The Importance of Being First. “It is better to be first than it is to be better.”

Who has the best rent-a-car service? The best cola? The best ketchup? If you are thinking Hertz, Coca-Cola and Heinz, you are in agreement with most customers who make these three companies the leaders in their fields. As a matter of fact, there is a strong axiom, or belief, in the minds of consumers that “the best product or service wins in the marketplace.” After all, this is so logical and so obvious that who could disagree? We could, that’s who. There’s a paradox in marketing. While everyone believes that the better product will win in the marketplace, the worst possible strategy for any company is to try to produce a “better product.”

Why is this so? Because the leader in your field already has the perception of producing the better product. If you try to claim that your product is better, the prospect thinks, “no, it can’t be better, otherwise they would be the leader.”

Yet what do most companies try to do? They try to (a) produce a better product and (b) communicate that difference to customers and prospects. It’s easy to do (a), but it’s almost impossible to do (b) communicate that difference to customers and prospects. Is Royal Crown cola a better tasting cola than Coca-Cola? Royal Crown thinks so and their research shows that prospects prefer the taste of Royal Crown cola to Coca-Cola Classic 57 percent to 43 percent. That’s a pretty big difference. Yet the better tasting cola (Royal Crown cola) has only 2 percent of the cola market. What they need to do, you might be thinking, is to communicate that difference. Well, they’ve tried and it doesn’t work. “That can’t be,” the prospect thinks. “If Royal Crown was the better tasting cola, they would be the leader, not Coke. There must be something wrong with the research.”  Actually the Royal Crown company hired an independent research organization to conduct one million taste tests comparing their product with Coca-Cola. Would ten million taste tests have made a difference? No. You believe what you want to believe and if you believe that the better product wins in the marketplace, then you think Coca-Cola must be the better product because it is the leader. 

Quick analysis.

It’s our experience that 90 plus percent of all marketing programs are based on trying to communicate the essence of the better product or service. Unless you are already the leader these programs are bound to fail because the prospect assumes that the leader must have the better product or service because everybody knows, “the better product or service wins in the marketplace.”

But how did the leader achieves its leadership? Not by introducing a better product or service. Invariably the leader in the category got to be the leader by being the first brand in the category. Some examples:

• Band-Aid, the first adhesive bandage.

• Charles Schwab, the first discount stock brokerage firm.

• CNN, the first cable news network.

• Coca-Cola, the first cola.

• Dell, the first personal computer sold direct.

• Domino’s, the first home delivery pizza chain.

• ESPN, the first cable sports network.

• Gatorade, the first sports drink

• Gore-Tex, the first breathable waterproof cloth.

• Heineken, the first imported beer.

• Hertz, the first car-rental company.

• Hoover, the first upright vacuum cleaner.

• IBM, the first mainframe computer.

• Intel, the first microprocessor.

• Jello, the first gelatin dessert.

• Kentucky Fried Chicken, the first fast-food chicken chain.

• Kleenex, the first pocket tissue.

• National Enquirer, the first supermarket tabloid.

• Palm, the first handheld computer.

• Pizza Hut, the first pizza chain.

• Playboy, the first men’s magazine.

• PowerBar, the first energy bar.

• Q-Tips, the first cotton swab.

• Red Bull, the first energy drink

• Reynolds Wrap, the first aluminum foil.

• Rollerblade, the first in-line skate.

• Rolex, the first expensive Swiss watch.

• Samuel Adams, the first microbrewed beer.

• Saran Wrap, the first plastic food wrap.

• Snackwell’s, the first fat-free cookie.

• Softsoap, the first liquid soap.

• Sun Microsystems, the first Unix workstation.

• Taco Bell, the first Mexican food chain.

• Tide, the first detergent.

• Time, the first newsweekly magazine.

• Xerox, the first plain-paper copier.

Some consultants have called this leadership phenomenon, “the first mover advantage,” but that is not so. It’s an advantage, but it’s not the reason that most leader brands were first in their categories. It’s the “first minder” advantage. That is, the brand that gets into the mind first is the winner, not the brand that is the first in the category.

• Duryea was the first automobile on the road, but never got into the mind. Ford was the first automobile in the mind.

• MITS Altair 8800 was the first personal computer, but never got into the mind. Apple was the first personal computer to get into the mind.

• Du Mont made the first television set. Hurley, the first washing machine. But these and many other brands failed to get into the minds of their prospects. You don’t win in the marketplace. You win in the mind.

Mini-examples.

If you weren’t first in your category and you can’t win by being better, what can you do?

The answer is obvious: you start a new category you can be first in. Marketing is more a battle of categories than it is a battle of products. Winning companies think category first and product second. They try to categorize what they do, not in terms of being better, but in terms of being different. In other words, what can we call this new category our product can be the leader in?

When Procter & Gamble introduced Tide many years ago, they could have called the product a “new, improved soap.” Tide was a soap then and Tide is a soap today, in the sense that soap is a “cleansing agent.” But Tide was made from synthetic materials rather than fats and lye found in traditional cleaning products like Ivory, Oxydol and Rinso. Tide could have been called a synthetic soap, but that would have nailed the brand to the soap category. Rather Procter & Gamble called Tide the “first detergent,” a totally new category and even today Tide is the leading brand of detergent. Winning strategy: Create a new category you can be first in. When Charles Schwab set up Charles Schwab & Co., he could focused on providing better service to stock buyers. But he didn’t. Instead he decided to launch the first discount stock brokerage company and today Charles Schwab & Co. is one of the leading stock brokerage firms in the country. When Michael Dell set up Dell Computer, he could have sold his “better” products through conventional computer stores, but he didn’t. Instead he launched the first brand of personal computer sold direct by phone. Today Dell Computer is the world’s largest selling of personal computers and still doesn’t sell any computers through conventional computer stores. Most everyone believes that Macintosh is a better computer system than the Microsoft/Intel systems offered by most of their competitors. Why hasn’t Macintosh become the leader computer brand?

Look at the facts. The IBM PC with the Microsoft/Intel combination was introduced in August of 1981 and quickly captured the minds of computer buyers. Apple didn’t introduce the Macintosh until 1984. (Remember their 1984 television commercial?) Who won? Not the better personal computer, but the first personal computer. A number of years ago, Patrick Sullivan (currently CEO of SalesLogix) arrived in our offices with a software product called Act. “What does Act do,” we asked? Everything,” Pat replied. “Act keeps track of your calendar, your correspondence, your mailing lists and expense accounts. Act literally does everything.” Not a good direction. We wanted to find one thing that we could build into a new category. After much discussion the group decided that the new software could best be described as “contact” software. In other words, software designed for sales people and others who do contact work. “The largest-selling contact software” became the new category for the brand. Everywhere the brand name was used, the leadership claim was also used. In advertising, publicity, brochures, letterheads, calling cards. Even on the product box itself. Today Act has 70 percent of the contact software market and has become the dominant brand in the category.

Quick checkpoint lists.

Before you launch (or relaunch) a new product or service, ask yourself the following questions.

1. What is the name of the category? Not a name that you might like, but a name the industry gives the category.

2. What is the brand name of the leader in the category? Not the actual leader, but the brand that customers perceive to be the leader.

3. If there is no dominant brand, or at least not a dominant brand in the mind of most prospects, jump right in with your product or service and try to quickly establish your leadership. Cut prices, cut deals, hire sales people, launch massive publicity campaigns, do everything you can to seize the leadership position before someone else does.

4. Promote your brand as the leading brand. “It’s so easy to use,” says AOL. “no wonder it’s number one.” Leave no piece of paper or website or TV advertisement or radio commercial without mentioning your leadership. Leadership is the most important aspect of any marketing program. Why? Prospects assume the better product or service will win in the marketplace. Therefore, you must have the better product.

5. If there is a dominant brand, then move on and set up a new category you can be first in. But make sure you have a new name to match the new category. You can get in serious trouble if you try to use an existing name.

6. You can’t dictate the category name. Only the industry and the media can do that. Therefore you have to launch your new brand with publicity and get the media to establish the category name for you.

Making it happen.

There’s almost always a way to set up a new category. Unfortunately most companies refuse to even consider the possibility of a new category because “there’s no market.” Of course, there’s no market. If there were, it wouldn’t be a new category.  That’s the most difficult thing to overcome. You have to have faith that you can succeed in getting acceptance for a new category. What was the market for personal computers sold by phone before Michael Dell launched Dell Computer Company? Zero. What was the market for sports drinks before Gatorade was launched? Zero. What was the market for discount brokerage firms before Charles Schwab was launched? Zero. Furthermore, a new category doesn’t necessarily represent a big, technological advance. Soapsoft, the first liquid soap, was a big commercial success. How difficult is it to take a tub of soap and liquefy it?

How difficult is it to take regular beer and add water? Miller Lite, the first light beer, was a big success, but ultimately paid a big penalty for their success. Instead of creating a new brand to match the new category, they used a line extension name which just about killed their regular beer brand (Miller High Life) and caused them lose their light beer leadership to the competition. A new category needs a new name. The IBM PC was the first 16-bit, serious, office personal computer, but the line extension name caused IBM to ultimately lose their personal computer leadership to first Compaq and then Dell Computer.  VisiCalc was the first spreadsheet for personal computers when all personal computers used 8-bit operating systems. Lotus 1-2-3 was the first spreadsheet for 16-bit, IBM-type personal computers, but lost their leadership to Excel which was the first spreadsheet to use Microsoft Windows. Listerine was the first mouthwash, but it was a bad-tasting mouthwash, hence the slogan, “the taste you hate, twice a day.” Except for Procter & Gamble, all competitors in the category thought that mouthwash had to taste bad. P&G introduced Scope, the first good-tasting mouthwash, which is neck and neck (or mouth and mouth) with Listerine for leadership in the category.

Conclusion.

Marketing is not a battle of products. Marketing is a battle of perceptions. And to win the battle of perceptions you have to become the leader in a category. Prospects assume the leader must be better because “everybody knows the better product or service will win in the marketplace.”

How do you become the leader? You launch a new category you can be first in. It doesn’t have to be a big technological advance. Sometimes the simple ideas are the easiest to get into the mind. And where do you win the battle of the marketing battle? You win the battle inside the mind of the prospect.