Positioning the competition

Sergio Zyman is perhaps the most famous marketer on the planet. With two books under his belt and a career which includes a stint as chief marketing officer of The Coca-Cola Company during the most heated of the 'cola war' years,...

Sergio Zyman is perhaps the most famous marketer on the planet. With two books under his belt and a career which includes a stint as chief marketing officer of The Coca-Cola Company during the most heated of the ‘cola war’ years, he has been variously described as ‘a genius,’ ‘arrogant,’ ‘provocative,’ and, only partly in jest, ‘the Aya-Cola.’

When it comes to speedy brand-building, Zyman has seen it all: Huge successes with Diet Coke, Fruitopia and Sprite, and what many call a huge failure with New Coke. A native of Mexico City, Zyman is a graduate of Harvard’s advanced management and corporate financial management programs and has attended graduate schools in London, Paris and Jerusalem. Before Coca-Cola, he worked in marketing at Procter & Gamble in Mexico and McCann-Erickson in Mexico, New York and Japan.

Based on his 30-plus years experience in the field, Zyman has designed a system called ZMarketing, which he preaches from his current post as founder and CEO of the Atlanta, Georgia-based Zyman Marketing Group. He took some time out recently to discuss the science of building brands on the run.

I wanted to start with an idea from your book The End of Marketing As We Know It: ‘Fish where the fish are.’ Could you explain what that means and how marketers could apply it to building brands?

That’s part of a concept I call reciprocal marketing. It means it’s very hard to sell to people who don’t already buy you, because you have to build the brand from the ground up with them. It’s much easier to go to light and medium users of your brand and give them reasons to buy more of your brand.

Look at what politicians do. The very first line of attack is aimed at the ‘soft support,’ people who may be willing to vote for you, but aren’t 100% convinced. By contrast, if you aim for people who have never bought your brand, or in politics, people who have never voted for you, you’re aiming for the undecided, which are very flimsy, or even the soft or hard opposition.

It’s much easier for me to convince a once-a-month Hertz renter to rent more often than it is for me to convince someone to switch from Avis to Hertz.

For someone who’s launching a new brand, that would imply that they’re better off launching a brand extension than coming up with a completely new name, because then you’d have some built-in ‘soft support.’

Not necessarily. But the very first thing that you need to do is to figure out where you’re going to play, and who you’re going to make obsolete.

One of the things I hear a lot when I talk to companies is ‘We’re going to grow by 25% and increase our market share by 5%,’ and I say, ‘At the expense of whom? Who are you going to steal it from?’

Every new idea has to make an existing idea obsolete. The market is a zero-sum game. So unless you’re able to build your brand by stealing volume from someone else, you can’t do it. You have to take some of the fundamental attributes of a brand that’s already in the marketplace and add new attributes for your new brand.

You also wrote that brand positioning begins and ends with the consumer. Could you elaborate?

When you launch a brand, you have to think about what the consumer is looking for. When we launched Diet Coke I went to the consumer and I said: ‘What’s your problem with diet drinks?’ And they said: ‘They taste bad, but I put up with it to lose weight.’ So we told them they didn’t have to put up with that, and introduced Diet Coke with the tag ‘Just for the taste of it.’

Once we understood what the consumer was looking for, we went in and gave them something with a strong brand. So you see, it’s the consumer who decides at the end of the day whether a product is going to live or die – not the board of directors, not the president of the company. Unless you talk to the consumer about it, they’re going to abandon you.

Now I’d like to take a look at some new brands so you can comment on how they’re doing. For instance, Kia entered Canada fairly recently, and they seem to be positioning themselves as a fun, economy car for young first-time car buyers.

Right. They looked at the total market, they saw that there was a niche. They figured that if they came in with what’s actually a pretty cheap car, then their competitive sell is going to have to be based on being low priced. They figured that if they’re going to sell low-priced cars, they’re going to have to target people who don’t have a lot of money, which happens to be young people.

So instead of saying for all of you people that are broke, here’s a car you can afford, they said, we developed this car especially for you young people.

So your positioning is as much affected by what you’re selling as who you’re selling it to?

Well, in a way, because you’re not going to be able to sell denture glue to 20-year-olds. So if you have glue for dentures, you’re going to have to sell it to people who have dentures. You’re going to have to position it in a way so that people who use dentures will feel that this is something that will make them feel better about themselves and go farther, in addition to talking about the benefits of the product itself.

Remember, the product itself eventually perishes in the proposition. It gets you in, but with the rate of technology advancements and everything else, most products quickly get obsolete.

For instance with Kia, they might introduce it as a $20,000 car, or whatever it costs, and then someone will come along almost right away and say, ‘I have one too.’ Instead, they’re trying to position themselves as ‘the car for youth.’ If they succeed, then if you ask a young person why he’s driving a Kia, he’ll say, ‘because this car was developed for me,’ as opposed to saying ‘It was cheap,’ which nobody wants to say. Everyone wants to drive a Lamborghini – they don’t want to drive a cheap, shitty car.

You also mention that it’s up to the new brand not only to position itself but to position its competitors. Can you think of a recent brand launch where this was done effectively?

Amazon.com. Amazon basically came in and said, ‘Buy the book you want. Don’t buy the book I’m trying to sell you.’ You can review the book, you can check it out and you can read reviews. You can do all kinds of things, and that means that you don’t have to go to a store and climb over a huge display of 17 books on the Gates of India, or something like that, to find the book you want.

Who is Amazon competing against and how did they position their competition?

I think [it is competing with] the bricks-and-mortar book stores – Barnes & Noble and Borders and the mom-and-pop stores on the corner.

They basically said that their competition was cumbersome, expensive, and was in the business of actively selling books, as opposed to allowing consumers to buy books.

Another good example is Schwab. When Schwab came into the market they said, ‘You shouldn’t be paying that much for brokerage, because at the end of the day, that guy giving you that report doesn’t know any more than you do.’ Basically, they said you can go and buy stocks based on what you think, rather than what we say, and for that I’m going to charge you less.

And now discount brokerages are all over the place.

Yes, because they’ve redefined the market on their terms. And look what happened: after arguing and arguing, finally Merrill Lynch came out and said, ‘We’re going to offer a discount brokerage service for our customers, and by the way, we’re also going to offer it via the Internet.’

Both of those were very new products, in that nothing like them had existed before, so they shook up the market. What if you’re trying to launch a new product that’s not so revolutionary in a market that’s already crowded?

A good example of that is Arm & Hammer’s new baking soda laundry detergent. They’re entering a very crowded market, but with a proposition that says this product is biodegradable and much better for the environment. The detergent has all of the characteristics of the Arm & Hammer baking soda in a little box, but now you can have it in a detergent. Same thing with toothpaste, Arm & Hammer entered that market as well.

Right. For both of those products, why was it the right choice to keep the Arm & Hammer brand?

Because it has equity. By using the Arm & Hammer brand, they didn’t have to spend a lot of time saying these products are biodegradable, good for you, keep stuff clean, all this close-to-nature kind of stuff.

And both products also redefined the market and repositioned their competitors.

They segmented the market. Because they ignored the whole ‘We’ll make your shirts whiter than white’ thing and they went to this whole other issue, pointing out that the other detergents pollute the environment. And there was a large group of people who cared about that.

Now I wanted to move onto another point you make in your book. The idea that companies must rigorously analyze results to constantly improve. If you’re launching a brand extension, what should you be measuring and how should you act on the results?

You should be measuring success. You have to figure out why things are working. Most people spend all of their time worrying about why things aren’t working.

You know, I find it amusing when people use test markets and they go to Calgary for the test and they spend the equivalent of a $100-million national rate on marketing in the test. Then they roll out the brand on a national basis with a $20-million national rate, because that’s all they can afford. So they do it one way in the test, and then when they actually launch, they do it in a whole different way.

You have to first figure out how to do a realistic test, then you have to figure out why it worked – this is very important – and then you have to spend time making sure that you replicate those things and keep on doing them.

What exactly would you measure if you were launching, say, the Arm & Hammer laundry detergent?

I would look at why people would buy it. I don’t want to just measure how many boxes of the stuff I sold, I also want to measure why people are buying it – what is it doing for them? Because what I want to do is tell them more about the reasons they’ve already decided to buy my brand.

How do you then take that data and put it into practice?

Well, you modify your advertising, you modify every piece of communication. If people are saying to you, ‘The reason that I buy Arm & Hammer detergent is because I love the yellow box,’ then you don’t mess around with the box, and you tell people to look for the yellow box in the supermarkets. If they come back and they say, ‘I love this brand because it gets natural fibres cleaner,’ then you make sure you put that into your advertising. You have to make sure you have a deep understanding of why things are working.

The last thing I wanted to talk about was deciding whether you should launch a new brand at all. Can you give our imaginary marketing executive some tips?

New brands are necessary when you cannot extend the existing brand, when you’re going into a fundamentally different direction. Look at Boeing, when they introduced the new 777 planes as a way to get ahead of Airbus. It was a plan that was designed with the consumer in mind.

If they had just developed the 767 into a 767ER, for extended range, the consumers and the people who buy planes wouldn’t believe that this plane used the very latest technology and the rest of it. They had to go to a new model, they had to go to a new product, and new brand in essence, to get there.

What about cannibalization?

I’m OK with a new product cannibalizing volume from your existing products. What I’m not OK about is when a new brand cannibalizes the budget of an existing brand.

For instance, look at movie theatres. They ran into problems because they would build a theatre for $1 million, that was making a million dollars, say. Then they would build a second theatre close by, and that one would be bringing in $700,000, while cannibalizing some business from the existing theatre, which would now also bring in $700,000. So they’d say, ‘Great, we’ve got a net increase of $400,000 between the two theatres.’ But the cost of each theatre is $1 million. So they went from $1 million in sales from a $1-million theatre to $1.4 million in sales from theatres costing $2 million. Not a good idea.

You have to look at the economics. The idea of a business is to get more throughput from existing assets, and to try to grow your business in a profitable way. Your margins should increase as your business grows, not decrease.