The Law of Leadership It's better to be first than it is to be better.
Page 2#marketing, #marketingLaws, #marketingLawLeadership
Written by Al Ries & Jack Trout
Total notes 120
The Law of Leadership It's better to be first than it is to be better.
The basic issue in marketing is creating a category you can be first in. It's the law of leadership: It's better to be first than it is to be better. It's much easier to get into the mind first than to try to convince someone you have a better product than the one that did get there first.
Not every first is going to become successful, however. Timing is an issue-your first could be too late. … Some firsts are just bad ideas that will never go anywhere.
If you're introducing the first brand in a new category, you should always try to select a name that can work generically. Not only does the first brand usually become the leader, but also the sales order of follow-up brands often matches the order of their introductions.
Marketing is a battle of perceptions, not products.
The Law of the Category If you can't be first in a category, set up a new category you can be first in.
When you launch a new product, the first question to ask yourself is not "How is this new product better than the competition?" but "First what?" In other words, what category is this new product first in? E.g.: Charles Schwab didn't open a better brokerage firm. He opened the first discount broker. Lear's was not the first woman's magazine. It was the first magazine for the mature woman. (The magazine for the woman who wasn't born yesterday.) This is counter to classic marketing thinking, which is brand oriented: How do I get people to prefer my brand? Forget the brand. Think categories. Prospects are on the defensive when it comes to brands. Everyone talks about why their brand is better. But prospects have an open mind when it comes to categories. Everyone is interested in what's new. Few people are interested in what's better.
The Law of the Mind It's better to be first in the mind than to be first in the marketplace
Is something wrong with the law of leadership in chapter 1? No, but the law of the mind modifies it. It's better to be first in the prospect's mind than first in the marketplace. … Being first in the mind is everything in marketing. Being first in the marketplace is important only to the extent that it allows you to get in the mind first. For example, IBM wasn't first in the marketplace with the mainframe computer. Remington Rand was first, with UNIVAC. But thanks to a massive marketing effort, IBM got into the mind first and won the computer battle early. The law of the mind follows from the law of perception. If marketing is a battle of perception, not product, then the mind takes precedence over the marketplace.
Once a mind is made up, it rarely, if ever, changes. The single most wasteful thing you can do in marketing is try to change a mind.
If you want to make a big impression on another person, you cannot worm your way into their mind and then slowly build up a favorable opinion over a period of time. The mind doesn't work that way. You have to blast your way into the mind. The reason you blast instead of worm is that people don't like to change their minds.
Apple's problem in getting into its prospects' minds was helped by its simple, easy-to-remember name. On the other hand, Apple's competitors had complicated names that were difficult to remember.
The Law of Perception Marketing is not a battle of products, it's a battle of perceptions.
Marketing people are preoccupied with doing research and "getting the facts." They analyze the situation to make sure that truth is on their side. Then they sail confidently into the marketing arena, secure in the knowledge that they have the best product and that ultimately the best product will win. It's an illusion. There is no objective reality. There are no facts. There are no best products. All that exists in the world of marketing are perceptions in the minds of the customer or prospect. The perception is the reality. Everything else is an illusion. All truth is relative. Relative to your mind or the mind of another human being. When you say, "I'm right and the next person is wrong," all you're really saying is that you're a better perceiver than someone else. Most people think they are better perceivers than others. They have a sense of personal infallibility. Their perceptions are always more accurate than those of their neighbors or friends. Truth and perception become fused in the mind, leaving no difference between the two.
If the universe exists, it exists inside your own mind and the minds of others. That's the reality that marketing programs must deal with. There may well be oceans, rivers, cities, towns, trees, and houses out there, but there just isn't any way for us to know these things except through our own perceptions. Marketing is a manipulation of those perceptions.
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the universe exists the way we know it because of the perceptions we evolved to survive.
…the three largest-selling Japanese imported cars in America are Honda, Toyota, and Nissan. Most marketing people think the battle between the three brands is based on quality, styling, horsepower, and price. Not true. It's what people think about a Honda, a Toyota, or a Nissan that determines which brand will win. Marketing is a battle of perceptions.
…customers frequently make buying decisions based on second-hand perceptions. Instead of using their own perceptions, they base their buying decisions on someone else's perception of reality. This is the "everybody knows" principle. Everybody knows that the Japanese make higher quality cars than the Americans do. So people make buying decisions based on the fact that everybody knows the Japanese make higher-quality cars. When you ask shoppers whether they have had any personal experience with a product, most often they say they haven't. And, more often than not, their own experience is often twisted to conform to their perceptions. If you have had a bad experience with a Japanese car, you've just been unlucky, because everybody knows the Japanese make high-quality cars. Conversely, if you have had a good experience with an American car, you've just been lucky, because everybody knows that American cars are poorly made.
Marketing is not a battle of products. It's a battle of perceptions.
The Law of Focus The most powerful concept in marketing is owning a word in the prospect's mind.
A company can become incredibly successful if it can find a way to own a word in the mind of the prospect. Not a complicated word. Not an invented one. The simple words are best, words taken right out of the dictionary. This is the law of focus. You "burn" your way into the mind by narrowing the focus to a single word or concept. It's the ultimate marketing sacrifice.
If you're not a leader, then your word has to have a word has to be "available" in your category. No one else can have a lock on it. You don't have to be a linguistic genius to find a winner. Prego went against leader Ragu in the spaghetti sauce market and captured a 27 percent share with an idea borrowed from Heinz. Prego's word is thicker. The most effective words are simple and benefit oriented. No matter how complicated the product, no matter how complicated the needs of the market, it's always better to focus on one word or benefit rather than two or three or four. Also, there's the halo effect. If you strongly establish one benefit, the prospect is likely to give you a lot of other benefits, too.
You can't take somebody else's word.
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In a broader sense, you should not jump in a competitive market. If you are trying to take somebody elses word, it means that you are attacking entrenched competition. (Blue ocean strategy)
The essence of marketing is narrowing the focus. You become stronger when you reduce the scope of your operations. You can't stand for something if you chase after everything.
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Words that are too broad won't work (see "quality" ex). No company aims to not ship quality products. You can't credibly stand for something that everyone agrees on, or claim to be doing.
The Law of Exclusivity Two companies cannot own the same word in the prospect's mind.
When a competitor owns a word or position in the not prospect's mind, it is futile to attempt to own the same word.
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Example of Volvo and "safety: Seems a very broad word.No other company would say to build unsafe cars. I wonder if with good marketing you can win with broad word. Perhaps "safety" can be precisely quantifiable while “quality” can’t be.
You can't change people's minds once they are made up. In fact, what you often do is reinforce your competitor's position by making its concept more important.
The Law of the Ladder The strategy to use depends on which rung you occupy on the ladder.
All products are not created equal. There's a hierarchy in the mind that prospects use in making decisions. For each category, there is a product ladder in the mind. On each rung is a brand name.
In general, a mind accepts only new data that is consistent with its product ladder in that category. Everything else is ignored.
What about your product's ladder in the prospect's mind? How many rungs are there on your ladder? It depends on whether your product is a high-interest or a low-interest product. Products you use every day (cigarettes, cola, beer, toothpaste, cereal) tend to be highinterest products with many rungs on their ladders. Products that are purchased infrequently (furniture, lawn mowers, luggage) usually have few rungs on their ladders. Products that involve a great deal of personal pride (automobiles, watches, cameras) are also high-interest products with many rungs on their ladders even though they are purchased infrequently. Products that are purchased infrequently and involve an unpleasant experience usually have very few rungs on their ladders. Automobile batteries, tires, and life insurance are three examples. The ultimate product that involves the least amount of pleasure and is purchased once in a lifetime has no rungs on its ladder. Ever hear of Batesville caskets? Probably not, although the brand has almost 50 percent of the market. There's a relationship between market share and your position on the ladder in the prospect's mind. You tend to have twice the market share of the brand below you and half the market share of the brand above you.
What's the maximum number of rungs on a ladder? There seems to be a rule of seven in the prospect's mind. … According to Harvard psychologist Dr. George A. Miller, the average human mind cannot deal with more than seven units at a time.
…it's sometimes better to be No. 3 on a big ladder than No. 1 on a small ladder.
The Law of Duality In the long run, every market becomes a two-horse race.
Early on, a new category is a ladder of many rungs. Gradually, the ladder becomes a two-rung affair.
The law of duality suggests that these market shares are unstable. Furthermore, the law predicts that the leader will lose market share and No. 2 will gain.
In a maturing industry, third place is a difficult position to be in.
In the long run, marketing is a two-game race. Time frames, however, can vary
In 32 of its 44 product categories in the United States, P&G commands the No. 1 or No. 2 brands. Early on, in a developing market, the No. 3 or No.4 positions look attractive. Sales are increasing. New, relatively unsophisticated customers are coming into the market. These customers don't always know which brands are the leaders, so they pick ones that look interesting or attractive. Quite often, these turn out to be the No. 3 or No. 4 brands. As time goes on, however, these customers get educated. They want the leading brand, based on the naive assumption that the leading brand must be better. We repeat: The customer believes that marketing is a battle of products. It's this kind of thinking that keeps the two brands on top: "They must be the best, they're the leaders.”
The Law of the Opposite If you're shooting for second place, your strategy is determined by the leader.
In strength there is weakness. Wherever the leader is strong, there is an opportunity for a would-be No.2 to turn the tables. Much like a wrestler uses his opponent's strength against him, a company should leverage the leader's strength into a weakness. If you want to establish a firm foothold on the second rung of the ladder, study the firm above you. Where is it strong? And how do you turn that strength into a weakness? You must discover the essence of the leader and then present the prospect with the opposite. (In other words, don't try to be better, try to be different.) It's often the upstart versus old reliable.
When you look at customers in a given product category, there seem to be two kinds of people. There are those who want to buy from the leader and there are those who don't want to buy from the leader. A potential No. 2 has to appeal to the latter group. In other words, by positioning yourself against the leader, you take business away from all the other alternatives to No. 1.
Too many potential No. 2 brands try to emulate the leader. This usually is an error. You must present yourself as the alternative.
Marketing is often a battle for legitimacy. The first brand that captures the concept is often able to portray its competitors as illegitimate pretenders.
A good No. 2 can't afford to be timid. When you give up focusing on No. 1, you make yourself vulnerable not only to the leader but to the rest of the pack.
The Law of Division Over time, a category will divide and become two or more categories.
Notes -
The innovators dilemma
The marketing arena can be viewed as an ever-expanding sea of categories. A category starts off as a single entity. Computers, for example. But over time, the category breaks up into other segments.
Companies make a mistake when they try to take a well-known brand name in one category and use the same brand name in another category.
What keeps leaders from launching a different brand to cover a new category is the fear of what will happen to their existing brands.
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Fear of self-cannibalization: if the main brand has to die, let it die. Survival comes first.
Timing is also important. You can be too early to exploit a new category. … It's better to be early than late. You can't get into the prospect's mind first unless you're prepared to spend some time waiting for things to develop.
The Law of Perspective Marketing effects take place over an extended period of time
Any sort of couponing, discounts, or sales tends to educate consumers to buy only when they can get a deal.
The Law of Line Extension There's an irresistible pressure to extend the equity of the brand.
One day a company is tightly focused on a single product that is highly profitable. The next day the same company is spread thin over many products and is losing money.
When a company becomes incredibly successful, it invariably plants the seeds for its future problems.
When you try to be all things to all people, you inevitably wind up in trouble. "I'd rather be strong somewhere," said one manager, "than weak everywhere."
There are as many ways to line extend as there are galaxies in the universe. And new ways get invented every day. In the long run and in the presence of serious competition, line extensions almost never work.
Why does top management believe that line extension works, in spite of the overwhelming evidence to the contrary? One reason is that while line extension is a loser in the long term, it can be a winner in the short term (chapter 11: The Law of Perspective). Management is also blinded by an intense loyalty to the company or brand. Why else would PepsiCo have introduced Crystal Pepsi in spite of the failures of Pepsi Light and Pepsi AM? More is less. The more products, the more markets, the more alliances a company makes, the less money it makes. "Fullspeed ahead in all directions" seems to be the call from the corporate bridge. When will companies learn that line extension ultimately leads to oblivion? Less is more. If you want to be successful today, you have to narrow the focus in order to build a position in the prospect's mind. What does IBM stand for? It used to stand for "mainframe computers." Today it stands for everything, which means it stands for nothing.
For many companies, line extension is the easy way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to succeed, it ought to be first in a new category (chapter 1: The Law of Leadership). Or the new brand ought to be positioned as an alternative to the leader (chapter 9: The Law of the Opposite). Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable line extension approach. The antidote for line extension is corporate courage, a commodity in short supply.
The Law of Sacrifice You have to give up something in order to get something.
There are three things to sacrifice: product line, target market, and constant change. First sacrifice: the product line. Where is it written that the more you have to sell, the more you sell? The full line is a luxury for a loser. If you want to be successful, you have to reduce your product line, not expand it. Second sacrifice: target market. … There seems to be an almost religious belief that the wider net catches more customers, in spite of many examples to the contrary. … The target is not the market. That is, the apparent target of your marketing is not the same as the people who will actually buy your product. Even though Pepsi-Cola's target was the teenager, the market was everybody. The 50-year-old guy who wants to think he's 29 will drink the Pepsi. The target of Marlboro advertising is the cowboy, but the market is everybody. Third sacrifice: constant change. Where is it written that you have to change your strategy every year at budget review time? If you try to follow the twists and turns of the market, you are bound to wind up off the road. The best way to maintain a consistent position is not to change it in the first place.
If you want to be successful today, you should give something up.
Marketing is a game of mental warfare. It's a battle of perceptions, not products or services.
Eveready was the long-time leader in batteries. But new technology arrived-as it does in most indus tries. The first technology to change the battery business was the heavy-duty battery. What would you call your heavy-duty battery if you had the No. 1 name in batteries? You'd probably call it the Eveready heavyduty battery, which is what Eveready did. Then the alkaline battery arrived. Again, Eveready called its alkaline battery the Eveready alkaline battery. It seemed to make sense. Then P.R. Mallory introduced a line of alkaline batteries only. Furthermore, the company gave the line a better name: Duracell. The power of the sacrifice for Duracell was in being able to put the "long-lasting battery" idea in the mind of the prospect. Duracell lasts twice as long as Eveready, said the advertising. Eveready was forced to change the name of its alkaline battery to "the Energizer." But it was too late. Duracell had already become the leader in the battery market.
Notes -
battery war example
The world of business is populated by big, highly diversified generalists and small, narrowly focused specialists. If line extension and diversification were effective marketing strategies, you'd expect to see the generalists riding high. But they're not. Most of them are in trouble. The generalist is weak.
There seems to be an almost religious belief that the wider net catches more customers, in spite of many examples to the contrary.
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Greed and over optimization are amongst the causes.
The Law of Attributes For every attribute, there is an opposite, effective attribute.
Too often a company attempts to emulate the leader. "They must know what works," goes the rationale, "so let's do something similar." Not good thinking. It's much better to search for an opposite attribute that will allow you to play off against the leader. The key word here is opposite-similar won't do.
Some attributes are more important to customers than oth ers. You must try and own the most important attribute. … But the law of exclusivity points to the simple truth that once an attribute is successfully taken by your competition, it's gone. You must move on to a lesser attribute and live with a smaller share of the category. Your job is to seize a different attribute, dramatize the value of your attribute, and thus increase your share.
You can't predict the size of a new attribute's share, so never laugh.
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Disruption
The Law of Candor When you admit a negative, the prospect will give you a positive
…one of the most effective ways to get into a prospect's mind is to first admit a negative and then twist it into a positive.
…candor is very disarming. Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best. Especially in an advertisement. You have to prove a positive statement to the prospect's satisfaction. No proof is needed for a negative statement.
Marketing is often a search for the obvious. Since you can't change a mind once it's made up, your marketing efforts have to be devoted to using ideas and concepts already installed in the brain.
When a company starts a message by admitting a problem, people tend to, almost instinctively, open their minds.
Some years ago, Scope entered the mouthwash market with a "good-tasting" mouthwash, thus exploiting Listerine's truly terrible taste. What should Listerine do? It certainly couldn't tell people that Listerine's taste "wasn't all that bad." That would raise a red flag that would reinforce a negative perception. Things could get worse. Instead, Listerine brilliantly invoked the law of candor: "The taste you hate twice a day." Not only did the company admit the product tasted bad, it admitted that people actually hated it. (Now that's honesty.) This set up the selling idea that Listerine "kills a lot of germs.
Notes -
Good example for the law of candor.
One final note: The law of candor must be used carefully and with great skill. First, your "negative" must be widely perceived as a negative. It has to trigger an instant agreement with your prospect's mind. If the negative doesn't register quickly, your prospect will be confused and will wonder, "What's this all about?" Next, you have to shift quickly to the positive. The purpose of candor isn't to apologize. The purpose of candor is to set up a benefit that will convince your prospect.
The Law of Singularity In each situation, only one move will produce substantial results
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Pareto distribution
Whether you try hard or try easy, the differences are marginal. Furthermore, the bigger the company, the more the law of averages wipes out any real advantage of a trying harder approach.
History teaches that the only thing that works in marketing is the single, bold stroke. Furthermore, in any given situation there is only one move that will produce substantial results.
Most often there is only one place where a competitor is vulnerable. And that place should be the focus of the entire invading force.
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Book Warfighting - center of gravity, surfaces, gaps, and striking where it hurts.
While it's theoretically possible to stumble across the right idea if you haphazardly generate all the ideas you can possibly think of, it's not an efficient way to work.
Because of the high cost of mistakes, management can't afford to delegate important marketing decisions. That's what happened at General Motors. When the financial people took over, the marketing programs collapsed. Their interest was in the numbers, not the brands. The irony is that the numbers went south, along with the brands. It's hard to find that single move if you're hanging around headquarters and not involved in the process.
The Law of Unpredictability Unless you write your competitors' plans, you can't predict the future.
Most of corporate America's problems are not related to short-term marketing thinking. The problem is short-term financial thinking.
Good short-term planning is coming up with that angle or word that differentiates your product or company. Then you set up a coherent long-term marketing direction that builds a program to maximize that idea or angle. It's not a long-term plan, it's a long-term direction.
How can you best cope with you can get a handle on trends, which is a way to unpredictability? While you can't predict the future, take advantage of change.
The danger in working with trends is extrapolation. Many companies jump to conclusions about how far a trend will go. … Equally as bad as extrapolating a trend is the common practice of assuming the future will be a replay of the present.
Remember Peter's Law: The unexpected always happens. While tracking trends can be a useful tool in dealing with the unpredictable future, market research can be more of a problem than a help. Research does best at measuring the past. New ideas and concepts are almost impossible to measure. No one has a frame of reference. People don't know what they will do until they face an actual decision.
One way to cope with an unpredictable world is to build an enormous amount of flexibility into your organization. As change comes sweeping through your category, you have to be willing to change and change quickly if you are to survive in the long term.
It's probably true that a personal mainframe product would undermine IBM's two other main sources of revenue, but a company must be flexible enough to attack itself with a new idea. Change isn't easy, but it's the only way to cope with an unpredictable future.
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Be ready to implement disruptive technologies even at the cost of cannibalizing your main source of revenue. See The innovators dilemma.
One final note that's worth mentioning: There's a ing a chance" on the future. … No one can predict the future with any degree of certainty. Nor should marketing plans try to.
The Law of Success Success often leads to arrogance, and arrogance to failure.
Ego is the enemy of successful marketing. Objectivity is what's needed. When people become successful, they tend to become less objective. They often substitute their own judgment for what the market wants.
When a brand is successful, the company assumes the name is the primary reason for the brand's success. So they promptly look for other products to plaster the name on. Actually it's the opposite. The name didn't make the brand famous (although a bad name might keep the brand from becoming famous). The brand got famous because you made the right marketing moves.
The more you identify with your brand or corporate name, the more likely you are to fall into the line extension trap. "It can't be the name," you might be thinking when things go wrong. "We have a great name." Pride goeth before destruction and a haughty spirit before a fall. Proverbs 16:18.
Actually, ego is helpful. It can be an effective driving force in building a business. What hurts is injecting your ego in the marketing process.
Brilliant marketers have the ability to think like a prospect thinks They put themselves in the shoes of their customers. They don't impose their own view of the world on the situation. (Keep in mind that the world is all perception anyway, and the only thing that counts in marketing is the customer's perception.)
The bigger the company, the more likely it is that the chief executive has lost touch with the front lines. This might be the single most important factor limiting the growth of a corporation. All other factors favor size.
Notes -
Stay in touch with the frontline. See Warfighting.
Like kings, chief executives rarely get honest opinions from their ministers. There's too much intrigue going on at the court.
…chief executives delegate the marketing function. That's a mistake. Marketing is too important to be turned over to an underling. If you delegate anything, you should delegate the chairmanship of the next fund-raising drive. (The vice president of the United States, not the president, attends the state funerals.) The next thing to cut back on are the meetings. Instead of talking things over, walk out and see for yourself. As Gorbachev told Reagan, "It is better to see once than to hear a hundred times."
The Law of Failure Failure is to be expected and accepted.
The Japanese seem to be able to admit a mistake early and then make the necessary changes. Their consensus management style tends to eliminate the ego. Since a large number of people have a small piece of a big decision, there is no stigma that can be considered career damaging.
Marketing decisions are often made first with the decision maker's career in mind and second with the impact on the competition or the enemy in mind. There is a built-in conflict between the personal and the corporate agenda. This leads to a failure to take risks. (It's hard to be first in a new category without sticking your neck out.)
When the senior executive has a high salary and a short time to retirement, a bold move is highly unlikely. Even junior executives often make "safe" decisions so as to not disrupt their progress up the corporate ladder.
An idea gets rejected not because it isn't fundamentally sound but because no one in top management will personally benefit from its success.
The Law of Нуре The situation is often the opposite of the way it appears in the press.
When things are going well, a company doesn't need the hype. When you need the hype, it usually means you're in trouble.
History is filled with marketing failures that were successful in the press.
Forget the front page. If you're looking for clues to the future, look in the back of the paper for those innocuous little stories.
Capturing the imagination of the public is not the same as revolutionizing a market.
For the most part, hype is hype. Real revolutions don't arrive at high noon with marching bands and coverage on the 6:00 P.M. news. Real revolutions arrive unannounced in the middle of the night and kind of sneak up on you.
The Law of Acceleration Successful programs are not built on fads, they're built on trends.
A fad is a wave in the ocean, and a trend is the tide. A fad gets a lot of hype, and a trend gets very little. Like a wave, a fad is very visible, but it goes up and down in a big hurry. Like the tide, a trend is almost invisible, but it's very powerful over the long term. A fad is a short-term phenomenon that might be profitable, but a fad doesn't last long enough to do a company much good. Furthermore, a company often tends to gear up as if a fad were a trend. As a result, the company is often stuck with a lot of staff, expensive manufacturing facilities, and distribution networks. (A fashion, on the other hand, is a fad that repeats itself. Examples: short skirts for women and doublebreasted suits for men. Halley's Comet is a fashion because it comes back every 75 years or so.) When the fad disappears, a company often goes into a deep financial shock.
Here's the paradox. If you were faced with a rapidly rising business, with all the characteristics of a fad, the best thing you could do would be to dampen the fad. By dampening the fad, you stretch the fad out and it becomes more like a trend. You see this in the toy business. Some owners of hot toys want to put their hot toy name on everything. The result is that it becomes an enormous fad that is bound to collapse. When everybody has a Ninja turtle, nobody wants one anymore. The Ninja turtle is a good example of a fad that collapses in a hurry because the owner of the concept got greedy. The owner fans the fad rather than dampening it. On the other hand, the Barbie doll is a trend. When Barbie was invented years ago, the doll was never heavily merchandised into other areas.
One way to maintain a long-term demand for your product is to never totally satisfy the demand.
The Law of Resources Without adequate funding an idea won't get off the ground.
Even the best idea in the world won't go very far without the money to get it off the ground.
Ideas without money are worthless. Well… not quite. But you have to use your idea to find the money, not the marketing help. The marketing can come later.
What about a rich company? How should it approach the law of résources? The answer is simple: Spend enough.
You can't save (money) your way to success.