Dear CMO:
Giants exude a smug arrogance. They may have earned their way to the top but often they forget that a one time masterpiece does not a dynasty make. They start believing their press. They’re clinging to the back-end of a rocket and convincing themselves that they’re steering. It’s our job to bring them down. It’s a new year. The War of the Flea has begun.
How do you kill a giant? I’ve been on both sides of this in my career, so far, so between what I’ve lived through and what I’ve learned from others, here’s a good discussion starting point. Classroom participation is mandatory, so I’m counting on my loyal ten readers to add their words of wisdom here. Don’t make me cold call you. I will.
Killing Giants:
Lesson #1: Aikido
Familiarity breeds contempt. Use this, their size and their popularity against them. If I was competing against the iPod, this is where I would begin. They have 80% share and therefore are by definition a “mass market” product – they did iTunes right, have a nice MP3 player (not without problems) but they charge double. “We” have performance for a fraction of the cost.
Consumers are smart. They know when they’re paying too much. Remind them. Performance is everything. And image is nothing.
And by relying on this ‘performance is everything’ platform – which you can back up – you’ve just carved out an image of your own. You’re a populist in an age of fluff. Now animate this in a dozen smart, positive ways and start carving out share. The iDont campaign was well-aimed by a smart company with an excellent agency, but they missed the mark and received a bit of deserved backlash because the campaign went negative. So say the blogs. You don’t have to go negative.
Lesson #2: Thin Ice
Go where they can’t go because of their size, their capabilities, or their structure. Lead them out over the thin ice of your own creation. At Plantronics, we positioned our own specific technical capability – making boom-style headsets – against the bigger guys who also sold phones. The sound transmit of a boom is better because the mic is next to your mouth, not dangling around your collar. We quantified the impact of the distance on transmit quality in the lab and then trained our retailers that the difference between a boom and an ear bud was the same as walking down the street and then passing a jackhammer.
We also launched a series of enterprise campaigns to drive headset adoption in the enterprise with a heavy dose of PR talking about how our field salespeople helped office workers pick which headset style worked best for them in their offices. Our competition didn’t have a field sales organization. We won by default.
Lesson #3: Inconvenient truths and ROII
Back in the 90’s, we launched Sony batteries in the US. We got a foothold in the US market just as I left the company. This was an ill-fated product launch, but it proved an interesting point. By measuring the return on inventory investment (ROII), calculated as [turns] x [margin], we financially proved our case to several key US retailers that they made a better financial return on every dollar invested in Sony inventory than they did with Duracell and Everready. It warranted a test. And we got on the planogram.
This same strategy worked with our other blank media products. We took VHS tape from a #4 position to a #1 position, with a market size twice that of our nearest competitor, in a pure commodity market – a 10% drop in retail price caused a jump of 1,800% in unit volume in mass merchants — using ROII data. Our products turned faster because we promoted very effectively, even at a slight premium to the market price.
Figure out the mathematical scenario where you make them more money: if you don’t turn as fast, give them a higher margin and figure out how to increase your turns until your ROII is better. Show them the math and start carving out share.
Lesson #4: The War of the Flea
Can’t outspend them? Win at the point of influence. Winning the channel’s hearts and minds can work where brute force, which giants are known for, can’t. They run national advertising? I run a channel spiff. They drive traffic. I get the sale. They spend millions? I spend thousands.
Does your competitor lose focus, even for a moment? Take advantage of it immediately. A competitor discontinues a particular product in the enterprise market that has an installed base – you launch a guerilla campaign at their installed base showing how your competitor has just orphaned the product they just bought and offer a trade-in to your product. Another Plantronics tactical move that absolutely confounded our competition and left them churning for a quarter.
Does a competitor’s senior marketer leave with no heir in place? Now is the time to launch a sticky, difficult to counter program (like the PLT example, above), just in time to wrong-foot them with no one in charge. How RIM missed this opportunity recently I’ll never understand.
* * *
Key Takeaways:
> Aikido: use their popularity against them. Be a populist in an age of fluff.
> Thin Ice: lead the giant out over the thin ice of your own creation.
> Inconvenient Truths: make the math work to your advantage.
> The War of the Flea: win at the point of influence. They spend millions? We spent thousands.
* * *
This is the year of killing giants. I said so in my resolutions. How are you going to kill the giant in your industry this year?
Regards.
Copyright © 2007 Stephen Denny
And you’ve used a Caravaggio painting in doing all that, amazing! This is David with Goliath’s head.
For those who do not know, Caravaggio was not only a talented Italian painter from the sixteenth Century, he was also a thief and murderer. In fact, the head is a self portrait of the artist and a way of communicating that he knew he had a guilty conscious.
On David’s sward are carved the words: Humilitas occidit superbiam, which means humility (David), has a moral victory over arrogance (Goliath).
Yes, “Killing Giants, Part 1” shows my second Caravaggio graphic in as many posts — did you see Saint Jerome updating his blog in the previous?
Peter Robb’s exceptional “M: The Man Who Became Caravaggio” hooked me on Sr. Michelangelo Merisi. He’s a good metaphor for our blogging sides, isn’t he? Rebelious, passionate, brawling and painting ‘from life.’ A 1%-er, I suppose.
Humility’s victory over arrogance should have been the subtext of this post. As always, thank you for your comment, VM!
Stephen,
These are some of the more provocative (and sensible) marketing suggestions I’ve seen on the web. I look forward to the coming parts of your series!
Question about your Aikido strategy: let’s suppose I’m a company with a product competing against the iPod. What sort of timing would you recommend to implement your strategy?
Roger:
Let’s look at two possible outcomes: one is the aikido strategy relative to a dominant industry player – let’s stay with the iPod example; the other, as described in your email, could be an implementation against a market entry of a dominant player – here, you suggested the iPhone. Two very different situations, in my opinion.
Versus the iPod, you’re attacking an 80% player from a small base. You’re also working to a timetable of your own choosing. If “the people’s war is a political struggle”, according to Mao, then the timing must be fluid, advancing only when the political atmosphere is ripe. However, you are always attacking. By positioning yourself in terms of your own choosing – a purely authentic brand statement that iPod can’t copy – you’ve defined the ground of your own choosing. You extend this idea into merchandising in-store, because it’s more effective, it’s cheaper, and it integrates well with the channel evangelism you want to aim at the floor sales staff.
Versus the iPhone, the opposite is true: you are defending. Take the role of Palm in this instance. How would you defend against the iPhone? Concede the “Mac Market” – every VC in Silicon Valley and any Mac user in the office – while choking off the heart of the market, meaning the enterprise market sold through the carriers. By nailing your message to every CFO, CIO and purchasing agent in America with, “ours works, does email, is build from the ground up for the business user – and it doesn’t do iTunes,” you reinforce the simple point that business users use business tools. And the CIO of Allstate Insurance has absolutely no interest in having field people listening to music. None. Zero. All they want is failsafe mobile computing. And that’s where you hinge your communications strategy, while your channel strategy aimed at the Cingular B2B Enterprise Sales Group hammers away at the A/B comparison of performance versus cost. Here, iPhone always loses.
The aikido metaphor holds up pretty well here! And frankly, the other three play into this as well.
Thanks for a fun question to fight with! The dojo is open for follow-ups!
Good stuff — especially your take on Palm (or Blackberry, etc.) holding off the iPhone. The clear manner in which you explained it makes me think that I’ve seen this movie before: back in the late 80s and 90s when PCs were touted as real business tools against the more frivolous Macs.
Thanks for the clarity.
Every product like the iPod that has a monopoly falls by the wayside eventually due to the large volume of users and mass production. As soon as the factory workshops start to get full of repairs when the design faults show themselves on a product, the public backlash against the product begins and the product begins to lose it’s market share.
As soon as the iPod batteries start to explode or die before their time, that’s when you should unleash your mp3 player on the market. It’s an ill wind as they say!