Marketing research and strategy development for target markets

Micromarketing

If someone doubts that marketing now is toward specialized, targeted markets vs. The mass populations, just say to look at a catalog like JC Penny that has page after page of athletic shoes. Gone are the days of "tennis shoes" or "tennies" that serve a number of different reasons. Today there is a different type of shoe for every sport from walking, to jogging, to playing basketball and hiking. A walk down the cereal isle in a grocery store reveals the same thing with not only a variety of children's breakfast treats, but with those for adults as well. Or if that same person does not believe that Americans are seeing themselves in more refined terms, only think about the recent cultural trend of identifying with one's tradition: "Italian-American," "Asian-American," "Irish-American."

Over the past few decades, marketing has been moving from mass appeal or developing an advertisement to the largest population to what is called "micromarketing." As noted in the article "The Vanishing Mass Market," the U.S. has segmented into infinite numbers of groups and subatomic groups delineated by demography, as well as increasingly distinct and demanding product preferences. "All the research we're doing tells us that the driver of demand going forward is all about products that are 'right for me," says David Martin, president of Interbrand Corp. "And that's ultimately about offering a degree of customization for all." The major goal is to send the right message, to the right person, at the right time via the right vehicle.

The problem with this form of marketing, says the article, is similar to hunting game birds with a high-powered rifle instead of a shotgun. If you miss, you miss entirely. This is a difficult realization for organizations that are used to measuring progress in tiny increments of product market share. It is an entirely new mindset, especially for those who have been involved in the completely opposite approach for so many years.

This new tailored approach to marketing is impacting the vehicles that were born, fed and raised on mass appeal. For example, it threatens mass media and their heavily ad-dependent business models. Network TV and the like have been the primary recipients of the advertising money. "Even as prime-time ratings fell by 41.5% from 1977 to 2003, network TV's advertising revenues rose nearly fivefold." For building product, there is no effective substitute for mass media, especially TV. Every year, for instance, the cost for advertisements on the Super Bowl increase by leaps and bounds and in fact, are becoming an integral part of the football season. The next day by the cooler, people are talking not only about the touchdowns but "Did you see that commercial for such and such?"

However, as shows on cable TV and other specialized programming continue to steal away market segments piece by piece, this is bound to change. A Wall Street study by Sanford C. Bernstein & Co. predicts that ad revenues of narrowcast media will grow at 13.5% a year from 2003 to 2010, while the mass media slow rise about 3.5% -- well below the projected 5.7% gain in gross domestic product. By 2010, Bernstein predicts, marketers will be spending more for advertising on cable ($27 billion) and the Internet ($22.5 billion) than on network TV ($19.1 billion) or on magazines ($17.4 billion).

The Madison Avenue ad agencies that produced these mass media commercials are also being impacted significantly. Marketers are spending more money on niche vehicles, such as direct mail, telemarketing, and e-mail and less on mass media. Thus, the smart agencies are following the money and diversifying into other areas.

Publishing companies are responding to the targeting by producing magazines for the different markets. The magazine sections of book stores and pharmacies fill a sizeable portion of square footage by covering a range of titles from Teen People to Harley Davidson. Thousands of consumer magazines have been founded over the past decade, including 440 last year alone, nearly all of them born targeted. Only about 10% of the 6,200 consumer magazines published in the U.S. are general-interest titles, down from 30% two decades ago.

However, because of the ever increasing cost of paper and printing and the growing numbers of people going online to read about their special interests, the Internet is fast becoming the Mecca of targeted publications and the advertisements that go hand in hand with them. What makes it more enticing is being able to capture the names and locations of these online users through electronic tricks of the trade and market other things to them as well. As time goes on, other vehicles will take part of the markets. For example, what will happen when it becomes easier and easier for people to use their cell phone evolves as a media player, enabling people to read news reports, watch video, or play games.

Go online now, and everywhere there are banners, popups, ad videos, etc., etc., etc. Build it and they shall come, so why not ads on cell phones as well? ESPN, which is making sure its sports programming and stories can be found everywhere, call the cell phone their "third screen," after the TV and PC. More than 50,000 cell-phone users subscribe to ESPN BottomLine, a service that sends out constantly updated sports news and scores.

Will mass advertising go the way of the dinosaur and be consumed by targeted micromarketing? This probably will not happen completely for several reasons. One, specialized marketing is expensive. It is much more costly to develop six different targeted ad campaigns than one. Especially with the high cost of advertising, money still has to be saved wherever it can.

Similarly, there are just too many different niches. No company can develop a marketing approach for too select and focused groups. They would go out of business very quickly.