Sunday, August 14, 2011

Who decides: 1) What products and services to offer; 2) What to name those products and services; and 3) What distribution channels to use to sell those products and services?

In my opinion, these are primarily marketing issues. Yet in our work with companies large and small, we don't see many marketing people calling the shots on 1) Products; 2) Names; and 3) Distribution.

Instead, marketing people tend to focus on "communications" issues. They spend most of their time figuring out how to interest prospects in their companies' current product lines. Sure, communications are important, but they are only the tactics of a marketing program. The other half, the more important half, is strategy.

The two are related. In order to improve the communications, it often is necessary to make changes in strategy. In products, names, pricing, distribution, etc. And who is in a better position to suggest such changes than an experienced marketing person?

Yet who is calling the shots on marketing strategy? Mostly top management people.

What's the strategy of Hewlett-Packard?
As best as I can determine, here is H-P's new strategy as outlined in an interview The Wall Street Journal conducted with its new CEO Leo Apotheker.

Invest more in software, networking and storage.
Emphasize systems that combine these functions.
Increase spending on research.
Focus on cloud computing.
Build a business helping companies build cloud-computing setups.
Increase sales to telecom firms.

This is typical of a top-management approach to strategy. Let's increase sales by expanding the brand in all directions.

Now, how is marketing going to execute Hewlett-Packard's new strategy? By positioning the company as a leader in "software, networking, storage and cloud computing"? And, of course, personal computers.

Most companies take a similar approach. What's the strategy of Dell, the world's third-largest seller of PCs? Same as H-P. Expand the brand in all directions.

What's the strategy of Wells Fargo?
According to the Journal, "Wells Fargo plans insurance growth."

"The effort comes at a time when loan demand remains tepid and, given the size of Wells, growth in banking is hard to achieve," reported the Journal. "Other units the bank is expanding include securities brokerage and investment banking."

Insurance makes up a tiny portion of the bank's revenues, last year, about 2.5%. Didn't Wells Fargo study what happened when Citicorp merged with Travelers Group to form Citigroup? (Four years later, Citigroup spun off Travelers in an IPO.)

Maybe this is heresy in a world smitten with the line-extension religion, but why doesn't Wells Fargo focus on banking? It's the smallest of the big four, after Citigroup, Bank of America and JPMorgan Chase.

I would think Well Fargo would want to move up the banking ladder before trying to climb the insurance ladder.

What's the strategy of Romney, Bachmann, Cain, et al?
So far, there are eight Republican presidential candidates: Mitt Romney, Michele Bachmann, Herman Cain, Ron Paul, Newt Gingrich, Tim Pawlenty, Rick Santorum and Jon Huntsman.

Do you know the verbal position of any of these eight?

I don't think they have any.

Doesn't anyone remember "Change we can believe in?" After Barack Obama's victory in 2008, I would have thought that any future presidential candidate would summarize his or her campaign with a few memorable words. But so far, no one has.

Apparently, nobody wants to be tied down to a single idea or concept. Everybody wants to be free to expand their campaigns in all directions, depending on which way the wind blows.

Take Jon Huntsman. "He resigned just 11 weeks ago as the U.S. ambassador to China," reported The Journal, "but already Jon Huntsman has a logo, a musical theme, a small arsenal of promotional videos, a Hollywood narrator and a line of travel mugs, lapel pins, baseball caps and T-shirts emblazoned with the distinctive H of his infant presidential campaign. He even has a generation named after himself. Generation H, his campaign calls it."

Jon Huntsman has everything except a marketing strategy.

What is strategy anyway?
Dictionary definition: "The science of planning and directing large-scale military operations, specifically maneuvering forces into the most advantageous position prior to engagement with the enemy."

And what is the most advantageous position? According to Carl von Clausewitz, the world's most-famous military strategist, "Keep the forces concentrated in an overpowering mass. The fundamental idea always to be aimed at before all and as far as possible."

Strategy is like a garden hose with an adjustable nozzle. Turn it one way to increase the concentration and out comes a powerful stream of water that could knock down a child. Turn it the other way and out comes a fine mist that wouldn't harm a butterfly.

Almost every military strategist recommends "concentration of forces," while almost every business strategist recommends "scatteration of forces."

We used to run a series of seminars entitled "Marketing Warfare." One of our luncheon speakers was William Westmoreland, the four-star general who commanded U.S. military operations in Vietnam. After watching some of our presentations, Gen. Westmoreland expressed surprise that marketing people found anything new in our lectures. Everybody knows these military principles, he said.

Not so.

Hewlett-Packard has just 17.5% of the world market for personal computers. One would think the company would focus on making Hewlett-Packard a dominant brand like Windows (90%) or Google (75%) or iPod (70%) before trying to expand in all directions.

Everything about marketing strategy parallels military strategy. The principle of force. The superiority of the defense. The advantage of flanking. And most importantly, the principle of focus.

There is one difference. Marketing is about brands, not companies. You can successfully expand a company, but not usually a brand.

Apple has become the world's second most-valuable company, not by expanding the Apple brand, but by launching new brands: Macintosh, iPod, iPhone, iPad.

Marketing: A discipline in decline?
Is this what marketing has become? A discipline that execute strategies designed by somebody else. If so, I have a message for marketers, borrowed from Tennyson.

Forward Marketing Brigade!
Was there a person dismay'd?
Not tho' marketers knew
Someone had blunder'd:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.

ABOUT THE AUTHOR

Al Ries is chairman of Ries & Ries, an Atlanta-based marketing strategy firm he runs with his daughter Laura.

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