside the mind of your
prospects, every day of the week.

The mind is the battleground. A terrain that is tricky and difficult to understand.

The entire battleground is just 6 inches wide. This is where the marketing war takes place. You
try to outma- neuver and outfight your competitors on a mental moun- tain about the size of a
cantaloupe.

A marketing war is a totally intellectual war with a bat- tleground that no one has ever seen. It
can only be imagined in the mind, which makes marketing warfare one of the most difficult
disciplines to learn.

Mapping the mind :

How do you see inside a human mind to find out what the terrain looks like and what strong
points the enemy holds ?

One way to reconnoiter the humen mind is to use marketing research. But not in one traditional
way of asking customers what they want to buy. That's yesterday's approach. What you are
trying to find out is what positions are held by the companies. Who owns the high ground?
Done correctly. You can contour the mind of average prospect to produce a map that is just as
useful to a marketing general as the Michelin maps that patton carried across the Europe.

Mapping the mental background can give you an enormous advantage. Most of your
competitors won't even know where the battle is being fought. They will be preoccupied with
their own camp. Their own products , Salesforce, own plans.

Mountains in the mind :.

Any attempt to describe a human mind in physical terms is bound to be symbolic. Yet there are
certain symbols used in both miltery and marketing operations that seem to be especially
appropriate.

In warfare, mountain can be occupied or unoccupied. Tissue mountain occupied by Kleenex.

Ketchup is heinz . Computers is occupied by IBM.

When customer uses brand name as generic . You know the mountain in their mind is strongly
occupied.

He who attempts to defend everywhere defends nothing.

Chapter 6 - The strategic Square
 1. Defensive
2. Offensive
3. Flanking
4. Guerrilla

In leader board, if you order them, each company is half the size of the next larger company.

The game is more than winning. Of course, General motors will have more points on score
board.

For ford , increasing its share of the market would represent a substantial victory.

For Chrysler, profitable survival would be enough to declare a victory.

For American motors, survival would be enough.

The type of warfare General motors should wage :

Competitors? Justice department, Trade commission, Us Congress.

General motors can't win by winning, if they wiped out one oor more of their automotive
competitors , the courts or Congress would break them up. GM will win by not losing.

Karl Clausewitz says, Defense itself is a negative exercise, since it concentrates on

resisting the intentions of the enemy rather than being occupied with your own.

What ford should do :

Who should they attack?

People rob banks , because there's where money is. Si ford should attack GM.

Ford can pick 10% from General motors or 10% from AM. The temptations is to prey on the
weak rather than the strong . On the theory easy pickings. Yet the opportunity is close to the
truth. The smaller the company, its harder to protect small share of its own.

Ford should attack GM against weak points.

What Chrysler should do :

Old African Proverb : When Elephants fight , its the ants that take a beating.
Chrysler should avoid attacks between General motors and ford and launch flanking attack. This
is exactly what Lee Iacocca has done. Some of his classic flanking attacks against the entire
U.S. automotive industry include the "first" convertible, the first minivan the first six-passenger
front-wheel-drive car.

What Mr. Iacocca has accomplished is all the more brilliant when you realize where he was
coming from. After 8 years at the top of Ford, he made an abrupt switch to Chrysler, helped
along by a gentle push from Henry Ford II. What could have been expected is the grafting of a
Ford strategy onto a Chrysler organization. Not so. Iacocca deserves the credit for developing a
different strategy, much more appropriate to the situation he found at Chrysler.

How many marketing generals would have been able to do the same? Most of us would have
tried to play the marketing game the way we had successfully played it in the past.

In retrospect, there was one Ford strategy that Iacocca could have used as a pattern for
Chrysler. That was the successful flanking attack represented by the Mus- tang, the first
two-passenger "personal" car. Iacocca per- sonally developed the hot-selling car after selling a
reluc- tant Henry Ford on the idea.

What American Motors should do?

What can you say about poor American Motors except head for the hills, put on your black
pajamas, and become a guerrilla.

American Motors is too small to launch offensive attacks against General Motors. Even if initially
success- ful, American Motors doesn't have enough dealers, enough manufacturing capacity,
enough marketing muscle to sustain a marketing attack.

American Motors is too small to launch a flanking attack against the industry. Not too small to
start a flank. ing attack as the company proved with the Nash Rambler But too small to
dominate the segment after being the first to launch the concept.

The only category that has been a consistent winner for American Motors is the Jeep. This is a
classic guerrilla tactic. Find a segment big enough to be profitable for the guerrilla, but too small
to be tempting to the leader.

The mountain in the mind

Let's review the battleground in the mind. The mountain, of course, is the high ground owned by
the leader. If you go through the mountain, then you are fighting an offensive marketing war.
Hopefully, you'll find a valley

or crevice that your troops can break through. But the battle is tough and often costly because
the leader usually has the resources to make strong counterattacks.
If you come down the mountain to stop competitive attacks, then you are fighting a defensive
marketing war. And the rule is, the best defense is a good offense.

If you go around the mountain, then you are fighting a flanking marketing war. This is usually the
most effective and least expensive type of marketing operation to con- duct. But opportunities
for good flanking moves are becoming scarce in many product categories.

If you go under the mountain, you are fighting a guerila marketing war. You want to select a
territory secure enough to defend. Or too small for the leader to bother with.

Chapter 7 - Principle of Defensive warfare

Leadership is a Powerful motivating force only when it's in the consumer's mind. Power
doesn't derive from actual market leadership, But from perceptual leadership.

Defensive Principal 1 : Only the market leader should consider

playing defense. This might seem straightforward but it's not.

Axiom : every company believes they are the leader. But the customer doesn't care.

Companies don't create leaders. Customers do. They choose who is the leader.

Example : there are the many leaders in the computer industry. But only one IBM, the true
leader in the mind of the customer.

Then there are pretenders to the throne, some business people actually beleive you can " will "
your way to the top. They beleive in the power of positive thinking. First , you have to convince
yourself you are the leader before you can go out and convince others.

A good marketing general must have a clear picture of the actual suitation so that he or she can
lead from truth.Fool the enemy ande never fool yourself.

Defensive Principle No 2 : The best defensive strategy is the

courage to attack yourself.

Because of its leadership position, the defender owns a strong point in the mind of the prospect.
The best way to improve your position is by constantly attacking it. In other words you
strengthen your position by introducing new products or services that obsolete your existing
one.

Example: IBM is the master of the game. Every so often , IBM introduces a new line of
mainframe computer with significant price / performance advantages over existing products.
Competitions continually struggles trying to catch up.

Example: Gillette is another example. Gillette owned the wet shaving market. The company was
stunned when rival Wilkinson sword beat it to the Market in the early sixties with the stainless
blade. At that time , Gillette got its act together and started to play a brilliant game of Defensive
warfare.

Gillette counter-attacked with Trac II , the world's first double bladed razor. The success of Trac
II set the pattern for future Gillette strategy. " Two blades are better than one, " said Gillette 's
advertisement.

Gillette's customer who promptly bought the new product instead of the old. It's better to take
business away from yourself than have someone else do it for you.

Six years later, the company introduced Atra, the first adjustable double bladed razor.Again by
implication the new product was better than the Trac II , the non adjustable two blades razor.
Gillette constantly attacked itself to be a leader. Gillette has 54 % market share.

Attacking yourself may sacrifice short term benefits, but it has the fundamental one, it protects
the market share, the ultimate weapon in any marketing battle. The reverse is true.

Defensive Principle No 3 : Strong competitive moves should

always be blocked.

Most companies have only one chance to win , but leaders have two. If a leader misses an
opportunity to attack itself, the company can often recover by copying the competitive move. But
the leader must move rapidly before the attacker gets established.

Blocking works well for a leader because of the nature of the battleground. Remember, the war
takes place inside inside the mind of the prospect. It takes time for an attracker to make an
impression in the mind. Usually, the time enough for the leader to cover.

Example: General motors had not produced a significant, major automotive innovation since the
1939. But ford pioneered I'm practically every major new market while Chrysler produced the
significant technical innovations such as power steering, power brakes , electric windows and
the alternator.
The power of majority : To me it seems I'm right , but my reason tells me I'm wrong, because I
doubt that so many people could be wrong and I alone right. The fact is , many people pay more
attention to the opinion of others than they do to their own. If everyone is laughing in the theater.
You assume movie is funny. If no one else is laughing, you assume it is not funny.

Most leaders say, "Let's monitor the situation and see what happens." But that can be
dangerous tactic for a leader. Too often what happens, happens too fast. All of a sudden, its too
late to get into the new ball game.

Be prepared to strike back :

What do most companies do when one of their major brands is hit by a price attack?

The classic response is "wait and see". Wait and see if it affects our sales. Wait and see if the
competitor can hang in there financially for the long haul. Wait and see if our customers come
back after tying the low priced alternative.

Be prepared. The leader should be emotionally ready to attack back.

Karl von Clausewitz said , The statesman who, seeing war inevitable , hesitate to strike first is
guilty of a crime against a country.

Keep something in reverse:

While an attacker should go all out , its not always desirable for the leader to spend as much
money as posible on marketing operations. Much better to spend only as much as necessary to
defend your position. Keep the rest as a reserve.

Should the competition attack with an usually attractive offer, you'll have the wherewithal to
defend your position.

What about the feds ?

One of the constraints that hold companies in check is the fear of legal reprisals. And the fear is
real , especially for the market leader.

Marketing peace:

The goal of all defensive war , of course, is marketing peace.

Marketing peace is what kodak has achieved in photograpic film , Campbell in soup and IBM in
computers. These are so dominant that there are no companies in second place.

Assuming that peace has permanently broken out , leaders can change their strategy. They can
shift gears to a generic rather than a brand strategy. Which is why Campbell's "soup is good
food ".
They promote soup not Campbell's soup. Kodak promotes photography film , IBM promote
computer

When you own pie , you should try to enlarge the pie rather than try to increase the size of your
slice.

Chapter 8 : Principles of offensive warfare

Where absolute superiority is not attainable, you must produce a relative one at the
deceive point by making skillful use of what you have. - Karl von Clausewitz

Offensive warfare is for No 2 or No 3 companies in a given field.

So it's important to constantly ask yourself: What position you occupy in the marketplace before
you apply strategy.

This is a company strong enough to mount a sustained offensive against the leader. No one can
tell you what "strong enough " means, like military warfare , marketing warfare is an art, not
science. You have to use your judgment.

In some industries several companies may be strong enough to launch offensive attacks against
the leader. In other industries, no one.

Offensive Principle No 1 : The main consideration is the strength

of the leaders position:

Most companies are like kids. They want to "do it themselves" Their instant reaction to
marketing problem is to study their navels. The quality of their own product, service, and
Salesforce. Which is why most companies end up talking and acting as if they were the leader.

What they ( No 2 ) should do ?

What a No 2 or No 3 company should do is to focus on the leader. The leader's product, the
leader's service, and the leader's sales force.
No matter how strong a No 2 company in a a certain catagory to attribute, it cannot win if this
also where the leader is strong.

What the leader owns ? A position in the mind of the prospect. To win the battle of mind , you
must you must take away the leader's position, before you can substitute your own.

In a given field, half dozen companies might develop marketing plans with similar share
increasing objectives.

Much better strategy for No 2 is : How do I decrease the market share of the leader?

Marketing warfare is a battle with minds not products. You artillery nothing but words,
pictures , and sounds.

Offensive Principle No 2 Find a weakness in the leaders strength

and attack that point. .
That's not a misprint. We mean " Find a weakness in a leader's strength. Not in the leader's
weakness.

Sometimes leaders have weak points that are just weak points and inherent part of their
strength. They may have overlooked the point , considered it unimportant, or forgotten about it.

Example : Mercedes Benz made big , comfortable, prestigious vehicle. So BMW attacked with
smaller, more nimble machines. The ultimate driving machine is how BMW expressed its
position.

Nor is high price an inherent weakness in Benz. Because of the scale of the production , Benz
has the lowest manufacturing cost in the industry. Its always dangerous to attack Benz on price
because they have the financial ability to make money at almost any price. No matter how.
Offensive Principle No 3 : Launch the attack on as narrow a
possible
In World war II , offensive attacks were usually launched on a very narrow front. Sometimes
down a single highway. Only the breakthrough was achieved did the attacking forces expand
laterally to expand the territory.

Clausewitz says "when absolute superiority is not attainable you must produce a relative
one at the decisive point by making skillful use of what you have"

Offensive warfare is not an easy task . As Clausewitz says " odds favours the defender "

Statistics shows that most attacks are going to fail. In a survey of 600 companies over a 2 year
period ,only 20 percent enjoyed market gains of 2 percent or more.

There is always weakness in strength. If you can find it.

Forgot finding a weakness. That's just a weakness. Turn the problem around and look at it's
strength.

Don't expect any company to pick up on these concepts soon. Good offensive ideas are
extremely difficult to sell because they are negative in nature. They go against the positive
thinking.

Benefits of narrow minded :

Disadvantages of being broad minded
Attacking monopoly

Example : wall street journal

Summary; Wall Street is the monopoly in newspaper segment.

Don't attack with good editorial product. But that's not good editorial thinking. A good general
tries to avoid depending on quality of personal for his victory. A good general wants relative
superiority at the deceive point ( weakness in strength)

Wall street is Market place for money & Investing . You can attack one part of it. Let's call it
business times.

Look at below image for offensive strategy

Principles of flanking warfare:

Principle No 1: A good flanking move must be made into an

uncontested area.

You don't drop your paratroops on top of the enemy's machine gun positions. And you don't
launch a flanking product into the teeth of an established product.

Success of an flanking attack often hings on your ability to create and maintain a separate
catagory. Traditional marketing it is called segmentation. And first you should occupy the
segment. Otherwise it would be offensive attack against defended position.

Flanking skill requires exceptional foresight. The reason is that in a true flanking attack. There is
no market for new product or service.

Example: Mercedes flanked Cadillac by selling more expensive cars. But mercedes continues to
undermine it's high end position by selling cheaper version of its luxury cars, such as it's a class
and c class vehicles.

Its difficult for a traditional Marketer to market a product with no Market. But that's
exactly what you have try to do if you want to launch a successful flanking attack.

Question ❓ : where will the business come from if there is no market to start with ? From the
competitors whose shoulders you are flanking. This unraveling of the enemy's strength is the
essence of successful flanking maneuver. It can create enormous momentum which can be
extremely difficult for the competitors to stop.

Principle 2 : Tactical surprise ought to be an important element of

the plan
Most successful flanking should be totally unexpected. The greater the surprise ,the longer it will
take the leader to react.

Greater flanking attacks are undermined by test marketing, or too much research, which
exposes the strategy to the potential danger.

If the leader fails to notice your moentem , you might get lucky to move youe company to
national basis.
Principle 3 👍The pursuit is just as critical as the attack itself.
“Reinforce success , abandon failure” - To many companies, however, quit after they’re
ahead. They achieve their initial marketing targets and they move resources into other
endevours.

Example : Let say A company have 5 products, 3 winners and 2 losers. Who get the most time
or attention: the losers. This sould be opposite in business. Shoot the losers. Reinforce
success.

When you have a flanking product, that starts to become successful , you ought to really pour it
on. Your objective ought to be to win and win big.

The best time to build a strong position is in the begining, when the product is new and exciting
and the competition is scarce or running scared. This is a luxury you seldom enjoy for a long.

Success breeds success. It’s important to use your marketing weight to get your new product off
the ground in a hurry. Before the leader can cover and you get overwhelmed by me too product.

“You should have the resources to follow through, to reinforce success.” otherwise you will go
no where.

➕
➕
1. FLANKING WITH LOW PRICE

➕
2. FLANKING WITH HIGH PRICE

➕
3. FLANKING WITH SMALL & LARGE SIZE
4. FLANKING WITH DISTRIBUTION
5. FLANKING WITH PRODUCT FORM

FLANKING WITH LOW PRICE ➕

The most obvious form of flanking is low price. The advantage of this approach is that market is
there. After all, everyone presumably wants to save money. Yet it's tough to make money by
cutting price.

The trick is to cut the cost in areas where customers won't notice or don't care;

Long back, days Inns flanked holiday inns at low end of the motel market. Today days Inns are
the most profitable.

Example:
FLANKING WITH HIGH PRICE ➕
There are two reasons why high price represents more of a marketing opportunity than a low
price.

1. One is the tendancy of the prospect to equate quality with price. "You get what you pay
for"
2. Other one is the potential for higher profit margins with high price.
FLANKING WITH SMALL SIZE ➕
Example: Vokswagen
The classic flanking attack of all time is beetle. The automotive industry has never been the
same since Volkswagen outflanked general motors.

GM made big cars. Volkswagen made small cars.

"Think small"said the Vokswagen ad. Outflanked GM.

But it's line extension bested itself. By being everything to everyone.

FLANKING WITH lARGE SIZE ➕

Howard head , the founder of ski company. After selling his ski company, he turned his attention
to tennis and think big.

He launched over-sized tennis racquet. It was called as " the cheaters racquet" by scoffers.
Inspite it acquired 30% of the market.later He sold his company. And he launched mid sized
racquet. It was a mistake. History repeats itself.

FLANKING WITH DISTRIBUTION ➕

Flanking the competitors' distribution.

Watches are used to sold in jewellery and departmental stores. Untill times flanked the
established brands by using drugstores.

Avon was the first company to use door to door cosmetics delivery.

FLANKING WITH PRODUCT FORM ➕

Example: The toothpaste catagory has not been the same since proctor and gamble's crest won
the American dental association's seal of approval and rocketed into the first place.

Two lever scientists found silica abrasives, never before used in toothpaste. The result was
closeup. A clear red gel. Do you think close up is an innovation or scientific discovery. White
teeth and mouthwash combined are the Marketing strategy.so scientist looking for components
to make the concept work.

If you know what you are looking for. You can recognise lot easier when you found it.

Factors in successful FLANKING:

Flanking is not for the timid of cautious. Its a gamble with the possibility of a big payoff or big
loss.

Flanking requires vision and foresight. Research oriented people tend to avoid flanking. what is
the market for over-sized tennis racquet.

Prospects cannot know what they are likely to buy in the future if their choices are going to
change drastically.

Example: apple successfully flanked IBM at the low end to dominate the 8 bit home computer
market for decades. And IBM returned a favour by flanking the 8 bit apple computer at the high
end with its 16 bit pc. This was perhaps the most important product introduction of the twentieth
century.

Before they copy your product, they have to swallow their egos that can take a while.

Principles of guerrilla warfare

The smallest automobile company America motors is considerably larger than Gillette. But AM
should play guerilla and Gillette should play defensive.

What is more important than your size is , size of your own competition. The key to marketing
warfare is to tailor your tactics to your competition, not your own company.

Guerrilla principle 1 : Find a segment small enough to defend.

It could be small geographically or in volume. Or in some other aspects difficult for a larger
company to attack.

A guerila organisation does not change marketing war - big company still beats small company.
Rather a guerila tries to reduce the size of the battleground in order to achieve a superiority of
force. In other words tries to become big fish in small pond.

Geography is the traditional way to achieve this objective. In any given city or town, you can find
bigger departmental store than sears , bigger restaurant than McDonald's, a hotel bigger than
Holiday inns. A local retailers tailors the merchandise, food, or service offered to local tastes.

Example: Rolls Royce

A high priced guerila in automotive business. They dominate the market for cars costing more
than $100000 dollers.

Nobody thinks competing with rolls Royce, because

1. Market is small
2. Mathematics are in the side of rolls Royce

Computer vision is bigger than IBM in computer aided design.

Differences between FLANKING and GUERILA

A flanking attack is deliberately launched close to the leader's position. The objective of the
flanking attack is to bleed or unravel the leader's share.

Example: Mercedes Benz is a high price flanking attack against Cadillac. And it succeed in
bleeding business from GM. So that Cadillac launched the Sevilla in an attempt to defend its
turf.

Guerila: Rolls Royce is a true guerila. It might take some business from others. But it's not
unravel the competitor's position.

Try pick a small segment so that you can become the leader. The tendancy is to do the
opposite, tru to grab as big Market as possible. This could be mistake.

We read a lot about companies that went under because the Market they were concentrating on
was too small. On the other hand , you often read about companies torn apart by
overexpansion, companies that launched too many products in too many markets in too large a
geographic area.

Sometimes it's tempting for a guerila to change its strategy to flanking one. In other words, to
attempt to increase Market share by getting closer to the industry leader and unraveling it's
position. For example introduce a less expensive car and take business from Cadillac,
mercedes and BMW.the key consideration is resources. Does guerila have resources to go
against?

Why can't guerila do the both? Why can't rolls Royce continues to sell $ 150000 cars as well as
50000 cars designed to flank the mercedes. - line extension trap. This just invites disaster.

Guerrilla principle 2: No matter how successful you become,

never act like a leader.
That's not to say that the business schools of this world don't produce excellent leaders. They
do, for the big companies whose case histories make up the core of their curriculum. But the
essence of guerila strategy and tactics is the opposite of what's right for the fortune 500 crowd.

Shut your mouth, keep your vision safe place.

Guerrilla principle 3 : Be prepared to bug out at a moment's

notice. A company that run away lives again to fight another day.

Che Guevera said "Don't hesitate to abandon a position or a product if the battle run against
you. A guerilla doesn't have the resources to waste on a lost cause. A guerilla should be quick
to give up and move on"

Guerilla should use their flexibility to jump into a market quickly when they see an opportunity.
The guerilla can often move quickly to fill the void while the market is still there.

Geographic guerilas :

A guerilla doesn't change the mathematics of marketing war. Rather guerilla reduces the size of
the battleground in order to achieve a superiority of force.

Demographic guerilla
This tactic appeal to specific segment of the population. A segment created by carving out a
specific catagory by age, income, occupation.

A publication called inc. represents typical demographic guerilla. The first national magazine for
the small business owner. It was phenomenal success since it was launched in 1979. In its first
year Inc, carried 648 pages of advertising worth almost 6 million.

Industry guerilla

It concentrates on a specific industry. This known as vertical marketing

The key to success of an industry guerilla is to be narrow and deep.

Example: some computer companies are selecting an industry say, advertising or banking or
commercial printing and then designing an entire computer systems to solve problems that crop
up only to the industries.

Product guerilla

Many guerillas make money by concentrating small Market with unique one of a kind products.
Their sales never get large enough to tempt the larger companies in the same industry.

In the last 10 years, for example, AM selling just over 100,000 jeeps a year. In the same period ,
general motors sold 18 times as many Chevrolets. Why should GM launch jeep type product
and maybe sell 30000 cars per year.

High end guerilla

In the today’s affluent society, there are plenty of guerillas at the high end market. Many
potential high-end guerilla hesitate to jump into the market. They worry that their proposed
brand names dont have mystique to justify the extravagant prices they are thinking of charging.

So they compromise by introducing product by low prices. Sometimes they cut the quality or
features to do so. As a result, the new product never does create the mystique or the high sales
they want.

They confuse cause and effect. The mystique is not the cause that creates the effect of high
demand And high sales. The high quality and high price are the cause that creates the effect
(the mystique - the belief system) which then creates the demand.

High prices create “visibility “ in the distribution system. Hey look what they are charging for
their product. The customer says. And then ask why. This , of course creates the opportunity to
tell the prospect what the product does to justify its price. But you have to be first in that
territory to be high end guerilla.

It takes faith and courage to become a high end guerilla. Faith on future of your innovation and
courage to launch the product with an unknown name. Dont look for security / established name
to launch the product. One name cannot stand for two different strategies.

Who can afford a ferrari? Not many people. But who can afford to pay $ 5.00 for salt. Almost
everybody. But the trick is not to sell the salt at 5.00 . The trick is to find something put into the
salt to make it worth the price.
Example Starbucks
Developing allies:

Developing allies is a common strategy in many industries, especially where the predominant
competition consists of hordes of local guerrillas. A typical pattern is the franchi- sor who
attempts to assemble a national chain under a national name, but with local ownership and
control. This strategy can be attempted in either of two different ways: top-down or bottom-up.

Top-down organizations develop the entire package and offer it to local business people to run.
McDonald's, Pizza Hut, Holiday Inn, Coca-Cola are typical examples. In other words, you
develop a concept and then try to recruit an army of guerrillas to make it work.

because a bottom-up operation requires fewer resources to get started. A typical example is
Century 21. The company recruited existing realtors to join the national group which would
exchange leads and information. Century 21 especially good concept because the sale and pur-
chase of a house often involves moving from the territory was an of one real estate agent into
that of another. The Leading Hotels of the World, a voluntary group of 195 deluxe hotels, is
another successful bottom-up organization. So is Quality Inns, a group of 582 motor inns in
North America.

A key question to ask yourself in developing allies is, "Who is the competition?" Sometimes your
competition is your neighbor, sometimes not.

Two motels across the street from each other might Today be fierce competitors-reason enough
for one of them to join a chain like Quality Inns. On the other hand, the two motels might be on a
Caribbean island where the real competition comes from another island hundreds of miles away.
So instead of fighting each other, the two could join forces and promote the values of their island
in compar- ison with the competition's.