‘Micro-Marketing’ : Firms Get Personal in Sales Quest
Ford Motor Co. changed American motoring 70 years ago when it used assembly-line techniques to mass-produce Model Ts. Now, to meet Japanese competition, it is taking a more personalized approach toward Californians.
On certain models, such as Thunderbirds, Ford a few years ago abandoned the standardized look and began offering Californians special options such as improved paint finishes and sporty wheels. Advertising was different, too. Commercials aired here showed Fords at state landmarks such as Yosemite.
It paid off. Thunderbird has become the No. 1-selling domestic car in California in the last two years.
Broad-Based Approach
For years, big companies like Ford relied on a marketing strategy that sought to appeal to buyers everywhere, and they were content to let others serve regional or specialized markets. Not anymore.
Increasingly, the nation’s largest firms are finding that the broad-based approach is not enough. With more foreign competition, they are taking advantage of greater industrial flexibility and supplementing their principal lines with specialty or regional products and promoting them that way. American companies and consumers are in the midst of what one analyst calls an “age of micro-marketing.”
The grocery division of Chicago-based Beatrice Cos., for instance, markets a kosher Wesson vegetable oil to the large Jewish population in the Northeast and markets Mexican cuisine to Latinos in the Southwest.
Midwestern Campaign
The company also has a campaign to promote Orville Redenbacher’s popcorn in the Midwest where, Beatrice spokesman Bill Blodgett said, a disproportionate number of the nation’s popcorn lovers live.
In forcing large companies to abandon their shotgun approach to selling, consumers are raising the stakes in a marketing contest that has grown increasingly complex and expensive in recent years.
Not only are some companies producing more commercials to target specific kinds of buyers, many are opening regional offices and even decentralizing their manufacturing process to make products in the area of the country where they sell best.
Beatrice’s grocery group, which had one central marketing office as an independent concern 10 years ago, now has offices in the Northeast, Midwest, South and West.
Competition is not the only spur in the race to serve smaller or more specialized markets. These “niche” products, such as sports cars or gourmet TV dinners, often have higher profit margins.
More Choices
A few regional bottlers such as Crush International Inc., now a unit of Procter & Gamble Co., and Nesbitt’s of Monarch Co. once had the tiny orange soda market (3.6% of all soft-drink sales) to themselves. But now both Coca-Cola and Pepsico have new orange soft drinks.
Similarly, 10 years ago, sports car lovers had only one domestic choice and had to look to European car makers such as Ferrari and Triumph for two-seaters. Today, there are three domestic two-seater sports cars and another four scheduled to be introduced by the Big Three auto makers before the end of the decade.
The big companies have been aided in their quest for specialized markets by new research that eliminates some of the guesswork in reaching them. Until the mid-1970s, marketing research analyzed and classified consumers mostly by age, income, level of education and other quantitative variables such as how many children were in the household. Since then, that kind of data has been supplemented by more sophisticated measures that group consumers by region and by values.
Such efforts promise a new day for shoppers with different needs.
“Ultimately, the consumer could benefit by getting a product geared more to his tastes,” said Charles Crane, an advertising industry analyst at the New York investment firm Oppenheimer & Co. “But the trade-off is that that choice will cost him more. Marketers are not in this game for altruistic reasons.”
Increase in Flexibility
Adds Daniel Garnick, associate director for regional economics at the Commerce Department in Washington: “Robotics and other new technologies make it easier for companies to shift or change their products than the old assembly line did.” Companies, he said, can respond more quickly to the growing influence of demographic groups such as baby boomers, Latinos and working women.
Fueling that flexibility is a manufacturing revolution on the assembly line, said a spokesman for Hyde Park Electronics Inc., a Dayton, Ohio, company that makes electronic sensing devices for food processing and beverage firms such as Coca-Cola, Pepsico, General Foods and others.
“Computers and microprocessors have allowed much more control over the manufacturing process and give the operator many more opportunities to produce several varieties of his product,” said Ronald J. Toke, marketing manager for Hyde Park Electronics.
Toke said, for instance, that electrical connections of manufacturing components used to be “hard-wired together.” Thus, altering the assembly line was an expensive proposition because wires had to be manually disconnected and rerouted.
Today, he says, an operator “just dials in changes on a . . . control panel, and the parameters of the next product are ready to drive the line.” Assembly-line speeds can be varied more easily, he said, and microprocessors have made equipment smaller as well. So, a soft-drink bottler can more easily switch from production of 12-ounce bottles of cola to 16-ounce bottles of orange soda.
Filling Information Gap
As companies become more nimble, research firms are filling the information gap, using new computer technology, such as universal product code scanners, to track consumer buying patterns more accurately.
Alexandria, Va.-based Claritas uses census data to segment the country into micro-geographic communities averaging 340 homes. Other firms, such as SRI International of Menlo Park, Calif., group people on the basis of their attitudes, needs and beliefs.
“The 1960s was an age of mass production and mass distribution,” said Philip Kotler, a business professor at Northwestern University. Later, “companies began looking for (niches) in the marketplace” much as Volkswagen did in the late 1960s, when it promoted its Beetle as an alternative to Detroit’s gas guzzlers.
Today, Kotler said, “segmentation of the marketplace is one of the most powerful forces going on in marketing. In the 1980s, we are in the age of micro-marketing.”
A financial-services client of Claritas, for example, might use its data to find out where potential investors live. Palos Verdes and Winnetka, Ill., might be good places to search for potential investors, since they are classified by Claritas as “America’s wealthiest socioeconomic neighborhoods, populated by . . . professionals and heirs to old money.”
Tailored to Life Styles
Texas developer Ray Ellison Homes used a different measure to help tailor newly built houses to fit the needs and life styles of San Antonio home buyers.
Using life style data from SRI International, the developer found that, although many consumers say they want wallpaper, most feel it’s worth less than what they have to pay for it. So Ellison deleted wallpaper in the baths and kitchens and substituted a fireplace in the master bedroom of the $70,000 homes.
Both a life style and a regional challenge face Glenview, Ill.-based Kraft Inc., maker of Velveeta cheese and other dairy and food products.
Ethnic foods are influencing Americans palates, yet experimentation with such new cuisines remains confined to cities and certain regions of the country. Thus, Kraft sells its European Valley specialty cheeses only in urban markets and offers a hot and spicy specialty cheese primarily in the Southwest, where it appeals to the large Latino community, said Bob Eckert, group brand manager for refrigerated products at Kraft.
“A smart marketer is going to hone his advertising campaign and marketing program in on those markets where he thinks his product will do best and not waste money running a national campaign,” Eckert said.
The diversity of the consumer market seems odd given the success of the burgeoning number of look-alike franchised businesses such as Southland Corp.’s 7-Eleven convenience stores and McDonald’s fast-food restaurants. But experts say it is rooted in fundamental changes that have occurred in what was thought to be a homogeneous American melting pot 25 years ago.
“One commercial fits all only when there are identical consumer and marketing situations--and that just isn’t the case anymore,” said Ron Kaatz, a vice president in the Chicago office of the J. Walter Thompson advertising agency. “The nuclear family--where daddy goes to work and mom stays home with the 2.1 kids--is no more. We have a population that is older, with a greater percentage of working women and where fitness and well-being are in vogue.”
Shift From Networks
In response, mass marketers in recent years have moved to shift advertising dollars away from national media like network television and general-interest magazines to specialized media such as city and regional publications and cable television in order to capitalize on regional and life style differences.
According to the Television Bureau of Advertising in New York, for example, the national networks’ share of total spending on television advertising has declined to an estimated 41% last year from 45% in 1980.
Similarly, between 1980 and 1984, advertising pages declined 4% at Newsweek and 1% at Time, while Southern Living magazine--which circulates mostly in the Southeast--grew nearly 13% and Texas Monthly, another regional magazine, increased its ad pages 5.7%, according to the most recent figures from Leading National Advertisers, a New York-based trade group that tracks advertising.
Some network officials say they aren’t concerned.
“We haven’t seen any big growth in regional advertising,” said Jerome Dominus, vice president of sales for CBS, adding that regional ad spending at CBS has remained a steady 2% to 3% of the network’s advertising revenue. Nevertheless, CBS and other networks now allow advertisers to purchase only parts of their national broadcasts, such as allowing a company to buy time on only the West Coast feed of the evening news.
10 Kinds of Yuppies
Some experts warn that even that concession may not be enough to reach consumers.
“You can never know the consumer too well,” said William Meyers, a former advertising executive who is author of the recently published book “The Image Makers.” “Right now there are probably 10 different kinds of yuppies. There are yuppies that want to be chairman of the board and yuppies that want to clean up the environment.”
Still, most experts believe that increased segmentation of consumers is inevitable.
“The notion that all products sell the same in all parts of the country is untrue,” said Bruce Carroll, manager and general partner of the market research firm Claritas. “The concept of America as a melting pot only makes sense when you are reading a history book. When you are a marketing executive, you view the country as a mosaic.”
