Much has changed in the world since 1993, but the classic book on marketing, "The 22 Immutable Laws of Marketing," is still highly relevant. Find out how location-based leisure entrepreneurs violate three particular laws to become industry road kill.
Back in 1993, Al Ries and Jack Trout, two highly respected marketing strategists, published their classic book, The 22 Immutable Laws of Marketing, which is still in publication. Their laws were based on what they had distilled during 25 years of marketing experience as the basic laws governing success and failure in the marketplace. Basic laws are just that, principles that govern, and 17 years later, they are just as true and applicable as they were when the book was first published.
In defining marketing, Ries and Trout don’t just mean in the sense of advertising. They reference marketing in the broader sense, which includes product development.
All 22 laws apply to location-based entertainment (LBE) as well as the larger category of the location-based leisure (LBL) industry. However, in our company’s experience, we see many start-up entrepreneurs continually getting in trouble by violating three of the 22 immutable laws: the Law of Sacrifice and the Law of Division, which are related, and the Law of Acceleration.
Let’s start with the Law of Sacrifice. Ries and Trout state, “If you want to be successful today, you should give something up. There are three things to sacrifice: product line [meaning product offerings], target market, and constant change.” In their book, they cite many examples of companies that have a narrow focus of both offerings and target market (what is referred to as a “focused assortment’’) and are successful and generalist companies that offer a broad range of products to a broad market who are weak or no longer in business. In the retail industry, they cite department stores as an example of a retail category in trouble by trying to sell everything (that was back in 1993, and their predictions have rung true) compared to the many successful specialty retailers. “Where is it written you have to appeal to everyone?” they ask. And finally for the third sacrifice, constant change, they write, “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 in the first place.”
The second immutable law, the Law of Division, says that over time, a category will divide and become two or more categories. In their book, Ries and Trout explain that a category starts off as a single entity, such a computers. But in time, the category broke into mainframes and minicomputers. In turn those two categories divided into others, with minicomputers splintering into workstations, PCs, laptops, notebooks and others. Another prime example they use is beer. Now we have domestic and imported beer; premium and popular-priced beer; light, draft and nonalcoholic beers; mass-produced and microbrews.
The Law of Acceleration is rather simple: Successful businesses are not built on fads, they’re built on trends. According to the book, “a fad is a short-term phenomenon that might be profitable, but a fad doesn’t last long enough to a do a company much good.” They go on to explain companies often gear up as if a fad were a trend, and as a result, get stuck with a lot of expensive stuff.
Now let’s relate these three laws to LBEs. Back in the late 1980s, shortly before White Hutchinson first entered the industry, the concept of the indoor family entertainment center first emerged. These were basically FECs offering a little bit of something for everyone. You could find kiddie rides and soft play units for younger children, rides and games for teenagers and recreation for adults, including pool tables. The mix had no sacrifice and the target market was everyone. Those centers were the first industry road kill. What emerged where more narrowly focused centers that sacrificed both mix and market to become successful. Examples included children’s entertainment centers such as Jungle Jim’s Playland (later rebranded as Jeeper’s) with rides and games, as well as children’s pay-for-play soft play centers such as Discovery Zone. The indoor FECs narrowed its focus to families. Specialized facilities such as laser tag centers appeared. What began as one category became multiple categories. Today, early second generation categories like Jeeper’s and Discovery Zone are basically history, but the children’s center category has further fragmented into play cafes for children 5 and younger, children’s edutainment centers for children 8 and younger, children’s mega role-play centers such as Kidzania for children 4 to 12, children’s discovery farms, birthday party centers and children’s activity centers, to name some of the major subcategories.
Bowling is another example. Not that many years ago, bowling alleys tried to cater to all age groups and both open-play and league bowlers. That part of the industry has evolved into more specialized centers targeting narrower markets. Now we have hybrid-bowling centers that target families with both bowling and family entertainment center attractions, upscale bowling lounges that target young adults and boutique centers that combine a few lanes of bowling with a restaurant, to name just a few categories. And the vast majority of these specialized bowling centers owe much of their success to sacrificing part of the market, both demographically and by not offering league play.
Now, back to those wayward start-up entrepreneurs in the LBE industry. We frequently see that many of these entrepreneurs do not understand the Law of Sacrifice, which stresses the importance of being focused; or the Law of Division, which covers how the industry continues to evolve into many different specialized categories. When we travel the U.S., as well as the world, we see many new centers that are prisoners of the past, stuck in the early 1990s with what the industry looked like then. Offering a little something for everyone, these centers end up being special to no one. Furthermore, violating the Law of Acceleration, many feature attractions that are fads rather than those with proven staying power. The entrepreneurs buy into the latest new thing they find at trade shows, not understanding that considering the cost of attractions, long-term success is built on proven trends, not fads. As a result, the centers these entrepreneurs develop are rather short lived, because when the facility gets into trouble a year of two later, the owners plug remaining capital (if they still have any) into yet another latest-and-greatest fad attraction. These well intentioned but misguided entrepreneurs haven’t understood the basic laws of marketing. What’s more, they have failed to examine the LBE industry’s history and evolution, and the lessons this brings, which are consistent with the immutable laws of marketing.
Many prospective clients come to us with the “little something for everyone” mindset and/or wanting to develop their centers on new, unproven attractions that are probably fads. The clients we continue to work with are those who recognize you can’t be special to everyone, and you have to build your business based on proven concepts and emerging trends, not fads. You can only be successful by being special to a narrow market with a focused assortment that has staying power.
Why don’t we work with the other prospects? It’s because we enjoy helping clients become successful. Working for someone you know will fail as they are breaking the immutable laws of marketing is not enjoyable. Working on projects means a lot more to us than the fees. It’s immensely rewarding to help our clients realize long-term success.