marketing warfare in the 1980s - usp · that it will destroy gillette. rather, it is conducting...

Marketing warfarein the 1980s

Philip Kotier and Ravi Singh

The language of husiness is hecoming littered with similesof war and military analogies. So just how useful are suchhattlefield parallels to those engaged in developing practicalmarketing strategy? Very, say the authors of this article,and chiefly the principle of directing operations toward ''aclearly defined, decisive and attainable ohjective," withoutwhich no plan can hope to succeed. Here they show some ofthe insights to be gained from applying military concepts inboth attacking and defending market positions.

Marketing is merely a civilized form of warfare in which most battles arewon with words, ideas and disciplined thinking.

Albert W. Emery

As the 1980s get under way, numerous signs point to an era ofslower economic growth. Scarce resources, proliferation oftechnological resources across nations, sharply rising energycosts, economic slowdowns, trade barriers, political tensions,leveling off of population growth in the developed world and otherfactors suggest tbat company prospects for prosperity and growthwill become tougher in the years ahead.

Companies will have to pursue their profitability at the expense ofother companies, through market-share gains rather than market-growth gains. The scene will move from normal marketingcompetition to marketing warfare. Successful marketing willrequire devising competition-centered strategies, not just customer-centered and distribution-centered strategies.

In this article we will show how military strategy ideas can helpbusiness firms formulate effective marketing strategies for the

62 THE McKINSEY QUARTERLY

1980s. Too many business firms sound tough and act tough but failto be subtle enough in thinking through their marketing attackand defense options. The use of brute force against competition isusually the least effective way to win a battle or war. We willconsider the following questions:

11 How close is business competition to military warfare?

^ What business objectives make sense in a confrontationsituation?

H What military strategies are available for market attack, andwhat are their respective strengths and weaknesses?

*f What military strategies are available for market defense, andwhat are their respective strengths and weaknesses?

Military science and marketing competition

The increased need of businesses to develop competitor-centeredstrategies to win market share will lead managers to turn in-creasingly to the subject of military science. The classic works ofClausewitz, Liddell Hart and other military theorists are beingincreasingly combed for ideas, just as economic theory andconsumer behavior theory were combed in the last two decades fortheir potential applications to improved market performance.^

Articles dealing with competitive strategy are on the increaseand business people frequently use military talk to describetheir situations. There are price "wars," "border clashes" and"skirmishes" among the major computer manufacturers; an"escalating arms race" among cigarette manufacturers; "marketinvasion" and "guerrilla warfare" in the coffee market. A com-pany's advertising is its "propaganda arm," its salesmen are its"shock troops" and its marketing research is its "intelligence."There is talk about "confrontation," "brinkmanship," "super-weapons," "reprisals" and "psychological warfare."

The real question is whether the use of "warfare" language inbusiness is just descriptive or whether it really aids in thinking andplanning competitive strategy. We believe it does. We will showhow principles drawn from military strategy apply in three criticalbusiness decision areas - namely, determining objectives, de-veloping attack strategies, and developing defense strategies.^References appear on page 81.

SUMMER 1981 • 63

The meaning of warIs the objective of war the same as the objective of competition?It turns out that military theorists differ among themselves as tothe objective of war. Clausewitz, the nineteenth century's greatestmilitary theorist, saw war as a necessary means to pursue nationalself-interest. "War is a mere continuation of policy by othermeans." The object of war is to vanquish the enemy by achievingan unconditional surrender. This is accomplished by breaking theenemy's will to resist, which generally requires overwhelming theenemy on the battlefield. "The destruction of the enemy's mainforces on the battlefield constitutes the only true aim in war."Although Clausewitz had a more subtle conception of war, thisdictum, along with other loosely dropped phrases such as "Blood isthe price of victory," influenced the conduct of war for over acentury before World War II. They led his less profound disciples,such as Marshal Foch, to confuse the means with the end.

The twentieth century's greatest military theorist. Captain BasilH. Liddell Hart, sets the contemporary position: "The 'object' inwar is a better state of peace, even if only from your own point ofview."^ Liddell Hart was severely critical of Clausewitz: "Theuniversal adoption of the theory of unlimited war has gone far towreck civilization. The teachings of Clausewitz, taken withoutunderstanding, largely infiuenced both the causation and characterof World War I. Thereby it led on, all too logically, to World War

Cutthroat competition can lead to ultimate defeat. Modern com-petitors rarely adopt the Clausewitzian objective of "totalannihilation of the enemy." This is not to deny that competitorshave the capacity to conduct themselves this way. Any large,well-resourced company can destroy any small company by lower-ing its prices substantially and causing losses both to its competitorand itself until the competitor is forced out of business. And twolarge companies could slug it out until one of them surrenders orretreats. "Cutthroat competition" is the name given to thisextreme state of business warfare, which has characterized businesscompetition in certain periods in certain industries (such as the oilindustry and the rubber industry). Cutthroat competition a laClausewitz would be much more prevalent were it not for the USantitrust laws starting with the Sherman Act (1890) and con-tinuing later with the Clayton Act (1914). The legal sentiment hasbeen that "unfair methods of competition in commerce areunlawful," "where the effect . . . may be to substantially lessencompetition or tend to create a monopoly in any line of commerce.''


Indeed, were it not for the antitrust laws, it could be argued thatwar, not peace, is the natural state of business.

A company has to be very careful, in fact, not to take actions whosepurpose appears to be to weaken or destroy a competitor. Thecompany can take normal steps to woo consumer preference for itsproducts (improve product quality and service, improve com-munication and promotion, lower prices in a reasonable way inrelation to costs, increase distribution, and so on) even when thishurts a competitor, as long as it does not hurt competition. ThatMiller Beer's aggressive marketing hurt Schlitz and that TexasInstruments' aggressive marketing hurt Rockwell were the con-sequences and not the aims of the policies that these aggressivecompanies adopted.

Besides running afoul of antitrust legislation, companies that com-pete on the basis of wiping out competition will find in their veryvictory the seeds of ultimate defeat. While a unique advantage ata given time may afford it the brute force of wiping out competition,it is difficult to conceive of a single company differentiating itsproduct line sufficiently to meet all segment variations. 'Thinlyspread" over the market, and complacent in the thought of itscommanding position, it would offer an ideal target for the nextclever and forceful competitor who might come along and shatterits foundations.

Attaining a better state of peace. Liddell Hart's doctrine that "theobject in war is a better state of peace" may be a more appropriateguiding objective for business. When a company undertakes war-like maneuvers toward another firm - when Bic attacks Gillette andKodak attacks Polaroid - the objective is not to annihilate theother but to attain a better state of peace. Bic is under no illusionthat it will destroy Gillette. Rather, it is conducting limited warfarewith a limited ohjective - attaining a certain substantial and dur-able share ofthe razor market. "When a government appreciatesthat the enemy has the military superiority, either in general or ina particular theatre, it may wisely enjoin a strategy of limitedaim.'' ^ The issue is largely what distribution of shares (or territory)the two will agree to settle on. When Kodak introduced its ownversion of the instant camera, it may have aimed to achieve thedominant share, but Polaroid fought back and managed to containKodak's share at about 25 percent, and now both of them seem tobe accepting the compromise share. This is not to say that Kodakmay not mount another attack in the future to raise its share to,say, 50 percent.

SUMMER 1981 65

There is another interpretation of business seeking "a better stateof peace." Each business seeks to groove itself in some part of themarket where it has a natural and comparative advantage, enoughto discourage other firms with less advantage from attacking it. Asa result, tbe market is occupied by several firms practising peacefulcoexistence, because each is safe and supreme in its own territory.When war breaks out, it does so because some competitor is doinga poor job of serving its niched market segment, because some com-petitor is trying to bring some new advantage to that market seg-ment, or because environmental change is causing major shifts inthe composition of segments.

Defining strategie objectives. Each competitor must define its stra-tegic objectives in each of its markets. The military "principle ofobjective" holds that "every military operation must be directedtoward a clearly defined, decisive and attainable objective."

Choosing the enemy. Deciding on the business objective - whetherit is to crush the competitor, reduce its share, or freeze its share -interacts with the question of who the competitor is. Unlike war,where tbe enemy is "given," the business firm in most cases isable to choose its enemy. All markets are occupied by one or morefirms that enjoy different competitive positions, strengths andweaknesses. One firm is the market leader, having the largestmarket share. One or more other firms are market challengers inthat they are large and willing to fight one another and the leaderfor territory. Still other firms are large but play the role of marketfollowers, being content with their current positions in the marketand wishing not to rock the boat. Finally, several smaller firms aremarket nichers that serve small market segments which usually donot attract the interest or actions of the larger firms.

Basically, an aggressor can choose to attack one of three types offirms:

1[ It can attack the market leader. This is a high-risk but potentiallyhigh-payoff strategy and makes good sense if the leader is not atrue "leader" and is not serving the market well. The "terrain"to examine closely is consumer satisfaction. If a substantial areais unserved, it offers a great strategic target. Miller's campaignin the beer market was so successful because it pivoted initiallyon discovering the light beer segment. The alternative strategyis to out-innovate the leader across the whole segment. ThusXerox took the copy market away from 3M by developing a bettercopying process (dry copying instead of wet copying).


•[ The aggressor could attack firms of similar size who are not doingthe job and whose resources are not formidable. Both consumersatisfaction and innovation potential need to be examinedminutely. It is even possible to conceive of a frontal attackstrategy of just snowing the enemy under, should its resourcesbe limited.

H The aggressor could define its enemies as the smaller firms thathave fewer resources and are often not doing a very economicjob. Several of the major beer companies grew to their presentsize not by stealing one another's customers so much as bygobbling up the "small fry" - namely, local and regional brewers(also called a "guppy strategy").

Thus, the issues of choosing the enemy and choosing the objectiveinteract. If the attacking company goes after the market leader, itsobjective may be to gain or maintain a certain share. If it goes aftera small local company, its objective may be to drive that companyout of existence. The important principle remains: "Every militaryoperation must be directed toward a clearly defined, decisive andattainable objective."

Waging war: attack strategies

Given clear objectives, how do military strategists view their majoroptions in attacking an enemy? The starting point is known as the"principle of mass," which holds that "superior combat powermust be concentrated at the critical time and place for a decisivepurpose."

We can make progress by imagining a competitor who occupies acertain market territory. We can distinguish five possible strategiesof attack: (1) frontal attack; (2) flanking attack; (3) encirclementattack; (4) bypass attack; and (5) guerrilla warfare. These strate-gies are illustrated in Exhibit I overleaf and discussed below.

1. Frontal attack. An aggressor is said to launch a frontal (or"head-on") attack when it masses its forces right up against thoseof its opponent. It attacks the opponent's strengths rather than itsweaknesses. The outcome depends on who has the greater strengthand endurance. In a pure frontal attack, the attacker matches pro-duct for product, advertising for adyertising, price for price, and soon. Recently, the second-placed razor blade manufacturer in Brazildecided to go after the market leader, Gillette. Management wasasked if it was offering the consumer a better blade. "No," was the

SUMMER 1981 67

Exhibit I Attack strategies

reply. "A lower price?" "No." "Better allowances to the trade?""No." "Then how do you expect to take a share away fromGillette?" it was asked. "Sheer determination" was the reply.Needless to say, its offensive failed.

For a pure frontal attack to succeed, the aggressor needs a strengthadvantage over the competitor. The "principle of force" says thatthe side with the greater manpower (resources) will win the en-gagement. This is modified if the defender has greater firingefficiency through enjoying a terrain advantage (such as holding amountain top). The military dogma is that for a frontal attack to besuccessful against a well-entrenched opponent or one controllingthe "high ground," the attacking forces must deploy a 3 : 1advantage in combat firepower. If the aggressor has a smaller forceor poorer firepower than the defender, a frontal attack amounts toa suicide mission and makes no sense. RCA, GE and Xerox learnedthis the hard way when they launched frontal attacks on IBM,overlooking its superior defensive position.^


As an example ofa successful pure frontal attack and the resourcesit required, consider S. C. Johnson & Son's entry into the shampoomarket with its new Agree brand. ̂ In 1977, with what Forbesdescribed as "almost Japanese-like thoroughness," S. C. Johnsonfirst raided Colgate and others for experienced executives. Then itblitzed the market with a $14 million promotion that included 30million sample bottles of its new hair conditioner. Agree. Thatabout equaled the industry's total promotion on hair conditioners.It grabbed 15 percent of the market in its first year, wrested fromsuch giants as Gillette's Toni, Breck and Clairol (by 1979, its sharewas 20 percent). Then, in 1978, it invaded the shampoo market,reportedly spending $30 million in marketing costs in the summerof that year. It ended up with a 6 percent share of that market.

As an alternative to a pure frontal attack, the aggressor may launcha modified frontal attack, the most common being to cut its pricevis-a-vis the opponent's. Such attacks can take two forms. Themore usual ploy is to match the leader's offer on other counts andbeat it on price. This can work if:

*I The market leader does not retaliate by cutting price, too; and

t The competitor convinces the market (1) that its product is equalto the competitor's, or (2) that, at a lower price, it is a real value.

The rapid proliferation of "generic brands" in canned foods andbasic household goods provides an excellent example of a competi-tor's convincing the market that, at a lower price, its product is areal value. Helene Curtis is a master practitioner of the somewhatrisky strategy of convincing the market that its product is equal tothe competitor's.' Curtis makes no bones about its approach -making budget imitations of leading high-priced brands and pro-moting them with blatant comparative advertising campaigns: "Wedo what theirs does for less than half the price," is the message. In1972, Curtis had a meager 1 percent share of the shampoo marketfor its five Suave shampoos. Its new strategy was launched in 1973.By 1976, it had overtaken Procter & Gamble's Head & Shouldersand Johnson & Johnson's Baby Shampoo to lead the market involume. Its share hit 16 percent in 1979.

The other form of price-aggressive strategy is one in which theattacker invests heavily in research to achieve lower productioncosts and then attacks competitors on a price basis. Texas Instru-ments has been brilliantly successful in using the price weaponstrategically. It invests heavily in R&D and moves very rapidly

SUMMER 1981 69

down the experience curve. The Japanese, too, launch frontalattacks on the basis of cost-related price cutting, and this is one ofthe most viable bases upon which a sustained frontal attackstrategy can be founded.

2. Flanking attack. An army on a battlefield is deployed to bestrongest where it expects to attack or be attacked. It is necessarilyless secure in its fianks and rear. Its weak spots (blind sides), there-fore, are natural points of attack for the enemy.

The major principle of modern offensive warfare is concentrationof strength against weakness.*^ The aggressor will act as if he willattack the strong side to tie up the defender's troops, but launchthe real attack at the side or rear. This "turning" maneuvercatches the defending army off guard. Elanking attacks alwaysmake sense, and are particularly attractive to the aggressor pos-sessing fewer resources than the opponent. If he cannot overwhelmthe defender with brute strength, he can outmaneuver him withsubterfuge.

A fianking attack can be directed against a competitor along twostrategic dimensions - geographical and segmental. A geographicalattack consists of the aggressor's spotting areas in the country orthe world in which the opponent is not performing at high levels.For example, some of IBM's rivals chose to set up strong branchesin medium- and smaller-sized cities which are relatively neglectedby IBM. According to a Honeywell field sales manager:

Out in the rural areas, we are relatively better off than in the cities.We have been quite successful in these areas because our sales-force does not meet the 10-plus to one ratio it hits in the cities whereIBM concentrates its people. Thus, ours must be a concentrationgame.''

The other, and potentially more powerful, fianking strategy is tospot uncovered market needs not being served by the leaders:

German and Japanese automakers chose not to compete withAmerican automakers by producing large, flashy, gas-guzzlingautomobiles, even though these were supposedly the preferenceof American buyers. Instead, they recognized an unserved con-sumer segment that wanted small, fuel-efficient cars, and movedvigorously to fill this hole in the market. To their satisfactionand Detroit's surprise, American taste for smaller, fuel-efficientcars grew to be a substantial part of the market.

70 THE MrKIKSEY QUARTERLY

11 Discovering, so to speak, the light beer segment. Miller BrewingCompany pivoted on this unserved gap in the market and vigor-ously developed it into a huge breach across the whole industry'sfront and propelled itself from seventh place in the industry toa very close second in five years.

A flanking strategy is another name for identifying shifts in marketsegments - which are causing gaps to develop that are not beingserved by the industry's product profile - and rushing in to fill thegaps and develop them into strong segments. Instead of a bloodybattle between two or more companies trying to serve the samemarket, flanking leads to a fuller coverage of the varied needs ofthe whole market. Flanking is in the best tradition of the modernmarketing philosophy which holds that the purpose of marketingis to "discover needs and serve them." Flanking attacks have ahigher probability of being successful than frontal attacks. This isalso borne out in military history. In his penetrating analysis ofthe30 most important conflicts of the world from the Greek wars up toWorld War I (which embraced more than 280 campaigns), LiddellHart concluded that in only six campaigns did decisive resultsfollow strategies of direct head-on assault.'" Tbe strategy of in-direct approach has overwhelming support from history as the mosteffective and economic form of strategy.

3. Encirclement. The pure flanking maneuver was defined as pivot-ing on a gap in the existing market coverage of the enemy. Theencirclement maneuver, on the other hand, is seen as an attempt todisperse this coverage so that the enemy's segment differentiation(and therefore brand loyalty) is diluted and a more fiuid front iscreated that can be pierced at a number of points and envelopedinto new segments. Encirclement (also called envelopment) in-volves launching a grand offensive against the enemy on severalfronts so that tbe enemy must protect bis front, sides and rearsimultaneously. Tbe aggressor may offer tbe market everything theopponent offers and more, so that the offer is unrefusable. Encircle-ment makes sense as a strategy under circumstances where theaggressor has, or is able to muster, resources superior to those ofthe opponent and believes that tbe encirclement will be completeand swift enough to break the opponent's will to resist.

Seiko's attack on the watch market illustrates an encirclementstrategy.'' For several years, Seiko bas been acquiring distributionin every major watch outlet and overwhelming its competitors andconsumers with an enormous variety of constantly changingmodels. In the United States, it offers some 400 models, but its

SUMMER 1981 71

marketing clout is backed by the some 2,300 models it makes andsells worldwide. "They hit the mark on fashion, features, userpreferences and everything else that might motivate the con-sumer," says an admiring vice president of a US competitor.

An encirclement attack does not always work, as Hunt's found outwhen it tried to blitz Heinz's brand of catsup in a grab for increasedmarket share. In 1963 Hunt's, with a 19 percent share of the catsupmarket, launched a major encirclement attack on Heinz to go afterHeinz's 27 percent market share. Hunt's rolled out a number ofmarketing attacks simultaneously: it introduced two new fiavors ofcatsup (pizza and hickory) to disrupt the consumers' traditionaltaste preference for Heinz and also to capture more retail shelfspace; it lowered its price to 70 percent of Heinz's price; it offeredheavy trade allowances to the retailers; and it raised its advertisingbudget to over twice the level of Heinz's.

Tbis marketing program meant that Hunt's would lose money whilethe battle raged but would make it up if it attracted enough brandswitchers. The strategy failed to work. The Heinz brand continuedto enjoy consumer preference. As a result, not enough Heinz userstried the Hunt's brand and most of those who did returned to theHeinz brand. By the mid-1970s Heinz had increased its share toover 40 percent through heavy-up advertising.

Hunt's debacle underscores our core proposition that segmentationopportunity is fundamental to choosing the axis for an indirectapproach. If empty niches do not exist, or cannot be created bysegment diffusion tactics, then what is a flank attack in the mindof the aggressor peters out into a plain frontal attack in themarketplace. As such, it would require the 3 : 1 advantage incombat firepower to succeed.

4. Bypass attack. The bypass is the most indirect of assault strate-gies and eschews any belligerent move directed against the enemy'sexisting segment span. Conceptually, the bypass hinges on a muchmore global - or at least macro conception of competition thanenemy A and his territory Z. It is analogous to peacetime politicalwarfare ("cold war") in which allied pacts, so to speak, are createdagainst the prospect of future hostilities in the core confrontationzone. For a company, it means bypassing the arch enemy and at-tacking easier markets to broaden one's resources base. This typeof attack offers two lines of approach: diversifying into unrelatedproducts and diversifying into new geographical markets forexisting products.


Consider, for example, Colgate's impressive turnaround.^^ In theUnited States, Colgate has always struggled in Procter & Gamble'sshadow. In heavy-duty detergents, P&G's Tide routed Colgate'sFab by almost 5:1. In dishwashing liquids, P&G had almost twiceColgate's share. In soaps, too, Colgate trailed far behind. WhenDavid Foster took over as CEO in 1971, despite its SI.3 billion insales, Colgate still had the reputation of a stodgy marketer of soapand detergent. By 1979, Foster had transformed the company intoa S4.3 billion conglomerate, capable of challenging P&G ifnecessary.

Foster's real achievement was in recognizing that any head-onbattle with P&G was futile. "They outgunned us 3 to 1 at the storelevel," said Foster, "and had three research people to our one."Foster's strategy was simple - maintain Colgate's lead abroad andbypass P&G at home by diversifying into markets sans P&G. Astring of acquisitions followed in textiles and hospital products,cosmetics and a range of sporting goods and food products. Theoutcome: in 1971, Colgate was underdog to P&G in about half of itsbusiness. By 1976, in three-fourths of its business, it was eithercomfortably placed against P&G or didn't face it at all.

5. Guerrilla warfare. Guerrilla warfare is another option availableto a market aggressor. Guerrilla warfare consists of making small,intermittent attacks on different territories of the opponent, withthe aim of harassing and demoralizing the opponent and eventuallysecuring concessions. The military rationale was stated by LiddellHart.

The more usual reason for adopting a strategy of limited aim is thatof awaiting a change in the balance of force - a change often soughtand achieved by draining the enemy's force, weakening him bypricks instead of risking blows. The essential condition of such astrategy is that the drain on him should be disproportionatelygreater than on oneself. The object may be sought by raiding hissupplies; by local attacks which annihilate or inflict dispropor-tionate loss on parts of his force; by bringing him into unprofitableattacks; by causing an excessively wide distribution of his force;and, not least, by exhausting his moral and physical energy.'''

The guerrilla attacker will use both conventional and uncon-ventional means to harass the opponent. In the business world,these would include selective price cuts, supply interferences,executive raids, intense promotional bursts and assorted legalactions against the opponent. The last - legal action - is becomingone of the most effective ways to harass the other side. Many firms

SUMMER 1981 73

find it worthwhile to search the opponent's legal conduct forpossible violations of antitrust law, trademark infringement anddeceptive trade practices.

As an example, a Seattle-based beer distributor who had beensupplying beer to Alaska by ship was upset when the Oetker Groupof West Germany obtained a 75 percent tax credit for 10 years fromthe Alaska legislature to establish heer production in Alaska. TheSeattle distributor slapped a lawsuit on Oetker, charging the taxincentive was unconstitutional. Oetker eventually won in thecourts, but four years of delay crippled its hope of capitalizing onthe oil pipeline construction boom. After operating for just 30months, Oetker closed its Anchorage brewery.^*

Normally guerrilla warfare is practised by a smaller firm against alarger one. Not able to mount a frontal or even an effective flankingattack, the smaller firm launches a barrage of short promotionaland price attacks in random corners of the larger opponent'smarket in a manner calculated to gradually weaken the opponent'smarket power. Even here, the attacker has to decide betweenlaunching a few major attacks or a continual stream of minorattacks. Military dogma holds that a continual stream of minorattacks usually creates more cumulative impact, disorganizationand confusion in the enemy than a few major ones. In line with this,the attacker would find it more effective to attack small, isolated,weakly defended markets rather than major stronghold marketslike New York, Ghicago and Los Angeles, where the defender isbetter entrenched and more willing to retaliate quickly anddecisively.

It would be a mistake to think of a guerrilla campaign as only a"low-resource" strategy alternative availahle to financially weakchallengers. Conducting a continual guerrilla campaign can beexpensive, although admittedly less expensive than a frontal, en-circlement, or even fianking attack. Furthermore, guerrilla war ismore a preparation for war than a war itself. Ultimately it must bebacked by a stronger attack if the aggressor hopes to "beat" theopponent. Hence, in terms of resources, guerrilla warfare is notnecessarily a cheap operation.

Defense strategies

We have seen that attack strategies in business can be clarifiedthrough considering the classic offenses available in military en-gagements. Are models of military defensive action also pertinent


Exbibitll Defense strategies

^ " defense ""

defense .'I'.-i'::

iPositiodtdefensel1 1

fender

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a

6 Strategic

to corporate engagements? The answer is yes, although the strate-gic issues may often appear as refiections of offense employed inother directions.

There are six models of defensive deployment that can provideuseful insight. They are illustrated in Exhibit II and discussed inthe following paragraphs.

1. Position defense (the "fortified front line"). The traditional con-cept of defense is closely tied to a psychology of' 'fortification.'' TheFrench Maginot Line, the German Siegfried Line and, most re-cently, the Israeli Barlev Line on the Suez are twentieth-centuryversions of the "fort" of the Middle Ages. Like almost all the greatforts of history, these extensive, supposedly impregnable, fortifiedfront lines all failed in the hour of peril. Static fort-like defense, likefrontal attack, is apparently one of the riskiest strategies in themilitary theater.

SUMMER 1981 75

How do we interpret static defense in the business world? Theappropriate analogy is that of marketing myopia. The marketingconcept for many years now has sought to demolish the myth ofthe invincible product. Certainly, Henry Ford's myopia about hisModel-T brought an enviably healthy company - with $1 billion incash reserves at its zenith - to the brink of financial ruin. Even suchdeath-defying "brands as Coca-Cola and Bayer Aspirin cannot herelied upon by their companies as the main sources of future growthand profitability. Coca-Cola today, in spite of producing nearly halfthe soft drinks of the world, has aggressively moved into the winemarket, has acquired fruit drink companies, and has diversifiedinto desalinization equipment and plastics. ̂ ^ Clearly, leaders underattack would be foolish to base their defense on putting all theirresources into building fortifications around their current product.

Reasonable broadening, however, makes sense. Armstrong Corkexemplified a successful market-broadening strategy by redefiningits domain from "fioor covering" to "decorative room covering"(including walls and ceilings). By recognizing the customer's needto create a pleasant interior through various covering materials,Armstrong Cork expanded into neighboring businesses that weresynergistically balanced for growth and defense.

The other alternative to generating "strategic depth" is diversifi-cation into unrelated technologies. The multidivision corporationis such a common feature today that it seems almost the only routeto growth and competitive strength. In a strategic sense, marketdiversification is the defense analogue of the bypass attack. Thus,Colgate and Levers not only bypassed P&G in their offensivepostures but simultaneously built a defensive depth from which todraw resources in future counterattacks or challenges that theymay need to launch in the confrontation zone with P&G.

2. Mobile defense ("defense in depth''). Far superior to positiondefense is mobile defense, in which the firm attempts to stretch itsdomain over new territories that can serve as future centers fordefense or counterattack. It spreads to these new territories not somuch through normal hrand proliferation as through innovativeactivity on two fronts - namely, market broadening and marketdiversification. These moves generate "strategic depth" for thefirm, which enables it to weather continual attacks and to launchretaliatory strikes.

Market broadening is the "defense-in-depth" solution advocatedhy Theodore Levitt in his widely acclaimed "Marketing Myopia."^^


Levitt calls on a company to shift its focus from the current productto the underlying generic need and to get involved in R&D acrossthe whole range of technology associated with tbat need. Thus,"petroleum" companies are asked to recast themselves into"energy" companies. Implicitly, this demands dipping their re-search fingers into the oil, coal, nuclear, hydroelectric andchemical industries.

But tbis market-broadening strategy should not be carried too far.In a strategic sense, it faults two fundamental principles - theprinciple of the objective ("clearly defined and attainable") andthe principle of mass. The objective of being in the energy businessis too broad. The energy business is not a single need but a wholerange of needs (heating, lighting, propelling, and so on). Tbatleaves very little in the world that is not potentially the energybusiness. Furthermore, too much broadening would dilute thecompany's mass in the competitive theater today, and survivaltoday surely must take precedence over the grand battles imaginedfor some tomorrow. The error of marketing myopia would be re-placed by marketing hyperopia, a condition where vision is betterfor distant than for near objects.

3. Preemptive defense ("offensive defense"). Offense as a form ofpreemptive defense assumes that prevention is better than cure -that war and not peace is tbe natural state of business. Preemptivedefense includes all the attack strategies considered earlier.

For example, a company could launch a fiank or envelopmentalattack against a competitor whose market share is approachingsome criterion mark. When Chrysler's market share began risingfrom 12 to 18 percent some years ago, one rival marketing executivewas overheard to say: "If they (Chrysler) go to 20 percent, it willbe over our dead bodies."^'

Or a company could practise a sort of sustained guerrilla actionacross the market - hitting one competitor here, another there - andkeep everyone off balance in the tactical theater. Or the offensivedefense could assume the proportions of a grand market envelop-ment, as practised by Seiko, or the sustained frontal barrage of theTexas Instruments type. Sustained high-pressure strategies aim atretaining the initiative at all times and keeping the competitionalways on the defensive.

Companies fortunate enough to enjoy high levels of market assets -high brand loyalty, technological leadership, and so on - would

SUMMER 1981 . 77

probably find it disadvantageous to pursue too broad a preemptivestrategy. They have the capacity to weather some punishment andmay even prefer" to entice the opponents into expensive and costlyattacks that will not pay off (they hope) in the long run. Heinz letHunt's carry out its massive attack in the catsup market withoutmuch counteroffensive; and, in the end, this proved very costly toHunt's. Standing firm in the face of an attack, however, calls forgreat confidence in the ultimate superiority of the company'smarket offer.

4. ''Flank-positioning'' defense. The fianking "position" is estab-lished by a defender as a hedge against some probable but uncertaineventuality, or as a defensive corner overlooking a weak front. Asin the military theater, a fianking position is of little value if it isso lightly held that an enemy could pin it down with a small forcewhile its main formations swing past unmolested. A careful assess-ment of any potential threat must be made and, if indicated, arelatively serious commitment made to flanking the threat.

Many instances of flank positions are to be found in the businessworld. The defensive stance taken by Chicago-based Jewel FoodStores is an instructive example of fiank positions in some marketscoupled with a head-on counteroffensive in others. The companybelieves that the supermarket will continue to remain a dominantforce and its counter offense consists of strengthening the "fit"between its assortments and the changing life-style parameters ofits consumer segment. The fast-food boom has been met by offeringa wide assortment of instant and frozen meals, the discount foodchallenge by promoting generic lines, and Jewel's various super-markets are being tailored to suit local demands for assortmentssuch as fresh bakery products and ethnic foods.

However, the company is taking no chances with some institutionaldevelopments in other fields. It has set up the Jewel-T division,which is a network of' 'box'' discount stores patterned after pioneerAldi. Watching a sudden turnaround in the competitive position of"independents" in 1977, Jewel's Star Market division in NewEngland promptly began moving into franchising the followingyear. To hedge the "comho" store challenge, it integrated a largenumber of its supermarkets with its Osco Drug stores, using bothside-by-side and fully integrated designs.

5. The ''counteroffensive'' in defense. A defender can respond to anattack by mobilizing his reserves and counterattacking the oppo-nent. He has the strategic choice of meeting the attacker's spear-


head head on, maneuvering against the fiank of the attacker, orlaunching a pincer movement threatening to cut off the attackingformations from their base of operations.

When Oxy-5 blitzed the acne medications market with an extremelypowerful promotional attack, the market leader, Clearasil, re-taliated with a stepped-up counterpromotion of its own. Sometimeserosion of market share is so rapid that such a head-on counter-stroke may become necessary. But a defender enjoying somestrategic depth can often weather the initial attack and riposteeffectively at the opportune moment. In many situations, it may beworth some minor setbacks to allow the offensive to develop fully(and be understood) before countering. This may seem a dangerousstrategy of "wait and see," but there are sound reasons for notbarreling into a counteroffensive.

A better retort to an offensive is for the defender to pause andidentify a chink in the attacker's armor - namely, a segment gap inwhich a viable counteroffensive can be launched. Cadillac designedits Seville as an alternative to the Mercedes and pinned its hope onoffering a smoother ride and more creature comforts than Mercedeswas willing to design.

An example of pincering out the opponent's attack is Heublein'sstrategy in defending its Smirnoff vodka against an attack fromWolfschmidt in the 1960s. Wolfschmidt priced at a dollar less abottle and claimed to be of the same quality. After considering allfrontal counteroffensive alternatives, Heublein rejected these asdetrimental to its profits and came up with a brilliant pinceringmaneuver. It raised the price of Smirnoff by one dollar (effectivelypreventing segment diffusion) and introduced two new brands tomeet Wolfschmidt head on (same price) and on the other fiank(lower price).

6. ''Hedgehog'" defense {"strategic withdrawal). Strategic with-drawal is a move to consolidate one's competitive strength in themarket and concentrate mass at pivotal positions for counterattack.The hedgehog pattern of withdrawing into consolidated positionsalong the front line fits the marketing operation of countersegmen-tation. ̂ ** In the slow-growth 1980s, an increasing opportunity seemsto be emerging for profitable strategy in either eliminating or fusingthese fragmented segments. This opinion is shared by 70 chiefmarketing executives of the Fortune "500" who responded to aquestionnaire. Westinghouse's refrigerator models have been cutfrom 40 to the 30 that accounted for 85 percent of sales. General

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Motors has standardized its auto engines and now offers feweroptions. Campbell's Soup, Heinz, General Mills, Del Monte,Georgia-Pacific, Studebaker-Worthington, Gable Industries andAPL Corporation are among those that have significantly prunedtbeir product lines in recent years. Again we find the underlyingprinciple is concentration of mass if the desegmentation oppor-tunity permits.

Conclusion

During the prosperous 1950s and 1960s, rapid economic growthallowed companies to focus their attention on the character ofdemand rather than the character of competition. The emerging"marketing concept" held that companies would succeed if theyfinely analyzed consumer needs and wants and met them withappropriate products, prices, distribution and promotion. Success-ful companies would be those practising a consumer orientationand the plans of competitors would at best be incidental.

The 1970s might be loosely described as the decade of distributionorientation. Mass merchandising retailers and other distributorsgrew in power, and manufacturers found themselves selling tofewer but larger marketing intermediaries. It was a decade whenmanufacturers focused their attention increasingly on the problemof skillful maneuvering in the "power" politics of the distributiongame.

The 1980s are not about repudiating a deep consumer and distribu-tion orientation but rather about adding a deep competitionorientation. Companies now bave to choose markets whose needsthey can satisfy and whose competitors they can handle. In select-ing their own target markets and objectives they must know eachcompetitor's plans and resources.

Military principles and strategems are not the whole answer tocompetitive strategy, but they do provide insight into what it takesfor a company to succeed in attacking another company or indefending itself against an aggressor. Company managements havealways talked loosely about "going to battle," "invading markets,""returning fire with fire," and so on. But management has rarelyappreciated the full array of possible attack and defense strategiesand their relative requirements and merits. This article has em-phasized the foolishness of "head-on" attacks and "fortification"defenses in the light of the availability of more subtle confrontationstrategies.


As market share and rank become more obsessive concerns in theexecutive suite,^^ management must deepen its understanding ofmilitary strategy doctrines. A military consciousness, however,must not replace the more basic marketing consciousness. Thecompany must still be good at finding needs and filling them, butnow it must also know how to outmaneuver its competitors in thesame task.

REFERENCES

See Carl von Clausewitz, On War, London, Routledge & Kegan Paul. 1968; B. H.Liddell Hart, Strategy, New York, Praeger, 1967; and J. F. C. Fuller, The Conductof War, 1789-1961, London, Eyre & Spottiswoode, 1961.Op. cit., p.351.Ibid, p.357.Ibid, p.334.See "RCA Goes Head-to-Head With IBM," Fortune, October 1970; "The 250 MillionDollar Disaster That Hit RCA," Business Week, September 25, 1971.See "Stopping the greasies," Forbes, July 9, 1979, p.121."A 'Me-Too' Strategy That Paid Off," Fortune, August 27, 1979, p.86.Liddell Hart, op. cit., p.347.Quoted in "Honeywell Information Systems" (case available from the IntercollegiateCase Clearing House, Soldiers Field, Boston, 1975), p.7.Liddell Hart, op. cit., p.161.See "Seiko's smash," Business Week, June 5, 1978, p.89.See "The Changing of the Guard at Colgate," Fortune, September 24, 1979, p.92;"How to Be Happy Though No. Two," Forbes, July 15, 1976, p.36.Op. cit., p.335,"Alaska chills a German beer," Business Week, April 23, 1979. p.42."The Strategy That Refreshes?" Forbes, November 27, 1978. p.81.See Theodore Levitt, "Marketing Myopia," Harvard Business Review, July-August1960, p.45."If the Big Three's a Crowd, Blame Chrysler," Newsweek, May 20. 1968, p.84.See Alan J. Resnik, Peter B. B. Turney and J. Barry Mason, "Marketers turn to'countersegmentation'," Harvard Business Review. September-October 1979, p.100.See Robert D. Buzzell. Bradley T. Gale and Ralph G. M. Sultan. "Market share - akey to profitability," Harvard Business Review, January-February 1975, p.97;"Corporate Strategists Giving New Emphasis to Market Share. Rank." The WallStreet Journal, February 3, 1978,

Philip Kotler is Harold T. Martin Professor of Marketing at theJ. L. Kellogg Graduate School of Management, NorthwesternUniversity, Evanston, Illinois; Ravi Singh., currently pursuingdoctoral studies at Northwestern University, is on the Faculty ofManagement, University of Rajasthan (India). This article isreprinted by special permission from the Winter 1981 issue of TheJournal of Business Strategy. Copyright r 1981 by Warren,Gorham & Lamont, Inc., 210 South Street, Boston, Massachusetts.All rights reserved.

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