by: Allan U.
Micromarketing, or Segment-of-One Marketing An interesting development in the past few years has been the emergence of a new segmentation concept called micromarketing, or segment-of-one marketing. Forced by competitive pressures, mass marketers have discovered that a segment can be trimmed down to smaller subsegments, even to an individual. Micromarketing combines two independent concepts: information retrieval and service delivery. On one side is a proprietary database of customers’ preferences and purchase behaviors; on the other is a disciplined, tightly engineered approach to service delivery that uses the database to tailor a service package for individual customers or a group of customers. Of course, such custom-designed service is nothing new, but until recently, only the very wealthy could afford it. Information technology has brought the level of service associated with the old carriage trade within reach of the middle class. Micromarketing requires:
1. Knowing the customers Using high-tech techniques, find out who the customers are and aren’t. By linking that knowledge with data about ads and coupons, fine-tune marketing strategy.
2. Making what customers want Tailor products to individual tastes. Where once there were just Oreos, now there are Fudge Covered Oreos, Oreo Double Stufs, and Oreo Big Stufs.
3. Using targeted and new media Advertising on cable television and in magazines can be used to reach special audiences. In addition, develop new ways to reach customers. For example, messages on walls in high-school lunchrooms, on videocassettes, and even on blood pressure monitors may be considered.
4. Using nonmedia Sponsor sports, festivals, and other events to reach local or ethnic markets.
5. Reaching customers in the store Consumers make most buying decisions while they are shopping, so put ads on supermarket loudspeakers, shopping carts, and in-store monitors.
6. Sharpening promotions Couponing and price promotions are expensive and often harmful to a brand’s image. Thanks to better data, some companies are using fewer, more effective promotions. One promising approach: aiming coupons at a competitor’s customers.
7. Working with retailers Consumer-goods manufacturers must learn to “micro market” to the retail trade, too. Some are linking their computers to retailers’ computers, and some are tailoring their marketing and promotions to an individual retailer’s needs.
An example of micromarketing is provided by a North Carolina bank, First Wachovia. The bank’s staff serves all customers the way it used to serve its best customer. The staff greets each customer by name and provides personalized information about her or his finances and how they relate to long-term objectives. Based on this knowledge, the staff suggests new products. In this way, the commodity retail banking has been turned into a customized, personalized service. This marketing strategy has resulted in more sales at lower marketing costs and powerful switching barriers relative to the competition. Three major investments are behind this seemingly effortless new level of service: a comprehensive customer database, accessible wherever the customer makes contact with the bank; an extensive training program that teaches a personalized service approach; and an ongoing personal communications program with each customer. Similarly, Noxell’s Clarion line illustrates how micromarketing can be implemented. When the company introduced its line of mass market cosmetics in drugstores, it looked for a way to differentiate it in a crowded market. The answer was the Clarion computer. Customers type in the characteristics of their skin and receive a regimen selected from the Clarion line, thus providing department store-type personal advice without sales pressure in the much more convenient drug channel.
This article examined the role of the third strategic C the customer in formulating strategy is the definition of the market. A conceptual framework for defining the market was outlined. The underlying factor in the formation of a market is customer need. The concept of need was discussed with reference to Maslow’s hierarchy of needs. Once a market emerges, its worth must be determined through examining its potential. Different methods may be employed to study market potential. Based on its potential, if a market appears worth tapping, its boundaries must be identified. Traditionally, market boundaries have been defined on the basis of product/market scope. Recent work on the subject recommends that market boundaries be established around the following dimensions: technology, customer function, and customer group. Level of production/distribution was suggested as a fourth dimension. The task of market boundary definition amounts to grouping together a set of market cells, each defined in terms of these dimensions. Market boundaries set the limits of the market. Should a business unit serve a total market or just a part of it? Although it is conceivable to serve an entire market, usually the served market is considerably narrower in scope and smaller in size than the total market. Factors that influence the choice of served market were examined. The served market may be too broad to be served by a single marketing program. If so, then the served market must be segmented. The rationale for segmentation was given, and a procedure for segmenting the market was outlined.
Micromarketing, or Segment-of-One Marketing An interesting development in the past few years has been the emergence of a new segmentation concept called micromarketing, or segment-of-one marketing. Forced by competitive pressures, mass marketers have discovered that a segment can be trimmed down to smaller subsegments, even to an individual. Micromarketing combines two independent concepts: information retrieval and service delivery. On one side is a proprietary database of customers’ preferences and purchase behaviors; on the other is a disciplined, tightly engineered approach to service delivery that uses the database to tailor a service package for individual customers or a group of customers. Of course, such custom-designed service is nothing new, but until recently, only the very wealthy could afford it. Information technology has brought the level of service associated with the old carriage trade within reach of the middle class. Micromarketing requires:
1. Knowing the customers Using high-tech techniques, find out who the customers are and aren’t. By linking that knowledge with data about ads and coupons, fine-tune marketing strategy.
2. Making what customers want Tailor products to individual tastes. Where once there were just Oreos, now there are Fudge Covered Oreos, Oreo Double Stufs, and Oreo Big Stufs.
3. Using targeted and new media Advertising on cable television and in magazines can be used to reach special audiences. In addition, develop new ways to reach customers. For example, messages on walls in high-school lunchrooms, on videocassettes, and even on blood pressure monitors may be considered.
4. Using nonmedia Sponsor sports, festivals, and other events to reach local or ethnic markets.
5. Reaching customers in the store Consumers make most buying decisions while they are shopping, so put ads on supermarket loudspeakers, shopping carts, and in-store monitors.
6. Sharpening promotions Couponing and price promotions are expensive and often harmful to a brand’s image. Thanks to better data, some companies are using fewer, more effective promotions. One promising approach: aiming coupons at a competitor’s customers.
7. Working with retailers Consumer-goods manufacturers must learn to “micro market” to the retail trade, too. Some are linking their computers to retailers’ computers, and some are tailoring their marketing and promotions to an individual retailer’s needs.
An example of micromarketing is provided by a North Carolina bank, First Wachovia. The bank’s staff serves all customers the way it used to serve its best customer. The staff greets each customer by name and provides personalized information about her or his finances and how they relate to long-term objectives. Based on this knowledge, the staff suggests new products. In this way, the commodity retail banking has been turned into a customized, personalized service. This marketing strategy has resulted in more sales at lower marketing costs and powerful switching barriers relative to the competition. Three major investments are behind this seemingly effortless new level of service: a comprehensive customer database, accessible wherever the customer makes contact with the bank; an extensive training program that teaches a personalized service approach; and an ongoing personal communications program with each customer. Similarly, Noxell’s Clarion line illustrates how micromarketing can be implemented. When the company introduced its line of mass market cosmetics in drugstores, it looked for a way to differentiate it in a crowded market. The answer was the Clarion computer. Customers type in the characteristics of their skin and receive a regimen selected from the Clarion line, thus providing department store-type personal advice without sales pressure in the much more convenient drug channel.
This article examined the role of the third strategic C the customer in formulating strategy is the definition of the market. A conceptual framework for defining the market was outlined. The underlying factor in the formation of a market is customer need. The concept of need was discussed with reference to Maslow’s hierarchy of needs. Once a market emerges, its worth must be determined through examining its potential. Different methods may be employed to study market potential. Based on its potential, if a market appears worth tapping, its boundaries must be identified. Traditionally, market boundaries have been defined on the basis of product/market scope. Recent work on the subject recommends that market boundaries be established around the following dimensions: technology, customer function, and customer group. Level of production/distribution was suggested as a fourth dimension. The task of market boundary definition amounts to grouping together a set of market cells, each defined in terms of these dimensions. Market boundaries set the limits of the market. Should a business unit serve a total market or just a part of it? Although it is conceivable to serve an entire market, usually the served market is considerably narrower in scope and smaller in size than the total market. Factors that influence the choice of served market were examined. The served market may be too broad to be served by a single marketing program. If so, then the served market must be segmented. The rationale for segmentation was given, and a procedure for segmenting the market was outlined.