Exploring the new age of Micromarketing

Traditional mass marketers, expend huge advertising budgets to reach out to a large audience. The main argument in favour of the widely used methodology of mass marketing is that it attracts maximum potential consumers and has a wider reach.

However these marketers are increasingly finding themselves with cost overruns and diminishing profit margins. This can be accounted to the gradual change in buying patterns and the changing consumer buying behaviour. With the increasing proliferation of advertising and distribution, advertisers are caught up in an intense competitive scenario, where the costs are huge and the hit ratio is less.

This can be attributed to the fact that consumers buying patterns are changing and this has led to creation of various microsegments within a particular customer segment. For example, consider a market segment for compact sedans. A compact sedan may be targeted to various segments like young married couples or the unmarried buyer with high median income.

The preferences of consumers within the particular segments vary, and hence automobile companies launch a wide range of variants at different price bands to satisfy a wide range of consumer needs within the same microsegment.

Maruti Suzuki’s portfolio consists of thirteen car models with at least forty variants, to cater to different needs of consumers. The base model of the vehicle may not have air conditioning or power steering, but for the models that have these features, the buyer has to pay higher prices.

The key for marketers is to identify the microsegments that are willing to pay the premium for additional features and roll out newer variants to satisfy the needs of diverse consumer segments.

The trend shows that consumer satisfaction is passé.Consumers want to be shocked, surprised and jolted out of the boredom of the routine product offerings. Consumer delight is the way of the future. This is why companies like P&G, McDonalds, and LG have used micromarketing techniques to satisfy a wide range of customer expectations.

For example, P&G created a separate budget for introducing a product variant which was called Pantene Relaxed and Natural to cater to the needs of Black Women in the United States. The customer now knows that he is the king. Given the newly evolved demanding consumer, huge competition, shrinking marketing budgets, the challenge for today’s marketer is to get closer to the consumer by micro-segmenting and micro-positioning his offerings.

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Banks recognize that a targeted database marketing may be the best approach in reaching out to small businesses. Through the application of small-business customer databases in identifying small-business customers, and determining their product use and profile, banks can effectively conduct market targeting initiatives. Target marketing provides banks with such long-term benefits as reduced new-business acquisition costs, higher customer retention rate, and increased customer satisfaction. The successful target marketing efforts of First Tennessee Bank, KeyBanks and Pittsburgh National Bank are testaments to the potentials of this technique in developing relationships with small businesses.

Check out the e-book below to explore in depth analysis and research on micromarketing in the banking sector.

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How does Dell's $3.9 billion acquisition of Perot Systems affect the IT industry

Dell’s $3.9 billion acquisition of Perot Systems gives the company a better foothold in the IT services market. Dell had been talking about diversifying away from its core PC and server businesses for months, but the Perot purchase is the first move that illustrates the company is serious about its transformation.

CEO Michael Dell said on a conference call the Perot purchase is a platform that the company can use to acquire more companies. Dell specifically said it will look for more deals similar to the EqualLogic purchase. Dell also said that Dell and Perot would be able to grow faster combined. “We will leverage Perot’s services capability across Dell’s customer base,” said Dell. “This acquisition makes great sense.”

Perot is one of the largest IT services providers to hospitals and physicians. President Obama has made healthcare IT a big focus to slow the rate of increasing costs.

Ross Perot Jr., Chairman of the Board, Perot Systems says; “This transaction represents a great opportunity for our company and our associates. Today’s announcement is the next step in formalizing a relationship that has flourished for some time. When my father founded Perot Systems he envisioned a global information-technology leader. The new, larger Dell builds on that promise and its own successes by taking Perot Systems’ expertise to more customers than ever.”

The acquisition “definitely makes a statement,” says Gartner analyst Dane Anderson, and gives Dell new expertise in the healthcare and government markets. But the merger is not a guarantee of success. “Whether they suddenly become the next big competitor to IBM, Accenture, or HP EDS, that remains to be seen,” he says. Size-wise, Dell’s services organization still pales in comparison to some competitors. HP, having purchased EDS, does $40 billion in services revenue, Anderson says. IBM is even bigger with $57 billion in services revenue.

Using Radical Marketing to stay ahead of competition

Organisations have evolved around the years by using the traditional marketing mix and sticking with conventional marketing ideologies to thrive in the market. A lot of companies however find themselves in a closed loop when there is no consistency in growth and sales tend to become stagnant. This is the time when a firm needs to employ the concept of radical marketing to turn around its fortunes and firmly establish itself in the hearts and minds of customers. This is done, in such a way that the customers not only love the company, but also become missionaries for the company and its offerings.

So what exactly is radical marketing? To put it in simple terms it is just to do marketing beyond the conventional way. It goes deeper than just being crazy or revolutionary in approach, but to have a passion and love for the company’s brand, product and its consumers.

In radical marketing the CEO becomes much closer to the marketing action and in fact owns the marketing department. The CEO and top management drive marketing approach; hence everyone in the organization focuses on its interaction with the market and become more accountable to the company’s marketing practices.

The crux of radical marketing is to understand the pulse of the customer by getting out of the office and get face –to- face with the people that matter the most, the customers. Snap-on Tools, a leading designer and manufacturer of tools, used radical marketing and became a two billion dollar organisation by selling tools door-to-door to its core customer base of over one million auto mechanics. Among other organisations that adopted radical marketing are Harley Davidson, Virgin Atlantic Airways and Boston Beer, who focussed on stretching limited resources, staying in close contact with customers, and creating more satisfying solutions to meet customer needs.

Radical marketers can also be termed as missionaries, who strongly believe in the product and the customer base as strongly as the CEO. They go beyond age old conventions and follow innovations in terms of their product, advertising and brand building strategies. A radical marketer is obsessed with brand integrity and is fixated on quality.

Radical marketers tend to have smaller marketing budgets, which makes them learn to be creative with a small amount of resources. Most of these marketers tend to rethink the marketing mix, by using more targeted campaigns to reach their customers. Since radical marketers are focused on one-to-one customer interaction, they spend little on their advertising budgets. However they tend to use advertising in short, sharp bursts what is called as “surgical strike advertising”. Radical marketers tend to rely more on tools such as direct mail, local advertising, and sponsoring local events and so on.

Radical marketing is not just apt for large companies, but also smaller companies are equally benefited by being innovative and thinking out-of-the-box.

There are various instances where new entrepreneurs have adopted innovative marketing practices and boosted sales and brand equity with considerably low resources.

One such Radical Marketer is Joy Gendusa, the Founder and CEO of PostcardMania, the fastest growing direct mail postcard marketing firm, recognized by Inc Magazine. She began PostcardMania in 1998 with no capital injections of any kind, using her marketing acumen and direct mail postcards to expand her corporation year after year.

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The Changing Face of CRM in Marketing

The role of CRM has always been to keep abreast with latest customer trends and maintain long term relationships with them. The marketing team makes use of CRM applications to make sure the campaigns are effective by optimising the processes of email, managing templates and recording responses of the campaigns. However there is always a gap in terms of quality leads generated and their authenticity when it comes to their handover to the sales team.

Marketing efforts are streamlined towards maximising leads generated through online campaigns, webinars, and such events. However the core focus of marketing is always lead quantity and the quality of leads generated is often ignored. In a recessionary economic scenario, companies cannot afford to waste time and resources running after junk leads or leads which are not fully qualified.

Marketing’s revised role

This is where evolution of marketing must take place. Marketing must be involved in the entire lead lifecycle stage, not just to generate leads but also the qualification stage. This will enable the sales team to work more efficiently as they would get sales ready leads.However, there must be a mutual understanding between sales and marketing as to define the company’s requirement of a sales ready lead.

Once this is determined marketing needs to devise targeted campaigns and work towards producing more qualified leads and passing them to the sales team. There is a trade-off that the quantity of leads might be reduced, however the leads generated would not be cold enquires as a result of campaigns, but potential customers who really have a need or requirement of the company’s products and services.

Most companies have a standardized process for sales and hence it is necessary for the company to understand the new role of marketing which would be responsible for the entire lead management process. It is up to the marketing team to design their campaigns in congruence with the company’s product and service strategies and what information it really needs from potential customers as a result of their campaigns.

For instance does a company need to track the leads demographic information, its buying behaviour in the past, its interaction with the company, specific questions to be asked regarding compelling events and so on. Once the marketeer tracks his requirements for a specific campaign, he needs to design the required tools and metrics to implement and measure the responses of these campaigns.

This change may come gradually with trial and error and learning through patterns and general trends. It would be best to start with one campaign and manage the entire lead management process with respect to designing metrics and tools in order to produce the required sales ready leads in line with the campaign objectives.

With the gradual change in processes marketing would be more in tune with sales and there would be better co-ordination and congruence with respect to sales and marketing efforts. Since lead generation is a pre-cursor to the sales process, refinement of this process would definitely lead to efficient use of resources and an overall win-win with respect to company objectives and the role of marketing in the company.

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The Changing Face of Marketing

This is the first entry in my blog called Exploring the changing face of marketing. Here you would find interesting topics, including current marketing trends, innovative marketing practices and the latest happenings in the field of marketing.