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Mastering Noon Nopi

Marketing Strategy : CHAPTER 4

Dinosaurs,
Monkeys and
Cockroaches
D inosaurs, Monkeys and cockroaches.
That is usually not what one conjures
up with the mere mention of “strategy.” For
me, however, as someone who has taught
marketing for a long time, that is what invariably
happens when I hear the word and you will
understand why when you read this chapter.

Let’s begin by learning from where the

word strategy comes. It originates from
Greek “strategos” and means “generals” or
“generalship.” In short, strategy is based on
concepts and practices about warfare and
marketing strategy therefore can be defined
as marketing warfare. Indeed marketing can
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PART II . MARKETING STRATEGY

be about winning or losing and ultimately about surviving.

Marketing survival is not just a figure of speech anymore but a fact

of life as scores of companies are faced with the possibility of going
out of business or having diminishing returns. Just looking at Fortune
500 companies and comparing the lists from 1955 and 2014, almost
90% on the list are no longer around.1 One can say that is bound to
happen when almost 60 years passes but just examining the list across
the last 14 years, while the attrition is not as severe, still close to 50% of
the companies have vanished. The survival rate it seems is becoming
increasingly lower.

1955 2014
st
1 GM WalMart
Exxon Exxon
2nd
Mobil Mobil
3rd U.S. Steel Chevron
Berkshire
4th GE
Hathaway
5th Esmark Apple
6th Chrysler Phillips 66
th
7 Armour GM
Ford
8th Gulf Oil
Motor
9th Mobil GE
Valero
10th DuPont
Energy

Table. 4.1 Fortune’s list of America’s largest corporations2

Only 3 companies on the list above, GM, Exxon Mobil, and GE still
maintain Top 10 rankings in America. Several corporations did not even
exist in 1955. Walmart and Berkshire Hathaway were founded in the
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Mastering Noon Nopi

1960s, Apple in the 1970s and Valero Energy in 1980. When conducting
a further analysis by delving into the Top 50 corporations in America,
only 8 corporations are still in existence as of 2014. These results show
just how hard it is for a company is to survive in the long run.

The demise of many of these companies is caused by their inability

to adapt to their changing environmental conditions. In a broad sense,
there is a Darwinian dynamic that, like species, companies have to
evolve to fit their environment if they want to avoid the fate of becoming
corporate dinosaurs.

The disruption is often started by technological upheaval such as the

advent of digital media and smart phones but the turmoil is aggravated
by companies ignoring or downplaying their impact.

When I was studying at Harvard Business School I had the great

fortune of sometimes sharing conversations with one of the greatest
thinkers in the history of marketing –Theodore (Ted) Levitt. He was the
author of two of the most read Harvard Business Review articles of all
time, “Marketing Myopia”3, and “The Globalization of Markets.4” Our
first meeting was when I went up to him to introduce myself at Boston’s
Logan Airport when I was coming back from a trip to New York. He
offered me a ride back to campus in his vintage green Mustang.
Thinking back on that “wow” first impression that I had about Levitt and
his cool car, I think it instilled in me the dream to buy my own sports car
many years later.

Marketing Myopia is a call to arms for companies to think beyond the

narrowly defined confines of industry and product. It was famous for
talking about how petroleum and railroad companies had to redefine
their business broadly as being more energy and transportation related.
At the core, Levitt is urging companies to have a wider Noon Nopi about
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PART II . MARKETING STRATEGY

what they are really selling to consumers.

In Chapter 1, I talked out why managers should learn filmmaking.

One of the lessons is how changing a lens influences how you see a
picture. With a telephoto you can see something very far and with a
wide lens you become more sensitive to a variety of components that
comprise the frame. Both are very different from a macro lens that is
used for close-ups where you basically only see one thing.

Many marketers fall into the habit of using a myopic macro lens and
blind themselves to what is happening beyond that perspective –they
belong to just one industry or their only customer is one familiar type.

Charles Revson, the founder of Revlon, is purported to have said

that he didn’t sell cosmetics but that he actually sold “hope.” While to
some this may sound too cynical, I think what Revson was arguing
is that beauty is something that anyone can aspire to and is a very
psychological need.5 That hope can be satisfied with other products
such as clothing and many fashion brands therefore offer both to help
their consumers attain hope.

The importance of having a proper Noon Nopi business definition is

for the following reasons.

1. Customer needs and wants are relatively constant.

2. Products and technologies enable need and want satisfaction.
3. Companies
‌ are free to change products and technologies when
needed.

Customer needs and wants are relatively constant when understood

at more fundamental levels. There is the famous example about what
customers are buying when they shop for a drill –the answer is a “hole.”
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Mastering Noon Nopi

In sum, they do not care about what helps them achieve that goal
whether is an awl, a manual or automatic drill, a numerical controlled
machine or a laser. The point is that technologies come and go but the
desired end result by consumers remains constant. Levitt’s point about
energy and transportation is basically the same. People need fuel or
power for their homes or vehicles and also need to get from one location
to another. The manner in which both are done, however, is likely to
change because of economics.

Products and technologies therefore as seen from the Noon Nopi of

customers act only as the means and not the ends of their consumption
behavior. What may serve them one day in satisfying their end goal
may be substituted someday by something else. Levitt predicted that
fate for gasoline-powered cars and even though electric cars are not
economically viable on a mass scale, their day in the sun could come.
That is what visionaries like Elon Musk of Tesla are betting on.6

The final implication of business definition is that companies have to

sometimes be flexible and proactive in creating their own destruction
when disruptive innovation becomes apparent.7 This is not as easy as it
sounds as companies will have production capacity, capital, and people
vested in existing products and technologies. Moreover, they may still
be successful in what they are presently doing such as in having a
dominant market share. Market share can be a myopic performance
index since it doesn’t always guarantee that the denominator chosen is
done so in a strategically relevant way.8

The end result is that, unlike the popular song, they cannot “let it
go.” Companies become like the monkey with his clenched fist in the
coconut shell trap –all he has to do is let go of the melon seeds and he
can escape the doom of becoming captured. The sad truth is that even
with his life on the line, the monkey becomes hell-bent on keeping the
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PART II . MARKETING STRATEGY

seeds. Companies fall into the same mental trap of thinking that their
former sure-fire products and technologies such as analog film and 3G
cellphones will still serve customers just as well as new innovations. But
the harsh reality is that in order to survive sometimes you have to let go
of even what has brought you past success.

If marketing survival is avoiding the fates of dinosaurs or monkeys

caught with their hands in a coconut trap, then what kind of organism
should a company try to emulate? As unpleasant as it may sound, the
ideal species for companies to benchmark might be cockroaches.
What? No way, how can that be! But think about how they are like. True,
they are small but size is not a key determinant of long term success.
If anything, the large size of a company is one of the reasons why
successful companies become so resistant to change. The well-known
comparison is that big firms are like aircraft carriers –it takes miles for
them to turn around.

Cockroaches, ironically unlike the dinosaurs, have been around for

hundreds of millions of years. A recent discovery discussed below in
the related MIX provides key survival insights that even corporations
can heed. One, evolutionary adaptation should be a characteristic
that companies pursues not only in terms of its products and brands
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Mastering Noon Nopi

but also its internal management system. Two, to accomplish that, the
MIX below suggests that, companies have to re-align their evaluation
methods with the risks in their marketplace. For example, a salesforce
that “cherry picks” customers may end up diminishing their ability to
develop new prospects. Thus, sales force performance should be
balanced in terms of the mix of existing and new customers. Three,
the “adding of a function” is a valuable managerial takeaway for long
term corporate survival. As social media is now an important frontier for
companies, instead of opening a Facebook and twitter sites, they need
to solve how to make their presence felt there be more authentic.

In all seriousness, of course, I do not want to suggest that we be

really like cockroaches. I use them merely to show how we can learn
from any adaptive organism whether they are bacteria, insects, animals
or organizations. The keyword here is adaptation, the ability and agility
to adjust to new circumstances.

The Curious Case of Cockroaches

Marketing Info Example Avoiding Sweets

According to an article in the Los Angeles Times,

some species of cockroaches have genetically
altered their internal chemistry of detecting
and evaluating food to avoid poisonous baits.9
Cockroaches detect food using their hair-
like buds. For the German cockroach, over
generations of cockroaches they have developed
an internal signal that makes their brains think that glucose, a standard form of
sugar, is bitter. This has saved them from eating glucose-based poisonous baits.
According to scientists, animals can sometime lose a function, but it is rare that
animals can add a function such as is the case here where cockroaches have
adopted a system to avoid danger.
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The VSA Framework : CHAPTER 5

a company
navigational
system
W hat is VSA? It stands for Vision,
Strategy and Action and it is a popular
framework that helps us to avoid becoming
like a dinosaur or a stubborn monkey.
VSA is an analytical template that allows
companies to map out its long term goals, its
intermediate strategic directions and current
operational plans.10 Above all, the beauty of
the VSA framework lies in its simplicity –using
one diagram we can evaluate how consistent
(or inconsistent) our three different levels of
marketing are. A useful analogy of how the
VSA helps a company is to consider it to be
like a car navigational system.
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Mastering Noon Nopi

Fig. 5.1 VSA : Vision Strategy and Action

A car navigational system tells more or less us how we can get to

where we want to go. Without that kind of guidance we might take a
more difficult path, or worse, actually become lost. That is the role of a
good VSA –it shows us to where we want to go (the Vision), the different
roads that we can take (the Strategy), and the precise stops and turns
that we need to make while getting there (the Action).

I prefer car navigational systems, like the one below, that use a split
screen –one with the “bigger picture” and the other with close-up details
of the next set of driving actions. For “navis” that only display current
action, a key problem is that you may be going too fast and miss a turn.
But with the left sided screen providing a forewarning of what is ahead,
a driver has enough time to get ready.

The same kind of mistake happens with companies that are too
caught up with present-day action and are caught off guard with the
sudden impact of “strategic turns” such as when the smartphone
technology shifted the center of gravity of mobile communication.

With satellite car navigational systems, they can also tell you that
sometimes you need to change the road, e.g. to get off the normally fast
freeway that may be jammed because of traffic jams or an accident and
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PART II . MARKETING STRATEGY

Fig. 5.2 Car Navigational System as VSA

instead to take the local road that is less crowded. The VSA of a
company likewise should be periodically monitored to make sure that
the direction taken is continually a correct one and if not to change
course even if the vision remains the same.

That kind of scanning of the environment is becoming more and more

important as markets become increasingly vulnerable to turbulence
or “chaotics,”11 a term coined by Kotler and Casilione (2009). I had
the immense honor of lecturing together with the “father of marketing,”
Philip Kotler a few years ago on how to manage marketing in the age of
turbulence to a large business audience. As a marketing professor I felt
blessed not only to have known Levitt but also hold court for a day with
the field’s creator.

I have always used Kotler’s textbooks in my teaching and it was easy

to tell that he is a walking encyclopedia of marketing knowledge and
wisdom. He was one of the first academics that applied mathematic
and economic principles to marketing. He later would also link
marketing with a broader range of disciplines such as sociology, non-
profit management, and environmental sustainability. In Chaotics, a key
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recommendation that the authors make is for companies to install an

early warning system and the need to be sensitive to “weak signals.”

What is a weak signal? We could liken it to a small increase in tidal

activity that occurs after an earthquake in a remote location such as that
which occurred in 2004 in the Indian Ocean. Even though the signal is
barely noticeable and the epicenter far away, the window of opportunity
to escape is actually very small. The Tsunami that was created from the
earthquake traveled over 600 kilometers in less than 75 minutes and
killed over 250,000 people.

In business, the effect of what I will call “Marketing Tsunamis”

can be quite devastating as well. These are time bombs that have
a clock ticking away but without us realizing it. Using the common
categorization of environmental forces, let’s think about what are some
clear and present “marketing tsunamis.”

Demographic Tsunami

In Asia, there is an aging of the population that has been taking

place for some time. Whereas this problem is associated with Japan,
it is actually more serious in countries like Korea and China given their
lower birth rates. This creates problems for companies that depend on
young consumers such as those that sell baby diapers and feminine
napkins. Yuhan Kimberly is one such company and with the prospect
of the median age in Korea (also Japan and Taiwan) becoming over 45
by 2030, they have to diversify their product line accordingly. I blogged
about the aging problem and how it impacts business in Asia and the
readers can find it in the appendix.
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PART II . MARKETING STRATEGY

Technological Tsunami

We have already witnessed the havoc created by the advent of the

internet, digital media and smartphones. We now understand therefore
that technological disruption is ever-present and can be a game
changer. Such cataclysmic impact may occur with the wider spread
application of 3D printing or the actual realization of the Internet of
Things.

MIX Internet of Things(IoT)12

Today, the internet can be connected to anything. This means that these “Things”
can share information with people or with other devices. People usually think of
IoT as a technology applied to household appliances and other devices found
inside the home but it can also be
applied to shoes, clothes, and even
rooms. For example, a dormitory in
MIT uses IoT to connect bathrooms
and websites, enabling residents to
easily recognize which bathrooms
are vacant. Moreover, laundry
machines and driers in dorms are
connected to the Internet as well.
According to an announcement
made by Samsung at the IoT
conference, the decreasing price of chips, development of IT technologies, and
the invention of new devices, will continue driving the development of IoT.

Political Tsunami

Politics whether it is in the international or domestic domain has

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Mastering Noon Nopi

a significant impact on business and marketing. For Asia, relations

between governments can both foster or hamper business or consumer
confidence in marketing between nations. For example, the recently
strained relationship between Japan and its neighbors Korea and
China may adversely impact the marketing of products between these
countries. In terms of ASIA-NA CO-BRA branding, it limits the wiggle
room that companies can have.

For South Korea, where I live, the biggest political Tsunami is the
potential reunification with North Korea. If that were to occur, the impact
would extend beyond the political sphere and perhaps alter all of the
other domains listed here, especially the economic one. I recently co-
authored an article where I speculate about marketing in North Korea
and how reunification on this peninsula presents both challenges and
opportunities for South Korea.

Economic Tsunami

The prolonged recession in many regions of the world has dampened

demand for many products especially those that require high
purchasing power. As if that fundamental factor wasn’t enough many
industries have been hit a double or triple whammy with their currency
exchange rates going up and oil prices coming down. The net effect
has been to make their products become less affordable in countries
like Russia that is also suffering from lower oil revenues. If you are a
company that exports a large portion of its products to Russia, then it
shows your vulnerability to a single country or region.
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PART II . MARKETING STRATEGY

Cultural Tsunami

This may be the hardest sector for a weak signal to be detected as

cultures often change at a glacier-like pace. Culture moreover is hard
to define. It does however have some key characteristics such as
indicating how a society or a region collectively thinks. That is where
weak signals need to be assessed –is society changing in some of their
long-held beliefs? One such cultural weak signal in Asia may be how
society views women.

Many Asian countries have Confucian origins that preach a

hierarchical order among people such as between genders. While
women have not broken through the “glass ceiling” in this region as
compared to the west, at least in terms of spending power, they have
become a force to be reckoned with. A key marketing segment and
case that I will focus on in this book will be the “Gold Misses” and is
included in the Appendix.
 m er
Co nsu

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l i z a Visi
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Mastering
Gl oba
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Strate

Product
Culture

NOON NOPI
Pricing
Brands Dae Ryun Chang
Dae Ryun Chang is Professor of Marketing at Yonsei School of

Mastering Segme Positioning Business. He received his Doctorate from Harvard University,
ntatio
NOON NOPI
and his MBA from Columbia University. He has held visiting
Ch n faculty appointments at Helsinki School of Economics, Hong
an Loca
Kong University of Science & Technology, Australian National
ne
ls lizat University, Singapore Management University and Nanyang

ion Technology University. He is a contributing blogger at Harvard

Business Review Online where he opines about marketing,
branding, entertainment, sports, and Asian business-related
issues. He has launched a MOOC course, International

Mastering

DAE RYUN CHANG

Marketing in Asia on Coursera.org.

NOON NOPI
The Art & Science of Marketing in Asia

DAE RYUN CHANG

www.yonsei.ac.kr/press YONSEI UNIVERSITY PRESS