Mass Marketing vs One to One Marketing

Mass Marketing Vs One To One Marketing Mass marketing Mass Marketing is a type of marketing (or attempting to sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that will reach the largest number of people possible. Traditionally mass marketing has focused on radio, television and newspapers as the medium used to reach this broad audience.

Background Mass marketing or indifferent marketing has its origins in the 1920s with the inception of mass radio use. This gave corporations an opportunity to appeal to a wide variety of potential customers. Due to this, variety marketing had to be changed in order to persuade a wide audience with different needs into buying the same thing. It has developed over the years into a world-wide multi-billion dollar industry. Although sagging in the Great Depression it regained popularity and continued to expand through the 40s and 50s. It slowed during the anti-capitalist movements of the 60's and 70's before coming back stronger than before in the 80's, 90's and today. These trends are due to corresponding upswings in mass media, the parent of mass marketing. For most of the twentieth century, major consumer-products companies held fast to mass marketing- mass producing, mass distributing and mass promoting about the same product in about the same way to all consumers. Mass marketing creates the largest potential market, which leads to the lowest costs.

The Evolution Into Mass Marketing Mass marketing first emerged as a workable strategy in the 1880s. Prior to that time, local markets in the United States were geographically isolated, few products had brand recognition beyond their local area, and continuous process technology had not yet come into its own. Profits in the fragmented markets were based on a low volume/high price strategy. Between 1880 and 1890, several things occurred that eliminated the barriers and enhanced the appeal of mass marketing. Both the railroad and telegraph systems were completed, thus providing the potential for nationwide distribution and communication. Mass-production techniques and equipment were refined and adapted to a variety of products. Additionally, the population was growing rapidly, the country was recovering from the Civil War, and the largest depression in U.S. history until that time was ending. These favorable circumstances by themselves did not create mass marketing. Entrepreneurial vision, drive, organization, and resources had to be added to implement the strategy. From 1880 to 1920, early innovators in many different industries stepped forward to seize the opportunity. Although the total number was relatively small—one or a few per industry—the impact on the U.S. economy was enormous. Many of these pioneering marketers built national reputations for their brands and companies that continue today. Two of the most widely recognized examples are Ford and Coca-Cola. Henry Ford applied the concept in the automobile industry. His Model T was conceived and marketed as a "universal" car—one that would meet the needs of all buyers. By adopting mass-production techniques and eliminating

optional features, he was able to reduce costs and sell his product at an affordable price. The combination catapulted the Model T to the top of the market. As a Candler was equally successful at using mass marketing in the softdrink industry. Like Ford, he also viewed his product as being the only one that consumers needed. His initial mass-marketing efforts focused on an extensive national advertising campaign. As product recognition grew, he established a network of bottling operations throughout the county to facilitate sales and distribution. No product in history has matched CocaCola's total sales. Other mass marketers of this era achieved success by focusing on one aspect of the approach. Manufacturers such as Quaker Oats, Proctor and Gamble, and Eastman Kodak used refined mass-production techniques to establish consistent product quality. Still other manufacturers, such as Singer Sewing Machine, developed integrated distribution systems to ensure reliable delivery to the market. In general merchandise retailing, Sears and Montgomery Ward developed a mass-marketing niche through mail order. Grocery retailer A&P, on the other hand, established its mass market through private branding and systematic operation of multiple stores. Mass marketers continued their domination in major industries well into the 1960s. Many of them maintained essentially the same mix, while others expanded their use of the strategy. Sears and Montgomery Ward, for example, added store retailing in the 1920s. In the 1930s, supermarkets appeared with a different emphasis than previous grocery retailers—national brands. Over the next several decades, large discount stores came into prominence with a format similar to the supermarkets.

The Evolution from Mass Marketing The successes of mass marketers led to the appearance of an alternate approach to marketing. Potential competitors wanting a share of the large market had two options. One was to replicate the organization, promotion, and distribution systems of the company that had created the mass market. The other was to go after a part of the market that had unique needs by developing products specifically for them. For nearly all of the challengers, building an operation to parallel that of an entrenched industry giant was not profitable or realistic. As a result, most of them gravitated to the more attractive market-segmentation approach. (Figure 1 shows the different demand curves for mass marketing and market segmentation.) General Motors used market segmentation as early as the 1920s when it produced different models for different groups of customers to compete with Ford. Pepsi made a series of attempts, beginning in the 1930s, to crack into Coca-Cola's market share through changes in product and targeted promotion strategy. In the 1940s, television provided a powerful tool for both new and old companies to reach segmented markets. By the 1960s, market segmentation had surpassed mass marketing as the primary approach. Mass Marketing Now and in the Future

In spite of the shift to market segmentation, mass marketing continues to be used in many situations and has potential for others. Products with broad appeal and few distinguishing characteristics —such as household cleaners, potato chips, and pain relievers— lend themselves to mass marketing just as they always have. At the

same time, businesses that use mass marketing for their goods and services continue to look for ways to enlarge their markets by designing different appeals for noncustomers. Chewing gum, for example, is presented as an alternative to smoking. Utilities and credit cards offer special rates to entice potential high-volume customers. And discount retailers, such as Wal-Mart, match their mix of mass-marketed products to local customer bases. Any current or future product that has mass-marketable attributes will likely be marketed by some form of the approach. In addition, the Internet provides a new medium for mass-marketing initiatives, and newly opened international markets offer a possible arena for mass-marketing opportunities.

One-to-one marketing

One-to-one marketing (sometimes expressed as 1:1 marketing) is a customer relationship

management

(CRM) strategy

emphasizing personalized

interactions with customers. The one-to-one marketing of interactions is thought to foster greater customer loyalty and better return on marketing investment. The concept of one-to-one marketing as a CRM approach was advanced by Don Peppers Only the term is new; the approach is almost as old as commerce itself. In the past, for example, proprietors of a general store would naturally take a one-to-one approach, remembering details about each customer's preferences and characteristics and using that knowledge to provide better service. One-to-one marketing seeks to reinvest marketing with the personal touch absent from many modern business interactions. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-to-action." This aspect of direct marketing involves an emphasis on traceable, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium. If the advertisement asks the prospect to take a specific action, for instance call a free phone number or visit a website, then the effort is considered to be direct response advertising.

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One-to-one marketing is treating different customers in different ways. This focus demands meticulous knowledge of the customer, based on his or her value and potential lifespan in the heart of the company.

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One-to-one marketing is a very fashionable term in the marketing world, but to apply it is a complex thing, since it demands a previous capacity for segmentation and very refined profiling.

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One-to-one marketing strategies are directly related to Marketing Oneto-One theories, which entail an entire organizational shift towards the customer, instead of the product.

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The four basic pillars on which One-to-One Marketing rests are: identify high-value customers, differentiate proposals for different customers, interact with the customer, and customize the business culture.

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Not all one-to-one marketing strategies are profitable: every company must predict the return on investment in this type of strategy, before they go into it.

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We should not offer excessively personalized products and services. “A la carte” Marketing must satisfy the customer’s need to be individualized; in no case should that be confused with an excess of proposals.

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It’s not the customer who must define him or herself to the provider, personalizing their demands. It is the obligation of the provider to know these needs and anticipate them.

“Treating different customers in different ways”. This is the premise underlying One-to-One Marketing, a new concept of sales and marketing management, whose philosophy puts the customer at the center of the company. Derived from One-to-One Marketing theories, one-to-one marketing strategies and Individualized Marketing opt for exhaustive knowledge of the customer and his or her needs, in order to provide them with what they need, when they need it, and differentiate them clearly from the rest of customers. However, Oneto-One Marketing techniques have limitations, which can only be overcome by an accurate Customer Intelligence strategy.

1.

Individualized

Marketing:

treating

different

customers in different ways Sales has traditionally been an assisted process... When someone goes to a dealer to buy a car, the salesperson acts as an advisor, steering the customer towards the product that most fits his or her tastes and needs. It is up to the salesperson’s intuition to figure out what impulses move that potential customer and play with those purchasing impulses and habits in order to close the coveted deal. Intuition is an excellent sales tool, but it relies on factors as arbitrary as they are subjective. The skills of the people monitoring a sales process must be supported by empirical and provable information, and that only exists if a Customer Intelligence strategy has been implemented in the company. “One-to-one marketing” has been a very fashionable term in the marketing world recently. If we go back to the example we opened the chapter with, we will see that the principle of “personalizing” the relationship with the

customer is not very far from the elements we mentioned: orienting, guiding, collaborating with the customer not only in the purchase / sale process, but also before and after. However, for several years now, the term “one-to-one marketing” has proliferated to the point of being applied to almost any marketing action, from a mere letter to a customer with their name and surname, to setting up a mobile phone or PC screen according to the consumer’s taste. Today, “Oneto-one marketing” is a word on the minds of the majority of marketing and sales experts, but which translates into true results on only a few occasions. . What is one-to-one marketing? Perhaps the simplest and most accurate definition is “treating different customers in different ways”, in order to increase their level of linking and loyalty to the company. It’s as simple and as complicated as this. When there are a dozen customers, personalizing treatment is relatively easy. But what happens when there are thousands or millions? Every company with a large customer portfolio, especially those that are aimed towards the final customer – although this includes companies that work in B2B -, know that in a market as competitive as today’s, in which the customer is well-informed and changes providers with extreme ease, “personalizing” its relationship with the customer is one of the keys to success.

“One-to-one marketing is not only being able to call the customer by his or her first name. It involves creating very refined profiles, based on the customer’s value and potential lifespan” Several years ago, Don Peppers and Martha Rogers revolutionized the world of marketing when they coined the phrase “One-to-One”, which calls for differentiated strategies for differentiated customers, within the framework of an entire organizational shift towards the customer. Since then, “one-to-one marketing”, “One-to-One” , and “Individualized Marketing” are expressions that have invaded marketing plan presentations, obsessed directors in this area, and appeared in thousands of articles; but in practice, they are efficient in very few cases. One-to-one marketing is not only being able to call someone by their first and last names from a “contact center”. One-to-one marketing is not only running a direct marketing campaign that identifies its target audience one by one. One-to-one marketing is about refining segmentation strategies until we obtain very specific individual or company profiles, with similar characteristics, but also with a similar value and potential lifespan for the company, and apply marketing and sales actions with them accordingly.

2. Accurate one-to-one marketing requires intelligent segmentation

It is essential to understand that there can be no accurate one-to-one marketing without first adopting accurate segmentation strategies. The American banking entity First Union recently launched a complex strategy to segment its customer portfolio, assigning them importance according to their current value and potential lifespan in the heart of the bank. The bank’s sales reps have a scorecard in which not only are customers rigorously classified by these two factors, but which invites the reps to offer maximally personalized treatment to those customers of greatest interest. At First Union’s customer service center, operators have weather information for each state in the United States at their disposal at all times, so that the first thing they do is ask the most potentially “interesting” customers about the weather in the place they’re calling from…It’s a curious and intelligent way of making the customer feel that their financial entity is following their steps very closely… If we stop to examine the differences that separate traditional marketing’s customer strategies from those of “One-to-One Marketing” or Individualized Marketing, we find that: •

While traditional marketing focuses on market share, Individualized Marketing opts for the “share of customer”

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Traditional marketing speaks of products that are differentiated for the market as a whole, while Individualized Marketing entails strategies for differentiated customers.

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Traditional marketing focuses on product management, while Individualized Marketing focuses its efforts on customer management.

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Traditional marketing sees the customer as an “enemy to be conquered”, while Individualized Marketing relies on the customer as

a collaborator in the growth and improvement of the company and its products and services. •

Traditional marketing struggles to find customers that adapt to new product launches, while Individualized Marketing strives to find products adapted to the customers.

•

Traditional

marketing

is

based

on

mass

marketing,

while

Individualized Marketing is founded on personalized messages. •

Traditional marketing uses standard promotions, while Individualized Marketing employs incentives that adapt to each customer.

When a company is dealing with thousands or millions of customers, the key is to identify in the greatest detail possible the groups and segments with very similar characteristics, using profiling techniques and offering solutions that are practically custom-made. Based on these premises, a well-known American pharmaceutical company has adopted an extremely interesting one-to-one marketing strategy for its services on the Internet. It used this strategy to loyalize chronic patients, who are potential consumers of their pharmaceuticals. It divided these patients into four groups, each with very specific characteristics: “individualists”, “connected”, “abdicators” and “newly arrived”. The first group includes patients who are well-informed about their disease and who want to make their own decisions about it, and the laboratory attends to them with on-line medical support, a personalized newsletter, and tools for carrying out routine checks over the Internet. The pharmaceutical company has invited the “connected” patients, who like to be informed in order to make the most appropriate decisions, to participate in forums and chats about their disease.To the “abdicators”, patients who do not want to be informed

regularly and resign themselves to living with the disease without fighting it, the laboratory offers resources for home care, nutritional information, diets… resources that help them live with their disease. Finally, the “newly arrived” patients are those that were recently diagnosed and completely lack information and resources. Therefore, the company offers them basic information about their disease, medical directories, etc...

3. The four pillars of One-to-One Marketing The rules of One-to-One Marketing rely on four axes to focus customer relations: •

Identify customers individually (Identify)

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Differentiate customers by value and needs (Differentiate)

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Interact with customers, optimizing costs (Interact)

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Customize the business culture (Customize)

Identifying our customer’s forces us to respond to the following questions: •

Who are our highest-value customers?

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Does our company have a customer strategy defined according to that value?

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Which customers do we still need to identify and how do we solve it?

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What customer information do we have and where is it?

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Do you have accurate customer information analysis?

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Does that analysis translate into an appropriate customer strategy?

Differentiating our customers forces us to respond to the following questions:

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Do we know how to distinguish our customers according to their potential

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Do we know how to distinguish our customers by need segments?

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What are the key questions we must ask ourselves in order to know exactly what our customers’ value and needs are?

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What information must we have in order to determine our customers’ value and needs?

Interacting with our customers forces us to respond to the following questions: •

Through what channel and in what way can we optimize our contact with the customer?

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What customer needs are we able to anticipate?

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How can we measure this interaction with the customer?

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Can we transform our monologues at the customer into dialogues with the customer?

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How does the customer knowledge we have benefit the customers?

Customizing our strategy forces us to responder to the following questions: •

Is our organization aimed at the customer or is its structure still marked by the product culture?

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How can we improve our products, services, and messages in order to adjust to the customer’s needs?

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What must we offer our highest-value customers in order to increase our share of customer?

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How can we save the customer time, effort, and money, and at the same time generate more income for the company?

Asking this barrage of questions is a duty and a necessity for any company that wishes to bury the orientation towards the product once and for all, and opt for sales growth based on dialogue with and exhaustive knowledge of the customer. 4. From profile strategy to lifespan strategy One-to-one marketing and Individualized Marketing strategies have relied in the past on the study of customer behavior and spending habits in one segment or profile, in order to offer similar proposals to similar customers. The leading on-line bookstore, Amazon.com, usually proceeds in the same way: if it observes a customer’s purchases, it sees that that customer fits one of the company’s previously determined profiles, and it offers products accordingly.

There

is

one

drawback:

the

on-line

bookstore’s

recommendations are “automatic”, not truly personalized. This strategy is valid, but it is beginning to reveal itself as incomplete. Moreover, we must base our strategy on the customer’s lifespan in the company, and not only on similar customers, in order carry out cross-sales activities with that customer. The final customer evolves over time (they get older, obtain higher incomes, have children, etc…), and their provider must know how to anticipate those life changes in order to offer them appropriate products and services. Therefore, one-to-one marketing demands not only segmentation by behavior, but also by moments.

5. Is it profitable to personalize? The limits of “marketing a la carte” Although any company with the desire to grow must consider an Individualized Marketing strategy in which each customer is attended to according to their needs, an excessive zeal for market micro-segmentation can have its risks. As we mentioned in previous chapters, an accurate segmentation strategy is that which allows us not only to detect groups of customers with similar characteristics, but also to generate profitable sales and marketing actions in those segments. Moving in the right direction

Identify

Strategic

levels

of

Identify

Differentiate Interact

the

Company’s Situation

implementation One-to-one marketing

The company The company looks 1-to-1

“possesses”

improve

Company

individual

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preferences

customer’s

to

needs Customers Focused on the customer

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to Product

by value and needs Customers

Constant feedback from each customer

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obtains

increasingly

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options

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segment

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The risk of excessively segmenting the market in order to offer practically customized products and services, is undertaking actions of dubious economic benefits. Hence the need to have an accurate profiling strategy that justifies the return on the investment foreseen, before it is made. Behind an Individualized Marketing strategy, it is essential to have a meticulous evaluation of costs, not only sales and marketing costs, but also logistical and human resource costs. Several years ago, the automobile company Renault decided to create an on-line system in order to manufacture cars “a la carte”, with elements chosen by the customer. The company had to face over 50 million euros of investments in production, logistics, and training...

“One-to-one marketing strategies are not always profitable. A proper, previous segmentation that justifies future sales and Individualized Marketing actions is obligatory”

It makes sense that one-to-one marketing is costly and return on investments is slow, if not unprofitable. That is why some are starting to speak of One-toOne Marketing more as a business culture philosophy than a theory capable of being applied without difficulties… The limits to excessive one-to-one

marketing are not just economic: the excessive diversification some companies have turned to, especially consumer goods companies aimed at the final customer, has ended up confusing the consumer, when what the company wanted was to satisfy their most specific needs as much as possible. In some eating establishments, just reading the menu is an extremely laborious task... Whoever has ordered a pizza over the telephone will know what it means to face several dozen combinations of toppings, drinks, sized, and condiments. These end up overwhelming the customer, when the idea was exactly the opposite, that is, to free the customer from standardization and let them order according to their own taste. This trend is expanding into other sectors as diverse as telecommunications, where the customer often faces real headaches by trying to figure out which telephone contract is best for their needs. It is essential to remember that knowing “what type of customer the customer is”, is not the customer’s task, but rather the provider’s. Hence, the previous portfolio segmentation, potential market, and profiling strategies must be accurate and appropriate. And this is only possible if the company’s strategy is based on true Customer Intelligence, capable of practicing not only One-to-One Marketing, but also a profitable, studied, and effective “One-to-Few” Marketing… Resource: http://www.bitpipe.com/tlist/Direct-Marketing.html http://managementpedia.com/index.php?title=Marketing