5 Rules of Marketing That Will Help You Find the Right Niche and Thrive Being first matters more than being better. Just ask Coca-Cola. Better yet, ask Pepsi.
By Han-Gwon Lung Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
In 2016 the internet is filled to brimming with white papers and ebooks on how to create an optimal landing page, set up an inbound marketing funnel, map out an email nurturing campaign, etc.
Related: 7 Time-Tested Rules for Marketing and Growing Your Business
But we don't often hear clients asking about the basics of marketing. It's almost as if, in this era of Internet specialization, marketing has become a series of systems rather than a single conceptual framework.
So, here's the billion-dollar question: Does marketing have "rules" that are true whether your audience is online or off?
Over the next few decades, marketing will evolve in a dramatic fashion; big data is already changing everything. The Internet of Everything will bring even more variables into the mix. And virtual reality will change everything yet again.
But, no matter what happens, it's likely that the following five rules of marketing will never change because they are firmly grounded in consumer psychology. And they have implications for business strategy, product development and, especially, growth:
1. Being first matters more than being better.
Whenever a company is "first" in a new category, as Coke was with carbonated soft drinks, the impression it makes lasts for generations.
Coca-Cola was founded in 1892. In the 124 years since, countless rival brands have come and gone. Only Pepsi (founded in 1898, only six years after Coke) remains a real competitor. Yet, in 2015, Coke owned 42.7 percent of the U.S. market for soft drinks, while Pepsi owned only 31.1 percent.
In other words, that six-year difference in being "first" in a market still amounts to an 11.6 percent advantage 124 years later. This is true despite the fact that Pepsi actually wins in taste tests.
Related: 5 Rules for Stand-Out Marketing Campaigns
Apparently, first impressions last much longer than you think.
2. If you can't be first in a category, create a new one.
In just about every new category that's ever been invented, there's a company that's first, and there are countless imitators. But, as with Coke and Pepsi, decades-long competitions eventually normalize into a two-company race.
That happened in the personal computing category, with Hewlett-Packard and Dell (28.1 percent U.S. market share versus. 23.9 precent). And it happened in the automobile industry, with GM and Ford (17.4 percent vs. 15.3 percent). If you're third, fourth or fifth in any of these categories -- good luck.
But is it possible to not be first or second in a category and still win? Yes, if you create a new category entirely. You can do that either by specializing in the existing category or opening a new geographic market.
For example, Apple knew that it wouldn't be able to significantly penetrate the worldwide notebook category dominated by HP and Lenovo (20.7 percent versus 20 percent) because it entered too late. So, in 2012, it created a new, specialized notebook category: tablets. Today, Apple is first worldwide in tablets, with 29.6 percent of the market.
3. Perceptions matter more than products.
It's human nature to believe that we can improve on something that's already on the market by creating a better product in an existing category. That's why so many new startups tout a specific feature that distinguishes them from the trendsetters. These startups usually disappear.
Consumers probably don't care that you've made a better product. They won't notice, and you can't convince them. That's why Pepsi beats Coke in taste tests and it doesn't matter. Quite frankly, if you're not first, you're probably worse in the consumer's mind.
But, as long as you understand the law of perceptions, you can work it in your favor even if you aren't first.
For example, Apple wasn't first in personal computers, digital music players or even touch-screen smartphones. Yet it's revolutionized each one of those categories because the perception of value is more important than the facts.
4. When you own a word, you own a feeling.
Remember all those TV and radio jingles you heard in the '80s and '90s? McDonald's has more jingles and slogans than just about any company on the planet, which is why you don't remember most of them. But Folger's has kept the same slogan (and jingle) since 1908.
Yup, it's the one you're thinking of right now. Why does this matter? Because when you own a word, a phrase, or a jingle, you effectively own real estate in your consumer's mind. You own an invoked feeling, which is priceless.
Nike's "Just do it" slogan is a great example of a brand owning a feeling. Nike's been running "Just do it" commercials and ads since 1988. Today, when people think of the brand, they think of lacing up their sneakers and just doing it -- whether that means playing pickup basketball or buying an expensive pair of kicks.
It's no surprise, then, that Nike has managed to surge past former sneaker market leader Adidas. Today, Nike owns 27.2 percent of the global footwear market while Adidas owns just 8.7 percent of the U.S. market.
What's the Adidas slogan, again?
5. Competing at everything often means winning at nothing.
Following the first four rules of marketing can help you become successful. But the fifth rule will help you stay on top.
What happens whenever a company reaches a certain size? It goes public. And what happens then? Shareholders want it to keep increasing profits (often unrealistically). Inevitably, the company's executives arrive at the same conclusion: The only way to satisfy shareholders is to extend the brand and create a new line of products.
While this may work in the short run and skyrocket profits, it almost always leads to the company's diminishment. That happened when IBM decided to extend its line beyond mainframe computers. It also happened when GM decided to make all its cars look the same. Foreign automakers like Toyota swooped in for the kill.
Which brings up another observation: Plenty of successful companies are still successful because of their "first" product or service, yet they continue to brand everything else under the same name.
Microsoft has a huge software brand but is only a significant market leader in its first offering: operating systems. As a brand name, Kraft isn't the market leader of anything anymore despite everything it sells. Yet it leads the cream cheese market because it sells that product under a different label: Philadelphia.
Whenever you try to bucket too many products, services or ideas under the same brand name, consumers just get confused and the brand name loses value. People will always associate the name with the product, perception or feeling that first made it famous. That's why you'd be better off branding each new product under a different name, instead.
Can these marketing laws ever be broken?
Of course they can! As in science, laws are true only until someone finds a significant exception. But they still matter to businesses large and small because they're the best we've come up with, given our present observations. For over 100 years, these laws of marketing have held true.
So ask yourself:
Are you "first" in your category, or should you create a new category?
Do you own a word, feeling or perception in your consumer's mind?
Are you overextending your brand or staying focused on your niche?
Related: Book Review: The New Rules of Marketing and PR By David Meerman Scott
These are questions all business owners should be asking themselves far more often. Knowing the answers will save them a lot of energy, time and money.
