Mass Marketing: Is it still Breathing?
Schultz, Tannenbaum and Lauterborn (1993) proclaimed that “the days of traditional mass marketing are over. Technology ended them. They will not return.” Although a hasty and sweeping generalization, their observation has a spectre of truth in it as companies at present recognize that they could not please all buyers in the existing marketplace. As an attempt to sell the same thing to a wide range of customers, mass marketing made a little effort to tightly target messages to certain groups. The obvious problem with mass marketing is puts to waste a lot of money reaching people who have no interest in the product. Thus, in the contemporary times, the more viable marketing strategy is through market segmentation, targeting and product positioning.
Mass Marketing: Is it still Breathing?
In the preface of a book entitled The New Marketing Paradigm: Integrated Marketing Communications by Schultz, Tannenbaum and Lauterborn (1993), it proclaimed “the days of traditional mass marketing are over. Technology ended them. They will not return.” Although a hasty and sweeping generalization, their observation has a spectre of truth in it as companies at present recognize that they could not please all buyers in the existing marketplace; or at least not all buyers in the same way. Buyers are too numerous, too scattered, and too diverse in their needs and buying practices. Moreover, the companies themselves vary widely in their abilities to serve different segments of the market.
To successfully attract customers, they must design strategies that combine the right relationships with the right customers at the right time. Rather than trying to compete in an entire market dominated by superior competitors, each company must identify the parts of the market that it can serve best and most profitably. Thus, some critics like Schultz, Tannenbaum and Lauterborn declare that mass marketing is dying.
As an attempt to sell the same thing to a wide range of customers, mass marketing makes a little effort to tightly target messages to certain groups. The obvious problem with mass marketing is that it wastes a lot of money, as it reaches people who have no interest in the product. But, why does Wal-Mart, Target, and other large retailers advertise heavily in mass media, especially in newspapers and supplements, yet they are quite successful? The answer is because these retailers have redefined mass marketing by offering a variety of products and brands in most product categories. In this way, they are able to satisfy many different customer segments.
Traditional mass marketing tried to create the largest potential market, which leads to the lowest costs, which in turn can lead to lower prices or higher margins. However, many critics point to the increasing diversification of the market, making mass marketing more difficult to accomplish. The proliferation of advertising media and distribution channels is making it difficult and increasingly expensive to reach a mass audience. An average customer profile is developed within a product market. Fact remains that mass marketing does not segment markets and therefore some authorities refer to this strategy as undifferentiated marketing. The original Model T developed by Henry Ford had no options and came only in black. The model was sold at a reasonable price to a broad consumer market through the use of only one basic marketing plan. For some years Sears & Roebuck appears to have used mass marketing or undifferentiated marketing for some lines of merchandise (Michman 1991, p. 12).
During the middle of 1980s, the emergence of digital marketing tools had shaken the arena of mass marketing. In the past, mass marketers conceived of, organized and implemented the marketing paradigm, which originated from the consumer markets. Toward the end of the 20th century, marketers were conceptualizing and launching a new marketing paradigm. It evolved in business-to-business markets. If Procter heralded the era of mass marketing, Federal Express seemed to anticipate the new one of digital marketing communications. In the long term, these systems would also proliferate in the consumer markets. The new environment puzzled even the hard-nosed veterans. Industry wisdom had become a competitive disadvantage. This means that old rules may no longer be possible (Steinbock 2000, p. 13). Incidentally, a Business Week elaborated the phenomenal decline of mass marketing:
Cynical consumers are wearying of the constant barrage of marketing messages. They’re becoming less receptive to the blandishments of Madison Avenue. And their loyalty to brands has eroded as they see more products as commodities distinguished only by price. At the same time that consumers have changed, technology and the proliferation of media are transforming the science of marketing to them. Now, companies increasingly can aim their messages to carefully pinpointed consumers through direct mail. General Motors Corp. is rolling out its new Cadillac Seville with a mailing offering a videocassette to 170,000 young and affluent consumers. Or they can advertise on one of the new and sharply targeted media. To reach young children, Levi Strauss ; Co. used to advertise mostly during Saturday morning cartoons on the networks. Now the company also advertises on MTV and a new music channel on cable called Video jukebox Network (Lander et al., 1991)
Presently, most companies are being more selective about the customers with whom they wish to build relationships. Most have moved away from mass marketing and toward market segmentation and targeting —identifying market segments, selecting one or more of them and developing products and marketing programs especially tailor-made to each segment. Instead of doing a big and unsure deal in their marketing efforts (the “shotgun” approach), firms are focusing on the buyers who have greater interest in the values they create best (the “rifle” approach). This is basically why market segmentation appeared to be a proactive choice because it plays a key role in the strategic planning process. This is because there are potentially many alternative ways to group customers and some will provide more competitive advantage than others.
By definition, market segmentation is a division of a market into subsets of prospective customers who behave in the same way, have similar wants, or have similar characteristics that relate to purchase behaviour. The overall market for a product consists of segments of customers who vary in their responses to different marketing mix offerings. Market segmentation attempts to explain differences among groups of consumers who share similar characteristics and to turn these differences into an advantage (Dickson ; Ginter 1987, p. 4).
According to Belch (2004, p. 39), the segmentation process involves five distinct steps:
1. Finding ways to group consumers according to their needs.
2. Finding ways to group the marketing actions—usually the products offered available to the organization.
3. Developing a market-product grid to relate the market segments to the firm’s products or actions.
4. Selecting the target segments toward which the firm directs its marketing actions.
5. Taking marketing actions to reach target segments.
In addition to the abovementioned steps, there are two necessary conditions for effective market segmentation: There must be economically relevant differences between the separated markets. These may arise from differences in the incomes of customers, or in the ways they use the product, or in competitive structure. And, there must also be effective barriers to arbitrage at both wholesale and retail level (Kay, 1995, p. 221). Armed with a segmentation strategy, a company could pursue variations in some or all aspects (like product, marketing communications, price, distribution) of the marketing elements. For example, many widely purchased products such as shampoos, appliances, and clothing involve variation in both product and marketing communications to reach market segments and increase sales. In the same vein, a single product may be marketed to different segments using different marketing communication campaigns. For example, a pharmaceutical manufacturer may promote the same new drug product to physicians, pharmacists, and hospitals using a different communication approach for each group.
According to Bearden and Laforge (2004), a number of factors need to be understood in order to recognize the importance of market segmentation in the development of marketing strategies. These are:
· Slower rates of market growth, coupled with increased foreign competition, have fostered more competition, increasing the need to identify target markets with unique needs. Social and economic forces, including expanding media, increased educational levels, and general world awareness, have produced customers with more varied and sophisticated needs, tastes, and lifestyles.
· Technological advances make it possible for marketers to devise marketing programs that focus efficiently on precisely defined segments of the market.
· Marketers now find that minority buyers do not necessarily adopt the social and economic habits of the mainstream (p. 148).
Thus, marketers divide segmentation descriptors into three major categories for both consumer and organizational markets: demographic descriptors (which reflect who the target customers are), geographic descriptors (where they are), and behavioural descriptors of various kinds (how they behave with regard to their use and/or purchases of a given category of goods or services).
Aside from market segmentation, target marketing and product positioning must also be well considered and implemented if the firm aims to be successful in managing a given product-market relationship. Target marketing requires evaluating the relative attractiveness of various segments (in terms of market potential, growth rate, competitive intensity, and other factors) and the firm’s mission and capabilities to deliver what each segment wants, in order to choose which segments it will serve. On the other hand, product positioning entails designing product offerings and marketing programs that collectively establish an enduring competitive advantage in the target market by creating a unique image, or position, in the customer’s mind.
More often than not, successful companies have been able to manage this product-market relationship. In doing this, companies distance themselves from their competitors. This is basically what happened in this international example:
In England, Japanese companies have outperformed their British rivals across a range of industries. A major reason for this was that the Japanese were better at managing the segmentation, targeting, and positioning relationships. Thus, only 13 percent of the Japanese firms versus 47 percent of the British were unclear about their target segment of customers and their special needs.
All too often the marketing directors of the British companies remarked that they see their target market as being the whole market and since their products had wide appeal, there was no need to segment the market. As a consequence, the Japanese concentrated their resources in specific high-potential segments while the British tended to spread theirs thinly across the entire market. When British companies did segment, they did so at the lower, cheaper end of the market. This resulted in customers increasingly perceiving the Japanese, in contrast to the British, as offering quality and status (Doyle 1992, p. 273).
No matter how large the firm, its resources are usually limited compared with the number of alternative market segments available for investment. A firm must make choices, even when caught up in the unusual case where a firm can afford to serve all market segments. The firm must determine the most appropriate allocation of its marketing effort across segments. It is also helpful to be aware that in order to target the best market segments, the company must first evaluate each segment’s size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources (Walker et al. 2002, p. 217).
Actually, there are four target marketing strategies, ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing, or the seller can adopt differentiated marketing developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
It was the technology revolution that bolstered fragmentation of markets and reduced the appeal of mass marketing approaches. Procter ; Gamble, a pioneer in mass marketing, is shifting its focus from selling to a vast, anonymous crowd to selling to millions of particular consumers. And so are Coca-Cola, McDonald’s, General Motors, Unilever Group, American Express, and many other consumer products giants. McDonald’s now devotes less than a third of its U.S. marketing budget to network television, compared with two thirds 5 years ago, with the remainder being spent on media such as closed-circuit sports programming, custom-published magazines, and in-store video (de Kluyver and Pearce 2006, p. 63).
According to a 2000 survey conducted by Ernst ; Young among 7200 consumers in 12 countries, the potential of marketing using the World Wide Web is huge. Almost two-thirds of our survey participants worldwide have purchased items online in the past 12 months, including 75 percent of German and UK respondents and 74 percent of U.S. consumers. By 2005, online channels will represent 10 to 12 percent of sales in such categories as apparel, accessories, and toys. In some categories, such as books, music software, videos, and consumer electronics, it could represent as much as 20 to 25 percent of sales.
With the advent of the Information Age, conducting business in the New Economy will call for a new model of marketing strategy and practice. Companies need to retain most of the skills and practices that have worked in the past. However, they must also add major new competencies and practices if they hope to grow and prosper in the New Economy. E-business is the use of electronic platforms to conduct a company’s business. E-commerce involves buying and selling processes supported by electronic means, primarily the Internet. It includes e-marketing (the selling side of e-commerce) and e-purchasing (the buying side of e-commerce).
In comparison to market-segmentation, mass marketing is already old hat. However, Kotler (2000) does not think so. He informed that mass-marketing used to mean making 1 bottle of Coca-Cola and getting the whole world to use it, even if some people wanted it sweeter or some people wanted it light. Presently, we have moved into the world of target marketing, and target markets. But we know for a fact that the segment for light colas is larger and, Kotler concluded that:
Target marketing is nothing but camouflaged mass marketing. A few people do believe in one-to-one marketing. They think it will be economical to customize the message and the offering to each individual. Some companies are doing this. It is common in business-to-business marketing. Panasonic has done it with bicycles, and so has Levi Strauss with jeans. I think one-to-one marketing is a paradigm that will have to coexist and work along with mass marketing and target marketing.
Ultimately, the key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and achieving vision of the organization to increase customer value, achieved through performing organizational functions more efficiently. The “increased customer value” can take many forms: more products, improved quality on existing products, lower prices, easier access to product through improved distribution, and so on. So the ultimate criterion for an organization’s marketing success is that customers should be better off as a result of the increased synergies (Kerin et al. 2006, p. 411).
As market segmentation stresses the importance of grouping people or organizations in a market according to the similarity of their needs and benefits they look for when making a purchase, such needs and benefits must be related to specific marketing actions the organisations could accomplish. These actions may involve separate products or other aspects of the marketing mix such as price, advertising, or distribution strategies. But facts still remain that when expenses are greater than the potentially increased sales from segmentation, a firm should think twice before venturing into segmenting its market.
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