Do Business Well

The biggest mistake of all is believing you can do anything.

Success in business doesn’t just show up on the bottom line of the profit-and-loss column; it also goes to the top. Success in business inflates the egos of top management.

Supremely successful companies believe they can do anything. They can launch any product into any market. They can make any merger work. It’s just a question of having the willpower and the resources to throw into the task. “What is it that we want to do?” is the question that management usually asks itself.

History hasn’t been kind to this type of thinking. Overconfident management has been responsible for most of the marketing disasters of the past decades.

• General Electric couldn‘t crack the mainframe computer market in spite of its reputation for brilliant management.
• Sears, Roebuck’s “socks and stocks” strategy of selling brokerage accounts, insurance, and real estate in its retail stores went nowhere.
• Xerox couldn‘t duplicate its copier success in computers.
• IBM, on the other hand, couldn‘t extend its computer success to copiers.
• Kodak lost its focus when it tried to get into instant photography.
• Polaroid, on the other hand, fared no better in conventional 35mm film.

Get the picture? As soon as a company is successful in one area, it tries to move into another. Usually with little or no success.

The problem is usually not the new product or service being offered. Xerox may well have had the best computer product on the market. The problem is in the mind of the prospect. “What does a copier company know about computers?”

In other words, the problem is not a product problem, it’s a mental problem. The most difficult problem in business is trying to change a perception that exists in the mind of a customer or prospect. Once a perception is strongly held in the mind, it can almost never be changed. (Anybody who has ever been married knows the difficulty of changing a perception in another person’s mind.)

What’s a Cadillac? In the mind of the car buyer, it’s a “big car.” But the market started shifting to smaller cars. So naturally Cadillac tried to sell a small Cadillac called the Catera, with very little success.

What’s a Volkswagen? In the mind of the car buyer, it’s a “small car.” But its customers now have families. So naturally

Volkswagen tried to sell a larger Volkswagen called the Passat, with very little success.

Cadillac couldn‘t sell small Cadillacs. And Volkswagen couldn‘t sell big Volkswagens.

Once you stand for something in the prospect’s mind, it’s hard to change what you stand for. Volkswagen stands for small. Cadillac stands for big. Can you change these perceptions? (And, furthermore, why would you want to?)

Unlikely. Yet they keep trying. Before the Catera launch, Cadillac tried selling the Cimarron, another smaller Cadillac. Predictably the Cimarron also never got out of the garage.

The folks at Lincoln ought to be laughing at Cadillac’s predicament, but they’re not. They too are busy introducing the new small Lincoln (LS for Lincoln Small, of course).

Meanwhile the three-and-a-half-ton Lincoln Navigator is doing great. When a new product matches the perceptions that already exist in the mind, the new product can be exceedingly successful.

When Volkswagen brought back the Beetle, their original small car, sales exploded. As you might expect, the success of the New Beetle also went to their heads. “There’s no reason we can’t sell $80,000 cars with the Volkswagen name on them,” said one VW executive recently. Yes, there is. People won’t buy them.

Will the online world be any different than the off-line world? We think not. To be successful on the Internet you still have to do business with human minds. Once you stand for something in a mind, it’s hard to change the perception of what you stand for.

Amazon.com was the first Internet site to sell books and music CDs. The site is a roaring success, with current sales well in excess of $1 billion annually (albeit with losses in the past year in the $300 million range).

So what is Amazon.com doing next? You know what they’re doing next. They’re in the process of turning themselves into a “destination site” where customers can find anything they could possibly want.

• DVDs and videotapes.
• Electronics and software.
• Toys and video games.
• Home improvement products.
• A gift-registry system.
• E-cards.

• Auctions, including a joint venture with Sotheby’s (Amazon spent $45 million for a 1.7 percent stake in Sotheby’s).
• ZShops, where thousands of small merchants can do business under the Amazon.com banner.
• Credit cards in a cobranded arrangement with NextCard Inc. (Amazon.com also spent $22.5 million for a warrant that lets it acquire 9.9 percent of the credit-card company.)

Wow! What a list. But, hey, if you’re “person of the year,” you ought to be able to do all of these things.

Possibly related posts: (automatically generated)
Online Marketing, Success in Business, Website Strategies part 1

• Marketing planning stage: implementation through the marketing mix
• Five Predictions for trends in Internet Marketing : WEBPROMOTE
• Separation or integration of online operations?
• Part Science, Part Art— and Online Market¬ing Programs Guided by Strategy
• E-MARKETING Planning Process
• Online Relationship Marketing
• Internet marketing plan for a more traditionally focused retailer, currently with brochureware Web site: River Island
• Launch Your Digital Marketing Program part 3
• Campaign Checklist: What goes in a campaign brief?
• Internet Marketing, as the voice of all customer communication, Ecommerce the power of Networking

3 Comments »