Two words sum up today’s consumer market: unlimited choice. Over the past decade, companies have rushed to steal market share by creating an unending stream of new products to meet the desires of consumers. At the same time, media outlets have proliferated. Marketers are faced with the challenge of getting their message heard by consumers who are hard to find and even harder to influence.

How can companies create awareness of their
products? One thing is certain: Mass marketing no longer works. Marketers are no longer able to reach a “mass market.” Even if they could, there is no longer a “one-product-fits-all” mentality that would appeal to consumers. Alumni Director Alisa Robertson sat down recently to talk with four School of Business faculty members – Neeraj Arora, Linda Gorchels, Jack Nevin and Aric Rindfleisch – to get their input on how the marketing industry is learning to “rediscover their customer.”

Marketers are shifting from mass marketing to more targeted micro-marketing. Why are we seeing such a dramatic shift?

Jack Nevin: Traditional marketing is much less powerful. You can’t get a mass audience anymore. With thousands of print, radio and cable outlets, the market is much more segmented. Marketers can no longer reach a mass market; they have to move toward micro-marketing. Marketing as a discipline is still very powerful, but the tools are evolving.

Linda Gorchels: America is much more diverse than it was in the past. The mainstreaming of affluence and a more self-indulgent culture lends itself to micro-marketing. Also, as companies consolidate and are getting larger, it impacts the kind of marketing they can do. People are “hyperliving.” They’re trying to get things done spontaneously, immediately. All these external trends impact marketing. We have lots of efforts to get closer to the customer and at the same time, we have customers with the ability to avoid commercial messages. There’s a bit of a battle. And then there’s the issue of ROI...

Are marketers facing increased pressure to show a return on investment?

Aric Rindfleisch: Marketers are finding they need to use the same metrics as the finance department to show their cost is producing a return.

Nevin: Corporations are allegedly trying to create value for their customers. Creating value has two parts – the benefits side, generating sales, managing the experience, etc. The other side is driving efficiencies. Marketers are dealing with how to manage this cost-benefit relationship. Companies today have to be very good at innovation and drive for more efficient distribution processes.

So, are companies taking measures to make their supply chain more efficient? Are they working more closely with retailers who sell their products?

Neeraj Arora: What consumers see in stores is very much driven by what retail buyers decide to stock. However, most marketing research is focused on what consumers buy. Understanding needs of retailers is perhaps equally important but far more difficult to do — it’s a much smaller sample. We have huge amounts of data at the consumer level, but very little at the retailer level.

Nevin: Consumer goods companies are realizing their customer is now the retailer, marketing efforts need to start at that level. When they talk about having a customer-focus, they don’t necessarily mean being focused on you and me, they mean focusing on retailers, like Wal-Mart, Target, etc.

Gorchels: It used to be that B2B companies emulated the marketing of consumer packaged goods companies. Now, consumer companies are learning the importance of channel relationships from the B2B companies.

Nevin: As marketing educators, we always assumed the perspective of a manufacturer marketing products to consumers. The new definition of marketing focuses on the fact that marketing is the business of creating relationships. It means marketers don’t completely control this system anymore.

Marketers are faced with the challenge of influencing the decision making of retailers and reaching a consumer audience that is more fragmented than ever. How are marketers adapting their strategies to get their message out?

Nevin: One of the big changes is in corporate vision and mission. Companies are rediscovering their customer. The definition of customer may mean the retailer; it may mean the consumer. Instead of looking at a product, they’re looking at everything from a customer perspective. Marketers are trying to shift from managing their products to trying to experience the company from a customer’s point of view. It’s not an easy thing to do, because day-to-day salespeople need to make sales, brand managers need to create campaigns.

What about new techniques like customer intimacy, experiential marketing and
storytelling?

Gorchels: I’m not sure customer intimacy is totally new – it’s just being reinvented. If we look back to times when companies were smaller, people did have experience with companies. Small businesses knew their customers by name. As companies grew, they moved to mass marketing. Now I think companies are trying to use technology and other means to get closer to customers and have customers experience a stronger relationship with companies and brands.

Rindfleisch: There’s also a move toward more authentic experiences. Budweiser’s “true” campaign is an example. I’ve worked with another business professor, Craig Thompson, on some research on brand avoidance. We looked at customers who chose to visit local coffee shops instead of Starbucks. They’re owned locally and they provide an experience that’s different from the cookie-cutter, homogenized experience they feel they’ll get at Starbucks. Managing authenticity for large companies is very difficult.
It’s the marketing of not marketing. Sometimes companies are better off not marketing, at least not in the traditional sense. For the past two years, Pabst Blue Ribbon has been the fastest-growing domestic beer brand. And, they’re willfully choosing not to do mass market advertising.

Arora: One thing we hear from our board members and when we talk in the classroom is we need to tell a story. For marketing as a function to be impactful in running a business, an effective approach is to relate numbers with a face or a story.

Rindfleisch: More and more, marketing is becoming stories about brands. The history of brands over the past 100 years has gone through four stages. First, brands were a symbol of quality. Ivory soap was a symbol of purity. Later, brands represented a collection of benefits for the consumer. Then, brands were portrayed as a lifestyle. More recently, brands have become a story, a stylized story. People don’t want to be a segment; they want a story unique to them.

How is the Internet affecting advertising and market research?

Gorchels: In some ways, the Internet is becoming the new TV – it’s being funded by advertisements similar to the way television used to be. Advertising as an industry is not going away, but it is shifting to this new channel.

Arora: It comes back to ROI. Measuring the link between pop-up ads and online shopping is easy, but it’s hard to relate surfing behavior to a product that a consumer purchases in a store a week later. ACNielsen is partnering with Yahoo to try to track Internet browsing with in-store purchases. The link is tough to find.

With more and more consumers blocking email advertisements and joining “do not call” lists, how are marketers reaching customers who don’t want to be reached?

Arora: It’s making companies more efficient in that if you can’t reach a specific segment, it doesn’t matter. They now need to reach the customers who want to be reached. Word-of-mouth advertising is the single most powerful method of getting the word out. In some ways, the problem of reaching customers is solving itself, with opt-in options.

Nevin: Advertising has often been used to create awareness. Customers are now taking a more active role in building awareness on their own through their own research.

Gorchels: What if you’re an established brand? How do you reach potential customers? How can you generate a buzz? There are a lot of established brands facing those questions.

Nevin: But, should you reach them? If they’re not your authentic customers, if they’re not your segment, why should you reach them? And, if you do reach them, do you lessen the experience for your authentic users?

Gorchels: If you don’t reach them, you’ll die with your existing customers. Existing brands that may no longer appear “cool” have to generate a buzz through something other than traditional media. It might require something more subtle, like a public relations campaign rather than traditional advertising.

It sounds like consumers have more power than in the past.

Rindfleisch: Consumers are much more active. There are brands today that are solely run by customers. A good example is the Apple Newton, the first PDA, which came out a decade ago. In less than two years it failed, but had about 20,000 loyal customers who have kept it alive. Without any help from Apple, customers developed software to share with each other and through Web sites support each other. Customers are talking to each other; they’re talking directly to the company. I think customers in the future will have more of a voice in creating products.

So consumers may feel more in control but in reality companies are gathering data and targeting the messages we’re receiving. Should consumers be worried about privacy?

Gorchels: There is a growing awareness of concerns over privacy. CNN recently ran a story of a nightclub in Barcelona that was testing RFID chips put on people’s arms. The chips identify the customer and when scanned, drinks are billed directly to the customer’s account. If you think about what that could mean in terms of privacy, it’s pretty scary. Online tracking technology allows marketers to see what someone is viewing and display targeted ads or send targeted spam that corresponds to what the consumer is interested in. That’s very powerful information.

Rindfleisch: The technology is way ahead of customers’ comfort levels. A key part of the discussion is that all of us are prejudiced as adults. I wonder if my children, who have known nothing but the Internet and email, will be as concerned about privacy.

Arora: It’s harder on us older people!

Rindfleisch: Perhaps the more dangerous issue is not so much privacy, but with an increasing flow of information both ways, there’s almost a caste system developing where certain customers are worth more than others. When I call my credit card company and put my card number in, it’s because they are determining if I’m a silver, gold or platinum user. If I’m a more valuable customer, my call is answered faster. It could develop further separation between the “haves” and the “have nots.”

Arora: Are you saying that’s wrong? That’s
capitalism.

Rindfleisch: It’s potentially dangerous. It’s divisive.

Arora: It’s class market segmentation at work. We’ve been doing that forever. But the social effects of marketing, we’re paying more attention to that. There are clear social issues and impacts.

Gorchels: Companies are now looking at “strategic customers.” Not just: “What is the significance of their profitability today?” But: “What are their possibilities for the future?” Companies should be looking at long-term potential.

Rindfleisch: Although not all companies can afford to take that long-term approach.

Nevin: It goes back to ROI—management’s being evaluated on short-term revenue.

What advice would you give to marketers? How is their role changing and how can they stay ahead of the curve?

Nevin: In the industry, there’s a subtle transition from brand management to customer management. Companies are putting in customer relationship management teams. Brand managers used to manage their own realm. Marketing today needs to be focused around the customers rather than around the products.

Gorchels: Brand as a concept is changing. Corporate brand management is a broader concept than product brand management. The brands have to be integrated from the perspective of the customer.

Rindfleisch:We’ve become a victim of our success. If you go back 25 years ago, as David Packard, co-founder of Hewlett Packard, said, “Marketing is too important to leave to the marketing department.” The whole notion is that marketing is pushed down to every customer contact point. Engineers think like marketers in product design. Marketing has become diffused — it’s no longer an organizational function as much as it is a philosophy or mind-set.

Arora: In some ways, that’s not a bad thing. It’s making the field more efficient. It just makes a marketer’s job more difficult.