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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