Marketing Warfare

MARKETING WARFAREHow Corporations Are Applying Military Strategies To Business

AL RIES & JACK TROUTMAIN IDEAMarketing warfare is an attempt to apply successful military strategy to marketing situations. Marketing, as an academic discipline, is less than 100 years old. Military strategy has been developed in life and death struggles which have been ongoing throughout the whole of recorded history - more than 3,000 years. Successful companies today are competitor oriented - meeting the customers demands better than any other company in their field. By adapting military strategies to their operations, companies can gain and press home strong competitive advantages over all other companies in their industry.

FOUR TYPES OF WARFARE1. DEFENSIVE WARFARE 1. Only a market leader should wage defensive warfare. 2. Leaders must attack themselves by improving products. 3. All moves by competitors must be matched. 2. OFFENSIVE WARFARE 1. Focus on the strengths of no.1 in the market. 2. Find a weakness and attack at that single point. 3. Confine the attack to that single point of attack. 3. FLANKING WARFARE 1. Introduce a new product into an uncontested area. 2. Must be a surprise attack. Never boast in advance. 3. Pour everything into the flanking move if successful. 4. GUERRILLA WARFARE 1. Find a market segment small enough to defend. 2. Never start acting like a market leader. 3. Be ready to move elsewhere at a moments notice.

FUNDAMENTAL PRINCIPLES1. In marketing, the company with the larger resources is always going to win. Therefore, keep reducing the field of battle until you reach a stage where you are in the strongest relative position. 2. The defensive strength of a market leader is formidable. 3. Aggressiveness alone is not the sign of good strategy. 4. Marketing battles are fought in the mind of the consumer. 5. Effective strategy should be varied industry by industry.

STRATEGY & TACTICSTactics dictate the most effective overall strategy. An overall strategy should be developed from workable tactics upwards - not dictated from on high. There is no such thing as an inherently good or bad strategy strategies are judged solely on their ability to yield tactical results, and not on any other factor. Effective strategies anticipate their competitors strategic responses, and make allowance for that in the plan.

CHARACTERISTICS OF AN EFFECTIVE MARKETING GENERAL1. Flexibility - the ability to make ongoing adjustments as the battle unfolds. 2. Mental Courage - to stick with the plan, to defend it to others and to boost the morale of their employees. 3. Boldness - to take quick and decisive action when the business opportunity arises. 4. Knowledge of the Facts at the Front Lines - first hand knowledge of how customers are thinking and what they require. 5. Good Luck - an ingredient in any encounter - physical or mental. 6. Knowledge of the Rules - knowing the basic theories of marketing warfare so well they become subconscious.

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MARKETING IS WARMain Idea The principles that are successful in warfare between armies are a very effective analogy for the marketing battles between competing companies, products and services. The same principles that are successful in war can be equally applicable to marketing. Supporting Ideas The strategic principles of warfare have been developed over the more than 3,000 years of recorded history. While weapons may have changed dramatically, the strategy and tactics of successful warfare never vary. Like warfare, marketing has also evolved over time. In the early days, most marketing was production oriented - selling what was produced. (For example, Henry Fords famous "You Can Have Any Color You Want As Long As Its Black" approach.) However, since World War II, marketing has become consumer-oriented. (That is, producing what the customer demands regardless of any other business factor). But if every company is now consumer-oriented, how does a company become successful today? The answer lies in being competitor-oriented - to meet the customers needs better than any of your competitors do. In this situation, the principles of warfare are directly applicable - not in the physical sense that marketing losers are shot, but in the figurative sense that successful companies will prosper at the expense of the weaker companies. In other words: marketing is warfare, the competition are the enemy and the prize is the money consumers are willing to pay for your products or services. Marketing is a conflict between corporations to satisfy human needs and wants. Key Thoughts War belongs to the province of business competition, which is also a conflict of human interest and activities. ---- Karl von Clausewitz Karl von Clausewitz was a Prussian General. He wrote a book in 1832 called On War. In this book, he identified the strategic principles behind all successful wars. Clausewitz studied all the military battles of recorded history while writing his book. He joined the Prussian army when he was 12-years old, and was captured by the French at Jena. He was also at Borodino when Napoleon fought the Czar. He fought in the Battle of the Berezina River, and was at Waterloo. Clausewitz knew the importance of victory mainly because he had tasted the bitterness of defeat so many times in his military career. He developed his strategy for winning wars by first learning the battlefield tactics.

FUNDAMENTAL PRINCIPLES OF WARFARE1. THE PRINCIPLE OF FORCEMain Idea In the movies, everyone loves it when an underdog beats the favorite. In real marketing life, the company with larger marketing resources will always beat the smaller company. Supporting Ideas There are two marketing fallacies that people often fall prey to: 1. The "better people" fallacy. This suggests that your company are the good guys, the other companies are the bad guys and that the best people will prevail, even against the odds. However, the reality of any marketplace is that you should plan on winning a battle through a superior strategy, not by relying on superior performance by your people. 2. The "better product" fallacy. Otherwise known as "the better mousetrap sells itself", this fallacy suggests that the truth will come out eventually, and that if you can just get those facts out there, youll prosper. The problem is that this fallacy is based on truth as perceived in your prospects mind. Marketing wars, like military wars, are not won automatically by the force with truth on its side. Remember, history is always written by the winners - not the losers. Key Thoughts The art of war with a numerically inferior army consists in always having larger forces than the enemy at the point which is to be attacked or defended. ---- Napoleon The greatest possible number of troops should be brought into action at the decisive point. ---- Karl von Clausewitz

2. THE SUPERIORITY OF THE DEFENSEMain Idea A survey of the 25 leading brands in the year 1923 showed that sixty years later, 20 of those brands were still in first place, four were in second and one was fifth. Its harder to defeat an entrenched competitor than most marketing experts acknowledge. Never make the mistake of failing to appreciate the strength of a defensive position. The market leader has a huge advantage that must be overcome by any other marketing initiative. While the attacker has the advantage of surprise, in most cases this advantage is blunted by the friction of the whole company - by the need to communicate the marketing message to staff and potential customers. Key Thoughts The defensive form of war is in itself stronger than the offense. ---- Karl von Clausewitz In theory, surprise promises a great deal. In practice, it generally strikes fast by the friction of the whole machine. ---- Karl von Clausewitz


3. THE NEW ERA OF COMPETITIONMain Idea Marketing has traditionally used military terminology. However, the strategic thinking behind military language can be of even greater value to marketers. Example 1: Xerox ($2 billion annual sales) announced in 1986 it would seek the lead in office automation against IBM (with annual sales in excess of $40 billion). That would be about the same as Denmark invading West Germany, and had about as much chance of success. In the end, Xerox lost credibility as well as huge amounts of money. Any military strategist could have told Xerox their invasion was an exercise in futility. Example 2: Coca-Cola announced the new Coke and predicted a 1-percent gain in market share over each of the next three years. No good military commander in his right mind gives an exact timetable for victory. Coca-Cola promptly proceeded to lose their market share until they dumped new Coke and went back to the old formula. Aggressiveness alone is never the mark of a good military campaign. Adding more of everything cant turn a losing battle into winning the war - it just gets everyone bogged down into slogging it out in the trenches. Military history suggests a far more effective strategy are quick strokes to the heart of the objective that is, thinking smarter, not longer. Key Thoughts Some statesman and generals try to avoid the decisive battle. History has destroyed this illusion. ---- Karl von Clausewitz

FOUR TYPES OF WARFAREINTRODUCTIONThe four distinctive types of warfare are: 1. Defensive Warfare 2. Offensive Warfare 3. Flanking Warfare 4. Guerrilla Warfare As a general rule for any industry, one company (the market leader) should be using defensive warfare strategies, two companies (nos. 2 & 3) should use offensive warfare strategies, the next three companies should flank and the rest of the industry should use guerrilla warfare techniques.

1. DEFENSIVE WARFAREMain Idea 1. Only a market leader should wage defensive warfare. 2. The optimum defensive strategy is to attack yourself with new products or services that improve existing offerings. 3. Strong moves by all competitors should never be ignored, but must be matched blow for blow. Supporting Ideas Market leadership is based on who the customer perceives as the leader in that business category. Every company will try to think of itself as a leader in one way or another, but only one will occupy that distinction in the minds of the general public. When a leader attacks itself by introducing superior products on a regular basis, it may sacrifice short-term profits but it protects market share - the key target in the long-run. The market leader occupies prime position in the mind of the consumer. If a competitor introduces a superior product which the market leader then copies, most people will assume the market leader has truth on its side in the long run. The safest move for any market leader is to cover any strategic moves initiated by its competitors, even the ones that seem oddball. Its safer to over cover than be caught off guard and lose out on a major new market. Some of the most profitable new products in history have come as the result of an entrenched market leader matching a rival. Leaders should always have something in reserve to wheel out in response to any attack by a newcomer. The goal of all defensive warfare is to maintain marketing peace and the status quo. When a leader is well entrenched with no obvious company in second place, then the emphasis can shift to generic promotion, where enlargement of the entire market is the goal rather than beating the competition. These situations are very rare, and dont necessarily last forever. Key Thoughts The statesman who, seeing war inevitable, hesitates to strike first is guilty of a crime against his country. ---- Karl von Clausewitz Even though Ford was superior to General Motors in product innovation during the time I was with GM and Chrysler surpassed it in technical innovation, neither firm made substantial cuts into GMs half of the market. GM had not produced a significant, major automotive innovation since the hydramatic transmission (1939) and the hard-top body style (1949). Ford pioneered in practically every major new

4. THE NATURE OF THE BATTLEGROUNDMain Idea Critical military battles traditionally have been named after their geographical location. That suggests that the terrain for any marketing battle will be of vital strategic importance. Marketing battles are fought in the mind - your mind and the mind of your prospective customers. Marketing battles are totally intellectual, making them very difficult to master. The prospects mind is full of mountains that are positions with good strategic value. For example, computer mountain might be owned by IBM, photocopier mountain by Xerox, etc. Key Thoughts It is from the character of our adversarys position that we can draw conclusions as to his designs and will therefore act accordingly. ---- Karl von Clausewitz

5. THE STRATEGIC SQUAREMain Idea Theres no single way to fight every marketing war. The strategy to be used depends on the industry structure, competitors, the products involved and a whole host of other variables. Key Thoughts The first, the supreme, the most far-reaching act of judgment that the statesman and commander have to make is to establish the kind of war on which they are embarking; neither mistaking it for, nor trying to turn it into something that is alien to its nature. ---- Karl von Clausewitz


market while Chrysler produced the significant technical innovations, such as power steering, power brakes, electric windows and the alternator. ---- John DeLorean

2. OFFENSIVE WARFAREMain Idea 1. The only thing for a market no. 2 or no.3 to focus on is no.1s strengths. 2. Find a weakness in no. 1s position and attack at that point alone. 3. Confine the attack to that one point alone. Supporting Ideas Rather than a no. 2 saying they want to "increase their market share", they should focus on one specific way, or one specific product, to decrease no. 1s market share. In other words, find a unique mental angle with which you can attack no. 1 in the mind of the prospect, and continue to concentrate on that single area. Bad example: Attacking IBM on price is dangerous because they sell so many computers they can enjoy purchase economies of scale no one else can match. Good example: Avis attacked Hertz by saying: "Rent from Avis. The line at our counter is shorter." Hertz could not effectively counter this strategy without weakening their own position of market leadership. The historical odds have always favored the defender. However, any company that has a huge share of any market always becomes weaker, not stronger. In history, its not every day that a David slays Goliath, but it does happen from time to time. The attack must be focused on one single product. Federal Express floundered when it tried to offer a 1-day, 2-day and 3-day service like other existing freight forwarders. Only when it focused on the "has to be delivered tomorrow anywhere in the country" concept did it begin to move ahead. Today it totally dominates the market. Key Thoughts Where absolute superiority is not attainable, you must produce a relative one at the decisive point by making skillful use of what you have. ---- Karl von Clausewitz

3. FLANKING WARFAREMain Idea 1. A good flanking move means introducing a new product or service in an area which is uncontested by the market leader or any other major competitors. 2. By definition, a good flanking move will be a surprise attack, totally unanticipated by the general market. 3. Whenever a flanking move pays off, pour every available resource into that area, even at the expense of discontinuing other less successful products or services. Supporting Ideas Flanking is the most innovative way to wage marketing warfare. It is the best hope of achieving a huge, spectacular victory, and

requires a chess players ability to visualize how the battle will unfold to be carried off effectively. When its not possible to introduce an entirely new product or service, look for a way to break the market down into segments or categories. This requires imagination, and generally baffles traditional marketers. Example of a classic flanking move: Before Miller introduced light beer, the market for this product was zero. Yet, within five years, nearly 35 million barrels of light beer were being drunk. The greater the surprise of the flanking move, the longer it will take the market leader to respond. That means avoiding the use of test-marketing or too much research, as that will alert the market leader. You should base your strategy on what the market leader is able to do, not what he is likely to do. Therefore, youre far better off to launch a flanking move without telegraphing your moves beforehand. An ancient military axiom is to reinforce success and abandon failure. Whenever a flanking move has started well, pour every available resource into maximizing that competitive advantage. Avoid worrying about any failures - focus solely on how to get the most out of each winner. Flanking attacks generally take one of several formats: 1. Low price. While this has the advantage of being directed at the established market, generally speaking the leader can employ economies of scale to make this backfire. Example: Budget flanked Avis and Hertz at the low price end of the market and established third-place in car rentals. 2. High price or premium. In almost every category there is a high priced product which claims the high price is the main benefit. Most people equate price with quality, making a high price flanking move a good strategy. Example: Mercedes-Benz flanked GMs Cadillac. 3. Small size. Many companies introduce smaller, more compact (and usually more innovative) product offerings. This flanking move has worked numerous times historically. Example: Volkswagens beetle, Sony. 4. Larger than life size. A competitor can differentiate his products or services by making them larger than anybody elses. Again this has proved successful in a number of situations in the past. Example: Prince tennis rackets. 5. A new distribution channel. By marketing through sales channels no one else has ever tried, you can establish a market segment and dominate it. Example: Avon, Hanes with Leggs. 6. A new product format. You can establish a market segment by introducing innovation to an existing product or service. Example: Lever introduced Aim as a gel rather than a traditional toothpaste like the market leader Crest. Flanking is a bold move not for the timid or cautious. It can be a huge payoff, or a big loss. It takes vision and foresight, because it generally goes into an area for which no market currently exists. Research is no substitute for foresight. The best flanking moves substantially affect the choices facing every consumer. Good flanking moves are often made into an area which the market leader has publicly stated it does not intend


moving into. That way, the new competitor has a longer advantage while the leader swallows its corporate pride. There is also the matter of the time it will take the leader to tool up for production before responding to the flanking move. The objective of any good flanking move is to bleed or dilute the leaders market share. Key Thoughts Pursuit is a second act of the victory, in many cases more important than the first. ---- Karl von Clausewitz Keep the forces concentrated in an overpowering mass. The fundamental idea. Always to be aimed at before all and as far as possible. ---- Karl von Clausewitz

Classic guerrilla strategies for market segmentation include: 1. Geographical area. 2. Specific segments of the general population. 3. Single industries. 4. Purposefully high-priced or low-priced. 5. Alliances with a market leader for one particular segment. Key Thoughts The enemy advances, we retreat. The enemy camps, we harass. The enemy tires, we attack. The enemy retreats, we pursue. ---- Mao Tse-Tung

4. GUERRILLA WARFAREMain Idea 1. Find a market segment small enough to defend. 2. No matter how successful you become in that segment, never start to act like a market leader. 3. Be prepared to move out of that segment at any time. Supporting Ideas The guerrilla is not trying to take business from a market leader he is trying to take business away from all other competing uses for the money involved. Therefore, the guerrilla targets one small market segment in which he can become the leader. This requires judgment - if too big a market is targeted, it will attract the attention of the overall market leader. The key consideration is the application of resources. Guerrilla forces dont have the money and organization to take on a broad front of business - they have to focus on one key product, one key service. The most successful guerrillas in marketing history have operated with a different organization and a different timetable from their competition. To quote a military example: In Vietnam, the U.S. had 543,000 troops of which only 80,000 were in combat and the rest were in support services. By contrast, almost every enemy soldier had a gun they used against the U.S. Similarly, guerrilla companies should get a high proportion of their staff into the marketing fray - the actual point of contact between the company and its customers. There should be no organizational charts, etc - just all front line and virtually no back room staff. The advantage of flexibility and a lean organization means the guerrilla company can move into another product or service at a moments notice without huge internal pain and stress. A guerrilla company can also make decisions quickly, without massive bureaucratic paperwork. The guerrilla company can quickly jump into a market where an opportunity exists, and just as quickly leave when a huge company with overpowering resources moves into the same market. Or the guerrilla can quickly move into a market being abandoned by a market leader. Guerrillas dont change the mathematics of the marketing battle they simply reduce the size of the battlefield until they reach a stage where they have a superiority of firepower in just that one market alone.


EXAMPLESMain Idea

2. THE BEER WARThe beer wars between various brewing companies for the American domestic market illustrates the folly of trying to build market share by introducing line extensions of successful products. Invariably, whenever a company does that, they cause market confusion and encourage their established customers to try their competitors products. Supporting Ideas In the 1950s, Budweiser and Schlitz traded market leadership percentages for the U.S. market. Finally, in 1957, Budweiser gained a lead of slightly less than 2-percent and they built on their momentum. Today, Budweiser outsells Schlitz by 20 to 1. The first major imported beer after World War II was Heineken. They were soon joined by Lowenbrau and Becks. Their market share soon became quite significant, and Anheuser-Busch (owners of Budweiser) counterattacked with Michelob in 1963. By 1980, Michelob had a 6-percent share of the market, outselling all the imports combined by a factor of 2 to 1. In 1970, Phillip Morris bought Miller Brewing and started an attack on the market leader, Budweiser. Miller established a flanking attack by advertising its beer as the working mans drink. After three years of spending twice as much advertising money per barrel as the rest of the industry, sales began to turn around for Miller. The whole market changed in 1975 when Miller introduced Lite beer. This was an excellent flanking move into an uncontested area and presenting a huge tactical surprise. Despite the fact that 22 other light brands appeared over the next three years, Miller still holds the largest market share for light beers. Since that time, all of the leading American brewing companies have tried to extend their lines of successful brands by introducing a light version (less calories) of their beers. These efforts have proven to be disastrous - the combined market shares for both the originals and the light variants have fallen behind the market share for the original alone. These line extensions have also created niche marketing opportunities for an array of new competitors. In 1976, the Adolph Coors Company of Golden, Colorado joined the national brand fray. Until that time, Coors have been a successful regional guerrilla operation, selling in only the 12 western states of the U.S.A.. When the management decided to go national, their fortunes started downwards. By 1984, they were selling less beer in 44 states with $33 million worth of advertising than they had been selling in only 12 states with $2 million in advertising previously. Key Thoughts Many assume that half efforts can be effective. A small jump is easier than a large one, but no one wishing to cross a wide ditch would cross half of it first. ---- Karl von Clausewitz

1. THE COLA WARMain Idea The principles of marketing warfare provide a strong (and historically accurate) analytical framework for studying the Coca-Cola vs. Pepsi marketing history. Supporting Ideas Coca-Cola was first introduced in the 1870s as an exotic patent medicine for every affliction known to mankind. In 1902, the company took the cocaine out of the formula and started extensive advertising. The trademark Coke bottles were launched in 1915. In 1939, Pepsi-Cola launched a flanking assault on Coca-Cola by introducing a 12-ounce bottle which sold for the same price as Cokes 7-ounce bottle. This was a brilliant move as Coke had made that bottle so famous they couldnt change it readily - nor could they change the price as they had an installed base of hundreds of thousands of soft-drink machines. A strong defensive move would have been for Coke to introduce a second brand which competed directly with Pepsi. They didnt do that and by the late 1950s their lead over Pepsi was rapidly decreasing. Pepsi next introduced two strong strategic moves: 1. Large bottles sold at supermarkets for the home market. This was a new concept in a field that had previously been limited to small, single-serving packaging. Unfortunately, Coca-Cola was soon able to match Pepsis initiative in this area. 2. The Pepsi generation. All of Pepsis advertising suggested Coke was a drink for older people, while the next generation chose Pepsi. While Coke and Pepsi were fighting it out, the No. 3 cola, Royal Crown, introduced Diet Rite Cola. It was a brilliant flanking move that caught Coke and Pepsi by surprise. It took more than 3 years before Coca-Cola responded with Tab and Pepsi with Diet Pepsi. However, instead of building on that success, Royal Crown kept trying to build sales of its regular cola as well as the diet product - diluting the focus of its sales force Diet Rite Cola now has less than 4 percent of the market. By 1985, Coca-Cola was only selling 1.15 as many times the amount of Pepsi. Coca-Cola hit the panic button and suddenly changed their formula - and in the process managed to undermine their own market leadership position. Less than three months later, the company announced the return of the original formula, and the creation of a host of new products - New Coke, Cherry Coke, Diet Coke, Caffeine-Free Coke, etc. This has now created a huge identity crisis for the company, severe warehousing and retailing problems and opened a number of small skirmishes for the company to fight. The marketing warfare principles project that Pepsi should be able to take advantage of Cokes strategic mistakes to assume sales leadership of the cola market. Key Thoughts Historical examples provide the best kind of proof in the empirical sciences. This is particularly true of the art of war. ---- Karl von Clausewitz


3. THE BURGER WARMain Idea Marketing warfare principles also explain the burger wars with classic flanking, offense and guerrilla moves being successful in this specific market. Supporting Ideas Every marketer has three kinds of products: one product to advertise, one product to sell and one product to make money on. Movie theaters advertise the movie but make their biggest profits on the popcorn and soft drinks they sell. Car dealers advertise the cars but make their highest profits from accessories and servicing. Hamburger chains advertise the burgers, sell french fries with the burgers and make money on the drinks. (If people buy enough drinks, you can almost afford to break even on everything else). McDonalds was the first company to set up a nation-wide hamburger chain, and it has dominated that market ever since by sheer force of rapid expansion. Today, McDonalds outsells the next three competitors combined. (In 1984 alone, McDonalds spent more than a quarter of a billion dollars on television advertising). The first chain to successfully attack McDonalds was Burger King. They differentiated their product by advertising that unlike McDonalds assembly line procedure, they could vary whatever went into your burger to suit your tastes. Their sales jumped at the expense of McDonalds. Their next offensive strategy involved starting a "broiling vs. frying" public debate from a health perspective. Burger Kings broiling cooking method was advertised as clearly superior to plain frying, and sales again leaped. Similarly, Wendys differentiated its product by a flanking move going after the adult burger market. They pointed out their smallest burger was a big, juicy quarter-pounder (which was square so it poked out of the bun). Their famous "wheres the beef" series of commercials in 1984 lifted sales by 24-percent. While all the media attention has focused on the big national chains, numerous regional guerrillas still flourish in the burger market. For example, the 170-unit White Castle Hamburger chain sells old fashioned hamburgers. Interestingly, each unit has an annual turnover in excess of $1.28 million - better than McDonalds does on a per establishment basis. They continue to flourish in their niche market. Key Thoughts Let us not hear of generals who conquer without bloodshed. If a bloody slaughter is a horrible sight, then it is ground for paying more respect to war. ---- Karl von Clausewitz Main Idea

4. THE COMPUTER WARThe computer industry is a good illustration of the war principle that the competitor you fail to crush when you have the chance will come back to haunt you at a later stage. Supporting Ideas In a game of chess between two closely matched masters, the taking of a single pawn early in the game can be enough to dictate the result. In 1951, Sperry Rand delivered the first commercial computer (known as UNIVAC). Their technological leadership was matched by IBM on the strength of an established position in the office market through typewriters and other equipment. Once IBM gained a slight lead, they poured on the heat and stayed on top. IBM flourished while Sperry Rand sank into oblivion. IBMs next major competitor was the Digital Equipment Corporation (DEC) who flanked IBM at the small end of the market. IBM was in mainframes, and DEC introduced a new computer called a minicomputer. Their sales took off, and soon soared past the $4 billion mark. Even today, DEC still dominates this market segment. DEC then made a major tactical error. Instead of flanking itself again at the lower end by jumping on the microcomputer bandwagon, it totally ignored them. In 1981, IBM launched the personal computer, and immediately began to dominate the single industry with the fastest growth rate in history. Suddenly, everyone in the personal computer industry was attacking IBM. IBM responded by launching the IBM PC XT which had a hard disk for storing information. This was followed by the IBM PC AT, which used a new processor for improved performance. Marketing history books are full of stories of the numerous forays into the microcomputer industry by a wide range of other companies. Many people conclude that IBM has lost its way, and surrendered market leadership to a consortium of smaller companies. In reality, however, the industry is still too young to see any long-term patterns developing. Time will tell. Key Thoughts In such things as war, the errors which proceed from a spirit of benevolence are the worst. ---- Karl von Clausewitz The personal computer will fall flat on its face in business. ---- Ken Olsen, President, DEC Computers


STRATEGY & TACTICS1. RELATIONSHIP BETWEEN STRATEGY & TACTICSMain Idea Most companies issue a grand strategy from the top, and expect their people on the front lines to develop the tactics to make that strategy succeed. This is the exact opposite of the correct approach to strategy and tactics. Simply put, tactics should dictate the strategy. The achievement of the desired tactical aim is the ultimate and only correct goal of any strategy. Strategy should be developed from workable tactics upwards - not dictated from on high. A grand strategy may sound impressive, but if it doesnt yield tactical results, it is only hot air. There is no such thing as a good strategy or a bad strategy - strategies are judged solely on their effectiveness at the front line. Supporting Ideas All of the best military strategists learnt their craft first at the tactical level. For example, Napoleon was an artillery officer, and many of his later triumphs resulted from a superior handling of artillery at the tactical level. In marketing, the artillery is advertising. A marketer who doesnt know advertising inside out is at a definite disadvantage. The manager who knows the tactical application of advertising has a huge practical advantage over other managers. The distinguishing characteristic of a sound strategy is that a marketing war can be won without tactical brilliance. In other words, a strategy relying on one "master stroke" will always be inferior to a widely based strategy in which no single campaign is a make or break situation. At any single point in time, a marketing company should be geared towards one strategic objective. That is, the first call on all of the companys resources should be available for achieving a specific aim. There should be no diversification - no setting up a new company division to move into a field that "looks promising". Rather, every company should concentrate on maximizing their competitive advantages in their field. Many marketers fail to take into account possible countering moves by their competitors when drawing up a strategic plan. For example, they might lower their prices only to find that move matched by their competitor lowering profit levels for the entire industry. A better approach is to use the principles of warfare to try and anticipate what types of counterattacks competitors are capable of launching. Any action a company takes implies its strategy. The strategy, in turn, implies the tactics being used. Therefore, a knowledge of the achievable tactics helps a marketer develop a company strategy which outlines the course of action the company should take in the future. Once the overall course of action is clearly developed, the strategy can then dictate specific ongoing tactics. Key Thoughts We fall into error if we attribute to strategy a power independent of tactical results. ---- Karl von Clausewitz One does not plan and then try to make the circumstances fit those plans. One tries to make plans fit the circumstances. I think the difference between success and failure in high command depends on the ability, or the lack of it, to do just that. ---- George S. Patton Jr.

The more helpless the situation, the more everything presses toward one single, desperate blow. ---- Karl von Clausewitz

2. THE MARKETING GENERALMain Idea Business today requires marketing generals who can lift their companies ahead of the competition. The characteristics of a good marketing general are: 1. Flexibility. A marketing general must be able to adjust the companys strategy to suit the situation at hand. Instead of trying to make the situation fit their predetermined strategy, true generals mold a successful strategy around the facts as they exist. Generals have no built-in biases - meaning they consider all alternatives before attacking. 2. Mental Courage. Once a decision is made, a good general has the strength of will and conviction to stand up to superiors or associates who advocate a different approach. Generals are internally inspired. Marketing victories are great morale boosters. 3. Boldness. When the time is right, marketing generals must strike quickly and act decisively. That is, press home the advantage whenever they have it. 4. Knowledge of the facts. Good generals build strategy from the ground up, starting with the details. An effective strategy comes from a detailed, first-hand knowledge of tactics that will or wont work. 5. Good luck. Luck plays a large role in the outcome of any physical or marketing battle. With preparation and planning, a general makes certain the odds are on his side. 6. Knowledge of the rules. The best generals (like the best professional sports people) know the basic rules so well they dont have to think about them consciously. They are then free to concentrate on the opposition, and develop their strategy and timing. Key Thoughts If I had to sum up in one word the qualities that make a good manager, Id say that it all comes down to decisiveness. You can use the fanciest computers in the world and you can gather all the charts and numbers, but in the end you have to bring all your information together, set up a timetable and act. ---- Lee Iacocca Everything is very simple in war but the simplest thing is difficult. ---- Karl von Clausewitz Out of a thousand men who are remarkable, some for mind, others for boldness or strength of will, perhaps not one will combine in himself all those qualities which are required to raise a man above mediocrity in the career of a general. ---- Karl von Clausewitz

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Marketing Warfare