Top-down thinking trap

Marks and Spencer embarked on an ambitious expansion after forming a partnership, Marks & Spencer.

In 1920, they bought a processing business; in 1931, they established a food department; in 1973, they opened branches in Paris and Brussels; in 1986, they began to sell furniture; in 1988, the business entered the United States Market, the acquisition of Brooks Brothers and Kings two supermarkets. Then it moved into the Far East and continued to open new stores.

While all this looks beautiful, the company is in deep trouble, and its core retail business is getting less and less satisfactory!

In 1998, Martha's earnings deteriorated sharply. The company's biggest problems come from retail in the UK, but overseas operations have been equally disappointing.

Two Big Mistakes from Marks & Spencer

In the 1990s, there was a revolution in the UK retail industry, with the industry becoming more competitive and placing more emphasis on customer service. As a result, customer expectations have also increased. In such a situation, other stores immediately responded with an ever-increasing stream of innovative services. However, Marks & Spencer failed to keep up with this trend, with only a meager number of sales assistants, resulting in increasingly poor service and increasingly dissatisfied customers.

The depressing news doesn't stop there. There has been a drastic change in the way younger generations shop, as they head to other stores for more exciting brands. Customers in their 30s and 40s used to dress remarkably like their parents, but today, many of them want to dress like their children. And Marks & Spencer's store layout has an antique feel to it, "a relic of a bygone era," especially when compared to those of rivals like Gap and Next.

Marsha made two big mistakes. First, the corporate culture built on the previous successful record is extremely rigid, and it is the top-down corporate culture of "the head office knows everything". This kind of culture is desirable and feasible only if the competition is not too intense and there is a steady stream of customers. It made the company form a lot of outdated rules. The second mistake was that the company was so inbreeding that management had little fresh blood from the outside. That's why, in this ever-changing world, Martha turns a deaf ear to change.

Top-down thinking

The problems that Martha showed are typical of top-down management systems. Over the years, the company's top management has led the overall operation of the company with its own behavior, which has caused many troubles. The company's so-called long-term plan is nothing more than a manager's wish for what will happen in five to 10 years' time.

Managers who practice top-down planning practice a "forced" approach to making things happen; managers who practice bottom-up planning practice "induction" Working methods, try to find the "vacuum".

Top-down managers focus on existing markets, while bottom-up managers seek new market opportunities.

Top-down managers are internally oriented, while bottom-up managers are externally oriented.

Top-down managers believe that near-term failure is necessary for long-term success; bottom-up managers believe that both short-term and long-term success are necessary possible.

Top executives must go to the front line

In order to accurately outline the blueprint of the company's future operations, managers must step out of the ivory tower and experience the front line of marketing battles one after another.

Remember, don't confuse being on the front lines with assigning someone to do research on the front lines! In most businesses, they do exactly the latter, either sending someone out to the sales department to ask for a sales report or holding some form of marketing seminar. There's nothing wrong with performing market research, but it's important to remember that marketing is a game about the future, and most market research is just a report on past events.

Likewise, there is nothing wrong with sending someone to the front line to understand the situation, but of course the best way is to go to the front line yourself to get first-hand market information.

In order to ensure that corporate strategies are better aligned with the future, company managers must be aware of the trends that are taking place in the industry. If corporate strategy changes overnight, it's just a whim.

Two Principles of Differentiation

Differentiation strategy is the goal that enterprises should pursue. When planning enterprise prospects, they should formulate effective market plans for the weaknesses of competitors.

But sooner or later, you have to start with a differentiating idea to develop your corporate strategy. In fact, maybe you'll be repeating this process multiple times: pick an idea, then implement it; after a while, maybe it doesn't feel right, and try another.

There are two key principles that must be kept in mind when deciding on a differentiating idea: Don't make the idea company-oriented, but competitor-oriented.

Eliminate company-oriented creativity: Company-oriented creativity is the worst form of top-down marketing—chosen only because it fully meets the company's internal needs.

For example, Xerox once purchased a computer company called Scientific Data Systems, mainly because the latter could meet customers' needs for office automation, which is exactly the same as Xerox Align with the company's strategic goals. The acquisition proved to be a big mistake, costing the company billions of dollars. This was because there were already numerous computer companies on the market for customers to choose from.

Eight out of ten new products launched by enterprises are to fill the gaps in the enterprise plan, not to fill the gaps in the market. This is why eight out of ten new products fail!

Implementing a company orientation is extremely harmful, it may improve your reputation within the business, but it comes at the cost of disastrous consequences for the business in the external market.

Make sure the idea is competitor-driven: Years ago, Delta decided to offer its frequent flyer club members (and non-members) a 3X travel bonus. At first glance this seems like a good idea, and it should attract many travelers to the airline. That's true, but at the same time the new program is "very attractive" to American, United, Pan Am, TWA and Eastern. Virtually all of Delta's competitors have followed suit, offering the same rewards program. Apart from passengers, no airline has benefited.

When Burger King launched its "grill, not fry" campaign, McDonald's didn't put away the fryer and replaced it with an oven. Because doing so would be extremely expensive.

The reason "tripling the journey" is not a competitor-oriented strategy is that it can be quickly copied by competitors. Here, reaction speed is an important consideration. If your competitors can't quickly replicate your idea, then you'll have enough time to plant it in your customers' minds. On the other hand, "grilling, not frying" is a good competitor-oriented strategy, but it cannot be quickly imitated by competitors; even if it were imitated, it would be economically unprofitable.

In reality, a viable strategy is a market move that stabs a knife into the heart of a competitor. Conversely, simply offering customers some incentive to entice a purchase will entice competitors to follow suit. However, most marketing plans contain nothing more than coupons, discounts, in-store promotions and some bargains. These are all thankless.

Keep an eye on competitors

In war, the axiom of defense held by generals is that the best policy is to lead the aggressor into the water, where they have little mobility. The central strategy is to attack them on the beach, where they have limited mobility. But whatever the strategy, don't let them take root in the interior, which provides plenty of space and maneuverability for the invaders.

In business, you have to do your best to knock out a weaker competitor before it's fledgling. While German and Japanese car companies entered the U.S. market with small cars, General Motors finally backed off.

They thought it was impossible to make money producing this type of car, and what Americans needed was a big, comfortable car. It turned out they were dead wrong.

On the other hand, Gillette immediately responded with a portable razor with two heads called "Good News" for the portable razor launched by BIC. Gillette may have made little money on the project, but today they are firmly in the razor's seat.

Now let's look at the other side of the coin. In the face of a powerful competitor who has adopted the above suggestions, what is your strategy?

It's actually quite simple: be careful, take care! The best strategy is to act as quietly and early as possible, before powerful competitors find themselves a potential threat in the field. In areas that are not easily noticed, slowly establish your own base and strengthen your strength, and then give it a shot after you are full of wings.

Wal-Mart chose to start in sparsely populated C and D counties in the United States because its main competitors were smaller, weaker retailers. After the scale and strength of the company were greatly enhanced, Wal-Mart began to enter the densely populated Class A and Class B counties to compete with large merchants.

It must be remembered that we live in an extremely competitive and imitating world! You have to realize that your competitors may be figuring out how to crush you all the time. Therefore, in order to survive effectively in the fierce competition, you must constantly collect all kinds of information about your competitors, which may come from your capable sales team, from your friendly customers, or from your from certain research activities.

But don't put all the bets on the company's top management. The experience of Marks & Spencer is the best negative teaching material.

Originally adapted with permission from Big Brands, Big Trouble: Lessons Learned the Hard Way, John Wiley and Sons, 2001, by Jack Trout. Translated by Li Jian.

Jack Trout was the first to popularize the concept of "positioning" with clients. He has published many marketing classics such as Positioning.