NOVEMBER 7, 2004
 Cover Story
 Personal Finance
 BT Special
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The iPod Effect
Now you see it, now you don't. All sub-visible phenomena have this mysterious quality to them. Sub-visible not just because Apple's hot new sensation, the handy little iPod, makes its physical presence felt so discreetly. But also because it's an audio wonder more than anything else. Expect more and more handheld gizmos to turn musical.

What route other than musical would Panasonic take, even for a phone handset, into consumer mindspace?

More Net Specials
Business Today,  October 24, 2004
Interview/Jack Trout/President, Trout & Partners
"Don't Blow Away Your Culture"

He changed marketing theory by introducing the concept of positioning, along with co-author Al Ries, in the seminal text Positioning: The Battle for Your Mind, almost 25 years ago. So India can consider itself privileged when Jack Trout, President of US-based marketing firm Trout & Partners, says that the country has all it takes to be a great product (it, fabrics, culture, and tourist destination), and only needs to work on its brand. "Slowly but surely, the global economy is playing out here in India," says the guru. On a recent visit to India, Trout spoke to BT's . Excerpts:

You have been focussing on how companies can use differentiation as a means to stay alive in the marketplace. But you also say that product quality, advertising, price and breadth of product line are all bad differentiators. Then, what are the good ones?

Well, the good ones are attributes, leadership, how the product is made (whether there is) something unique there. It is something that enables you to really say we're different from our competitors. For example, take attribute and BMW, the ultimate driving machine. It is drivability and it built its whole brand around that particular attribute. Visa, the number one credit card in the world is built around the attribute of everywhere. Everywhere you want to be, and it built a big programme around it.

But competitors can copy such things quickly, so they do not seem to be sustainable.

No, once you take ownership of the idea, and if anyone tries to jump on it, it helps you and not them. Once a competitor owns an idea, you have to find a different one.

The fast moving consumer goods market, and, increasingly, the white goods market in India is virtually commoditised. How do you fight in such a market?

Well, number one, your assignment is not to let it become commoditised, to separate yourself. For example, in the white goods area, there could be a brand that sells more, and this leadership is a way to dramatise the fact, that we're the leader. A lot of companies overlook that; they don't take advantage of their leadership. It's a great way to prove that you indeed are a terrific brand because people tend to buy what other people buy. They know that you're the number one brand, that you're running strong and it gives you a chance to tell your stories as to how you got to be the leader. So you have to look at things like that.

Preference is another way of going. The JD Power survey stuff in the United States is very good at building preference. This car has the fewest defects, or this car is preferred by whatever. So, sometimes, you use third-party credentials to say that we're the preferred restaurant, or whatever you're selling, according to this group of very knowledgeable people.

Your new book is called Jack Trout on Strategy. So much has been written on business strategy that most people are pretty confused about what it is. What's your definition of strategy?

Strategy is how you differentiate yourself in the marketplace, and how you get that idea into the (consumer's) mind. You think BMW. Its strategy was to set itself up as the ultimate driving machine, and essentially getting that idea into the mind. Marlboro did it with cowboys on horses, and then kind of screwed up with too many variations of non-cowboy products. So strategy is virtually the cornerstone, but it is also recognising that perceptions matter. It is about building that perception.

"If you are a lesser player, you have to keep doing interesting innovations constantly''

What's the report card on strategy for some of the world's biggest brands, Coca-Cola and Nike like?

Coca-Cola's differentiating idea is, and it is the only one it has ever had, that Coke is the real thing. The company invented colas in 1928. It hasn't been consistent in using that idea, which has hurt it, dramatically. Nike's really powerful differentiating idea is the fact that it is the world's best athletic wear. It owns 4,000 of the world's best athletes. Just Do It is just a slogan; it's not a differentiating idea, though the company has been using it. But essentially, it visually says that its product is the best for Tiger Woods or Michael Jordan. And little swooshes on soccer players and everybody else. Only Nike just doesn't say it. I think all that's missing in the programme is-here's Tiger (Woods)-and then have the concept, what the world's best athletes wear. That's what Nike should be doing.

Almost a decade ago, you held the view that if you're not already a global brand, you're not going to be one ever, especially in categories where perceptions have matured. However, Samsung has taken everyone by surprise and that too in a mature category like consumer appliances and electronics.

Well, Samsung has done a pretty good job in cellphones. I think it has done a pretty good job with innovations. And yes, I'm not always right (laughs)!

Well, what I am saying is that it's harder unless you come out with some very unique innovation. Well, I don't know Samsung very well. I know it has done very well with new generation cellphones. It has done some interesting things there and sort of surprised some of the bigger players with some innovations. Well, Samsung got into the plasma thing (for flat television) early on, which is again a big innovation in that category. So the trick is, if you are a lesser player, you have to really do some interesting innovation or flank the industry as we say-you have to constantly develop things that the marketplace doesn't really have or (existing firms) have not addressed in a big way.

Why have all US/European, even Japanese, consumer appliances/electronics brands like Whirlpool, Electrolux, Philips and Sony, even after being in India for a long time, been upstaged by Korean brands like LG and Samsung?

Obviously, the Koreans have done a pretty good job of hanging in there. Hyundai has done really well. Generally, what the Koreans have appeared to have done very successfully is to come in with very innovative products at a very attractive price. Essentially, great value and good price. Yes, they are not the cheapest, but they offer good value at a good price. In the car business, what it is (Hyundai) saying is that if you look at us as opposed to Toyota, you can get a car with lots of stuff, lots of features, which will not cost you as much as a Toyota. What the Koreans have really pioneered is what I call the 'good value strategy'-not the cheapest, but with lot of very good features, at a good value. And that's a pretty good deal if you can pull it off.

How do you view Haier's (from China) brand strategy?

Don't know, don't see it. Well, the Chinese are moving up the food chain. They make it for everybody, and now they have decided to make it for themselves, and make more money by using branding. And that's where they are headed, and that's pretty good.

"I haven't seen a big India brand. I think fabric and tourism are very good possibilities for India"

In a market like India, where many sectors are opening to private companies, companies across the board, from telecom to liquor, are jumping into the fray. Some people have raised the issue of core competence. But there is no expertise that already exists in these sectors in India, and everyone is going in for foreign collaboration/technical tie-ups. What's your view on this?

Well, what you got in an emerging market (such as India) is a horse race, and no horse sees the end of the race! But the only ones that are going to last around the first turn is essentially a pretty good horse. In a market that is opening up, nobody knows who's good at it and therefore it is like a horse race and you have some running room and you can get out there. Well, my view is that in a competitive world you have to be open and good at what you're doing, and if you're up against an established competitor then that's tough. And if it is a brand new market, you know the race is likely to be won by the swiftest, one who doesn't fall down (laughs)! That's the deal.

What should be the differentiator for brand India?

I will say that, one, you have done a very good job with it. You have built some reputation there, and you certainly want to enhance and strengthen it. I think you can certainly do a lot with fabric. You have the heritage, you have a story there, and you have some good products there.

But what do we say?

Well, you have to build the brand that sort of begins to capture some of those things. I haven't seen a big India brand out there. It's very much like asking if China could put a brand of China out there. Again, enormous history, the Ming brand! I would bring the Ming brand back to get a new deal. Well, you've got to take advantage of what you have got-a story to tell, you've got heritage, you've got a product that you can put out there. I think fabric is a very good possibility for India. And of course there is tourism, and that's always big business.

But what is the differentiator? We have three independent areas in IT, fabric and tourism...

Well, Indian fabrics are going to be sold based on heritage and history. This country has been doing well with fabrics. You walk around and you see such amazing colours. And that's your story there.

It is kind of based on who's the hot new it player. I mean you talk about the fact that you are doing some very exciting new things, and you take advantage of the fact that you have the emerging, far east Silicon Valley in Bangalore.

Tourism is about culture. And in India you're going to see more history and culture unlike most other places where culture has almost gone away. You go to China, and believe me (the culture) has gone away. So in a way, India has to hang on to tourism. As you go forward, you have to make sure you don't blow your culture. Handle it well and keep it going if you can.

Brand marketers are storming into content (films, television programming) as a way to get around the advertising weary consumer. What's your view on it?

It's fashionable and everybody wants to talk about it. But here's my problem with putting your product into a film or whatever as a product placement-what's missing is the brand story. All you do is see the pictures, see the product. Why should I buy the product? Just because it is sitting there? Well, that's never going to replace your ability to tell your story in the marketplace. In other words, I want to be able to tell the BMW story, that it is the ultimate driving machine. I want to put the story out there and now if I put a BMW into a film, it's fine, but the (brand) story isn't there. Just putting it in without the story is a gigantic problem, it doesn't complete the message. All you get with placement is visibility, but no (brand) story.

But what if the brand is woven in seamlessly with the film story and characters?

It is hard to do. How do you do that?

Well, there is the oft repeated example of FedEx and Castaway.

FedEx and Castaway, fine. That was a terrific deal. If you can get somebody to write a whole movie around your product, terrific. Now, is that going to turn FedEx around? Not really. That movie is not going to help FedEx dramatically. It doesn't hurt them, it is pretty good, but it isn't necessary that it will help them against a UPS or DHL which is now trying to penetrate the us market. So these things are nice and terrific if you can pull them off, but they are not the answer, so to speak.




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