Mktg. Exec
offers game-winning biz plays
January 24, 2005
BY MICHAEL KRAUSS
John
Zagula gives new reason to view SuperBowl XXXIX. Watch the plays.
I admit it. As a marketer I used to watch the SuperBowl for the
commercials. Until Janet Jackson, I’d walk away at halftime.
Now my focus will be on play selection.
Credit Zagula, the former Microsoft marketing exec and co-author
of The Marketing Playbook with my transformation. His
new book defines a set of five core plays: the drag race, the
platform play, the stealth play, the best of both play and the
high-low play.
The plays Zagula outlines are a framework road-tested at Redmond,
Wash.-based Microsoft Corp. They provide a simple but potent approach
for defining marketing strategy. While many think of marketing
as ads and halftime promotions, Zagula believes it’s the
marketing strategies, the plays we choose, that are at
the heart of our professional success. He thinks we’ll play
the marketing game better if we adopt his playbook. Frankly, I
think he’s right.
Zagula cut his teeth at New York-based American Express Co. in
the late 1980s. He planned a Foreign Service career but landed
at AmEx instead. A quantitative guy, Zagula assumed he was an
analyst until one day his boss declared him a marketer.
“There was no such thing as CRM back then,” Zagula
says. “They just thought customers and databases were good.
We developed programs to acquire and retain customers.”
It
was then that Zagula found the love of his professional life--a
software program called Excel. “I loved presenting financial
models in Excel,” Zagula says. “I was a database modeling
junkie.” His affection for the software led him to answer
an ad in The Wall Street Journal.
“I had no qualifications,” Zagula says. “I liked
the copy on the ad. It said, ‘No one wants to be a cog in
a machine.’ So I wrote back and said, ‘No cog am I.’
I said, ‘I’m a great guy. And you should hire me.’”
Microsoft did. At the time Microsoft had fewer than 3,000 employees.
Today the company has more than 50,000, according to Zagula.
Zagula left the leader in database marketing, American Express,
to join Microsoft with its expertise in product development and
channel marketing. He arrived on the scene in time to help Microsoft
evolve into a phenomenal strategic brand marketer. Arriving in
1991, Zagula set out to create a database marketing unit. By his
account, Word and Excel held less than 25% market share. He left
the company in 2000 having launched the Office brand. When he
departed, Word, Excel and the umbrella Office brand held hegemony
across the category.
Zagula credits a talented team for the Microsoft success story.
Instead of taking credit, he focuses on what he learned. “I
benefited from working with a bunch of highly strategic rather
than tactical marketers,” Zagula says.
What Zagula gleaned and incorporated into The Marketing Playbook
is a commitment to placing the horse before the cart. “Know
the core strategy before you go and spend tons of money on marketing
tactics that may never succeed,” Zagula says.
Zagula
compares Microsoft with Apple. “Do they have as beautifully
executed a brand at Apple?” asks Zagula rhetorically. “Does
Microsoft have higher unit sales? Yes, because they picked their
battles correctly,” he says.
So here are the five plays Zagula coaches tech marketers to consider:
- The
drag race. Zagula used this play to win the word processor
wars. He established a head-to-head competition for Word against
WordPerfect. The drag race focused attention on two players
in a crowded category: Word and WordPerfect. As Word outperformed
WordPerfect in each race, the brand achieved category dominance.
“Two cars driving as fast as they can to beat each other
to the finish line,” Zagula says. “If you have a
lot to gain, a better product, patience and the resources needed
to win, it’s a good way to go,” Zagula says. “It’s
not a subtle play. Don’t go unless you have what it takes
to win.”
- The
platform play. This is a play you run if you’ve
won a drag race and want to consolidate your gains. “Long-term
greed is better than short-term greed,” Zagula says. “By
sharing your wealth and building alliances, you create an ecosystem
that will fight your battles for you.”
Zagula points to Microsoft and eBay as adopting the platform
play. Microsoft with its certified developers program creates
a platform by which Microsoft shares its wealth but picks up
acolytes that will defend the brand. “EBay doesn’t
sell a product,” Zagula says. “They have a universe
of folks who sell products who are highly dependent upon them.
They built a gigantic barrier to entry,” he adds.
- The
stealth play. When you don’t have the resources
to win a drag race, go where the larger competitors aren’t
looking. Pick market niches and segments that you can own that
others aren’t tending.
Zangula points to players who used this play: St. Louis-based
Enterprise Rent-A-Car Co. and Netscape Communications Corp.,
based in Mountain View, Calif. Enterprise didn’t want
to get between Hertz and Avis. Instead, the company provides
loaner cars for automotive repair shops.
“They turned into a huge business in a stealthy, nonconfrontational
way by doing their ABCs, their gap analysis and their playing
field assessment. They looked at where their competitors weren’t
going,” Zagula says.
Zagula sees this play especially suited for start-up technology
companies. Netscape was doing well until they decided to drag
race Microsoft. “They poked the gorilla in the eye. Not
a good idea,” says Zagula, who suggests a more sustainable
business may nevertheless have resulted for Netscape. “Unless
you have a lot to gain from direct confrontation, don’t
do it,” is Zagula’s guidance.
- Best
of both play. Here you get to run through the middle
of the market. Zagula drives a Volvo Turbo wagon. “I get
to be safe and fast,” he jokes. Zagula cites
the old U.S. market for imported cars. There were Japanese economy
cars and luxury European imports. Then Toyota collapsed the
market, building a good-performing car that’s reliable,
economical and highly luxurious.
“They did it again with the luxury SUV market,”
Zagula says. “Who thought you could have a truck and a
luxury car in the same product?” Those are wonderful promises,
“but you have to be able to sustain them,” he adds.
- The
high-low play. Here you own a high-end, high-margin
brand but want to capture the lower end, high-volume market.
Zagula describes Sheraton hotels as an upscale brand that wanted
to chase the lower end volume in the post-9/11 world.
They used the Sheraton Four Points brand to attract market share,
according to Zagula. His only concern: At some point users of
the higher-end brand may defect. This play can erode the higher-margin
brand.
“Lexus and Toyota became a high-low play,” says
Zagula. “It’s pretty tricky as a marketing person
to have one brand carry a premium and an entry brand. At Microsoft,
we had Works and we had Office.”
With Zagula
in mind, I’m going to watch the Super Bowl to see if I can
add a sixth play to his book. Even if I can’t, he’s
made the game a whole lot more interesting for us marketers.
Michael
Krauss is a partner with Marion Consulting Partners based in Highland
Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com
or news@ama.org.
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