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What is a marketing ladder and how does it work? Why shouldn’t you pretend your product is number one if it isn’t?
Ladder marketing says that the key is to know your position in the marketing hierarchy and acknowledge it in your advertising. If you market as though you are number one, consumers will reject it.
Continue on to learn about ladder marketing and the Law of Duality.
Leverage Your Market Position
Every company wants to be a market leader, but few companies can be. Be aware of your position on the market ladder, and use that to inform your message to consumers. The Law of the Ladder and the Law of Duality explain how to leverage your position for more effective marketing.
Ladder Marketing
While it’s ideal to be first in consumers’ minds, you can still have an effective marketing strategy if you’re not the market leader—the key is to know your position in the market and acknowledge it in your advertising. Every product category has a hierarchy of brands. Think of this as a ladder: The market leader is the first in the public’s mind and has the highest market share, and so it’s on the top rung. The product that’s second in consumers’ minds and has the second-highest market share is on the next rung, and each descending rung is occupied by the next-best-selling brand.
Each rung on the ladder generally has twice as many sales as the rung below and half as many as the rung above. The number of rungs on your market ladder depends upon whether you offer a high-interest or low-interest product or service because consumers want more options for the products they care most about. High-interest products:
- Are used frequently (such as cereal and toothpaste)
- Create a sense of personal pride (such as watches and cars)
- Max out at about seven ladder rungs, because people can generally only remember seven brands in any particular category.
Meanwhile, low-interest products have fewer rungs and include items that:
- Are used sporadically (such as luggage and lawn mowers)
- Are bought infrequently and are linked with a negative experience (such as car batteries and caskets)
If you’re on the second rung, be honest about it in your marketing. Consumers know where you are on the ladder, and they’ll only accept marketing messages that align with that truth—otherwise, they’ll disregard your entire message. For example, in the rental car market, Hertz was on the top rung, Avis was on the second, and National on the third. When Avis first launched a campaign that called itself the “Finest in rent-a-cars,” it failed because the message didn’t resonate as true. By contrast, the company went from losing money to making money when it changed its marketing campaign to say, “Avis is only No. 2 in rent-a-cars. So why go with us? We try harder.” The company acknowledged its position and gave consumers a reason to choose them anyway.
The Law of Duality
When a product category is new, the ladder may have many rungs as new companies join the fray and compete for customers. For example, in 1969, Coca-Cola had 60 percent of the cola market share, Pepsi-Cola had 25 percent, and Royal Crown cola claimed 6 percent. At this point, companies on the third and fourth rungs are fairly well-positioned and can make impressive profits (even with just 6 percent of the market share).
However, eventually, every market whittles down to just two top brands, while all their competitors fight for the crumbs. In the process, the market leader loses market share, the second-place brand gains market share, and remaining competitors lose ground. For example, by 1991, Coca-Cola had 45 percent of the market share, Pepsi-Cola had 40 percent, and Royal Crown had just 3 percent. Depending on how quickly the market evolves, it may take years or decades to turn into a two-company race. During that period, companies that hold the third rung in their category are in a tough position: They either have to reach the second-place spot, or they risk getting edged out entirely.
The Law of the Opposite
If you’re looking at the marketing ladder and want to claim your spot on the second rung, you need to find ways to turn the market leader’s strengths into weaknesses. Don’t try to out-do your competitor on what it does best—instead, embody the opposite. This often takes the form of an old, well-established market leader versus a newer startup. Consumers naturally tend to either be attracted to the most popular brand or repelled by it, so stake a claim on the market share that’s looking for something different. By doing this, you make your product the only alternative to the market leader, minimizing your competition with the companies on lower rungs and securing your position in the market when it inevitably narrows to just two primary brands.
In order to establish your brand as the opposite of the market leader, point out how your product is different and why that makes it better. In other words, your marketing strategy has to hinge on painting the market leader in a negative light. For example, in the fine china market, second-rung Royal Doulton ran an ad pointing out that the market leader, Lenox, actually manufactured its china in New Jersey, while Royal Doulton produced real china from England. Your attack on the market leader must be consistent, otherwise you risk losing your second-place spot to a company on a lower ladder rung.
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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
