From Mass Marketing to Segmentation to Micro-Marketing

Things in the marketing world are moving faster than ever. The changes of the last 10 years have caused significant shifts in companies marketing and especially advertising mix. Amazingly, to me, there are still a number of players who cling not simply to old terms but actually an old mindset that is way out of step for 2018.

Recently, someone told me that his firm remained very firmly a mass marketer. I started laughing and with usual Don Cole diplomacy told him that I did not know that his company sold toilet paper (one would hope that usage would cover all market segments!). He seemed wounded and the conversation ended pretty abruptly. I was surprised as mass marketing seemed to begin in earnest with the national reach of railroads and the Sears Roebuck catalog in the 19th century. Radio and then TV made mass marketing even more popular. Yet 10 years ago, at a conference, I heard a P&G executive talk only about segmentation even for flagship brand Tide. For 60 years, Tide has been America’s #1 detergent and now it is the global king. The shrewd P&G marketer did not consider Tide, Crest, or Gillette to be mass market brands. Every one of their 30+ billion dollars brands was carefully targeted. To him, mass marketing was dead.

Early in my career in New York, segmentation was the big buzzword. Yet it was not a new thing in 1974. I vividly recall in graduate school at Boston College putting together a brief paper about General Motors chief Alfred P. Sloan. In 1924, Sloan stated that “GM has a car for every purse and purpose.” Way back then, more than 90 years ago, Sloan was in to segmentation with his Cadillac, Oldsmobile, Buick, Pontiac and Chevrolet brands each reaching a different socio-economic group. Forty years after Sloan, Segmentation began to really get some meat on the bones, as theorist William Lazar added “lifestyles” to the marketing dynamic. The broad thesis started with demographics—gender, age, income, education, race, occupation and household size. Layered on to that was geography—urban, rural, climate and region and then psychographics—attitude, values, lifestyle and cultural opinions. Looking at prospects this way helped define whether a segment was worth the effort (I am convinced this is a major reason why most new businesses and products fail as people do not look at segments potential harshly enough). If a few segments pop and you can afford it, you speak to each segment in a different way.

Over the last 10 years as internet marketing has blossomed two other entries are changing the face of consumer sales—big data and some amazing algorithms. As we spend more online, be it with Amazon or individual retailers, more and more detailed and EMPIRICAL information is being gathered about us as individuals. Additionally, the big players do 21st century modeling which can forecast better than ever before about whom else among their customer base may like the product(s) that we just purchased. As invasive as this seems to us baby boomers, I assure you that most millennials could care. They want convenience—NOW! So, marketers know your sweet spot. Consider shoe leader, Zappos (owned by Amazon). They can smoke out the budding Imelda Marcos clones among us and offer them shoe “deals” almost daily. They can track your last purchases and know when you are due for a new pair of athletic shoes. All of this has to be rough on advertising. Why spent a lot with buckshot approach (mass market) or even to a segment when you know the volumetrics of your current base so well? As a friend said to me, “today’s marketers know more about me than the IRS, CIA, NSA, and my girlfriend combined.”

 A very wise economist I knew long ago told me that “bad ideas never really die in economics.” Try socialism or wage and price controls or protectionism. In a way, the same is true of marketing. Mass marketing is not dead yet although its utility is so limited that it cannot go it alone. Segmentation is still useful in many ways but that is being replaced with micro-marketing on a pinpoint basis.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com