Getting Started

• Introduction
• Overview

• Anyone who has done a case analysis in a college marketing course knows that the instructor often starts with the statement that "There are no right or wrong answers to this case." The case analysis then unfolds using a couple of standard approaches. The typical approach is to identify a strategic and tactical problem facing the company or brand, look for issues that bear on this, state some alternatives and then—after the discussion with no right or wrong answers—recommend a solution.

  A variant of this approach is called SWOT, which stands for Strength, Weakness, Opportunity, Threat analysis. Here a bunch of strengths are listed in bullet-point fashion, then weaknesses, then opportunities and finally threats. A solution is more or less divined from these lists.

  Neither of these approaches looks for logic in marketing decisions. It is not surprising, then, that it is not found. No wonder there are "no correct answers."

  All of this seems rather puzzling. Aren't some answers better than others? Isn't there a set of logical imperatives that can confine answers to better and more consistent ones? Can't marketing be logical and not merely subjective?

  There is no point in analyzing a marketing problem without looking for correct answers. And there is an approach that is both logical and practical: the Problem Solving Format.

• There is a clear logic to the Problem Solving Format (PSF): market coverage strategy defines target markets; price and distribution strategies are derived from the core benefit proposition, which itself follows from a brand's positioning strategy; the business model depends on price and place decisions; and promotion reflects—if it is to be logical—the core benefit proposition.

  Using the PSF, development of a marketing plan starts with the naming of the market. For Duracell, the market is batteries. Who will buy the product comes later, and it is a mistake to define the market by "who" and not "what."

  The market definition can be refined by considering a focus market. A focus market is just a device for narrowing the case analysis by excluding product categories that are not "substitutes" while including categories that are substitutes. For example, a case on Gatorade (which has a 90% market share) should not exclude water since that is a substitute for a sports drink and a possible source of new sales. But for Duracell, industrial batteries are not substitutes for consumer batteries, so the focus market could be consumer batteries.

  The first major brand management task is to choose a market coverage strategy, but to do that you must segment the market, that is, segment the focus market or whole market if there is no focus market.

  Draw a "blank" segmentation circle. Figure out which segmentation variables could divide up the market (the circle) such that each resulting segment meets separate needs and wants and thus is a potential product for the brand. List the segmentation variables. Show the finished segmentation circle. For the consumer battery market, one way of segmenting the market is by benefits sought, in particular type of use: regular or high-drain.

  Which market coverage strategy is best? Compare the best strategy with what the company is already using for the brand. Duracell uses a differentiated market coverage strategy to cover both the regular and high-drain segments of the consumer battery market with two brands: Duracell and Duracell Ultra.

  Then turn your attention to the second major brand management task: positioning

  Next define the target market(s). The target market is just the market(s) defined by the market coverage strategy.

  List the needs and wants of the target market under consideration. If the target market is the whole market, they would be very broad. If the target market is a segment of the whole market, they would be narrower. Then you can consider who has these needs and wants. By doing things in this order you will not make the mistake of defining the market by who before what.

  For example, Craftsman certainly sells more tools to men than women. But it would be a mistake to define Craftsman's target market as handymen. It would be better to define the target market as the home tool market.

  Then for consumers with these needs and wants, put yourself in the shoes of the buyer and ask yourself what process do consumers use to choose among brands in this market, i.e., identify the steps in the buying process.

  Create a Buyer Behavior Flow Chart (BBFC). Start with evaluative dimensions that are more important to all consumers at the top. Uncover evaluative dimensions at the bottom that can be used for positioning.

  Summarize the evaluative dimensions. List the ones that were derived from the Buyer Behavior Flow Chart, say A, B, C, D and E. Highlight the ones that will be used for positioning, say C, D and E.

  Draw positioning maps. Draw the maps in order of the evaluative dimensions used for positioning. Make pairwise comparisons, e.g. C vs. D, then C vs. E, or C vs. D, then D vs. E. Make sure that each map has evaluative dimensions, perceptions and preferences.

  State the logic of the positioning. This is a recap of what you have shown in the series of positioning maps.

  State the core benefit proposition (CBP). This is a restatement of the "meaning" from the positioning maps. (Don't worry about redundancy. The PSF is built with redundancy to emphasize the logic and make it more difficult to depart from that logic.)

  Now complete the third major brand management task: setting the tactical marketing mix variables in a logical order.

  What price strategy is implied by the CBP? A skimming price strategy would have the brand priced slightly higher than its main competition. A penetration price strategy would have the brand priced slightly lower than its competition. Note that this logic works since the brands with price points much higher or lower were ruled out as main competitors higher up in the BBFC.

  What place strategy is implied by the CBP and the price strategy? Selective distribution means distribution in a few outlets in a market area, while intensive distribution means distribution in just about every possible outlet in a market area. This simplification helps both the logic and consistency of the marketing plan. You would not have Krispy Kreme both positioned as fresh, hot and special (a core benefit proposition) and following intensive distribution, since that would be inconsistent.

  What promotion strategy is implied by the CBP, the price strategy and the place strategy? The message for promotion should be the core benefit proposition. With this guidance for advertising agencies, there would be little if any change of them adding some extraneous evaluative dimension (say "fun") or, perhaps more important, omitting one or more of the evaluative dimensions that the brand is logically positioned on. Under this logic Miller beer would be "Tastes Great, Less Filling" (a core benefit proposition) and not "It's It and That's That."

  The brand's business model is derived from the first two of the 3P's: price and place. This allows a consistency check on the marketing plan since the plan should not only reflect the brand's business model but do something about improving profits.

  Finally, protect the marketing plan against competition with MAGIC strategies.

  Developing a marketing plan using the Problem Solving Format results in a logical plan, a consistent plan and a plan largely protected from competitive reaction.

Steps

• Market definition
• Market segmentation
• Market coverage strategy
• Target market

• One of the most important decisions that a company makes is what market coverage strategy to use for a brand. In analyzing any one product, the first thing to consider is the market. For example, the market for Columbia is the clothing market. But this market is too broad to segment effectively (since it includes dress clothing, work clothes, etc.), so it makes sense to narrow the market to what can be called a focus market, in this case the casual clothing market. This market definition rules out products that are not substitutes such as suits and uniforms.

  Narrowing the focus market to "outdoor clothing," which at first may seem like the best thing to do given Columbia's heritage, might be a mistake since it suggests that Columbia would compete with only other outdoor clothing brands such as North Face and Patagonia. It may be just as easy for Columbia to expand sales to buyers of casual clothing in general than by trying to take sales from other outdoor clothing competitors. A focus market that is not too broad and not to narrow allows this type of analysis.

• For Columbia, the marketing issue is what market coverage strategy should they use in the casual clothing market. To answer this question a company can construct a "segmentation circle" that represents the possible ways that a market can be segmented such that each possible segment is or can be a product that meets separate needs and wants. If not separate, cannibalization can and probably will occur.

  The point about cannibalization is an important one. Stouffer's has gone so far as to remove all Stouffer's identity from their Lean Cuisine brand—which used to be labeled Stouffer's Lean Cuisine—to prevent the product from cannibalizing the Stouffer's brand. If the needs and wants are not separate for these brands, then the sales of one would take away sales from the other.

  Another consumer brand, Gatorade, stretches this idea with its (excessive?) product line. Suggesting that needs and wants are different before, during and after excercise is a tough sell. It doesn't help that the products have almost identical packaging.

  Consumer segmentation variables include demographics (e.g., age, gender and family life cycle), psychographics (e.g., self concept and lifestyle), usage rate (e.g., heavy and light users) and benefits sought. For the Columbia example benefits sought for casual clothing may include "technical" clothing such as waterproofing, sun protection, etc. Of course, many casual clothing buyers could care less about such features. But for those who do Columbia would offer an advantage.

  Consider Ben&Jerry's ice cream.

  The market is ice cream, in particular packaged ice cream, and we will not consider ice cream or soft serve restaurants as direct substitutes for packaged ice cream.

  Although a focus market could be defined, say premium ice cream, this would confine the analysis to that category and preclude Ben&Jerry's from trying to sell ice cream to all price categories. So in this example there is no focus market.

  The question becomes: What market coverage strategy should Ben&Jerry's use to cover the ice cream market? To answer this question, you must ask how the ice cream market can be segmented.

  Draw a segmentation circle for the ice cream market. Then show segments based on segmentation variables. We can use age (adults and children), benefits sought (regular, low fat, organic) and price sensitivity (low, medium, high).

  Be sure to check that the variables pass the "test." For example, income is not a good way to segment the ice cream market since even premium ice cream is not that expensive relative to regular-priced ice cream. An ice cream brand for high-income consumers does not make sense. Note that price sensitivity is not the same thing as income levels.

  • Example

  What this shows is that, based on three segmentation variables (age, benefits sought and price sensitivity), any company could choose to concentrate on a segment or ignore segmentation variables and offer one brand or multiple brands.

  The next step is to choose a market coverage strategy. For Ben&Jerry's they chose differentiated; they cover the whole ice cream market with three brands: Ben&Jerry's, Ben&Jerry's Light and Ben&Jerry's Organic.

  It follows from the choice of market coverage strategy that Ben&Jerry's has three target markets.

• A company has three basic choices for market coverage strategy:

  • Undifferentiated — ignore segmentation variables and go after the whole market with one brand.
  • Differentiated — operate in all or several segments of the market and design separate brands for each.
  • Concentrated — operate in one or only a few segments of the larger market following a niche strategy with one brand.

  For years Duracell and its competitors in the consumer battery market followed undifferentiated market coverage strategies. There was only the Duracell brand name and the company wanted to sell those batteries to everyone in the market. However, Duracell switched to a differentiated market coverage strategy by bringing out a new product line called Duracell Ultra (for high-drain devices). The success of this strategy depends on how well Duracell did their segmentation analysis—the segmentation circle—since that is what defines how different the two markets really are. If they are not different, the new product could cannibalize the existing product or, worse, dilute the meaning of the brand in the minds of consumers.

  The segmentation variables that are relevant are the ones that represent (or potentially represent) ways of offering different products to a market. That is why income is relevant for, say, sport utility vehicles but not for sports information. There are luxury sport utility vehicles, but there are not—and probably won't be—upscale general sports magazines or Internet sites. Income may be related to who has a computer, but not to creating the Internet or other sports information product itself. The "test" for any segmentation variable, then, is: If you can't say a subsegment could lead to a branded product in that segment, then it isn't an effective way of segmenting that market.

  A way of telling what market coverage strategy a company is using is the number of separately-branded products that it offers in any one market. Gap could have regional variation in product assortments (say for different climates), but if there was only one Gap name, the market coverage strategy would be undifferentiated. In reality, there are at least two Gap brand names: Gap and Baby Gap; hence, Gap follows a differentiated market coverage strategy. If there were only Baby Gap, the market coverage strategy being used would be concentrated.

  Columbia uses an undifferentiated market coverage strategy whether their market is defined as casual clothing or outdoor clothing because they use one brand name to cover the market.

• Once a company chooses a market coverage strategy for a brand it knows its target market. A concentrated market coverage strategy leads to one target market as does an undifferentiated market coverage strategy. A differentiated market coverage strategy leads to as many target markets as there are brands.

  A company must be sure to avoid the trap of defining a target market by who is in that market before analyzing the needs and wants of the target market. That's why we say that what the market is comes first, and then the choice of a market coverage strategy. For example, the Honda Element was aimed at 20-somethings but ended up selling to as many people in their 40's as 20's. If Honda had used a segmentation circle to indentify its market coverage strategy for the Element, thus defining a target market by name (say small utility sedans), and then asked themselves who had these needs and wants, they would have understood who would be in the target market.

Steps

• Needs and wants
• Buying process
• Positioning
• Core benefit proposition

• List the needs and wants of the target market under consideration. If the target market is the whole market, they would be very broad. If the target market is a segment of the whole market, they would be narrower. Then you can consider who has these needs and wants. By doing things in this order you will not make the mistake of defining the market by who before what.

  Then for consumers with these needs and wants, put yourself in the shoes of the buyer and ask yourself what process do consumers use to choose among brands in this market, i.e., identify the steps in the buying process.

• A Buyer Behavior Flow Chart is a device to help understand the process by which consumers choose brands. Since it involves "branching," it is noncompensatory by definition. To give you an idea of compensatory brand comparisons—and perhaps decisions—see Consumer Reports. Ranking brands on all attributes is what they do. But it is not necessarily what consumers do.

  One of the keys to an effective buyer behavior analysis (and flow chart) is to focus on a small number of salient and encompassing evaluative dimensions. There are two reasons for this: first, a noncompensatory decision process is consistent with the use of flow charts and, second, managers need to focus on the "big picture" rather than minor product attributes. It is not that the minor attributes are not important, but rather that the consumer's evaluative dimensions dominate product attributes. The attribute of "color of cola" is dominated by taste and price, for example, so that Crystal Pepsi wouldn't—and didn't—go anywhere.

  The Buyer Behavior Flow Chart is important because it helps prevent us dealing with the "wrong" evaluative dimensions. It would be easy to draw a positioning map for credit cards that had interest rate and credit limit as the two axes, but if you first do a buyer behavior analysis, you would probably realize that these are more or less the same for all major competitors and that positioning would be better served by availability and features. Visa owns "availability" and American Express does well on "features."

  

  With the "right" evaluative dimensions, getting positioning right is not only possible but probable.

• More products and marketing strategies probably fail due to poor positioning than for any other reason except simply failing to meet anyone's needs and wants. Yet positioning analysis is one of the oldest and most common techniques of marketing.

  Positioning involves three steps:

  1. Finding the evaluative dimensions on which consumers make their choice of brand.
  2. Locating consumer perceptions of brands on a positioning map.
  3. Locating consumer preferences on a positioning map.

  Many companies seem to do a poor job with this analysis or perhaps just forget that all marketing actions should be based on it. In the worst case, their brands end up in a black hole with no meaning.

  Consumers stay away from brands that they don't understand, so being in a black hole means that sales will decline or the product will fail completely. What brands need is a straightforward core benefit proposition that tells a consumer what the brand means. This is easily implemented as a restatement of the brand's positioning. Nevertheless, so may companies get this wrong that it must be due to other factors outside of marketing logic. For example, hundreds of millions of dollars are wasted every year on advertising that bears no relationship to a brand's core benefit proposition. "Enjoy the ride" was not good positioning for Nissan, especially since that ride was downhill to smaller market share.

  Consider how even the biggest brands can get themselves into a black hole. The reputation of Coca-Cola is the envy of corporations all over the world. Since their All-American, family, warm ("I'd Like to Teach the World to Sing") image was so hard-won, you would think that they would never do anything to hurt that—at least not after learning the once-in-a-lifetime lesson from New Coke—but then you would be wrong. A campaign of commercials showing mean-spirited people was so bad that Coke had to halt the ads and field angry calls from consumers and their own bottlers. One ad showed a young man returning to his parent's farm home after military service, the parents anxiously waiting on their porch, only to have him turn around and leave after they said they had no Coke. This surely leaves a feeling—but it's not warm and fuzzy. According to The Wall Street Journal, Coke "paid dearly for its ... uneven marketing."

  Coca-Cola executives breathlessly announced a new ad campaign (designed to repair the damage from the earlier campaign) with a multimillion dollar budget and the slogan "Life Tastes Good." Despite the obvious fact that this slogan bears no relationship to any discernible core benefit proposition, Coke went ahead with the campaign anyway. Soon the The Wall Street Journal reported that Coke's Chief Marketing Officer said "the company is abandoning global ad campaigns after its big 'Life Tastes Good' campaign for Coca-Cola didn't pan out." "Life Tastes Good" meant nothing, and consumers knew it.

  Note that a black hole is defined in terms of perceptions, not preferences. Coke (again!) launched its ill-fated C2 brand with half the calories of regular Coke. To the extent that they successfully communicated this "benefit" to consumers, a positioning map showing C2 straddling a calories axis (from none to normal) would rightfully put C2 on that line. So a half calorie drink does have meaning in the sense that it has half the normal calories. But consumers don't prefer a half calorie drink since they usually are either dieting or not dieting. C2 and Pepsi's Edge brand failed not due to lack of meaning but to lack of preferences. The behavioral premise that consumers want to "half diet" might have been useful here. (See section on Behavioral Premises on the Marketing Problem Solving site.

  A true black hole has to have no meaning when only looking at evaluative dimensions and perceptions. Consider a positioning map for a pet food brand, say Pedigree dog food. Although the evaluative dimensions for such a map would probably not include type of pet (since type would be higher "up" on a Buyer Behavior Flow Chart and thus not an evaluative dimension used to position a brand against its main competitors), let's say the map shows type of pet (dog or cat) vs. type of food (wet or dry).

  There is no problem with meaning for any brand on such a map unless it's positioned in the middle. Consumers would not understand a combination of wet/dry for a dog/cat, however popular the latter mutation might prove to be.

  In general, though, a black hole is not in the center of a positioning map (since often the center is meaningful, say a mid-priced, mid-featured cell phone). A black hole is simply the place on a positioning map—if it exists—where meaning is lost.

  Consider Burger King.

  The market is restaurants and we will focus on fast food since neither casual dining or fine dining is a real substitute for fast food.

  Burger King uses an undifferentiated market coverage strategy, going after the whole fast food market with one brand. Thus there is one target market for Burger King: the whole fast food market.

  This target market has many needs and wants, including ingredient quality, preparation style, preparation quality, service style, service quality, menu depth, menu variety, price, atmosphere, cleanliness, amenities (e.g., play area), promotions, meal coverage, convenience, no smoking policy and satisfaction guarantees. For consumers in this target market we want to know how they go about choosing among different brands of fast food.

  The goal is to position Burger King in the mind of consumers. To do that we can create a Buyer Behavior Flow Chart that depicts the decision process in a way that shows the more important evaluative dimensions at the top and the ones that any one brand can use to distinguish themselves from their main competitors at the bottom.

  • Example

  What this shows is that consumers first think about what type of fast food they want, then the price range (restricted because the market is fast food) and both of these evaluative dimensions are very important to consumers. But they do nothing to separate Burger King from McDonald's or Wendys. Indeed, today the lower evaluative dimensions—the ones that can potentially be used for positioning—are also not much use for product differentiation. (Recall that Burger King's best positioning and slogan was "Have it your way" when McDonald's could not customize burgers.)

  A positioning map includes evaluative dimensions, preferences and perceptions. The evaluative dimensions are the ones from the lower part of the Buyer Behavior Flow Chart. There is no question that the ones at the top are important to consumers—indeed they are the most important. In our example you have already decided on medium-priced burgers. So Burger King cannot position on the evaluative dimensions of type and price since its main competitors have the same type of food and same level of prices

  

  Preferences are shown on the map as green circles or ellipses. These circles represent individual ideal points of consumers. Where would you prefer a burger restaurent to be? It would be the point on the positioning map with your ideal level of each relevant evaluation dimension. For many consumers there would be many ideal points. There would be so many ideal points that, if they were green dots they would start to resemble a density of dots. A preference circle is just a summary of these individual ideal points.

  Now the positioning map has evaluative dimensions and preferences. Perceptions are added by showing where consumers perceive brands to be on these evaluative dimensions. By comparing where brands are and where they need to be—in the sense of having the right meaning in the mind of the consumer for your brand—you will see what needs to be done to position or re-position your brand.

  • Drawing Maps

  For Burger King, only the last evaluative dimension has the potential to successfully position Burger King.

  • Positioning Map

  This positioning map shows two markets (denoted by the preference circles) and four brand perceptions. The market for what might seem to be an inferior product has more preferences since any two-dimensional positioning map has other dimensions missing. For example, McDonald's appeals to families with kids (Happy Meals).

  For any positioning map there are certain logical "solutions" that can be drawn from reading the map.

  • Solutions

  If the positioning solution involves changing perceptions (represented by the convention of a yellow arrow), this can be done in a variety of ways including advertising that focuses on the (new) core benefit proposition. If the positioning solution involves changing preferences (represented by the convention of a green arrow), this can be done primarily by changing the "importance" weights that consumers place on any one evaluative dimension.

  For example, if a consumer's preference is for a certain level of safety in an automobile, a brand could focus its advertising on the evaluative dimension of safety, thus potentially raising consumers' ideal levels of safety (their ideal points change in the direction of higher safety). If the brand is known for safety (i.e., consumers perceptions are that the brand is safe), then more consumers will prefer the brand. Volvo is perceived as a safe vehicle and to the extent that consumers prefer safer vehicles it stood to benefit the most from ad campaigns that emphasized safety in two ways: reinforcing that the Volvo brand meant "safe" (perceptions)and increasing importance of the attribute "safe" (perceptions). A slogan of "For Life," then, follows directly from Volvo's core benefit proposition, that it is a safe vehicle and built to last.

• A brand's core benefit proposition is a restatement of its positioning strategy.

  Sometimes a brand needs to be re-positioned and one way of doing that is to capitalize on the opportunity of a "natural market." (Natural markets are always market opportunities but not all market opportunities are natural markets. See section on Natural Markets on the Marketing Problem Solving site.)

  Considering the Burger King example again, before Burger King would undertake the re-positioning of their brand suggested in our illustration of a positioning map, they might have been perceived as better than McDonald's and Hardee's on both preparation quality and home-made taste, but worse than Wendy's. Yet there are prerefences for a brand that is high on both evaluative dimensions. An area on a positioning map with preferences but no brands can be called a natural market.

  • Example

  What this shows is consumer preferences for a burger restaurant that has high preparation quality and high home-made taste. Burger King could change perceptions of their brand to move into this area and profitably serve this natural market.

  Naturally the question becomes how could Burger King change these perceptions. Perceptions can be changed through physical changes to the product, psychological changes or both. To substantiate "high preparation quality" Burger King would have to make sure that its ingredients were fresh and that the burgers were made carefully, both physical attributes of the product. To substantiate "home-made taste" Burger King could continue to flame-broil its burgers, another physical attribute, and focus some of its advertising on that smoke that comes out their restaurants' roofs, more a psychological attribute since it connotates "grilling."

  After all, everyone knows what a home-made burger looks and tastes like: a patty that's thick not thin, a bun that's high not low, tomato and lettuce that's cold not hot, all produced from a smoking grill. If a company has the resources to do that it would be worth trying as a positioning strategy.

  

  Compare this simple positioning map with the more sophisticated ones done in actual case analyses.

  • Examples

  (You will need to review the entire case logic to understand the suggested changes.)

Steps

• Price strategy
• Place strategy
• Promotion strategy

• The "4 P's" describe a brand's marketing mix. The first "P" can be considered to be product or product strategy. But this is nothing more than positioning, which itself includes virtually all aspects of how a product is designed to be perceived by a consumer. Since positioning is strategic in the sense of determining where a brand should be in the minds of consumers vis á vis competition, once the positioning decision is made, there are just tactical marketing mix variables to set. This, then, is the "3 P's." And there is only one logical order for the 3 P's and that is price, then place, then promotion.

  As a restatement of a brand's positioning strategy, a brand's core benefit proposition suggests what pricing strategy it should use. If it's offering more "benefit," then a price skimming strategy (relative to its closest competitor) makes sense; if it's offering more "value," then a price penetration strategy would be most appropriate.

• From the product strategy, i.e., the core benefit proposition, and the pricing strategy, a brand can deduce its distribution strategy. Since a brand's business model is influenced by price and place, a price skimming strategy generally implies selective distribution and a price penetration strategy generally implies intensive distribution. Yet many companies mix this up and try to make a profit selling a few low margin items.

• Finally, promotion comes last. Advertising agencies won't like this, but it's the truth. Promotion is communicating the product, price and place strategies to the target market. That's all. Too many companies look to advertising and promotion to rescue a brand in trouble when the problem lies in the core benefit proposition. Both push and pull promotion strategies can be used to communicate the core benefit proposition, but with advertising (a pull strategy) it seems easier to forget what promotion is for.

  If advertising doesn't reflect a brand's core benefit proposition, then it may be amusing or interesting, but it's useless as a driver of sales. "Enjoy the Ride" and "Life Tastes Good" have nothing to do with the evaluative dimensions that consumers use to choose among brands of cars or soda. Nissan and Coca-Cola learned that the hard way.

  Even the best marketing plan (the positioning or product strategy as represented by a brand's core benefit proposition plus the 3 P strategies) will have reduced effectiveness if it can simply be copied by competitors. What is needed is some way to deal with that.

Steps

• Can not be matched
• Will not be matched
• Not readily visible
• Induce gamesmanship

• Every company would like to think that they are smarter than their competition. And they hope that their competitors at least act intelligently. Sometimes, however, this is not the case. Competitors can do things that hurt everyone, including themselves. We call this "unintelligent competition."

  Unintelligent competition takes place when one company takes actions that result in matching actions by other companies with little, if any, prospect of the total market expanding. This situation can result in enormous marketing costs and reduced profitability for all competitors in the market.

  But when companies do act intelligently, there is a hierarchy of actions that they can take to be really smart.

  Companies should:

  1. Take actions that can not be matched.
  2. Take actions that probably will not be matched.
  3. Take actions that are not readily visible.
  4. Take actions that induce gamesmanship.

  Gamesmanship is not unintelligent competition. In some product categories—notably consumer packaged goods—new product introductions are invariably accompanied by a routine of advertising, cents-off coupons, end-of-aisle displays and so on. Competitors do not throw up their hands in bewilderment; rather they say, "OK, let's get in the game and protect our brand with the same things." The competitors understand the actions and see them as short term and targeted.

  All MAGIC strategies are not good. For example, an action that cannot be matched is to link a trademarked brand name to a new product. This is only a good MAGIC strategy if the brand name brings something to the new product in terms of evaluative dimensions. UPS linking their brand name with relatively unknown partners to create a service for transmitting documents electronically is both a MAGIC strategy and a good MAGIC strategy. If one important evaluative dimension is trust, then the UPS name brings this to the new product.

  Speaking of trust (as an evaluative dimension), the company that sold aluminum siding under the Sears name decided that the royalties Sears received were too high. They negotiated a new agreement with the real estate firm Century 21. Sales dropped immediately. Why? Trust. Some people don't trust real estate agents and many people don't trust siding contractors. The Sears name added the element of trust. Was it worth a small savings in the royalty rate to get a larger percentage of smaller sales. Of course not.

  MAGIC strategies allow a marketing plan to succeed.

  The first strategy to try is marketing actions that can not be matched:

  • Patent all or part of the technology for a new product or for the enhancement of an existing product.
  • Trademark a brand name or brand identity for a new product.
  • Link an established, quality brand name or identity (usually trademarked) with a new product.
  • Use a solely-owned distribution channel for a new product.
  • Establish contracts with certain buyers or joint ventures with certain sellers.
  • Compete on unique capabilities.
  • Acquire a firm that has one or more of these advantages.

• Next try marketing actions that probably will not be matched:

  • Commit resources that are beyond the financial capabilities of competitors.
  • Develop a product or promotion for a product that is inconsistent with a competitor's product or promotion.
  • Defend a product with vigorous litagation.
  • Bundle products and promotions.

• Then use marketing actions that are not readily visible.

  • Increase spending on specific R & D projects.
  • Lower costs.
  • Gradually control a supplier, distributer or retailer through dependence.
  • Change margins or other terms of sale.
  • Change compensation or other sales force parameters.
  • Use trade-ins on capital equipment.

• As a last resort, make understandable changes to the marketing mix variables. Remember, this is not unintelligent competition since it is simply part of the "game."

  • Make understandable product changes.
  • Make understandable price changes.
  • Make understandable distribution changes.
  • Make understandable promotion changes.