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:

  1. 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.”
  2. 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.
  3. 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.
  4. 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.
  5. 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.

 

 ©2004 Marion Consulting Partners