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BW Businessworld

Ries Above Them All

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The world first heard about Al Ries in 1972 when three articles authored by him and Jack Trout appeared in Advertising Age explaining a new concept called ‘Positioning'. The idea was path-breaking, and was even chosen to be among the 75 most important advertising ideas of the past 75 years by the magazine. Then, nine years later came Positioning: The Battle For Your Mind, which has since sold over 1 million copies worldwide. Trout and Ries have other bestsellers, too, to their credit: Marketing Warfare, Bottom-Up Marketing, Horse Sense and The 22 Immutable Laws of Marketing. Now, four decades after the world accepted the concept of positioning with open arms, there are many who question its relevance in current times. In an e-mail interview with BW's Smita Tripathi, Ries, who is also co-founder and chairman of consulting firm Ries & Ries, gives a strong reply.

Does the concept of brand positioning need to undergo a change for today's world?
The positioning concept is the same, but the world is different. Because of the wide array of products in every category it has become increasingly difficult to build a brand. That, however, doesn't mean that the principles of positioning can be ignored. Just the opposite. In a cluttered world, you need to pay even more attention to the only strategy that is going to work. Then, there is the issue of the short term versus the long term.

Too many marketers are only concerned with the short term; they overlook the long term. Early on in every new category there are likely to be dozens of brands, or sometimes hundreds. In the American personal computer (PC) market in the 1980s, there were some 300 brands. Today, just five brands account for 75 per cent of the market, and two brands account for 45 per cent of the market (Hewlett-Packard has 23 per cent and Dell 22 per cent).

What did these five brands do to assure their long-term survival?
As you might expect, each of these brands used a strong positioning strategy. Compaq was the first brand to introduce a "portable" PC. Then it was the first to introduce a PC using an advanced Intel 80386 chip. Both these moves were a classic positioning strategy: Be the first in a new category. In the process, Compaq became the largest-selling PC brand.

And, of course, Compaq was bought by Hewlett-Packard and the combination remained the leading brand in the category. (Hewlett-Packard should have kept the Compaq name, however. If they had done so, their leadership in the category would have been even greater than it is today.)

So what did Dell do to become a long-lasting PC brand? Dell focused on selling computers directly to businesses only. Even today, Dell gets less than 20 per cent of its revenues from (retail) consumers. It would have been a stronger brand by keeping its focus on selling directly to business. This is also a classic positioning strategy: Narrow the focus to dominate a segment of the category.

Apple is the No. 3 brand with a market share of 11 per cent. What did Apple do? It focused on the high end of the market. Apple computers, or really Macintosh, the brand name, are considerably more expensive than the other brands in the category.

What about Toshiba, the No. 4 brand with a market share of 10 per cent? In an era where every computer manufacturer made both desktop and laptop computers, Toshiba focused on laptops only. Another effective positioning strategy. The No. 5 brand is Acer, with a market share of 8 per cent. What is Acer's positioning? It is the low-cost computer.

Does the concept of positioning need to adapt itself to a digitally connected world? What are the principles that stand the test of time? What are the things that need to be re-thought and transformed?
Marketing consists of two aspects: strategy and tactics. Both are important, but you cannot win in the marketplace with good tactics only. You also need a good strategy. On the other hand, a good strategy can often be successful even though your tactics are not very efficient.

‘Digital' is all about tactics, not strategy. ‘Positioning' is all about strategy, not tactics. Just because the tactics of marketing have changed does not mean that they will affect the strategies of marketing. Today, a company, or rather the brands that a company is marketing, need both: good strategies and good ‘digital' tactics. Yet too many companies spend all of their time working on digital tactics and forget the need to first develop a good strategy.

Strategy always comes first. Tactics come second. First decide what position your brand wants to occupy and then figure out tactics.

In most cases, digital tactics are very useful in today's environment in order for a brand to occupy a position.

Many say brand positioning is more difficult in today's world. How can marketers overcome the challenges they are likely to face while positioning their brands?
Everything is more difficult in today's world. Decades ago, when I got out of the army, I could have gone to almost any college or university in the country. Today, top educational institutions accept less than 10 per cent of applicants. Here's the point. Because marketing is more difficult today is the reason marketers should pay more attention to the principles of marketing, in particular ‘positioning'. Not less. It does not make sense to ignore principles that worked in the past just because the environment has become more competitive. This should encourage marketing people to spend more time studying the principles of marketing.

(This story was published in Businessworld Issue Dated 18-06-2012)