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Trout on Strategy Capturing Mindshare, Conquering Markets by Jack Trout According to Webster's New World Dictionary, strategy is defined as "the science of planning and directing large-scale military operations; of maneuvering forces into the most advantageous position prior to actual engagement with the enemy." In the business world, asserts Jack Trout, strategy is "what makes you unique and what is the best way to put that difference into the minds of your customers and prospects." In Trout on Strategy: Capturing Mindshare, Conquering Markets, Jack Trout shares his insights on the essentials of good strategy. As the bestselling author of books such as Marketing Warfare and The 22 Immutable Laws of Marketing, Jack Trout is regarded as one of the world's foremost experts on marketing and strategic planning. He is also president of Trout & Partners, a marketing firm with offices in more than a dozen countries worldwide. Jack Trout believes that success isn't about having the right people, the right attitude, the right tools or the right role models. He says that they're all helpful, but they won't put you over the top. What makes a winner is the right strategy. This is because strategy sets the competitive direction, dictates product planning, tells you how to communicate internally and externally and tells you what to focus on. This is why strategy is so important and what follows are Trout's eight principles on creating a powerful marketing strategy. 1. Survival: In a tough world, using strategy is how you survive. Recent decades have witnessed an astounding proliferation of product choice across categories and industries; for example, in the early 1970s, there were 20 brands of soft drinks, by the late 1990s, they numbered more than 80. Moreover, it is estimated that over one million stock keeping units, or "SKUs" (unique codes by which all individual products are defined), exist for all products available in the United States. And while the average supermarket stocks 40,000 SKUs, the average family meets 80 to 85 percent of its needs from just 150 SKUs.

Consumers are overwhelmed and paralyzed by the sheer magnitude of the volume of choice. Because of this, they tend to seek advice on decision-making and this has spawned a "choice industry." The decision as simple as where to go out for dinner, for example, will often require a guide offering information and ratings. In 1979, Nina and Tim Zagat created the first New York restaurant survey, and today, the Zagat Survey guides are bestsellers with 100,000 participants rating and reviewing restaurants in more than 40 international cities. With the explosion of choice that is prevalent in nearly every industry, survival depends on excellence in strategy. To achieve this excellence, you must be clear about what the strategy is and constantly communicate it to customers, employees and shareholders. It's a simple, focused value proposition what is the reason to buy from you instead of one of your competitors? The "tyranny of choice" demands a focused strategy in today's world of killer competition. 2. Perceptions: Perception is reality. Don't get confused by facts. According to Trout, positioning is how you differentiate yourself in the mind of your prospective customer. Positioning is job one when determining your strategy. Trout outlines these important issues to consider when determining your position against the enemy.
1. Minds hate confusion Put simply, people resist the confusing and cherish the simple. Consumer boredom and inattention often results from excessive stimulation and information overload. Complicated answers don't help anyone, states Trout, nor do confusing concepts. Look at Mennen's Vitamin E deodorant, for example; spraying a vitamin under your arm got laughs from consumers, not sales. 2. Minds are insecure People tend to be emotional, not rational, and often consumers don't remember or know what their motive for a particular purchase was. More often than not, people buy what they think they should have, not necessarily what they need. When people are uncertain, they look to others to help them decide how to act. Consumers tend to be influenced by the bandwagon effect, which is why terms such as "fastest-growing" or "largest-selling" are widely used in advertising. Marketers also utilize company tradition and culture to get consumers on the bandwagon Coke invented the cola, and their most powerful strategy is calling their product "the real thing." 3. Minds don't change Belief: new product advertising should generate higher interest than advertising for established brands. Fact: consumers are more impressed by what they already know (or buy) than by what's new. In a research study by McCollum Spielman of more than 22,000 TV commercials over 23 years, greater persuasion ability and attitude shifts the so-called new product excitement was evident in only one of the ten categories (pet products) when comparing new brands to established brands. In the remaining categories that included drugs, beverages and personal hygiene products, no discernable difference was apparent. 4. Minds can lose focus Most big brands are clearly understood by their customers there is a clear picture of what a customers' favorite brands represents. When Anheuser-Busch declared, "This Bud's for you," the customer knew what was being served. Today, with the variety of beers Budweiser offers regular, light, draft, clear, cold-brewed, dry-brewed, ice-brewed that statement now causes the consumer to ask, "Which one?" The once clear perception of what the brand will deliver is now out of focus, and Anheuser-Busch is losing its market share.

Understanding how positioning works is critical in creating a successful strategy to differentiate your product from the crowd of competitors. 3. Being Different: If you don't have a point of difference, you'd better have a low price. As the editorial director at polling firm Roper Starch Worldwide explains: "All brands have to work harder to get ahead today. They keep upping the ante to meet consumer needs. The consumer is still king." With that in mind, businesses must strive to find ways to stand apart from the competition; here are some of Trout's best strategies.

Being first Getting into the consumer's mind first with a new idea, product or benefit gives you an enormous advantage. Harvard was the first college in America and it's still viewed as the leader. Time is still ahead of Newsweek and People wins over Us. Evian is currently spending $20 million on advertising to remind consumers it is l'original because this company understands the power of being first. Attribute ownership An attribute is a characteristic, peculiarity or distinctive feature of a person or thing, and all persons or things have a mixture of attributes. Marilyn Monroe was known for her attractiveness; Crest toothpaste for its cavity protection. Attribute ownership is the single most successful way to differentiate a product or service, but you cannot own the same attribute or position that your competitor owns. So you need to be creative like Pepsi. Coca-cola was the original so Pepsi (successfully) positioned itself as the new brand and the choice of the younger generation. Leadership The most direct way to establish the credentials of a brand is leadership, and credentials are the collateral you put up to guarantee the performance of your brand. Powerful leaders can take ownership of the word that stands for the category. For example, in the mind of consumers, Heinz owns the word ketchup, and they claimed the most important ketchup attribute: "slowest ketchup in the west." Owning the word "slow" helps Heinz maintain a 50 percent market share. Heritage A natural psychological importance is attached to having a long history, one that makes people secure in making a choice. However, you must find a balance between consumer-comforting tradition and progressiveness to enjoy continued success. LL Bean, for example, stylizes its catalogue, is online, and introduced women's clothing, but carefully maintains its New England image. How a product is made Many products contain a proprietary piece of technology or design. When you can't differentiate based on what your product does, consider focusing on your unique technology when defining a differentiating idea. When Proctor & Gamble introduced Crest toothpaste with "fluoristan" for cavity prevention, nobody knew what it was, but it sounded impressive. When Sony began its dominance in television, it brought the public eye to the "Trinitron" picture tube, which made them stand out. Hotness Word of mouth is a powerful force in marketing. Sales numbers, industry ratings, industry experts and the press can all be used to establish "hotness." Movie and book reviews are commonly used by Hollywood and publishing companies to bring exposure and differentiate their offerings.

4. Competition: Know your competition. Avoid their strength. Exploit their weakness. Trout asserts that you should start your strategic planning with your competition in mind. Where are they strong? Where are they weak? Business today is about war, not about better people and better products. Every company is customer-oriented knowing what the customer wants isn't too helpful if a dozen other companies are already serving the same customer. As Trout points out, General Motor's problem is not the customer. General Motor's problem is Ford, Chrysler and the imports. It only makes sense then, that to be successful a company must become competitor-oriented. It must look for weak points in the positions of its competitors and then launch marketing attacks against those weak points. Companies must learn how to attack and flank their competition, understand how to defend their position and learn how and when to wage guerrilla warfare. Learn from the example of Gillette. Every two or three years it replaces its existing blade with something new. The two-bladed razors, the "Atra", replaced single blades. Then, a shock-absorbent razor, the "Sensor," was introduced. Now there are three-bladed razors, the "Mach 3 and M3Power (which vibrates)." As Trout states, "a rolling company gathers few competitors." Further, when Bic introduced the disposable razor, Gillette quickly countered with the twin-bladed disposable, "Good News," and it now dominates this category. They own more than 60 percent of the blade market. 5. Specialization: It's better to be exceptional at one thing than good at many things.

Big or small, your strategy should revolve around your core competency. Why? People are impressed with those who concentrate on a specific activity or product and perceive them as experts. For proof of this concept we need only look at the failures of the generalists and the successes of the specialist companies in the retail sector. Large traditional department stores are floundering. The two legendary rivals, Macy's and Gimbel's, both wound up in bankruptcy court while specialty stores such as The Limited (upscale clothing for working women), The Gap (casual clothes for the young at heart), and Banana Republic (upmarket casual wear) are flourishing. Big box stores are also succeeding because they offer their own specialization Wal-Mart offers the lowest prices and Target has filled the void for price conscious consumers who aren't willing to sacrifice style. The way to survive and prosper is to be better than your competitors at one thing. Your strategy must highlight your core competency so you can be viewed as the "go to" place in your field. 6. Simplicity: Big strategic ideas almost always come in small words. For Trout, simplicity and common sense are one and the same. By definition, common sense is good judgment that is free from emotional bias and is not dependent on special technical knowledge. Simplicity and common sense allow you to see things as they really are following the dictates of cold logic, eliminating both sentiment and self-interest from your decision. Common sense is wisdom that is shared by all, something that registers as an obvious truth to a community. Trout asserts that simple ideas tend to be obvious ideas because they have a ring of truth to them. Moreover, what is obvious to you is usually obvious to many, and that is why an obvious answer works so well in the marketplace. Strategy is all about simplicity. Most successful companies are those that own one or two simple words in the mind of the prospect. Volvo equals safety, Pepsi connotes youth and Nordstrom represents service. When choosing your words, remember they can be benefit related, service related or sales related, but above all they must be simple. 7. Leadership: No one will follow if you don't know where you're going. "The foundation of effective leadership is thinking through the organization's mission, defining it and establishing it, clearly and visibly. The leader sets the goals, sets the priorities, and sets and maintains the standards." Trout believes that his statement, found in Peter Drucker's The Effective Executive, succinctly summarizes the significance of leadership in creating and executing a successful strategy. Trout offers several concrete actions that leaders can take to ensure that customers, employees and stakeholders alike will embrace their leadership and strategy.
Go down to the front To become a great strategist, you need to stay in touch with the marketplace. Sam Walton spent time at the front lines of numerous Wal-Mart stores throughout his life. Value Honest opinions Create an open environment where candid assessments of the current reality are praised rather than concealed. Once word gets around that a CEO prizes honesty and reality, the "real" truth will finally come out. Be visible The best leaders are also storytellers, cheerleaders and facilitators. Herb Kelleher, ex-CEO of Southwest Airlines, is recognized for instilling his personality spirit, enthusiasm and humour into the airline, making it one of the most admired and profitable companies in the US.

Ultimately, leaders are also characterized as good generals flexible, courageous, bold, knowledgeable, and to a great degree, lucky. 8. Reality: Goals are like dreams. Wake up and face reality. Trout asserts that: "goals are responsible for mucking up marketing plans." He objects to them because, more often than not, goals focus on pursuing existing markets increasing market share and return-on-equity rather than seeking fresh opportunities. Trout refers to the media world to illustrate this point. All six broadcast networks in the United States are tied to film and television production studios, completing the rabid soup-to-nuts integration of the broadcast business. Five companies Viacom, Time Warner, Walt Disney, News Corporation and General Electric have jumped into mergermania with both feet. Yet, as time goes by, it appears that more and more of these deals are problematic: rather than garnering success in the form of solid increases in market share and profits, they have typically fallen far short of these goals while at the same time accruing the unfortunate side-effect of a profusion of accounting nightmares. Trout's concluding thoughts concern facing the new reality. The past decade witnessed troubles and failures of America's corporate icons, from Polaroid to AT&T, from Xerox to Enron. According to Trout, the strategic lesson learned is that they simply lost touch with the reality of the marketplace. Further, Trout lays responsibility firmly at the door of Wall Street and the desire for growth. With the average company striving to achieve an annual growth of 15 percent in earnings per share, it's no wonder companies make strategic mistakes. In a world where most companies grow at an annual rate of just over 8 percent, it's not surprising that companies err in order to keep their growth rates up. Trout on Strategy Jack Trout's remarkable career has allowed him the opportunity to observe and understand what makes for success or failure in business. He has written extensively about these observations in ten books and spoken about them in countless lectures. But, what he returns to again and again is that success is all about having the right strategy. Strategy sets the competitive direction, dictates product planning, tells you how to communicate internally and externally, and tells you what to focus on. "The better you understand strategy, the better you'll be able to select the right strategy for success." And, conversely, the better you'll be able to avoid big problems you'll no doubt encounter in our era of killer competition.