The Lanchester Strategy
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F.W.LANCHESTER
Frederick Lanchester was an English matematician and engineer. He is, perhaps, best remembered for the Lanchester motor car, the first of he designed in 1895. Lanchester cars were consistantly ahead of their rivals, technically, and received royal patronage from the Duke of York (later King George VI). The company was sold to Daimler in the mid 1930s, but the marque continued as a Daimler derivative until 1956.
Of more modern significance is the fact that Lanchesters inventive and mathematical mind turned during the First World War, to a theory of conflict. This resulted in a published work in which his theories on military strategy were expounded.
THE LANCHESTER MILITARY STRATEGY
Lanchester developed two mathematical laws to govern military combat. The first applies to historical warfare where the battle is a series of man to man duels and is as fololws:
FIGHTING STRENGH = EFFICIENCY OF WEAPPONS * THE NUMBER OF TROOPS
The second law applies to modern warfare, where contrentation of firepower is possible and, because of the power of more modern weapons, a larger force can wipe out a smaller force at a greater rate.
The law is:
FIGHTING STRENGTH =
EFFICIENCY OF WEAPONS * THE SQUARE NUMBER OF NUMBER OF TROOPS
Lanchester was the first person to express these laws mathematically, but the practical application of the second law, through the principle of concentration has been used for many centuries.
At the Battle of Trafalgar in 1805, Nelson knew that his British fleet was smaller than the combined forces of the French and Spanish fleets. If he had gone ino battle in the conventional ways of the time his defeat would have been inevitable. His strategy, as a result, was to sail at right angles to the enemy, so cutting their fleet in two, then to concentrate his fire-power onto one half at a time. The "square" law meant that he could inflict a cruishing defeat at the first half, while still retaining enough ships intact to take on the second half with the possibility of success. As we know, this strategy worked and the British victory was assured.
Following the publication of Lanchesters work, this law was applied by the American forces in World War II, against the Japanese in the Pacific.
THE JAPANESE USE OF LANCHESTER IN MARKETING
A Japanese businessman called Takaoka came across a reference to the American use of Lanchester, quite by chance, in a document about the war. He and a collegue researched Lanchesters military laws and developed ways of applying them to business, specifically to competitive marketing.
Taoka and Onoda formed a consultancy, Lanchester Systems, in 1976, advising its clients solely on the use of Lanchester. This has added considerable weight to the well known American principles of market segmentation and niche - strategy. It has reinforced the existing Japanese approach of narrow "laser - beam" penetrations into one market segment after another until they dominate the total market.
The effects of this approach are obvious to all, merely by looking at the market penetration by Japanese motorcycles, cameras, cars, copiers, televisions and many more.
THREE CASE STUDIES OF APPLIED LANCHESTER STRATEGY
Case 1 Canon Copiers
Canon wished to achive significant sales in the UK in the late 1970s. They needed to attack the market leaders, Rank Xerox. Their strategy was to concentrate the resources on Scotland. Only when they achieved 40% merket share there, did they attack precisely defined regions in England, before making
a determined push into London with a much larger sales than Rank Xerox.
Once the market penetration had been achieved and they were dominant in their selected regions, they broadened their product range to consolidate their position.
Case 2 Honda Motorcycles
In the mid 1960s the British motorcycle industry was technically old-fashioned. The lower end of the market had been affected by the import of the Italian scooters, such as Vespa and Lambreta, but small leightweight motorcycles were very old fashioned.
Honda came into the UK at this time and concentrated all their marketing effort selling the Honda 50. This was a throughly modern, light motorcycle and its phenomenal success soon meant it dominated the market, to the detriment of such products as the scooters and motorcycles.
Only when the light motorcycle market was dominated totally by them, did Honda move up-market.
By this time they had a well established dealer network, a good image and a fast developing brand loyalty. Inevitably, as they began to dominate each succesive market sector, their customers were able to "trade-up" to the next level. By the early 1970s, Honda were the market leaders in the UK motorcycle market. Then they turned their attention to cars using a similar strategy and are now well established in this market.
Case 3 The Bolivian Railway
In the late 1970s, the Bolivian Government was inviting major contractors from all over the world to bid for the building of a major new railway. The contract was won by the Japanese bidder who applied two important aspects of Lanchester;
- good intelligence and information
- contration of effort
First they invested considerable effort into establishing as much information about the project, the customer (the Bolivian Government) and the competition, as possible.
Then, when going to Bolivia to talk to the Government, they assembled a strong team which was as large as possible. The aim was to "match" all the decision makers and influencers on a one to one basis.
After going to the preliminary meetings with the customer, all the Japanese team met to evaluate the information they had received and to decide their tactics for the next stages.
They then restructuredtheir team, sending to Japan for additional specialists, and dropping some whose role was superfluos.
Finally, with the most concentrated team they could muster, they made their final bid for the contract and won it on very favourable terms.
Summary of cases
These three cases show examples of the Lanchester principles of concentating effort and attacking the competition in their weak areas. They show that the Lanchester Strategy can be applied to
a geographical strategy, a product strategy or a major capital project.
THE MAIN PRINCIPLES OF USING LANCHESTER SELLING
There are three key principles:
a) Intelligence Information
The greater the quality and quantity of information available about the customer, market and competition, the better.
b) Concentration of Effort
Concentration of effort can be used as in the Canon case, by splitting the competition and attacking one part at a time, or as in the Bolivian case by marshalling all resources for planned impact on a major account.
c) Dominance
Identify segments of the market which can be dominated and which, as far as possible, can be insulated from the attack of any stronger competitors. From a position of dominance in one segment, it is easier to move out to dominate other segments, or to broaden the product range.
LANCHESTER STRATEGY AND PLATFORM CONCEPT
The platform concept is defined as:
All accumulated efforts and activities which contribute to future results.
These activities can be categorised into Buying Platform, Working Platform, Market Platform. Lanchester Strategy indicates where to concentrate effort into these three parts of the platform.
To identify a well defined Market Platform requres a high quality intelligence . The Working Platform is where specific plans for concentration of effort must be made- either like in the Canon approach or, as in in the Bolivian Railway case. In other words, on a market segment basis or, within that segment, on
a key prospect basis.
Effort in the Buying Platform needs to strenghten the "surface contact" between supplier and customer, again using the principles of concentration of effort, and also to achieve maximumu dominance.
SUMMARY
The Japanese have used Lanchester principles to great effect in the lasr 20 years and in this way have made a big impact on many European markets. There is no reason why European companies cannot use Lanchester, applied through the Platform concept to achieve similar or better results.
zaba1968