Lakhasly

Early on, a new category is a ladder of many rungs.Back in 1969, the Royal Crown company revitalized its fran- chise system, 350 bottlers strong, and hired the former president of Rival Pet Foods and a veteran of both Coke and Pepsi.The products are Coca- Cola, Pepsi-Cola, and Royal Crown cola, respectively, but the principles apply to brands everywhere.The law of duality suggests that these mar- ket shares are unstable."We're out to kill Coke and Pepsi," declared Mary Wells Lawrence, the agency's head, to the Royal Crown bottlers.When you take the long view of marketing, you find the battle usually winds up as a titanic struggle between two major players--usually the old reliable brand and the upstart.The company also retained Wells, Rich, Greene, a high-powered New York advertising agency. While the future is unknowable (chapter 17: The Law of Unpredictability), a betting person would put his or her money on MCI.MCI has won the battle with Sprint for second place, so now MCI ought to become the upstart alternative to old, reliable AT&T.Gradually, the ladder becomes a two-rung affair.In batteries, it's Eveready and Duracell.In photo- graphic film, it's Kodak and Fuji.In mouthwash, it's Listerine and Scope.In sneakers, it's Nike and Reebok.In toothpaste, it's Crest and Colgate.The rest of the market included either private label or minor brands.Sprint is probably feeling very comfortable on the third rung of the ladder.Nine percent doesn't sound like much, but it translates to $6 billion in annual sales.

Early on, a new category is a ladder of many rungs.
Gradually, the ladder becomes a two-rung affair.
In batteries, it’s Eveready and Duracell. In photo-
graphic film, it’s Kodak and Fuji. In rent-a-cars, it’s
Hertz and Avis. In mouthwash, it’s Listerine and
Scope. In hamburgers, it’s McDonald’s and Burger
King. In sneakers, it’s Nike and Reebok. In toothpaste,
it’s Crest and Colgate.
When you take the long view of marketing, you
find the battle usually winds up as a titanic struggle
between two major players—usually the old reliable
brand and the upstart.
Back in 1969, there were three major brands of a
certain product. The leader had about 60 percent of
the market, the No. 2 brand had a 25 percent share,
and the No. 3 brand had a 6 percent share. The rest
of the market included either private label or minor
brands. The law of duality suggests that these mar-
ket shares are unstable. Furthermore, the law pre-
dicts that the leader will lose market share and No.
2 will gain.
Twenty-two years later, the leader dropped down to
45 percent of the market. The No. 2 brand has 40 per-
cent, and No. 3 has 3 percent. The products are Coca-
Cola, Pepsi-Cola, and Royal Crown cola, respectively,
but the principles apply to brands everywhere.
Look at the three long-distance telephone compa-
nies. AT&T has 65 percent of the market, MCI has 17
percent, and Sprint has 10 percent. Who will win and
who will lose in the telephone wars? While the future
is unknowable (chapter 17: The Law of
Unpredictability), a betting person would put his or
her money on MCI. MCI has won the battle with
Sprint for second place, so now MCI ought to become
the upstart alternative to old, reliable AT&T.
Sprint is probably feeling very comfortable on the
third rung of the ladder. Nine percent doesn’t sound
like much, but it translates to $6 billion in annual
sales. And the market has been growing rapidly.
For the long term, however, Sprint is in serious trou-
ble. Look what happened to Royal Crown cola. Back
in 1969, the Royal Crown company revitalized its fran-
chise system, 350 bottlers strong, and hired the former
president of Rival Pet Foods and a veteran of both
Coke and Pepsi. The company also retained Wells,
Rich, Greene, a high-powered New York advertising
agency. “We’re out to kill Coke and Pepsi,” declared
Mary Wells Lawrence, the agency’s head, to the Royal
Crown bottlers. “I hope you’ll excuse the word, but
we’re really out for the jugular.”
The only brand that got killed was Royal Crown. In
a maturing industry, third place is a difficult position
to be in.
Take the domestic automobile industry. In spite of
heroic measures undertaken by Lee Iacocca, Chrysler is
in trouble. In the long run, marketing is a two-car race.
Take video games. In the late eighties, the market
was dominated by Nintendo with a 75 percent share.
The two also-rans were Sega and NEC. Today
Nintendo and Sega are neck and neck, and NEC is way