Introduction
This is a summary of ideas from the book The 22 Immutable Laws of Marketing by Al Ries and Jack Trout. Text in normal is my paraphrasing of what the book says. And remember: this is just a short summary and is not meant to replace the book, nothing beats reading the real thing. The book is short, buy and read it.
Law 1 (law of leadership)
Being first in the market is better than having a better product than a competition. Examples: we all remember who first flew over Atlantic or who was the first man on the moon but almost no-one knows who was the second. Heineken was the first imported beer in USA and still is No. 1 imported beer. Same for Miller Lite, first domestic light beer. Chrysler brought us the first minivan and still leads the category. Ries and Trout claim that the first player to appear in a category usually ends up being the number one player. There are plenty of good examples of this. However, I think the authors overstate the importance of being first, especially in our field. Being first doesn't matter if the idea/product is not good. There are just too many exceptions.
[*]Microsoft Excel was not the first spreadsheet, but it leads that category today.
[*]Visual Studio was not the first IDE, but it leads that category today.
[*]Perl was not first completely unreadable language, but it leads that category today.
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Anyway, the main point remains: There is a huge benefit to being number one in some category, even if you have to invent a whole new category.
I think it's better to say that being first gives one extremely big advantage over competition but doesn't guarantee the success. It's rather obvious that it doesn't matter that you're first to market if no-one needs your product or if your product is very bad. There are many examples from computer industry that disapprove this rule (i.e. first spreadsheet isn't the dominant spreadsheet, first word processor isn't the dominant word processor) so there are (many) cases showing that n-th product can overtake early leaders. But it's very hard and usually requires the leader to make huge mistakes.
Law 2 (law of category)
Given that it's very hard to gain leadership in a category where competition already exists, it's better to create a product in new category than trying to attack existing categories. Category doesn't have to be radically different, e.g. if there's dominant player in imported beer, one can become the first to import light beer. If one can't be the first to fly over Atlantic, one can still be the first woman to fly over Atlantic. This is really just another way of explaining a concept called "differentiation" New entrepreneurs tend to think purely in terms of finding a product which is better than the competition. But so very often, it is more important to be different than to be better. Don't think of MacOS as the number two desktop computing platform. Instead, think of them as the number one desktop computer in the graphic design category. The difference highlights the category in which Apple is number one.
Note that I am fully aware of the relative size of these two categories. Microsoft is number one in a category which is many times the size of the category in which Apple is number one. Finding a category in which Apple is number one is not an effort to claim equality. Rather, it simply explains who buys Macintosh and what differentiator is important to them.
The point of creating a category is to make sure you and your customers understand what your key differentiation is. What makes you different
Ries and Trout are right -- setup a category in which you can be first. But size does matter. Make sure the category you choose is not too large and not too small.
Law 3 (law of mind)
It's better to be first in the mind than to be first in the marketplace: "Is something wrong with the law of leadership (previously presented)? No, but the law of the mind modifies it. It is better to be first in the prospect's mind than first into the marketplace....Being first in the mind is everything in marketing. Being first into the marketplace is important only to the extent that it allows you to get into the mind first.
Law 4 (law of perception)
The Law of Perception says that in the battle between products, perception is more important than reality.
People tend to think that the best product will win. However, as Ries and Trout say, "Marketing is not a battle of products, it's a battle of perceptions." Sometimes the best product does not win.
This concept seems unfair, but it's fundamental and we might as well get used to it. Ries and Trout go so far as to say that "Most marketing mistakes stem from the assumption that you're fighting a product battle rooted in reality. All the laws in this book are derived from the exact opposite point of view."
Subjectivity
The real issue here is that the words "better" and "best" are subjective terms. People have different requirements and preferences upon which they form very different opinions. There are very few absolutes.
One could credibly argue that OS/2 was "better" than Windows 3.x. The 68k chip was better in some ways than the x86 line. But those are perceptions and opinions. In hindsight, we can simply say that more people perceived Windows and the Intel chip to be better.
Reality Still Matters
My only gripe with this chapter is that it sometimes tries to convince me that perception and reality are entirely disjoint. They're not. Quite frequently, perception is merely an exaggeration of reality.
Here at SourceGear we've got quite a few servers. We have Windows servers, and we have Linux servers. Our internal file server is named "Mufasa". Every once in a while, Mufasa gags for no apparent reason and requires a reboot. I can't remember this ever happening to a Linux box here. This experience has caused me (and others) to perceive Windows as being less stable than Linux. But that doesn't mean I think it is fair to categorically label Windows as an unstable product. After all, our phone system is running on Windows and it never has any problems. There is reality here, but there is exaggeration here as well.
I think it's important to remember the Law of Perception, but I would worry if small ISVs started taking it too seriously. Specifically, let's not just give up on our desire to make our products better, choosing instead to spend all our resources on the management of customer perception. The Law of Perception can help us understand when things don't seem to make sense, but it's not so powerful that product excellence doesn't matter.
One Final Thought
The Law of Perception is just one more reason why small ISVs need to get specific as they choose their competition. Don't try to create a "better" product. That strategy is too vague. Instead, try to create a product which is better for a specific group of people with specific problems that are not being solved very well by others. That specific group of people will perceive your product as the best.
Law 5 (law of focus)
This is one of my favorite chapters. The Law of Focus says that "the most powerful concept in marketing is owning a word in the prospect's mind." This law challenges us to boil our marketing message down to just one idea. If you can teach your market segment to associate your product with a single idea, perhaps even a single word, you can be a market leader.
Count Your Words
When entrepreneurs ask me for advice, I usually ask them to explain their product in 25 words or less. Hardly anybody can do it. The software developer is in love with his product and is unaware of the fact that nobody else is. Ask him to talk about his product and he will give you twenty minutes of rambling love poetry starting with a feature set and ending with a description of some arcane aspect of the product's underlying architecture. The customer has lost interest after the first ten seconds. The wire between your marketing efforts and your customer's mind is an extremely low bandwidth connection. Less is more.
During the dotcom bubble, as we all wasted three years of our lives chasing venture capitalists around like groupies, they taught us one useful concept: The elevator pitch. This is a major step in the right direction. The idea is that you have to explain your product and its benefits in the amount of time you spend in an elevator. In other words, you've got well under a minute. No time for product love poetry.
But the Law of Focus would claim that an elevator ride is far too long.
The Law of Focus would insist that a 25 word description is about 24 words too many
Law 6 (law of exclusivity)
The Law of Exclusivity says that "Two companies cannot own the same word in the prospect's mind."
It's time to face the facts. Some of these laws seem to have more punch than others. For example, I find the Law of Focus to be a concept with a lot of impact. It's very counter-intuitive, and yet very powerful.
Other laws here seem almost, well ... obvious. These other laws don't seem to deserve their pages quite as much as the great ones like the Law of Focus. I speculate that for some reason, Ries and Trout wanted exactly 22, so they kept adding laws until they got the right number. Too bad. If they had stopped at 21 they could have used some sort of a blackjack theme.
The Law of Exclusivity would have been a candidate for removal. It is fairly intuitive to me that two companies cannot have the same market position.
Still, let's not dismiss this law too quickly. After all, obviousness is not always a reason to ignore a topic. It is obvious that we should all eat better and exercise more, but we don't.
Similarly, marketers do routinely find a way to violate this law. They do a Smart Thing by following the Law of Focus and choosing one key benefit around which they build their product message. Then do a Dumb Thing by choosing the same benefit as somebody else. Almost invariably, they end up beating their head against the wall in futility. It is obvious that we should not try to beat somebody else at their own game. And yet, we often try.
Law 7 (law of the ladder)
The Law of the Ladder acknowledges that in most market categories, there is actually more than one available slot in the mind of the customer.
The Hierarchy of Categories
In our discussion of the previous laws, we have emphasized the importance being different, the important of finding a subcategory in which you can be #1. However, when you pop the stack frame up one level to the enclosing category, we find that you are ranked on a ladder among the other players.
I claim that my product, SourceGear Vault, is #1 in its category, which I define here as "compelling and seamless replacements for Visual SourceSafe". However, this category is actually just one small subcategory inside a larger one which I might call "basic source control tools". Vault is definitely not #1 in that category. We're just somewhere on the ladder along with a bunch of other products. There is a sister category here called "process-based source control tools". Both of these categories are enclosed in yet another category called "all configuration management tools". That category is enclosed inside another one called "developer tools". SourceGear is a small ISV. The bigger the category, the farther down the ladder we are.
Reading this book, it's easy to get confused about which level of category is being discussed. Does a certain law apply to the whole market, or just to my category, or to my sub-category, or to my sub-sub-category? The fact that this hierarchy of enclosing categories is highly subjective doesn't help. Sometimes a law makes more sense when it is understood to apply to the larger enclosing categories.
For now, let's just remember that every category level has its own ladder
Law 8 (law of duality)
The Law of Duality says that "in the long run, every market becomes a two-horse race."
Young markets have many rungs on the ladder. They are highly fragmented. Gradually, as the market matures, players disappear and the market settles on exactly two primary players. Examples of this phenomenon are everywhere:
[*]Coke and Pepsi
[*]Canon and Nikon
[*]Nike and Reebok
[*]GM and Ford
[*]McDonalds and Burger King
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It often takes a long time for things to settle down, but in the end, markets usually give people what they want, which is two strong choices. Buyers don't like choosing between ten or twenty players. It's too stressful.
A big reason for this effect is that most people don't make their own buying decisions. People tend to buy what somebody else is buying. Pragmatists buy something only after they see the Early Adopters buying it. Conservatives buy it only after the Pragmatists are buying it. Laggards buy it only when the peer pressure and ridicule is so severe that they look like absurd for not buying it. Market share begets market share, and the rich get richer.
Even as the market gets very mature, it will continue to tolerate the presence of more than two players. However, the top two will have the lion's share of the market. All other players are essentially in niche segments.
Once a market reaches this state, it will generally not allow #1 and #2 to move around. For example, the market will never allow the top two players to change positions. Burger King will never be #1.
Furthermore, the market will not allow #1 to get too far ahead. Just as markets hate having a ten-horse race, they also hate having a one-horse race. When #1 gets too far ahead of #2, the market will usually correct the problem.
Law 9 (law of opposite)
The Law of the Opposite says that the #2 player should generally do the opposite of what the #1 player is doing.
If you are #2 in your category, you want to be #1, right?
Wrong. You can't choose to be #1, but you can certainly choose to be #3 or #4. The worst thing you can do is to try and beat the #1 player at his own game. Instead, realize that not everyone in the market wants to play that game. Offer those people an alternative.
This law is the reason that I humbly assert that Borland's strategy for Delphi is all wrong.
For several years, Delphi had been doing a fine job playing Pepsi to Visual Basic's portrayal of Coke. Delphi is a solid #2 in the market for RAD tools. People like Delphi. It's a highly respected tool.
But something has gone terribly wrong. When Microsoft zigged, Delphi should have zagged.
VB.NET is a huge discontinuous change from Visual Basic 6. Even now, around two years later, some VB developers are still mad. Not everyone wants to move onto the new .NET platform. Some people need to continue developing traditional Win32 applications for quite a while longer.
I'm not saying that those angry VB6 people would have moved to Delphi. But the Law of the Opposite still applies here. Borland should have immediately shifted its message to be the opposite of the leader: "Delphi -- the Win32 RAD tool that isn't trying to force you into something you don't want to do."
(Yes, yes, I know that Delphi 9 will still have support for native Win32 targets. The point remains: Borland is weakening itself and its message by refusing to focus.)
Interestingly, Borland seems to have repeated this mistake throughout their product line. The result is that I can't figure out what market position they are trying to have. Is Borland a .NET company or a Java company?
Luckily, although their marketing strategy team is MIA, their marketing communications team has saved the day by coming up with "Excellence Endures". Surely a great tagline will take care of all their problems, eh?
Law 10 (law of division)
The Law of Division observes that over time, a category tends to divide and become two or more categories.
A new market category starts out very broad. For example, in the beginning of the automobile industry, the only category was "cars". Over time, categories break up into smaller and more specialized subcategories. Today, there are quite a few brands of car, each catering to a specialized niche.
This effect is an obvious and natural consequence of other laws. Each company will try to setup a new category in which it can be #1. Not all of these categories will end up becoming real, but some will.
This law is a good place to remind ourselves that Ries and Trout primarily consult for companies like Pepsi, McDonalds, and General Motors, not for small ISVs. There is a bit of an impedance mismatch between their world and ours. Those companies do business in mature industries selling mass market consumer products. Those products are easily interchangeable. I can switch from Pepsi to Coke with no major costs associated with the transition and deployment. Categories split into subcategories over very slight differences in consumer preference. Brand building is absolutely critical. General Motors understands that some car buyers want to feel like they are buying something sporty, whereas others want to feel like they are buying something conservative. So, they sell basically the same car under the Pontiac and the Buick name, managing each of these brands very carefully. The underlying engineering is identical, but the message of these two brands is very different.
Law 11 (law of perspective)
The Law of Perspective says that "marketing effects take place over an extended period of time", but the basic point of this chapter is that some marketing actions are negative in the long-term even though they seem positive in the short-term.Marketing effects take place over an extended period of time. It's a mistake to sacrifice long-term planning with actions to improve short-term balance sheet. E.g. sales increase short-term profits but in long-term educates people not to buy for regular price, therefore decreasing long-term profits.
Law 12 (law of extension)
The Law of Line Extension says that it is a mistake to take the name of one product and apply it to another. Companies do this often, but it basically never works. We think that the power of the brand will help sell the new product. Instead, the brand itself is tarnished. People start to get confused about what the brand means. Quite often it is necessary to kill the second product before it causes too much damage to the first one.
Confession: SourceGear broke this law when we introduced SourceOffSite Collaborative Edition. We should not have borrowed the name of SourceOffSite for this product. When I critique marketing mistakes, I don't spare myself.
I already wrote about this law back in April when I got all fussy about Golden Oreos. I don't have too much more to say, except...
#ifdef snide
Ever heard of the Java Desktop System?
#endif
Law 13 (law of sacrifice)
The Law of Sacrifice says that "you have to give up something in order to get something".
The cool thing about this law is that it's not automatically attractive. It makes you think.
The Law of Focus isn't like that. When people hear about the Law of Focus, the first reaction is to say, "Yes, yes, focus is good." People seem to forget that the word "focus" implies a decision about what you are not going to do. With the word "sacrifice", that particular implication is much clearer.
But in some sense, these two laws are the same idea with different expressions. There is power in focus, but to get there, we have to make tough decisions about what things we will not do.
. There are three things to sacrifice:
[*]product line
[*]target market
[*]constant change
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Law 14 (law of attributes)
The Law of Attributes says that "for every attribute, there is an opposite, effective attribute."
Fussy
There was quite an uproar from fans after the recent season finale for Star Trek Enterprise. You see, the episode contained a serious error. One of the characters states that the year is 2152 when in fact, as every Trek fan knows, the current episodes take place in the year 2154.
I've heard several people say that this mistake ruined the whole episode.
I concede the mistake is silly, but come'on -- the whole episode? Perhaps we need a bit of perspective. That date wasn't a central point of the show. It's a detail, and aside from the fact that it was incorrect, it doesn't matter.
Incidentally, guys, this is the reason why your girlfriend or wife doesn't like going to see movies with you. Nobody wants to watch a film with some anal-retentive dork who is ready and waiting to discard the entire film because the producers made a minor mistake in science or technology. Try to just enjoy the movie, or at the very least, shut your pie hole so that she can. (This tidbit of relationship advice is provided at no extra charge.
Law 15 (law of candor)
The Law of Candor says that "when you admit a negative, the prospect will give you a positive". As usual, the examples from the book are mainstream consumer products:
Listerine did it when they acknowledged that their mouthwash tastes terrible.
Avis did it when they acknowledged that they are #2.
Volkswagen did it when they acknowledged that the "bug" is ugly.
Each of these companies gained a lot when they applied the Law of Candor. People respect the courage and honesty it takes to admit that not everything is perfect
Law 16 (law of singularity)
The Law of Singularity says that "in each situation only one move will produce substantial results".
We literalists will once again have to endure the authors' word choice. The above statement is almost certainly not true.
And yet, Ries and Trout make two important points in this chapter, which I will paraphrase as follows:
[*]One bold stroke is much better than a bunch of small marketing efforts.
[*]Marketing is too important to be left to the marketing people.
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Law 17 (law of predictability)
The Law of Unpredictability says, "Unless you write your competitors' plans, you can't predict the future."
But that doesn't seem to be the main point of this chapter. What the authors are really saying is that long-range planning doesn't work. We can try to observe and follow trends. We can make big-picture predictions. But if we try to make detailed plans over the long term, our competitors will surprise us and those plans will end up getting scrapped.
I suspect this chapter is a lot more necessary for people like Pepsi and Burger King. Those guys probably do get tempted to make long-term plans. But in software, things move so fast that most of us wouldn't even think of trying to make any sort of detailed plan for a five year horizon. There are exceptions, but in general, the mere notion is absurd.
Nonetheless, although we intuitively know that long-term planning won't work for us, we don't always invest in the alternative. As Ries and Trout say, "One way to cope with an unpredictable world is to build an enormous amount of flexibility into your organization."
Flexibility is so critical in our industry, especially for a small ISV. Structure, planning and process have their place, but at the end of the day, your small ISV will probably survive largely on the basis of how well you can adapt to change.
Take the energy you would have used on long-range planning and use it to make sure your company is flexible
.
Law 18 (law of success)
The Law of Success says that "success often leads to arrogance, and arrogance to failure".
The basic point of this chapter is a warning to not let yourself get too far from your customers. Truly small ISVs may not need to worry too much about this, but the admonition is valuable nonetheless.
As companies grow, the CEO tends to get busy with other stuff. She doesn't spend much time "in the trenches" anymore. He goes to a lot of meetings and spends a lot of time working on the big picture. In the process, she loses touch with the customer.
Despite what the chapter says, I think this effect may or may not be rooted in arrogance. The root problem might be simpler and more innocent. Maybe the CEO simply let himself get too busy. It seems quite possible to become detached from the basic activities of the company without growing a big ego.
But either way, forgetting the customer is a fatal disease. Fortunately, this disease is also preventable and treatable. Don't let it happen to you. Even as your company grows, stay involved in the basic stuff, at least a little bit:
[*]When you go to a trade show, spend some time in the booth talking to prospective customers.
[*]Answer a tech support call.
[*]Write some code.
[*]Help with the testing before the next release.
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Don't get out of touch. When you do, you'll start to make bad marketing decisions
.
Law 19 (law of failure)
The Law of Failure says that "failure is to be expected and accepted".
Nothing interesting ever happens unless we take risks. The authors encourage an atmosphere of risk-taking with a good discussion of why individuals tend to be afraid of taking risks.
The chapter also includes another important point: When you realize you've made a mistake, cut your losses.
It's just so hard to admit a mistake. Denial is a wonderful thing
Law 20 (law of hype)
The Law of Hype talks about the fact that "history is filled with marketing failures that were successful in the press".
This chapter talks primarily about new things which claim to make existing things obsolete. Such products tend to become darlings in the press, because the notion of breakthru innovation is very attractive to readers. People love to read stories about things like the personal helicopter, which was supposed to make cars obsolete several decades ago. So the press jumps on the bandwagon, stories get written, newspapers get sold, and people get excited. And they still drive their cars to work everyday.
What I love about this chapter is that it was written in the early nineties, before the Web, and it still rings amazingly true. The Web was supposed to obsolete almost everything. Today we can see that the Web has changed life in many ways, but most of the previous structures and systems are still with us.
Law 21 (law of acceleration)
The Law of Acceleration says that "successful programs are not built on fads, they're built on trends".
Drawing their examples from mainstream consumer products, the authors observe the tendency for companies to overestimate short-term fads. When something new becomes big and hot, companies jump on the bandwagon, spending a lot of money doing so. They restructure. They invest in new equipment. They work hard to make themselves prepared to deliver products for the fad.
And then the fad stops, and the company is left with problems:
[*]"What am I going to do with all the olive green refrigerators and orange carpeting I bought just before the fashion changed?"
[*]"Oh, great -- I can produce fifty gazillion Cabbage Patch dolls per day. That'll come in handy now that nobody wants them anymore."
[*]"Darn it! I just bought a warehouse of fruit-colored translucent plastic, and now I find that the next iMac looks like a white desk lamp."
[/list]
Fads accelerate very quickly, but often don't last long. Trends have a much slower acceleration, but eventually run fast and steady. Chasing fads is expensive, so it becomes very important to learn how to distinguish them from actual long-term trends.
This discernment is particularly important for small ISVs. We are constantly being presented with new technologies, new protocols, new formats, new platforms, new components, and new APIs. Which ones will be strong in five years? We want to know if we will eventually regret building our apps on a given piece of technology.
Law 22 (law of resources)
Without adequate funding an idea won't get off the ground. You need a lot of money to market your ideas.
One hand you can read it as a "don't fool yourself" advice. On the other hand authors promote indiscriminate spending of money of advertising without any mention of the fact that sometimes advertisement doesn't pay. It seems obvious that you should never spend more on marketing that you can hope to get out of it in later revenues, yet the books never says that. It just asserts that you need to spend a lot on marketing which is a suspicious advice coming from people who do marketing.
Summary
In my opinion "The 22 Immutable Laws of Marketing" fails in that respect. Their examples that illustrate the laws are taken from the relatively small pool of the biggest companies in the world. It's not evident that the same rules apply to small (or medium) businesses.
The advice is frequently not helpful, e.g. "make sure your program deals realistically with your position on the ladder". Well, thanks guys, but how exactly?
A very frequent flaw of this book is its use of selected examples to illustrate their laws. If I can choose my examples I can make any laws I want - there will always be an example that support my "law" (the problem is that there might be 100 counter-examples that I won't mention). I can understand that providing counter-examples isn't something that authors were interested in, that a rule that is only correct in 80% of the cases is still a very useful rule, that not talking about every possibility can improve the clarity of exposition ("A little inaccuracy can save tons of explanation") but I got the impression that author's way of choosing examples was based on "whatever seems to confirm what we say" principle.
And never forget:
Marketing is the science of convincing us that What You Get Is What You Want. -- John Carter
Thank you
Vipin Mukesh