The 1990s will belong to the customer. And that is great news for the marketer.
Technology is transforming choice, and choice is transforming the marketplace. As a result, we are witnessing the emergence of a new marketing paradigm—not a “do more” marketing that simply turns up the volume on the sales spiels of the past but a knowledge- and experience-based marketing that represents the once-and-for-all death of the salesman.
Marketing’s transformation is driven by the enormous power and ubiquitous spread of technology. So pervasive is technology today that it is virtually meaningless to make distinctions between technology and nontechnology businesses and industries: there are
only technology companies. Technology has moved into products, the workplace, and the marketplace with astonishing speed and thoroughness. Seventy years after they were invented, fractional horsepower motors are in some 15 to 20 household products in the average American home today. In less than 20 years, the microprocessor has achieved a similar penetration. Twenty years ago, there were fewer than 50,000 computers in use; today more than 50,000 computers are purchased every day.
The defining characteristic of this new technological push is programmability. In a computer chip, programmability means the capability to alter a command, so that one chip can perform a variety of prescribed functions and produce a variety of prescribed outcomes. On the factory floor, programmability transforms the production operation, enabling one machine to produce a wide variety of models and products. More broadly, programmability is the new corporate capability to produce more and more varieties and choices for customers—even to offer each individual customer the chance to design and implement the “program” that will yield the precise product, service, or variety that is right for him or her. The technological promise of programmability has exploded into the reality of almost unlimited choice.
Take the world of drugstores and supermarkets. According to
Gorman’s New Product News, which tracks new product introductions in these two consumer-products arenas, between 1985 and 1989 the number of new products grew by an astonishing 60% to an all-time annual high of 12,055. As venerable a brand as Tide illustrates this multiplication of brand variety. In 1946, Procter & Gamble introduced the laundry detergent, the first ever. For 38 years, one version of Tide served the entire market. Then, in the mid-1980s, Procter & Gamble began to bring out a succession of new Tides: Unscented Tide and Liquid Tide in 1984, Tide with Bleach in 1988, and the concentrated Ultra Tide in 1990.
To some marketers, the creation of almost unlimited customer choice represents a threat—particularly when choice is accompanied by new competitors. Twenty years ago, IBM had only 20 competitors; today it faces more than 5,000, when you count any company that is in the “computer” business. Twenty years ago, there were fewer than 90 semiconductor companies; today there are almost 300 in the United States alone. And not only are the competitors new, bringing with them new products and new strategies, but the customers also are new: 90% of the people who used a computer in 1990 were not using one in 1980. These new customers don’t know about the old rules, the old understandings, or the old ways of doing business—and they don’t care. What they do care about is a company that is willing to adapt its products or services to fit their strategies. This represents the evolution of marketing to the market-driven company.
Several decades ago, there were sales-driven companies. These organizations focused their energies on changing customers’ minds to fit the product—practicing the “any color as long as it’s black” school of marketing.
As technology developed and competition increased, some companies shifted their approach and became customer driven. These companies expressed a new willingness to change their product to fit customers’ requests—practicing the “tell us what color you want” school of marketing.
In the 1990s, successful companies are becoming market driven, adapting their products to fit their customers’ strategies. These companies will practice “let’s figure out together whether and how color matters to your larger goal” marketing. It is marketing that is oriented toward creating rather than controlling a market; it is based on developmental education, incremental improvement, and ongoing process rather than on simple market-share tactics, raw sales, and one-time events. Most important, it draws on the base of knowledge and experience that exists in the organization.
These two fundamentals, knowledge-based and experience-based marketing, will increasingly define the capabilities of successful marketing organization. They will supplant the old approach to marketing and new product development. The old approach—getting an idea, conducting traditional market research, developing a product, testing the market, and finally going to market—is slow, unresponsive, and turf-ridden. Moreover, given the fast-changing marketplace, there is less and less reason to believe that this traditional approach can keep up with real customer wishes and demands or with the rigors of competition.
Consider the much-publicized 1988 lawsuit that Beecham, the international consumer products group, filed against advertising giant Saatchi & Saatchi. The suit, which sought more than $24 million in damages, argued that Yankelovich Clancy Shulman, at that time Saatchi’s U.S. market-research subsidiary, had “vastly overstated” the projected market share of a new detergent that Beecham launched. Yankelovich forecast that Beecham’s product, Delicare, a cold-water detergent, would win between 45.4% and 52.3% of the U.S. market if Beecham backed it with $18 million of advertising. According to Beecham, however, Delicare’s highest market share was 25%; the product generally achieved a market share of between 15% and 20%. The lawsuit was settled out of court, with no clear winner or loser. Regardless of the outcome, however, the issue it illustrates is widespread and fundamental: forecasts, by their very nature, must be unreliable, particularly with technology, competitors, customers, and markets all shifting ground so often, so rapidly, and so radically.
The alternative to this old approach is knowledge-based and experience-based marketing. Knowledge-based marketing requires a company to master a scale of knowledge: of the technology in which it competes; of its competition; of its customers; of new sources of technology that can alter its competitive environment; and of its own organization, capabilities, plans, and way of doing business. Armed with this mastery, companies can put knowledge-based marketing to work in three essential ways: integrating the customer into the design process to guarantee a product that is tailored not only to the customers’ needs and desires but also to the customers’ strategies; generating niche thinking to use the company’s knowledge of channels and markets to identify segments of the market the company can own; and developing the infrastructure of suppliers, vendors, partners, and users whose relationships will help sustain and support the company’s reputation and technological edge.
The other half of this new marketing paradigm is experience-based marketing, which emphasizes interactivity, connectivity, and creativity. With this approach, companies spend time with their customers, constantly monitor their competitors, and develop a feedback-analysis system that turns this information about the market and the competition into important new product intelligence. At the same time, these companies both evaluate their own technology to assess its currency and cooperate with other companies to create mutually advantageous systems and solutions. These close encounters—with customers, competitors, and internal and external technologies—give companies the firsthand experience they need to invest in market development and to take intelligent, calculated risks.
In a time of exploding choice and unpredictable change, marketing—the new marketing—is the answer. With so much choice for customers, companies face the end of loyalty. To combat that threat, they can add sales and marketing people, throwing costly resources at the market as a way to retain customers. But the real solution, of course, is not more marketing but better marketing. And that means marketing that finds a way to integrate the customer into the company, to create and sustain a relationship between the company and the customer.
The marketer must be the integrator, both internally—synthesizing technological capability with market needs—and externally—bringing the customer into the company as a participant in the development and adaptation of goods and services. It is a fundamental shift in the role and purpose of marketing: from manipulation of the customer to genuine customer involvement; from telling and selling to communicating and sharing knowledge; from last-inline function to corporate-credibility champion.
Playing the integrator requires the marketer to command credibility. In a marketplace characterized by rapid change and potentially paralyzing choice, credibility becomes the company’s sustaining value. The character of its management, the strength of its financials, the quality of its innovations, the congeniality of its customer references, the capabilities of its alliances—these are the measures of a company’s credibility. They are measures that, in turn, directly affect its capacity to attract quality people, generate new ideas, and form quality relationships.
The relationships are the key, the basis of customer choice and company adaptation. After all, what is a successful brand but a special relationship? And who better than a company’s marketing people to create, sustain, and interpret the relationship between the company, its suppliers, and its customers? That is why, as the demands on the company have shifted from controlling costs to competing on products to serving customers, the center of gravity in the company has shifted from finance to engineering—and now to marketing. In the 1990s, marketing will do more than sell. It will define the way a company does business.
The old notion of marketing was epitomized by the ritual phone call from the CEO to the corporate headhunter saying, “Find me a good marketing person to run my marketing operation!” What the CEO wanted, of course, was someone who could take on a discrete set of textbook functions that were generally associated with run-of-the-mill marketing. That person would immediately go to Madison Avenue to hire an advertising agency, change the ad campaign, redesign the company logo, redo the brochures, train the sales force, retain a high-powered public relations firm, and alter or otherwise reposition the company’s image.
Behind the CEO’s call for “a good marketing person” were a number of assumptions and attitudes about marketing: that it is a distinct function in the company, separate from and usually subordinate to the core functions; that its job is to identify groups of potential customers and find ways to convince them to buy the company’s product or service; and that at the heart of it is image making—creating and projecting a false sense of the company and its offerings to lure the customer into the company’s grasp. If those assumptions ever were warranted in the past, however, all three are totally unsupportable and obsolete today.
Marketing today is not a function; it is a way of doing business. Marketing is not a new ad campaign or this month’s promotion. Marketing has to be all-pervasive, part of everyone’s job description, from the receptionists to the board of directors. Its job is neither to fool the customer nor to falsify the company’s image. It is to integrate the customer into the design of the product and to design a systematic process for interaction that will create substance in the relationship.
To understand the difference between the old and the new marketing, compare how two high-tech medical instrument companies recently handled similar customer telephone calls requesting the repair and replacement of their equipment. The first company—call it Gluco—delivered the replacement instrument to the customer within 24 hours of the request, no questions asked. The box in which it arrived contained instructions for sending back the broken instrument, a mailing label, and even tape to reseal the box. The phone call and the exchange of instruments were handled conveniently, professionally, and with maximum consideration for and minimum disruption to the customer.
The second company—call it Pumpco—handled things quite differently. The person who took the customer’s telephone call had never been asked about repairing a piece of equipment; she thoughtlessly sent the customer into the limbo of hold. Finally, she came back on the line to say that the customer would have to pay for the equipment repair and that a temporary replacement would cost an additional $15.
Several days later, the customer received the replacement with no instructions, no information, no directions. Several weeks after the customer returned the broken equipment, it reappeared, repaired but with no instructions concerning the temporary replacement. Finally, the customer got a demand letter from Pumpco, indicating that someone at Pumpco had made the mistake of not sending the equipment C.O.D.
To Pumpco, marketing means selling things and collecting money; to Gluco, marketing means building relationships with its customers. The way the two companies handled two simple customer requests reflects the questions that customers increasingly ask in interactions with all kinds of businesses, from airlines to software makers: Which company is competent, responsive, and well organized? Which company do I trust to get it right? Which company would I rather do business with?
Successful companies realize that marketing is like quality—integral to the organization. Like quality, marketing is an intangible that the customer must experience to appreciate. And like quality—which in the United States has developed from early ideas like planned obsolescence and inspecting quality in to more ambitious concepts like the systemization of quality in every aspect of the organization—marketing has been evolutionary.
Marketing has shifted from tricking the customer to blaming the customer to satisfying the customer—and now to integrating the customer systematically. As its next move, marketing must permanently shed its reputation for hucksterism and image making and create an award for marketing much like the Malcolm Baldrige National Quality Award. In fact, companies that continue to see marketing as a bag of tricks will lose out in short order to companies that stress substance and real performance.
Marketing’s ultimate assignment is to serve customers’ real needs and to communicate the substance of the company—not to introduce the kinds of cosmetics that used to typify the auto industry’s annual model changes. And because marketing in the 1990s is an expression of the company’s character, it necessarily is a responsibility that belongs to the whole company.
