This article is an excerpt from the Shortform book guide to "The 22 Immutable Laws of Marketing" by Al Ries and Jack Trout. Shortform has the world's best summaries and analyses of books you should be reading.
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Why is it so important to focus on long-term goals rather than short-term profits in a company? Is there a way to accurately predict what the market trends will be?
In The 22 Immutable Laws of Marketing, the Law of Perspective states that you must resist being swayed by short-term benefits and diligently consider the long-term effects of your actions. This means resisting the urge to promote frequent price cuts because your sales may jump in the short term but they will suffer in the long term.
Keep reading to learn more about the Law of Perspective.
The Law of Perspective
The Law of Perspective states that, like many things in life, when it comes to marketing, the short-term effects of an action can be the opposite of the long-term effects. For example, when stores promote price cuts, their sales jump in the short term, but in the long term, they suffer because customers learn to wait for a sale instead of buying items at their regular prices. Smart marketers must resist being swayed by short-term benefits and diligently consider the long-term effects of their actions. Companies benefit more from longevity than from short-lived sales boosts.
Top beer companies Budweiser, Miller, and Coors endured long-term sales declines after chasing the light beer craze and introducing light versions of their products. Miller High Life had seen its sales grow significantly each year until it introduced Miller Lite. Five years after launching Miller Lite, sales for Miller High Life had nearly tripled—but then sales steadily declined for the following 13 years, falling below where they’d been before launching the light beer. Michelob faced a similar fate, with the sales of all of its offerings (including the original as well as the light beer) eventually dropping lower than the sales the original Michelob had brought before the company introduced the light version. That is because the companies lacked long-term perspective.
Plan for Unpredictability
Marketing plans are often based on some assumptions about the future, but there’s an inherent risk of these plans backfiring if competitors do something unexpected, such as introducing a disruptive innovation. No matter how closely you watch the market and how thoroughly you study market research, there’s no way to accurately predict the future unless you’re also writing your competitor’s plans. In fact, market research can often lead you in the wrong direction, because it focuses only on what’s worked well in the past and has no way of predicting the future.
Naturally, you don’t want to walk into the future blindly, or wind up winging it every step of the way, so there are ways to create flexible, more reliable plans:
- Watch long-term trends. Granted, Law #14 warns against chasing fads and constantly changing your strategy—but there is a difference between fleeting fads and long-term trends. For example, in the early ‘90s, a healthy eating trend had been gaining traction for years. Although ConAgra had previously introduced low-fat and low-sodium foods through line extensions, the company took advantage of the health-food trend and successfully launched the brand Healthy Choice. However, there is one caveat to consider when you’re following trends: Don’t extrapolate the trend and assume that its influence will reach every corner of the market or forever change the industry. In other words, although trends have longevity, be somewhat conservative in projecting a trend’s reach and endurance.
- Expect change. Change is inevitable, so although you can’t predict the future, you can safely assume that it will look different from the present.
- Build flexibility into your company. From executives to marketers to product designers, your organization must be built to adapt quickly and agilely to a changing market.
Most importantly, come up with a short-term plan and a long-term direction. Your short-term marketing plan is built around a word or concept that sets your brand apart from the competition; the shorter scope requires less forecasting and fewer chances of disruption from unpredictability. Meanwhile, your long-term marketing direction creates a program that builds upon that word or concept, which provides guidance for future short-term plans without committing to concrete details that could be upended.
Follow Trends, Not Fads
It’s critical to know the difference between fads and trends, because fads can hurt your business while trends can create long-term success:
- Fads are short-term. They hit like a wave, generate a lot of hype, saturate the market, and fade as quickly as they rose.
- Trends are long-term. They are subtle—almost unnoticed—and they can endure for years or decades.
Beware of investing in fads. Although fads can be profitable, their short lifespan can cause more harm than good for the company. By the time an organization has set up the staff, manufacturing, and distribution necessary, the fad is over. If you’re already selling a product that becomes a fad, the best thing to do is to dampen the fad by limiting the supply. If you flood the market, soon everyone will own the product and the excitement will be gone. On the other hand, if you restrict supply, the product will remain in demand. Ideally, you want to dampen the fad so much that it converts into a trend.
For example, Cabbage Patch Kids dolls became a fad after they were introduced in 1983. The manufacturer, Coleco Industries, capitalized on the hype and produced Cabbage Patch games, clothes, pens, and pencils. By 1988, the fad had passed and Coleco filed for bankruptcy. However, Hasbro acquired Cabbage Patch Kids and sustained sales—albeit at lower levels than during their heyday—with a more measured approach.
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- Why the quality of your product matters less than customers' perceptions of it
- Why trying to appeal to everyone will sink your sales
- How Marlboro sold more cigarettes to women by marketing to cowboys