The Marketing Gurus E-Book

Chris Murray

• Herausgeber: Atlantic Books
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2016

Seitenzahl: 507

Beschreibung

This indispensable guide to classics of marketing strategy, summarizing the lessons of seventeen of the most influential titles in the field. The featured books include: Crossing the Chasm by Geoffrey Moore The Popcorn Report by Faith Popcorn The Anatomy of Buzz by Emanuel Rosen Purple Cow by Seth Godin Relationship Marketing by Regis McKenna Don't Think Pink by Lisa Johnson and Andrea Learned Renovate Before you Innovate by Sergio Zyman The Marketing Gurus distils thousands of pages on branding, promotion, publicity, advertising and more into easily digestible summaries, revealing the wisdom that made them into classics.

Leseprobe

Title page

The Marketing Gurus

Chris Murray

Atlantic Books

London

Dedication

To my wife, Donna, and to our children, Samantha and Nick

Acknowledgments

There is nothing sadder than a great book that sinks in the marketplace with hardly a ripple. At Soundview Executive Book Summaries, our goal is to introduce and promote the best books on business to the widest audience possible. We want to thank all of the publisher and author partners featured in this book for helping us achieve our goal.

The summaries collected here—which present the key themes and case studies of two-hundred-and-fifty-page books in a little more than five thousand words each—were created thanks to the talent and efforts of Soundview’s editors and contributing editors. Special thanks to Chris Lauer, who manages the day-to-day editorial operations at Soundview; to his team of contributing editors, including Robert Smith, Greer McPhaden, Anniken Davenport, and Kevin Gault; and to graphic designer extraordinaire Debra DePrinzio.

Special thanks also to former editor in chief Roger Griffith, former editor Jeff Olson, and former editor Anita Warren, who played vital roles in the selection and production of many of the summaries in this anthology.

Thank you also to Soundview vice president of business development Stan Kornaga; this book would not have happened without his hard work.

We at Soundview are very grateful to the team at Portfolio—Megan Casey, Adrienne Schultz, Nikil Saval, Sharon Gonzalez, and Bruce Sylvester—for their professionalism and guidance in this new adventure. Special thanks to Portfolio publisher Adrian Zackheim and associate publisher Will Weisser for their unwavering support of the project.

Finally, I wish to thank Soundview publisher George Clement and former publisher and co-founder Cynthia Folino for their leadership and guidance during the twelve years that I have been associated with Soundview. For more than two decades, Cindy Folino was the heart and soul of Soundview, the visionary pioneer of an industry that didn’t even exist before Soundview. Thank you, Cindy.

Soundview Executive Book Summaries publishes 8-page print and 20-minute audio summaries of top business books, available by subscription. Summaries are available in print, audio CD, CD-ROM, and online formats at http://www.summary.com.

Contents

Introduction

DIFFERENTIATE OR DIE

LATERAL MARKETING

THE POPCORN REPORT

RELATIONSHIP MARKETING

NETWORKING WITH THE AFFLUENT

RELENTLESS

THE ONE TO ONE FUTURE

UP THE LOYALTY LADDER

SCORING POINTS

HOW TO DRIVE YOUR COMPETITION CRAZY

CROSSING THE CHASM

UNLEASHING THE KILLER APP

THE ANATOMY OF BUZZ

PURPLE COW

DON’T THINK PINK

THE DISCIPLINE OF MARKET LEADERS

RENOVATE BEFORE YOU INNOVATE

Index

About the Author

Copyright page

Introduction

There is perhaps no discipline in the world of business more eclectic than marketing, as proven by the staggering variety of ideas, concepts, frameworks, and guidelines gathered in this collection from Soundview Executive Book Summaries. We have been providing busy readers with business book summaries for nearly thirty years; the following seventeen comprise some of the most interesting and influential among them. The authors of these books are marketing gurus—consultants, academics, and writers—who have created new thinking in the area of marketing over the past twenty-five years. Some of these authors, such as Jack Trout, Philip Kotler, and Seth Godin, have familiar names. Others may be new to you but bring to the collection insightful and innovative ideas. After all, we chose the books for this collection not because of blockbuster sales, but because they advanced and challenged accepted marketing theory and practice.

The collection begins with recent books by two world-renowned marketing thinkers. In Differentiate or Die, Jack Trout, collaborating with co-author Steve Rivkin, explores how companies can help their products stand above the crowd of competitors. Philip Kotler and Fernando Trias de Bes introduce the concept of lateral marketing in their book of the same name, which helps companies avoid the trap of creating new products that only further segment their current markets instead of developing new markets.

Then comes futurist Faith Popcorn’s predictions for society and business in The Popcorn Report, which continues to provide grist for imagining new ideas and services.

The next summaries focus on connecting with the customer. Regis McKenna was one of the first to describe the changing role of the customer in the marketing equation in Relationship Marketing. Before scoring a bestseller with The Millionaire Next Door, Thomas Stanley was telling salespeople how to connect with those millionaires in Networking with the Affluent. In Relentless, Johny Johansson and Ikujiro Nonaka reveal the surprising attitudes of Japanese marketers toward market research.

One of the most important breakthroughs in marketing to the customer was the concept of one-to-one marketing, articulated memorably in The One to One Future by Don Peppers and Martha Rogers. Marketing consultants Murray Raphel and Neil Raphel use many of their own experiences to describe the actions and attitudes of a business that make customers become loyal advocates of a company’s products in Up the Loyalty Ladder. Then, in Scoring Points, Clive Humby and Terry Hunt with Tim Phillips present the inside story of one of the most successful customer loyalty programs in the world.

The next three summaries draw their inspiration from Silicon Valley. With typical enthusiasm, former Apple evangelist Guy Kawasaki urges companies to take on competitors with innovative and aggressive tactics in How to Drive Your Competition Crazy. Crossing the Chasm was the first of a string of bestsellers by Geoffrey Moore, one of the greatest gurus of marketing high technology products. The Internet finally makes an entrance in the collection with Unleashing the Killer App by Larry Downes and Chunka Mui.

The next summaries attack the issues and challenges of marketing in the twenty-first century. Emanuel Rosen dissects word-of-mouth marketing in The Anatomy of Buzz. In Purple Cow, the ever-inventive Seth Godin offers the perfect metaphor for the remarkable product. Lisa Johnson and Andrea Learned, two marketing consultants specializing in communicating with women, urge companies to become more modern in their marketing strategies in Don’t Think Pink. The Discipline of Market Leaders by Michael Treacy and Fred Wiersema was a bestseller because of its simple but highly effective framework. Finally, Renovate Before You Innovate was written by Sergio Zyman, the former chief marketing officer of Coca-Cola. As the creator of New Coke, he knows all about the pitfalls of innovation for innovation’s sake.

The Marketing Gurus includes some of the best thinking on marketing that has been published over the past twenty-five years. Because these summaries are presented as originally published, you will note some anachronisms in the examples; the underlying lessons, however, remain relevant and important. Whether you’re a local retailer or a multinational manufacturer, whether you have fifteen employees or fifteen thousand, whether your company was founded in 1900 or last year, your marketing equation contains the same two variables: your product and services and your customers. Because this fundamental equation is universal to all businesses, we believe that each of these summaries will offer some insight or advice that you can bring to the workplace—wherever and whatever that workplace might be.

DIFFERENTIATE OR DIE

by Jack Trout with Steve Rivkin

In a series of Advertising Age articles published in 1972, two marketing consultants, Jack Trout and Al Ries, introduced a new P to marketing: positioning. Their concept was simple: the success of a new product depended on how consumers thought about that product or, in their terms, how the product was positioned in the consumer’s mind.

Positioning was a response to what Trout and Ries saw as the overinformation age, or what they called the “overcommunicated society.” Too much communication was being sent to consumers, Trout and Ries believed, so that one particular product’s message had little chance of getting through. And this was before the Internet!

The best chance for companies in the overcommunication society was a targeted, focused approach to the consumer: choose one specific message that would drill through the noise and lodge in the consumer’s mind.

A few years later, Jack Trout updated his ideas on positioning with The New Positioning, co-authored with Steve Rivkin. Trout also began talking about differentiation, in which the focus of the marketing effort is communicating how your product is unique compared to competitive products. Although he did not use the word specifically, the concept of differentiation existed in Trout’s earlier books on positioning when he urged companies to look not only at their strengths but also at the competitors’ weaknesses.

What follows is the summary of Differentiate or Die, in which Trout and Rivkin expand on their original thoughts of differentiation. Differentiate or Die is not a manifesto, however, but a nuts-and-bolts how-to guide that offers eight differentiation strategies in addition to a four-step process to differentiate your product from the competition.

Jack Trout is president of Trout & Partners, Ltd., a prestigious marketing firm with headquarters in Greenwich, Connecticut, and offices in thirteen countries. Trout and his partners have consulted for AT&T, IBM, Burger King, Merrill Lynch, Southwest Airlines, and many more Fortune 500 companies.

With Al Ries, his business partner for more than twenty-six years, Trout co-authored the industry classic Positioning: The Battle for Your Mind, published in 1980. Trout is the author or co-author of numerous other books, including Marketing Warfare and The 22 Immutable Laws of Marketing.

In addition to Differentiate or Die, Steve Rivkin co-authored The New Positioning and The Power of Simplicity with Trout. Rivkin heads his own communications firm, Rivkin & Associates, Inc., in Glen Rock, New Jersey. He was previously with Trout & Ries, Inc., for fourteen years. Rivkin’s latest book is The Making of a Name (Oxford University Press, 2004).

DIFFERENTIATE OR DIE

Survival in Our Era of Killer Competition

by Jack Trout with Steve Rivkin

CONTENTS

1. The Tyranny of Choice

2. Losing and Reinventing the USP

3. What Differentiation Is Not

4. The Four Steps to Differentiation

5. Eight Successful Differentiation Strategies

6. Growth and Sacrifice in Differentiation

7. Being Different in Different Places: Five Rules for the Road

8. Who’s in Charge Here?

THE SUMMARY IN BRIEF

What factors allow a company or product to stand out in an increasingly competitive (and global) marketplace? That’s a question Jack Trout has been answering for thirty years as a consultant to Fortune 500 companies. It is a question that he (with co-author Steve Rivkin) uses in Differentiate or Die to help readers create solid strategies to get above the crowds of competitors and generate the business required to stay there.

What You’ll Learn in This Summary

• The tyranny of choice. With nearly one million branded products available in the marketplace today, consumers have more choices than they know how to handle. Companies must thus give customers the tools they need in purchasing decisions to draw them to their products.

• Losing and reinventing the USP. In order to reinvent the idea of a unique selling proposition (USP) and differentiate their products from competitors’, companies must move away from differentiation based solely on product, and engage consumers in ways that truly reach them.

• What differentiation is not. Some differentiation strategies look appealing, but require more effort than is really necessary in order to make the case for a product or company over others.

• The four steps to differentiation. Trout lays out the basics of his differentiation strategy in four essential steps.

• Eight successful differentiation strategies. Differentiating your business actually has very little to do with creativity or imagination and everything to do with pursuing a logical approach to engaging customers. Trout lays out eight points of strategy that have proven to beget success.

• Growth and sacrifice in differentiation. Growth can kill differentiation by tempting companies to thin out their product lines in search of mass acceptance. Trout details why you should avoid the distractions growth poses.

• Being different in different places. What differentiation strategy will work abroad? This section presents some key considerations.

Your efforts to stand out in the marketplace begin now.

THE COMPLETE SUMMARY

1. THE TYRANNY OF CHOICE

Differentiating products today is more challenging than at any other time in history. When our earliest ancestors wondered, “What’s for dinner?” the answer was clear: whatever the neighborhood could run down, kill, and bring back to the cave. Red meat? White meat? There was only one choice; it was a simpler time.

These days, the average supermarket stocks forty thousand brand items—or standard stocking units (SKUs)—an explosion of choice in just about every product category. That number is a mere fraction of the estimated one million SKUs available in America. The most interesting thing, though, is that the average family gets 80 to 85 percent of its needs from only 150 SKUs, which means there’s a good chance the other 39,850 items in the store will be ignored.

What drives choice is the law of division, which states that a category starts off as a single entity and then breaks up into other segments. Computers, for instance, once were their own category; over time, however, this category segmented into mainframes, microcomputers, PCs, laptops, notebooks, and so forth. Television programming once meant network television programming; now it, too, is broken into segments: network, independent, cable, satellite, public, and now computer-based “streaming” video.

The explosion of choice has led to an entire industry dedicated to helping people with their choices, whether it be a guide to New York City restaurants or advice on which of eight thousand mutual funds to buy. The World Wide Web has expanded this industry past long-accepted structures and strictures, doling out advice on command and fulfilling needs—any need—instantly.

With so much competition, markets today are driven by choice; customers have so many choices that companies that don’t address every whim of the marketplace will lose business and will not survive. Those that don’t stand out will get lost in the pack. Indeed, companies must address differentiation in three key ways:

• If you ignore your uniqueness and try to be everything for everybody, you quickly undermine what makes you different.

• If you ignore changes in the market, your difference can become less important.

• If you stay in the shadow of your larger competitors and never establish your “differentness,” you will always be weak.

It’s an unforgiving world out there, and we haven’t seen anything yet.

2. LOSING AND REINVENTING THE USP

In his 1960 book Reality in Advertising, Rosser Reeves defined the concept of the unique selling proposition (USP):

• Each advertisement must make a proposition to the consumer. Not just words, not just product “puffery,” not just show-window advertising. Each advertisement must say to each reader, “Buy this product, and you will get this specific benefit.”

• The proposition must be one that the competition either cannot or does not offer. It must be unique—either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising.

• The proposition must be so strong that it can move the mass millions.

When Reeves wrote of being different, the world was an easier place. Global competition did not exist; in fact, real competition barely existed. Today, many companies have sales figures that dwarf the gross national product of some countries—the top five hundred global companies represent 70 percent of the world’s trade. And the big keep getting bigger. Mergers and acquisitions are the rule of the day and competitors are tougher and smarter than ever before.

According to Reeves, in order to differentiate yourself from competitors, you must offer an option that the competition cannot or does not. To do so successfully, you should recognize how customers make decisions based on differentiation. Psychologists have come up with four functions that help people make these decisions: intuition, thinking, feeling, and sensing:

• Differentiating with “intuitives.” This group uses intuition to concentrate on possibilities, avoiding details in favor of a “big picture” view. They are susceptible to a “next generation” strategy of differentiation. For example, when Advil positioned their ibuprofen tablets as “advanced medicine for pain,” they perfectly differentiated themselves for the “big picture” crowd.

• Differentiating with “thinkers.” This group is analytical, precise, and logical. They possess a lot of information, often ignoring the emotional or feeling aspects of a situation, and frequently act in response to the facts about a product. BMW’s differentiating strategy of “the ultimate driving machine” and discussion of ergonomic design and maneuverability plays well with “thinkers.”

• Differentiating with “feelers.” This group dispenses with intellectual analysis in favor of following their own preferences, an ideal group for third-party endorsements from experts who look and sound real. Miracle-Gro’s “choice of experts” campaign (nice people surrounded by flowers) is the perfect “feeler” strategy.

• Differentiating with “sensors.” This group sees things as they are and has a great respect for facts, an enormous capacity for detail, and a knack for putting things into context. Hertz’s differentiating strategy of leadership (“There’s Hertz and there’s Not Exactly”) is a great program for “sensors,” who accept it as common sense that the company is the best.

Reinventing the USP

Regardless of approach, it is more difficult for companies today to hang on to a USP or product difference or benefit, as the Reeves model suggests. There are three explanations for what has happened:

• A torrent of new products has washed over consumers, each product with conflicting claims and the smallest points of difference (“Now! Tartar control with the great taste of fresh mint gel!”).

• The number-one response amongst competitors is “me-tooism.” Technology enables competitors to tear apart and reconstruct knockoff products before companies even have the chance to establish their differences.

• The speed of technology has enabled companies to reinvent themselves as quickly and as often as they desire, making it difficult to differentiate on product differences alone. Intel, for example, increases data storage and performance each year at astounding rates. That said, it’s not impossible to differentiate based on product—just difficult. Gillette, for instance, reinvents shaving every few years: with two-bladed razors (Trac II), adjustable two-bladed razors (Atra), shock-absorbent razors (Sensor), and now with three-bladed razors (Mach 3). Mach 3, in particular, may seem like just a new product, but it is actually the result of $750 million in research, patents, testing, and all-around excruciating hard work.

Gillette’s attention to detail and differentiation is spreading to its acquisitions. Oral-B, which Gillette acquired, hadn’t introduced a new toothbrush in twenty-seven years. Gillette assigned a team of 150 people to research manual plaque removal and create new products to address their findings, resulting in a stream of new implements. By improving, upgrading, and reinventing their products, Gillette has become an excellent model in differentiation.

Will competitors get their arms around razors and toothbrushes? Most likely. “Me-tooism” remains a dominant force in competition, since being competitive so often means cashing in on a competitor’s successes. Inventing and hanging on to a truly different product is hard work, but it can be done.

3. WHAT DIFFERENTIATION IS NOT

There are any number of ways to differentiate products; many of them have been proven successful (if executed properly). There are, conversely, several “yellow flags” to avoid—ideas that look appealing, but will rarely differentiate you.

Quality and Customer Orientation

The 1990s witnessed a war on quality. You couldn’t walk into the business section of your local bookstore without seeing dozens of books on quality with acronym-strewn titles (TQM, SPC, QFD, CQL, etc.). While companies focused on quality improvement programs to meet the demands of their customers, customers simply got more demanding and not necessarily any more loyal to qualitycentric organizations. A Gallup survey done for the American Society for Quality Control found that only 28 percent of executives had achieved significant results (in profitability or market share) from their quality initiatives. That doesn’t mean companies should (or can) abandon their quality improvement efforts. Customer expectations aren’t going away, regardless of how much it costs companies to keep pace.

Indeed, “Do whatever it takes to satisfy customers” became every company’s mantra in the 1980s and 1990s. Every complaint was a gift, a clue you needed in order to keep your customers “for life.” Frequent buyer programs popped up, first in the airline industry (with American Airlines’ AAdvantage program in 1983, then at nearly every airline). What airlines failed to do was to differentiate themselves for frequent travelers to the degree that justified the costs and drawbacks of the program; such programs were, and are, too easily imitated.

What airlines (and, indeed, many industries in the “Quality Decade”) should have done was draw the line between operational effectiveness and strategic positioning. Operational effectiveness means performing better the same activities your competitors perform—a common short-term strategy. Positioning, however, dictates that you find unique and meaningful points of differentiation, and use them to competitive advantage.

Creativity

Rosser Reeves railed against “puffery” and ineffectual advertising—“the best taste ever,” “incredibly smooth,” and so on. While such bits of fluff were not up to Reeves’s standards, at least they made the attempt to sell. Puffery has, today, been replaced with vagueness—“Start something,” “People drive us,” “Expanding possibilities.” These slogans are creative, even entertaining, but it’s sometimes hard to tell what companies are advertising.

One argument for such ads is the belief that advertising has lost its effectiveness in an age of overcommunication and cynicism. Ads that are emotional or bonding or “cool” connect with consumers, forming a bond with them. The more unconventional your ads, the more success you’ll have at differentiating yourself from your competition.

Yet, one factor remains true: if people think you have an important message to convey, they will generally open their eyes and ears long enough to absorb what you have to say. The trick is not to bury that information in what some call creativity.

Price

Price is often the enemy of differentiation. When price becomes a focus of a message or a company’s marketing, you begin to undermine your uniqueness. If you make price the main consideration for picking you over your competitors, you set yourself up to lose, since anyone can mark down a price. Cutting prices is insanity if the competition can go as low as you can.

There are, however, several methods you can employ to get around a price attack:

• Do something special. The leader can go to its biggest customers and do something special. Nike, for instance, offered the athletic shoe store chain Foot Locker the Tuned Air, a $130 shoe made exclusively for the chain. So far, so good: Foot Locker has ordered a million pairs thus far, and expects to sell $200 million worth.

• Cause some confusion. The leader wins when the market is confused about competing offers. AT&T countered MCI’s “Friends and Family” discount program with an aggressive advertising campaign that challenged whether their competitor’s program indeed saved consumers as much money as it claimed. The resulting confusion led the bulk of the market to simply stay with AT&T.

• Shift the argument. Introduce the concept of total cost as opposed to initial cost. In some categories, the costs you incur after you buy a product (an expensive car, for example) can be substantial. If your product performs better, you can build a cost-for-cost ownership versus cost-of-purchase comparison.

• Differentiate with high price. High prices tell the consumer that the product is worth a lot; in essence, the high price becomes an inherent benefit of the product itself. High quality should be more expensive; high-priced products offer more prestige.

Breadth of Line

People are overwhelmed by choice, causing confusion and making decisions difficult to come by. For some businesses, however, big selection works as a differentiator. Charles Lazarus, the founder of Toys “R” Us, noted, “When parents have no clear idea of what to buy, they go to the store with the biggest selection.”

“Biggest selection” is a mantra in retailing, with superstores (or “category killers”) becoming successful by using an everything-under-one-roof approach and deep discounts to cater to different niches.

But “big” can be too big, as such onetime kings of category killers as Comp-USA, Sports Authority, and Party City have found out. You have to manage endless selections of SKU inventories; you alienate core consumer groups with endless mazes of aisles; you alienate older consumers with huge parking lots and massive floor space; you alienate parents who, with cranky kids in tow, don’t have time to figure out your store layout.

What’s really needed is guidance on what and where to buy, something the Web provides in spades. Breadth of line is nowhere near as strong a differentiator as leadership or preference or product difference. Breadth of line can be copied easily by a competitor, leaving you with only price (another easy copy) as a differentiator.

SOUTHWEST BUILDS A PRICE ADVANTAGE

One of the few success stories of using price as a differentiating factor is Southwest Airlines. By using one kind of airplane, they saved on training and maintenance costs. By offering no advanced seats, they avoided expensive reservation systems. By offering no food, they eliminated expense and time. By avoiding costly hub airports and using less expensive, smaller airports, they avoided high gate charges.

Southwest used the savings incurred from these efforts to construct a system with a lower cost per air mile than any other airline, then passed that savings on to their customers. They have differentiated themselves as a low-fare airline and have become big enough that they can’t be forced out of a market by a bigger competitor that lowers their price. Many airlines have tried to use Southwest as a model for their own operation; most, if not all, have failed.

4. THE FOUR STEPS TO DIFFERENTIATION

Differentiating your business does not mean being cute or “creative” or imaginative. It has everything to do with logic—the science that deals with the rules and tests of sound thinking. Here is a four-step process you can follow to successfully differentiate yourself from competitors.

Step 1: Make Sense in Context

Arguments are never made in a vacuum; there are always competitors swimming around you, making arguments of their own. Your message must make sense in the context of the category; it must start with what the marketplace has heard and registered from your competitors.

You need a quick snapshot of the perceptions that exist in the market; from that snapshot, you can discern the perceptual strengths and weaknesses of you and your competitors as they exist in the minds of your target customers. You must also pay attention to what’s happening in the market, to gauge whether the timing is right for your differentiating idea. For example, Nordstrom’s idea of “better service” played perfectly into the context of a department store market that was reducing its people and service as a way of cutting costs.

Step 2: Find the Differentiating Idea

Your “differentness” does not have to be product-related. There are many ways to set your company apart; the trick is to find that difference and use it to set up a benefit for your customer.

Consider Hillsdale College, near Detroit—one of thousands of postsecondary institutions in the United States. Hillsdale has constructed a differentiation strategy based on the fact that it does not accept any federal aid for grants and student loans. The college’s pitch is “We’re free from government influence”—a successful argument that has positioned Hillsdale as a mecca for conservative thought.

Step 3: Have Credentials

To build a logical argument for your difference, you must have the credentials to support your differentiating idea, to make it real and believable. If you have a product difference, you should be able to demonstrate it; that demonstration, in turn, becomes your credentials.

Claims of difference without proof are simply empty claims. A “wide track” Pontiac must be wider than other cars. As the “world’s favorite airline,” British Airways should fly more people than any other airline. When it’s “Hertz or Not Exactly,” there should be some unique services that others don’t offer.

Step 4: Communicate Your Difference

If you build a differentiated product, the world will not automatically beat a path to your door. Better products on their own don’t win; you must build a strong perception in the marketplace to succeed. Every aspect of your communications should reflect your difference—your advertising, brochures, Web site, sales presentations, and so on. You cannot overcommunicate your difference.

A real differentiating idea can be a motivational bonanza. When Avis said, “We’re only Number Two; we try harder,” their employees were motivated to do just that. They were proud to be underdogs. You must give employees something they can latch on to and let them run with it. Come up with a differentiating idea and challenge them to bring it to life.

But there’s more. Differentiating does not stop with a simple idea. You must have the resources to build a solid communications program to broadcast your idea. Indeed, an idea without money is worthless; if you don’t have funding to put behind your idea, be prepared to give away a lot to get the funding. Steve Jobs and Steve Wozniak had a great idea, but it took Mike Markkula’s $91,000 to put Apple on the map. For his investment, he got one-third of the company; he should have held out for half.

5. EIGHT SUCCESSFUL DIFFERENTIATION STRATEGIES

■ Be First. Getting into the mind with a new idea, product, or benefit is an enormous advantage. People tend to stick with what they’ve got, and if you’re there first, any copycat measures by a competitor will just reinforce your idea. Being original translates into more knowledge, more expertise. Studies show that, in most cases, being first to the market provides a significant market share advantage over later entrants. It also forces those later entrants to find their own distinctive positioning strategy.

Being first is one thing; staying first is another. It takes hard work and enormous energy to stay on top with a new product or idea. Continued innovation is key; Gillette pioneered razor blades and remains the leader, thanks to their endless improvements in product and technology.

NOT-SO-GREAT FIRSTS

Successful firsts come from good ideas; unsuccessful firsts tend to stem from bad ideas:

• RJ Reynolds spent a fortune on the first smokeless cigarette, thinking that smokeless cigarettes would appeal to nonsmokers. Unfortunately, nonsmokers don’t buy cigarettes.

• The makers of Frosty Paws (billed as “the first ice cream for dogs”) never took into consideration the fact that Rover will eat anything you throw on the floor. Why would anyone buy premium-priced fake ice cream when dinner scraps will do?

Being first with a stupid idea will get you nowhere.

■ Maintain Attribute Ownership. An attribute is a characteristic, peculiarity, or distinctive feature of a person or thing; persons or things comprise a mixture of attributes. Each toothpaste, for example, is different from other toothpastes in terms of cavity prevention, plaque prevention, taste, and other attributes.

What makes a person or product unique is being known for one of these attributes. In fact, attribute ownership is probably the number-one way to differentiate a product or service. There is one caveat: you cannot own the same attribute or position that your competitor owns; you must seek out another attribute. Many companies attempt to emulate a leader, when it is much better to find an opposite attribute that will allow you to play off against the leader. To be most effective, attributes should be simple and benefit-oriented.

■ Be a Leader. Leadership is the most powerful way to differentiate a brand, because it’s the most direct way to establish the credentials of a brand. Credentials are the collateral you put up to guarantee the performance of your brand.

GETTING CREDIT FOR ATTRIBUTES

Visa has dominated the credit card world by taking possession of the attribute of being “everywhere.” It accounts for 53 percent of the $1.16 trillion annual credit card transactions, more than MasterCard by a two-to-one ratio. Master-Card, on the other hand, does not own an attribute of its own. It tries to act like Visa (a mistake), rather than staking out some other attribute for competitive advantage. Even American Express has seized upon a separate attribute, as an everyday usage card in grocery stores, gas stations, and the like. Not owning an attribute has been an expensive lesson for MasterCard.

Powerful leaders can take ownership of the words that stand for their category. When you think of computers, copiers, or chocolate bars, chances are you think of IBM, Xerox, and Hershey’s. An astute leader will go one step further to solidify its position. Heinz, for example, owns the word ketchup, but it also owns the word that describes the ketchup’s most important attribute: slow. Owning that one word helps Heinz maintain a 50 percent market share.

■ Have a History. Heritage has the power to make your product stand out. It can be a commanding differentiating idea because there appears to be a natural psychological importance to having a long history, one that makes people secure in their choices. Heritage also gives people the impression that they are dealing with an industry leader; if not the biggest, the company certainly is a leader in longevity.

Tradition isn’t always enough, though. Companies must strike a balance in their marketing between consumer-comforting tradition and progressiveness that is crucial to continued success. A good example of this is Tabasco (the longtime leader in the pepper sauce business), which both honors its heritage and looks forward (through, for example, its trendy neckties, Cajun cooking festivals, and Tabasco-laced drinks that originated in Louisiana oyster bars).

■ Specialize in Your Market. People perceive those who concentrate on a specific activity or product as experts on that activity or product, giving them more knowledge and experience than they sometimes deserve. Conversely, the generalist is rarely associated with expertise in many fields of endeavor, regardless of how good he or she may be. Common sense dictates that a single person or company cannot be expert in everything.

Consider a big food name like Kraft, which, when taken out against specialist brand names (such as Hellman’s in mayonnaise or French’s in mustard), is trounced every time. In retail, the biggest names that are in trouble today are department stores like Macy’s, Hills, and Gimbel’s—all of which have ended up in bankruptcy court. The big successes are the specialists. Gap, Victoria’s Secret, and Foot Locker have all succeeded by focusing on one thing.

■ Be the Preferred Provider. More often than not, people buy what they think they should have, like sheep following a herd. The main reason for this kind of behavior is insecurity. People are more likely to purchase a product that other people think is the correct one to buy. This is called “preference,” and it is widely used by companies to differentiate their products from competitors’.

Tylenol, for example, has become the number-one pain reliever in America in part because Johnson & Johnson promotes its product as “the pain reliever hospitals prefer.” Science Diet, a premium-priced dog and cat food, is “what vets feed their pets.” The list goes on and on. Companies use the preferences of others to establish authenticity and to set themselves apart from the competition.

SCHWAB’S PREFERENCE STRATEGY

Charles Schwab unleashed the ultimate preference strategy by taking out a three-page ad in The Wall Street Journal and quoting six authorities (including Money magazine, Smart Money, and the Financial Net News) who named the company the number-one online broker in the field. That wasn’t enough; they also noted that 2.5 million investors chose Schwab to help them invest online; that Schwab handles more online trades than any other broker; and that they handle more online assets than any other broker.

By the time Schwab was finished, there was no doubt that it was the most preferred online broker.

■ Make Your Products in a Special Way. Companies spend millions of dollars and thousands of man hours developing, producing, and testing new, innovative products, only to have their marketing departments hide all evidence of this work in their messages to consumers. Marketers dismiss such information as too complex, preferring to focus on the lifestyle experience associated with the product.

The problem with this strategy is that many competing products can provide the same lifestyle experience; focusing on the unique design or technology in the product, on the other hand, can help distinguish the product in the marketplace. Give the design element a name, and package it as the magic ingredient that differentiates the product from all others. If you’ve got it, flaunt it, as the following companies found out:

• Sony started its dominance in television by making a fuss over its “Trinitron.” Did anyone know what it was? Nope, but it sounded impressive.

• When Crest introduced its fluoride cavity-prevention toothpaste, they made sure everyone knew it contained Fluoristan, though no one knew what that was. However, it sounded impressive.

■ Be Hot. When you’re hot, the world should know you’re hot: word of mouth is a powerful force in marketing. While people love underdogs, they usually bet on winners. It is surprising, then, that so many companies are shy when it comes to telling people about their success. While a few may carp that bragging is pushy, the real reason they’re reluctant is the fear that they might not stay hot forever.

What they don’t realize is that getting a product or company off the ground is a lot like getting a satellite into orbit: it takes a lot of thrust to get it off the ground, but once it’s in orbit, it’s a whole different ballgame. Being hot or experiencing tremendous growth can get your product or company some altitude; once you’re there, you can figure out something else to keep you there.

6. GROWTH AND SACRIFICE IN DIFFERENTIATION

Brands often lose their uniqueness to the desire to be bigger. Indeed, the urge to grow seems almost like a reflex action, in part because that’s how businesses tend to reward employees and management. The question of whether growth is indeed necessary is rarely brought up. In the words of economist Milton Friedman, “We don’t have a desperate need to grow; we have a desperate desire to grow.”

Negative Effects

Growth negatively affects differentiation in two key ways:

• The company becomes distracted. Rather than pouring on the resources and preempting a differentiating idea, companies in “growth mode” tend to focus efforts on growing their businesses. When they do this, they miss out on opportunities to improve their niche development, pursuing instead a broader (and, in most cases, less rewarding) line of growth.

• The company overextends its product lines. In an effort to pursue “endless” growth, companies fall into a line extension trap, trying to hang their brand in as many related or unrelated categories as possible. McDonald’s, for instance, built a successful business on inexpensive, high-speed cheeseburgers. When the company decided to branch out into pizzas, chicken, and kids’ menu items, its growth slowed and its hold on the fast food market weakened.

Companies must recognize that maintaining focus on their basic business makes more sense in the long run than watering down their efforts in search of wider growth.

Conversely, giving up something can, on occasion, be good for your business. When you study categories over a long period of time, you can see that adding more can weaken growth, not help it. Philip Morris, for example, sought to maintain growth by adding products to its flagship brand, Marlboro. Soon, Marlboro Country was filled with Lights, Mediums, Menthol, and Ultra-Lights. Sales went down (real cowboys don’t smoke Ultra-Lights), so Philip Morris returned to the tried-and-true red-and-white packaging, focusing once again on the main Marlboro brand.

The more you add, the more you risk undermining your basic differentiating idea.

7. BEING DIFFERENT IN DIFFERENT PLACES: FIVE RULES FOR THE ROAD

Making your brand a global brand is a tricky, though not impossible, proposition. Before deciding that one differentiating idea can take your brand around the world, consider the following:

1. The current idea may be the wrong idea. Coke inexplicably got rid of its powerful slogan “The Real Thing,” only to bring it back in another form when it cracked the Russian market, where there’s a rediscovery of roots and a respect for authenticity. “Drink the Legend” is Coke’s slogan there.

2. Attributes can change when you cross borders. In Mexico, Corona is a low-rent, humble brand of beer; you can pick up a six-pack in Mexico City for about $2.50. In America, Corona has a spring-break, palm-trees, drink-it-with-a-lime image, and can usually be found for $6 to $8 a six-pack.

3. Your market leadership may not translate. Nescafé is Nestlé’s top-selling coffee brand in the world, except in India where the company’s specially made Sunrise coffee (made with chicory to give it a familiar flavor) outsells the flagship brand.

4. Your heritage may not be respected. Kellogg’s is a proud old name for breakfast food, but the cereal giant got a cold shoulder in India, where hot food is preferred for breakfast. So much for heritage.

5. Your specialty may get blurred. What is Lux? In Indonesia, it’s a soap; in China, Taiwan, and the Philippines, it’s a shampoo; in Japan, it’s both. It’s difficult to convince the world that you’re a specialist when your expertise varies according to geography.

8. WHO’S IN CHARGE HERE?

Top management has to be in charge of making sure that differentiating strategy is generated, communicated, and maintained. They cannot leave those duties to marketing people and ad agencies in a hands-off capacity. The pages of business publications are littered with tales of CEOs who were misguided in their strategy or who pursued no strategy at all.

In contrast, when you study success, you tend to find that the best CEOs do their own strategy, in their own specific ways. Herb Kelleher of Southwest Airlines helps maintain his company’s success by being intimately involved in all aspects of the business. Jack Welch of GE can’t go to every meeting and be involved with strategy; instead, he trusts his top business unit leaders to figure out the best way to meet corporate goals.

In 1966, Peter Drucker defined leadership as “thinking through the organization’s mission, defining it, and establishing it, clearly and visibly.” In a new age of killer competition, the foundation of leadership could be redefined slightly as “thinking through the organization’s difference, defining it, and establishing it, clearly and visibly.”

Rosser Reeves would have agreed with that revision.

Copyright © 2000 by Jack Trout. Summarized by permission of the publisher, John Wiley & Sons.

Summary Copyright © 2000 by Soundview Executive Book Summaries.

LATERAL MARKETING

by Philip Kotler and Fernando Trias de Bes

Everything that can be invented has been invented,” said U.S. Office of Patents Commissioner Charles H. Duell in 1899. While his assertion proved to be slightly off the mark, product developers and marketers today may sometimes feel as if, indeed, every product and variation of product possible has been invented!

Take a look at the one thousand varieties of cereal in a grocery store cereal aisle. Is there possibly a combination of cereal that has not been dreamed up, developed, and displayed? The problem, according to marketing eminence grise Philip Kotler, is that marketers are taking a vertical approach to product development. In other words, they take a product category and drill down into that category to find subcategories that can attract more customers.

The cereal category, for example, features dozens of subcategories for consumers who watch their weight, want fiber, want fruit in their cereal, prefer cereal with chocolate, want cereal in special shapes, and so on. This traditional vertical marketing, with its emphasis on market segmentation and brand proliferation, leads to markets that are fragmented and saturated.

In recent years, Kotler has been evangelizing a new approach called “lateral” marketing. As explained in the following summary, co-authored with marketing consultant Fernando Trias de Bes, the goal of lateral marketing is not to capture part of a market; it’s to create an entirely new market.

The fact that the cereal market is extremely fragmented and saturated, for example, didn’t prevent a European food company named Hero from inventing a completely new cereal product, thanks to some lateral thinking. Instead of developing another variety of cereal, the marketers at Hero asked themselves: Why should cereal be limited to breakfast? Why not turn cereal into a healthy snack that can be eaten at any time of the day?

The idea needed refining, of course. Carrying around cereal in bags and eating it with your hands wasn’t the best solution. Eventually, the company decided to adopt the shape of another snack food, the chocolate bar. The result was the Hero Muesli cereal bar, which is Europe’s leading cereal bar and the inspiration for all cereal bars now sold around the world.

In the following summary, Kotler and Trias de Bes show how marketers can think laterally—and offer scores of examples that demonstrate the power of lateral thinking. Philip Kotler, the S. C. Johnson & Son distinguished professor of international marketing at Northwestern University’s Kellogg School of Management, is considered the father of modern marketing. His seminal marketing text, Marketing Management, is now in its twelfth edition. He has written numerous other books including Principles of Marketing, Marketing Models, and Kotler on Marketing. He is also the author of more than one hundred articles in leading marketing journals.

Fernando Trias de Bes is a co-founder and partner of Salvetti & Llombart, an international marketing consultancy based in Spain, and a professor at ESADE, one of Spain’s most respected business schools. His most recent book is Good Luck: Creating the Conditions for Success in Life and Business.

LATERAL MARKETING

New Techniques for Finding Breakthrough Ideas

by Philip Kotler and Fernando Trias de Bes

CONTENTS

1. The Evolution of Markets and the Dynamics of Competition

2. Lateral Marketing as Complement to Vertical Marketing

3. The Lateral Marketing Process

4. Lateral Marketing at the Market Level

5. Lateral Marketing at the Product Level

6. Lateral Marketing at the Marketing Mix Level

7. Implementing Lateral Marketing

THE SUMMARY IN BRIEF

In a consumer economy saturated with homogenous products and inhabited by customers who are more and more immune to advertising messages, traditional vertical marketing—with its emphasis on market segmentation and brand proliferation—is failing us. But there is a better way to reach consumers, to create innovative products and markets that don’t yet exist, and to gain a real competitive advantage. This way is through an entirely different way of thinking—through lateral marketing. Lateral marketing complements traditional marketing by providing an alternative route to generating fresh new ideas. Whereas vertical marketing helps us find increasingly smaller subgroups for which a product might be developed, lateral marketing lets marketers develop an entirely new product that finds a much wider audience. Instead of accepting that your product or service will have a small share of a saturated market, you will find yourself the leader in new markets.

THE COMPLETE SUMMARY

1. THE EVOLUTION OF MARKETS AND THE DYNAMICS OF COMPETITION

The last decades of the twentieth century were prosperous for most companies in the developed world. Population growth and longer life expectancy meant greater purchasing power. Increasingly sophisticated marketing efforts resulted in greater product trials, repeat purchases, and brand loyalty. But you can’t expect to use twentieth-century marketing tactics in the twenty-first century to get the same result.

Nowadays, a strikingly high percentage of new products are doomed to fail. Only twenty years ago, the proportion of failures to successes was much lower. Why is it so difficult to succeed now? Because of the breadth of what’s available and what it means. Take the cereal category, which features dozens of subcategories and varieties, each addressed to a very specific target market: those who watch their weight, who need fiber, who prefer cereal with fruit, who prefer cereal with chocolate, and so on. Among milk-based products there are over fifty yogurts competing for shelf space. In any developed country there are several dozen TV channels, leaving little room for one more.

Marketing today is not the same as it was in the 1960s and 1970s. Today there are products to satisfy almost every need. Customers’ needs are more than satisfied. They are hypersatisfied.

Companies can continue to segment the market more finely, but the end result is markets too small to serve profitably.

Further complicating the picture are the facts that:

• Distribution of packaged goods is now largely in the hands of giant corporations and multinationals, such as Wal-Mart and Ikea. Distributors own shelf space and decide who gets it.

• There are more brands but fewer producers. Each segment and niche of the market got its own brand as producers discovered that by creating more brands it became more difficult for a competitor’s attacks to make headway.

• Product life cycles have been dramatically shortened. A brand arms race has developed in which competitors quickly launch new brands, competitors respond with their own new brands, and the cycle repeats.

• It’s cheaper to replace than repair. It’s faster, easier, and cheaper to buy new, and people have accepted that products are disposable, encouraging more new product launches.

• Digital technology has led to a new range of products and services, including the Internet, global positioning systems, and computer and consumer products.

• Trademark and patent registrations are increasing.

• The number of varieties of products has increased radically.

• Markets are hyperfragmented. Companies, in their search for differentiation, have identified and created more and more segments and niches, resulting in highly fragmented markets.

• Advertising saturation is increasing and a fragmented media is complicating product launches, making it harder to reach consumers.

• Claiming consumer mind space is harder. Consumers have become selective, ignoring commercial communications. Novelty might be the only way to catch their attention.

The challenge in marketing today is to fight against fragmentation, saturation, and the storm of novelties that appear daily in the market. But recently new business concepts have appeared that are the result of a different creative process from the endless vertical segmentation of yesterday. This process is responsible for cereal bars that can be eaten as a snack or in the morning instead of with milk, grocery stores at gas stations, refrigerated pizza, and yogurt that busy women can carry in a purse.

The new priority must be to find ways to create and launch more successful products. This is the main objective of lateral marketing.

Traditional Marketing Thinking

To understand how lateral marketing will transform how you market, you must first understand the strength and weaknesses of the traditional approach to marketing. Marketing starts by studying consumer needs and figuring out how to satisfy them. Yet many manufacturers forget to focus on needs and instead focus only on selling their products.

Once needs have been identified, the next step is determining who is the market. The market is defined as the persons or companies who buy or might buy the product or services you produce in a given situation to cover a given need. For example, the market for yogurt might be any person older than one year old (age when children start eating yogurts) who is in a breakfast, dessert, or snacking occasion.

In turn, every product and service is included in a category and a subcategory. For example, the product “yogurt” belongs in the milk-based foods market and has subcategories such as fruit yogurt. Defining a category for your product is necessary if you want to develop a marketing strategy because you need to know where and against whom you are competing.

Defining needs and categories is important but can also cause problems. By defining needs and categories for your products, you necessarily exclude from consideration those you think don’t need your product or service.

Imagine that we are in the first years when yogurts started to be commercially produced. Normally, markets are born with a first brand that creates the category. There is a current and potential market for the category. Competitors will appear if they sense an opportunity. The first two in the category typically capture 75 percent of the market, leaving just 25 percent for later arrivals.

If you are third or later, you typically choose a subgroup or persons/situations in the market and address your product directly to them. You usually do this by highlighting a concrete characteristic of the product to emphasize—this is your positioning. It allows you to divide and conquer. Instead of attacking the whole market and getting a tiny share, you segment the market and obtain a major share of that segment. And there is another benefit. By targeting specific needs, you fill the needs of a group of customers better and they may increase their consumption—they may eat more yogurt. Segmentation provokes a double effect: it fragments the market and at the same time makes it bigger.

Of course, as companies continue to segment the market, it becomes fragmented and saturated. Market fragmentation leaves little room for new products—which are the key components for companies that want to grow.

Another tactic you can use is “positioning.” Positioning is linked to segmenting. In the case of yogurt, there are brands positioned as healthier or cheaper or fresher or more natural. Choosing a characteristic and accentuating it gives personality to your brand and makes it more noticeable. It helps you stand out in a crowded field. On the other hand, it may also blind you to innovative new concepts.

Innovations Originated from Inside a Given Market

Another way you can innovate is through modulation. Modulation-based innovations consist of variations in any basic characteristic of a given product or service by increasing or decreasing that characteristic. Examples include:

• Juices: with low sugar content, with more juice, not from concentrate, with vitamins.

• Detergents: with more bleach, with more soap concentration, fragrance-free, with less foam, with more foam.

• Banking: with monthly interest payment, without usage charges, with more offices, with better-trained staff.

• Couriers: faster delivery, higher maximum weight, better guarantee.

SLIDE RULE MARKETING

A classic example of focusing on selling the product and forgetting about need is the slide rule. The slide rule was a wood or plastic device on which many numbers were printed. By gliding the parts of the ruler, a user could carry out most arithmetic operations. In its heyday, every engineer and math student had one and used it to make calculations faster than the old paper-and-pencil process allowed. But sales started to decline when the electronic calculator arrived on the scene. The calculator was easier, faster, and more accurate even if at first it was much more expensive.

Could its manufacturers have saved the slide rule by using traditional strategies for segmentation, targeting, and positioning? Would it have helped to make separate slide rules for different groups in different colors or to advertise how they feel good to hold and use? Was there any way to segment the market to make room for newer and better slide rules? No!

Could the slide rule makers have thought of a new product such as electronic calculators to substitute for slide rules? Probably not since segmentation thinking and positioning would not lead to imagining an electronic calculator. They were stuck looking at what they already had and not able to imagine something entirely different. The problem was a lateral one. Someone had to think of the idea of slide rule + technology + a need to calculate to create a product that was more efficient than the slide rule.

Current marketing theories tend to work from the top down. They are not very effective in creating alternative or substitute products.

You can also innovate by size—such as by selling in large packs and individual serving size. In this case, you never change the product or service, just the volume, intensity, or frequency of the offer. Another possible innovation is through packaging such as chocolates marketed in an array of boxes from simple to extravagant.

Another variation is design-based. The product, container, or package and size sold are the same, but the design or look is modified. A car company may launch the same product with a different exterior design or a ski maker may change the color of the skis. The changes keep the product fresh and appealing. There are also innovations based on adding complementary ingredients. Cookies can be sprinkled with sugar or chocolate or cinnamon, for example.

All these innovations have a common factor. They consist of continued variations on what the product or service is, but do not intend to modify its essence. The innovations occur within the category in which they compete, since the methodologies for creating them assume a fixed market. These innovations do not create new categories or new markets. The innovation always occurs within the category where the idea originated. The end result is still fragmentation and a small share of the total market.

2. LATERAL MARKETING AS COMPLEMENT TO VERTICAL MARKETING

Lateral marketing involves taking a product and sufficiently transforming it in order to make it appropriate for satisfying new needs or new persons and situations not considered before. The big advantage is that instead of capturing part of a market, it creates an entirely new one.

THE CASE OF CEREAL BARS

Cereals have many advantages. They are nourishing, rich in nutrients, and healthy. Hero, a European company selling food sector products but having a low market share in the breakfast cereal category, needed to gain more market share. Since the cereal segment was highly fragmented and saturated with cereal choices, it didn’t make much headway there. The solution was to redefine the utility of cereals. Hero decided to market them as a healthy snack at any time of day.

Hero adopted the form of another product—the candy bar. By combining cereal with chocolate and caramel, they created a cereal bar that could be carried and eaten any time. Today Hero is one of the European leaders in the cereal bar category. The innovation wasn’t within the market “breakfast cereals.” Instead, Hero used the positive attributes of cereal but embedded them in another concept, a candy bar, and created a new convenience and a new category. This lateral marketing process expanded the market for cereals into new occasions.

Vertical marketing and lateral marketing work side by side—both are necessary and complementary. In fact, lateral marketing cannot be fully developed without vertical marketing since the latter will produce more variations after a new category is discovered.

WHEN EACH TYPE OF MARKETING IS APPROPRIATE

Both lateral and vertical marketing are important. In understanding which is most appropriate in a given circumstance, remember that innovations that come from vertical marketing are easier for customers to assimilate and understand, while lateral marketing innovations need more time for assimilation.

Vertical marketing:

• works best in new markets

• works best to convert potential customers and to develop the market

• is less risky

• requires fewer resources

• doesn’t depend on high volume

• fragments markets

• maintains business focus

Lateral marketing:

• works best for mature markets with no growth

• creates markets from scratch

• is riskier

• requires greater resources

• anticipates high volume

• may redefine mission and business focus

The vertical marketing process obliges you to first define the market. Vertical marketing uses the definition of the market to create competitive advantages. The innovation is done inside the definition. Lateral marketing is based on seeking an expansion by approaching one or more needs, uses, targets, or situations that we discarded earlier when we defined the market.

Lateral marketing requires you to make an important transformation to your product. When you engage in lateral marketing, you restructure the product by adding needs, uses, situations, or targets unreachable without the change. Put simply, lateral marketing uses a process that creates by opening up new directions, being provocative, and making leaps.

The innovations that come from lateral marketing create new categories or subcategories. It does this in one of four ways:

1. A lateral product can restructure markets by creating new categories or subcategories. For example, the launch of Walkman by Sony radically restructured the market for electronic goods since it converted millions of young potential customers into personal audio products consumers.

2. It can reduce the volume of other products within the given market.