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Size Doesn't Matter! Marketing Focus Does.Monday, April 20, 2009

Lorraine Kessler,

Principal Strategy & Client Services

Marketing is the distinguishing, unique function of business. To those of you in leadership positions: The foundation ofeffective leadership is thinking through the organization's difference, defining it and establishing it, clearly and visibly.

You have to have a well differentiated brand to survive today.The world has gotten smaller and as it shrinks, the density of competitive products and services has exponentiallythickened. The level of competition will not decrease. It will increase. It is not going to level out. Things are going to getmuch more difficult.

What's the future? With all this competition, we have entered the age of specialization.

You have to be exceptionally good at just one thing. And the marketplace has to believe you are very good at this onething.

Take a look around. GE is a generalist and they are having trouble. General Motors is not differentiated and they'retanking. Toyota, on the other hand, is differentiated around reliability and they are doing fine. AIG tried to be all things toall people and we all know what happened to them. Nokia, Google, Intel, and Disney are among the top ten brands andare all essentially specialists. They're very good at one thing.

Clearly "size" is not the determinant factor in creating a profitable business. Marketing focus is.

Only when you have marketing with focus can a company or a brand over an extended period of time do you develop apowerful company whose future success is almost guaranteed.

The companies that are failing today have fallen because they have become unfocused. Unfocusing is called marketing entropy, or marketing disorder. Entropy is one of the fundamental laws of nature. Let'ssay you straighten your clothes closet. A month later the closet is a mess. The same thing happens with garages, andglove compartments and junk drawers. Why are they called junk drawers? Is it because they contain junk? Or is itbecause they are drawers where things get junked up. You have experienced the effects of entropy. Corporations are nodifferent than clothes closets. Over time, every company tends to become unfocused.

Again, size is not the determinant factor in creating a profitable business. Marketing focus is.

So why do so many companies get sucked into this marketing disorder? Al Ries, in his book Focus: The Future ofYour Business Depends on It, highlights several reasons contributing to the unfocusing of corporate America:

1. Distribution: Companies with well-established distribution, says Ries, ask themselves, "What else can we be

1

selling? What is the hot new product we can add?" Trap: The more products a salesforce handles, the more likely it isto lose marketing focus.

2. Manufacturing: Companies think what else can our factories be making to add efficiencies and reduce our overheadburdens? The more products, the more a company loses marketing focus.

3. Marketing: A company that successfully markets a consumer-package goods product assumes it can market anypackage goods product. The facts do not support this idea. The result? Too many unfocused brands poorly supported.

4. Customer life-cycles: "What happens when our customers outgrow our products? Companies think everyone can betheir customer. The result? They boldly launch into customer segmentation strategies that are blindingly unfocused.

5. Geography: What happens when companies outgrow their current geography? They think about expanding into othermarkets.

6. Brand inflation: Companies ask, "What does our brand stand for?" Line extension happens when companies ignorethe customer perspective. It's a problem caused by a "matter of perspective." How a product is perceived inside andoutside of a company. Companies look at brands from an economic point of view. To gain cost efficiencies and tradeacceptance, they are quite willing to turn a highly focused brand, one that stands for a certain type of product or idea,into an unfocused brand that represents two or three more types of products or ideas. This often leads to lineextension. From the point of view of the mind, the more variations you attach to a brand, the more the mind loses focus.Gradually, a brand like Chevrolet comes to mean nothing at all. Simple bottom line: A brand that is many things can't beone thing.

Line extension breaks the fundamental COMMANDMENT of proper positioning.A company, product or service can only stand for ONE thing in the mind of the prospect. The more you add to a brand,the more unfocused the brand becomes, the more you detract.

Lastly, a point not on Ries's list. Two words well known today. Wall Street. Or, said in one word: Greed. Companiesbecome pressured to do more with their brands chasing that elusive thing called growth. Until companies come togrips with the simple fact that they don't really have an inordinate need to grow, but an inordinate desire to grow(because of Wall Street), bad things will continue to happen. Slowly and surely brands will lose their meaning as theytry to become more.

The secret to success? Narrow your marketing focus."The remedy," says Peter Ducker, is to "focus scarce marketing resources on the greatest opportunities."

Marketing focus begins with positioning. Being crystal-clear about how your company's product or service isdifferentiated in the minds of your prospects. Staying focused. In the age of specialization, nothing can be more fatal toyour business than becoming unfocused.

Again, size is not the determinant factor in creating a profitable business. Marketing focus is.

Lorraine Kessler is Innis Maggiore's Principal Client Services & Positioning Strategist.

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