The Law of Division - Over Time A Category Will Divide Into Two or More Categories

Like an amoeba dividing in a petri dish, the marketplace can be viewed as an ever-expanding sea of categories. During my career as a management consultant with Deloitte, I experienced this Law of Division many times.

I joined Deloitte when the consulting profession, within the Big 4 (Big 8 at that time) Accounting and Consulting firms, was in its formulative stage. At that time, the consulting business was a single entity.

Over time, we divided into Advisory Services, Implementation Services, and Quality Review Services. These various service categories further divided into Strategy, Operations, Organization, and Technology specialties. These categories divided again according to industry specialties such as Telecommunications, Technology, Financial Services, Healthcare, Consumer Product Goods, and so forth.

Another division occurred according to geography in terms of Emerging Markets and the Industrialized Regions; and then there was another layer of specialty in terms of the Americas, EMEA (Europe, Middle East and Americas), as well as APAC (Asia Pacific Countries) regions.

While at times these layers of granularity and focus were done for internal purposes, a majority of the time it was the marketplace valuing expertise according to these categories. Each step of the way, we would face new competitors and had to learn how to adapt to these new entrants to the consulting business.

Like the consulting business, the automobile industry started off as a single category. Three brands (Chevrolet, Ford, and Plymouth) dominated the market. The category then divided and today we have luxury cars, moderately priced cars, and inexpensive cars. We also have full-size cars, intermediates, and compacts. And we have sports cars, four-wheel-drive vehicles, RVs, SUVs, and minivans; another example of the ever-expanding sea of categories.

In the television industry, ABC, CBS, and NBC once accounted for 90 percent of the viewing audience. Now we have network, independent, cable, pay, and public television with both instore, interactive, and even IPTV networks (niche oriented programming streaming across the internet) … ever watch CNBC online? This programming is available on both my cable TV network and on my PC or laptop (at no charge).

Beer started the same way. Today we have imported and domestic beer; premium and popular-priced beers; light, draft, and dry beers; we even have non-alcoholic beer.

Each segment is a separate and distinct entity. Each segment has its own reason for existence. And each segment has its own leader which is rarely the same as the leader of the original category.

In the computing world, IBM is the leader in mainframes; HP in mid-range computers; Dell and Apple in laptops; and Sun, now a part of Oracle has been the leader in workstations.

Instead of understanding this concept of division, many corporate leaders hold the naïve belief that categories are combining. Synergy and its kissing cousin, the corporate alliance, are the buzzwords in the boardrooms around the planet.

We saw AOL and Time Warner combine to take advantage of the convergence of television, music, publishing, and computing. How did that work out?

Benefits from synergy, and mega mergers, are seldom realized. Categories are dividing, not combining, into a sea of niche categories (and this is well described by Chris Anderson in his book The Long Tail: Why the Future of Business is to Sell Less of More).

The riches are in the niches.

The way for the leader to maintain its dominance is to address each emerging category with a different brand name as General Motors did with Chevrolet, Pontiac, Oldsmobile, and Cadillac.

What keeps leaders from launching a different brand to cover a new category is the fear of what will happen to their existing brands. General Motors was slow to react to the super-premium category that Mercedes-Benz and BMW established. One reason was that a new brand on top of Cadillac would enrage GM’s Cadillac dealers.

Contrast this with an operating principle of Andy Grove, former CEO and Chairman of the Board of Intel, the world’s largest semiconductor chip maker and one of the world’s most admired companies, where “only the paranoid survive.” Essentially this principle drove Intel to cycles of survival and leadership based on an ability to cannibalize themselves and make the leap to cross the chasm into the next product area. They were continually dividing successful product areas into new categories generating wildly successful and profitable new markets and avoided joining others at the bottom of the high tech abyss.

As an Internet Marketing professional, you need to understand the Law of Division. As a product category divides, there are leadership opportunities to rush in and become No 1 in one or more of the new categories.

Timing is also important but you have to have the courage or the money to hang in there long enough for the category to develop.

It is better to be early than late. You can not get into the prospect’s mind first (as described in Law No 1 of Leadership) for a category unless you are prepared to spend some time waiting for things to develop.

Many Internet Marketing entrepreneurs are using techniques and tools like mind-mapping, keyword research, Attraction Marketing Formula, Magnetic Sponsoring, and MindMeister to conduct the market research and plan a successful marketing campaign. They then use the power of MyStory marketing, brand You Inc, and hypnotic writing skills, in their marketing campaigns, to deal realistically with the position of their brand and the strategy they want to pursue in the world that includes the Law of Division.

The goals is to not emphasize why their offering is better, feature and function-wise, over a competitor’s but to develop a message that is recognized, accepted, and agreed to so that it will seduce and persuade a customer, in the new category, that what is offered to the target market is real and will work for them.

Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Division and if you are not the leader then you must monitor the marketplace and as a category divides, be prepared to rush in to be No 1 in one or more of the new categories.

You can find out more about Internet Marketing and home-based businesses by reading updates that will be posted at my blog over the next few weeks.

Finally, a great book to read is "The 22 Immutable Laws of Marketing" by Ries & Trout. It is the source of some of the material provided in this article.

Internet Marketing for the Digital Entrepreneur, explains Mike Farrell aspenIbiz

As a result of the job loss situation and the poor economy, there are numerous Digital Entrepreneurs considering an Internet Based business where they leverage a suite of best practices, Internet software tools, education, and support in a community of gifting colleagues thereby placing themselves at the center of the New Economy 2.0 & the Ascendancy of the Entrepreneur.

Innovation on the internet is proceeding at a super-fast pace. Phone books are going away … print advertising is disappearing … at any time over 1.5B people are searching for something on the Internet.

When you buy something on the Internet, you want to buy from someone that you believe is an authority and someone that you can trust. As a result, there is certainly innovation occurring on the Internet with the Web 2.0 technologies that include social networking, blogs, video-sharing channels, and micro-blogging … these are being used by agents and representatives with home-based businesses to become a trusted authority.

A few years ago during my career with Deloitte, a Big 4 Accounting and Consulting Firm, I worked on a consulting project with Microsoft in Redmond and lead teams undertaking marketing and advertising activities as part of a very large product launch. Our team was fond of a saying, “a fool with a tool is still a fool.”

In order to be effective and not be foolish by solely emphasizing technology during the product launch, it was important for our team to understand how the rules of marketing and PR (public relations) in the offline world had evolved and merged into a set of new rules for Marketing and PR in the New Economy 2.0 of the Internet.

In the offline world, marketing is a one-way interruption with yesterday’s message. Here is a listing of several of the old rules of marketing and advertising:

- marketing simply meant advertising (and branding);

- advertising needed to appeal to the masses;

- advertising relied on interrupting people to get them to pay attention to a message;

- advertising was one-way – company to consumer;

- advertising was exclusively about selling products;

- advertising was based on campaigns that had a limited life;

- creativity was deemed the most crucial component of advertising;

- it was more important for the ad agency to win advertising awards than for a client to win new customers; and

- advertising and PR were separate disciplines run by different people with separate goals, strategies, and measurement criteria.

In the offline world, PR is a money pit of wasted resources dealing with the journalistic black hole. The following old rules of PR are becoming obsolete:

- the only way to get ink and airtime was through the media;

- companies communicated to journalists via press releases;

- nobody saw the actual release except a small number of reporters and editors;

- companies had to have significant news before they were allowed to write a press release;

- jargon was okay because the journalists all understood it;

- you were not supposed to send a press release unless it included quotes from third parties, such as customers, analysts, and experts;

- the only way buyers would find out about the press release’s content was if the media wrote a story regarding it;

- the only way to measure the effectiveness of press releases was through “clip books” which noted each time the media decided to pick up a company’s release; and

- PR and marketing were separate disciplines run by different people with separate goals, strategies, and measurement techniques.

Marketing in the online world is not about generic banner ads built to trick people with neon colors or wacky movement. It is about understanding the keywords and phrases that buyers in your target market are using, and designing and activating a series of micro-campaigns to drive buyers to pages that are full of the content they seek.

In order to do this effectively, it is best to understand the new rules of Marketing and PR in the online world that are listed below:

- Marketing is more than just advertising;

- PR is for more than just a mainstream media audience;

- Your are what you publish;

- People want authenticity not spin;

- People want participation not propaganda;

- Instead of causing one-way interruption, marketing is all about delivering content at just the precise moment your audience needs it;

- Marketers must shift their thinking from mainstream marketing to the masses to a strategy of reaching vast numbers of underserved audiences via the Web;

- PR is not about your boss seeing your business on TV - it is about your buyers seeing your company on the internet;

- Marketing is about your organization winning business - not about your ad agency winning awards;

- The Internet makes public relations public again, after years of almost exclusive focus on media;

- Companies must drive people into the purchasing process with great online content;

- Blogs, online video, ebooks, news releases, and other forms of online content let organizations communicate directly with buyers in a form they appreciate; and

- In the internet, the lines between marketing and PR have blurred.

In the offline world, marketing and PR are separate departments with different people and different skill sets. In the online world, marketing, advertising, and PR are converging hence there is just one set of Internet Marketing rules for the Digital Entrepreneur to follow.

People do not like to be sold to, however people want to shop and buy.

Great content helps potential buyers see you, relate to your brand, and understand and value what you have to offer (your products).

By utilizing hypnotic writing, your content will drive a (lead and/or) customer to take the action you want!

Internet Marketing for the Digital Entrepreneur is not a battle of products … it is about using multiple online tools all directed toward increasing the visibility of brand You Inc, generating viral and word-of-mouth online awareness, and utilizing key tactics to ensure success in the knowledge economy.

The Internet provides opportunities you never had before. Internet Marketing is all about selling anything, to anyone, at any time, anywhere in the world!

Finally, a great book to read is "The NEW RULES of MARKETING & PR" by David Meerman Scott. It is the source of a majority of the old rules and new rules listed in this article. This book also contains an action plan that can be followed to harness the power of the NEW RULES!

In closing, be sure to meet me at my website, WhoIsMikeFarrell, learn some tips about being No 1 on Google at apenIbiz My Go-To-Market Partners, my affiliate website, and learn how to be savvy with your money like the insiders at aspenIbiz The Conspiracy For Your Money blog.