Positioning as more than just marketing

by justingibbs on May 22, 2009

I’m reading Peter Drucker’s seminal book on management and came across the interesting story of Sears expansion into new markets. It was meant to be a cautionary tale to learn from failure and reexamine your theory of the business. However I wonder if it can also be a cautionary tale of positioning.

Seventy years ago, in the midst of the Depression, Sears decided that automobile insurance had become an “accessory” rather than a financial product and that selling it would therefore fir its mission of being the informed buyer for the American family. Everyone thought Sears was crazy. But automobile insurance became Sears’s most profitable business almost instantly. Twenty years later, in the 1950s, Sears decided that diamond rings had become a necessity rather than a luxury, and the company became the world’s largest – and probably most profitable – diamond retailer. It was only logical for Sears to decide in 1981 that investment products had become consumer goods for the American family. It bought Dean Witter and moved its offices into Sears’s stores. The move was a total disaster. The U. S. public clearly did not consider its financial needs to be “consumer products.”

Was it that the consumers didn’t see them as consumer products yet or was it more due to the fact that they didn’t see Sears as that type of company? Al Ries and Jack Trout explained in their book Positioning, the proliferation of marketing messages has forever changed how we market to consumers. It’s moved the battle field into the mind of the consumer and they only have one slot, or if you’re lucky a few slots, for any product category. If you already see BMW as the leader in driving performance it’s nearly impossible for another car to knock them off and you’re better off trying to create another slot to own – Volvo and safety.

Sears expanded into auto insurance and diamonds when there were much less messages plastered everywhere. Consumers hadn’t yet built up processes to deal with the influx of messages. By the time Sears bought Dean Witter the consumer had already put Sears into a slot, a slot that didn’t include consumer products. Of course that in itself should prompt Sears to reexamine their theory of the business as Drucker advices.

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Tagged as: positioning

  • "Was it that the consumers didn’t see them as consumer products yet or was it more due to the fact that they didn’t see Sears as that type of company?"

    I think in the context of this story that is pretty much the same thing.

    SEARS knew the financial products didnt fit their brand at the time of acquiring Dean Writer, but that was 'all part of the plan'. SEARS was the family brand, trusted by regular americans who werent marketed to for direct investments. But SEARS bet on the nature of the product changing, shifting towards a product that would fit the family man as a consumer good (I'll have 2 pints of milk, a bread and 15,000$ put opt on GOOG). It tuined out SEARS was too early (Unilever and ALEX are doing it now quite successfully).

    If SEARS was right about their prediction (or more accurately, their timing), their positioning would have been their success - no one was directly selling to the family man and the family man trusted the SEARS brand (because of positioning). So the mismatch of brand positioning and product was intentional, not a flaw in strategy.

    It's basically the Blue Ocean strategy (even though I think the book doesn't offers any real insights) - find a new market for an existing product or concept and 'innovate' from there. The family man would become a new market to directly sell investments to, but they misread the trend.
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