The crux of the issue is that marketing is shadow-boxing, when, according to Trout, companies should be ‘in search of the obvious’. He says as much in his forthcoming book, in fact. Marketing people spend too much time tinkering with new ideas and really don’t focus on the one thing that they should be focusing upon — differentiation.
According to the co-author of the bluntly titled book, Differentiate Or Die, in “all this fooling around” with new ideas, marketing executives are forgetting the basics of how to separate their brand from the competition. “What marketing folks need to look for is that simple, obvious strategy and not get bogged down in the complexities,” says Trout.
The question, however, that is foremost on many marketers’ lips is the relevancy of differentiation, given the avalanche of new products hitting the market. Trout admits that creating differentiation is becoming increasingly difficult. But, he argues, the arrival of so many products also puts the emphasis back on the need to be different. “You are getting into a market with an army of competitors out there. You have to face that fact and say, ‘Maybe there’s no room for me unless there is something different.’ The trouble with marketing people is that hope springs eternal,” he says. And for clear differentiation, the marketing programme has to inevitably start with the competition. “What you want to do is what your competition will let you do,” Trout says.
According to Trout, the biggest challenge facing the marketing fraternity today can be summed up in two words: Wall Street. “Financial statements are pushing companies to grow and be everything for everybody. Companies, in their insatiable desire to grow, lose focus and move away from a simple idea. Beware of Wall Street,” he cautions. And there’s a valuable lesson here for Indian companies intent on chasing that much-required global scale to remain competitive. “They should plot their growth strategies carefully and not take the brand where it does not make sense,” warns Trout. “You cannot be everything to everybody unless you are a Wal-Mart.” That said, even Wal-Mart discovered, much to its discomfort, that it cannot be everywhere. For example, the chain could not successfully compete in the up-market retailing space against Target, the retail chain that sells “fancier stuff for less,” Trout points out. Another example: Home Depot tried smaller neighbourhood formats to retail hardware, but failed because local retailers had deeper insights into local market needs. What Trout does endorse, from a retailing perspective, is experiment with multiple retailing formats. “Under a separate brand, maybe,” he adds quickly.
The economic downturn spells bad news to most marketers, but a slump also presents an opportunity to build brands. “You need to have a pretty good idea how to ride the downturn,” Trout says. He cites the example of a real estate company from the US which is exploring a strategy for selling houses in an environment tainted by the sub-prime crisis. “Real estate is always priced on wishful pricing. It’s time for realty to adopt reality pricing. You need a strategy that fits with the times,” he says drawing the discussion back to Wal-Mart. “The best thing that happened to Wal-Mart is a recession,” he says. The retailer, too, was faced with a prospect of a slowdown in sales, but because consumers began downgrading, the recession worked to Wal-Mart’s benefit. Another example he uses to demonstrate his point is Ford’s F-150 pick up trucks. “The company should communicate with fleet owners how the truck will help with business in current times. You should shift your product message to fit the times. You need not change the whole strategy; just change the packaging and messaging to suit the times,” he advises.
Toyota’s hybrid fuel cars are another example of future-focused innovation. “Toyota’s hybrid cars have found a lot of interest as more consumers are moving away from gas because of spiraling fuel prices. When the entire auto industry is in a decline, Toyota is marching ahead,” says Trout. Rival General Motors, according to him, continued to sell its big cars to focus on profit and satisfy Wall Street. But as customers are moving away from gas guzzlers, GM’s erstwhile star-models like the Hummer are on the block. “Sometimes it’s better to be first, than be better,” he adds about Toyota.
This intuitively suggests that R&D needs to be closely connected with marketing. But Trout laments that in most cases “the R&D team sits in a different place from marketing.” He gives the example of P&G’s toothpaste brand Crest, which offered protection from plaque and cavities, but not gingivitis (gum inflammation). Soon Colgate’s Total came and stole the show. Sometimes it’s better to walk up to R&D and insist that this property must be there in a product, says Trout. “In most cases, R&D lives in a different world.” Not occupying a space or need-gap is a mistake that marketers can end up paying for dearly; but vacating a hard-earned space is, in Trout’s opinion, a cardinal sin. “Volvo’s positioning of ‘safety’ is well documented and well respected. But the company decided to extend its product portfolio to convertibles. Big mistake,” Trout announces. So when Volvo was working on convertibles, its Japanese competition was working on the next safety idea — electronics safety. “Volvo should have been working on that and not
on convertibles. The convertible goes against Volvo’s ‘safety’ idea,” Trout says.
With so many examples of bad marketing decisions available in public domain, it stands to logic that marketers would have got better at their business. Yet, marketers routinely dig themselves into the next marketing mud hole. Trout believes the issue lies in the kind of people who are present in marketing meetings. “One of the biggest problems is having the right people in the meeting room. If you cannot have the top people, it’s just not worth it. The CEO is the CMO. You cannot push marketing as a function to be executed by someone who’s far below in the pecking order,” insists Trout. He points Apple’s head Steve Jobs as a good case in point. “He is the CMO,” says Trout. A mention of Apple, quite naturally, leads the conversation to the iPhone and the kind of response the device has elicited from rival mobile phone marketers. “All handset manufacturers are under pressure to develop high-technology handsets. It does tend to be a herd mentality,” says Trout. “Herd is the opposite of being different. That’s the key role of the CEO — to find a differentiator.”