The external communication and marketing timeline
The world today is very different compared to only 40 years ago. Then we made our weekly rounds to the local butcher, grocer, and other local speciality shops. Now it is global choice, global businesses, global communication, global culture, global brands, global everything. Global choice with local customers looking for an exact fit with what they want and not what the business wants to give them.
We all live and work in a community; is our working life really so different to the old days when the butcher, baker and candle stick maker all did their bit for the village? The beginning of the global village is leading us unavoidably back to the simple truth - we are all in this together.
During these past 40 years, businesses have gone through a lot and learned a lot. To create our future, we need to understand our past. Why? Because many organizations are stuck in it. Finding where they are stuck is the key to knowing what to do to move forward.
1950s-1960s: the production economy
Manufacturers ruled supreme up to the Second World War and immediate after. Customers were so hungry for anything the manufacturer could make that car producers like Henry Ford could say, 'You can have any colour as long as it is black'. Imagine the reaction to the arrogance of a statement like that today!
Not only was there limited choice, but the chances of a quality product were sometimes pretty slim as well. There was even a time when the Japanese, desperate to create trade and establish a positive balance of payments after the war, were only able to deliver what was disparagingly referred to as 'junk'. Today Japanese quality is envied the world over.
With manufacturing far from able to create a total quality product, the manufacturer simply had to concentrate on the process of production. It was more a case of getting something made rather than getting it right first time. Whether they liked it or not, customers had to make do with guarantees and repairs rather than knowing they had a reliable, fault-free product.
During this period, mass markets began to emerge, shifting the focus to mass production. How did the manufacturer communicate with their customer? Easy! Tell them the product was available. Tell them what it contained, did, cost and needed in order to remain in working order. Most importantly, get them to buy it and then think perhaps about how to move them on to a repeat purchase.
Here is how Cadbury Schweppes, the UK chocolate manufacturer, recounts its own history: 'the early Cadbury labels were for the most part clear and dignified. Their designs reflected the "quality and superior style" which marked the Cadbury approach to business ... Chocolate for eating was a novelty and the packs were designed to tempt the customers to taste this new product.'
Listen to the language, the labels were 'clear and dignified' and chocolate for eating was a novelty compare this to the company's sophisticated marketing and communication approach today where Cadbury Schweppes believes: 'Successful companies monitor their consumers' attitudes and lifestyle changes, then move quickly to respond to their demands'.
Manufacturers during the 1950s were simply in “tell” mode.
Such was the lack of competition that if they came up with a snappy name, they could even sometimes manage to make their brand name into the generic product name. A Hoover became the generic word for a vacuum cleaner.
What power the manufacturers had in the past and how they failed to make use of it! They saw little reason to develop the emotional capital of their customers as they had an almost automatic stranglehold on them. If they could make it the customers would buy it. Demand far exceeded supply. Apart from the seemingly inevitable boom and bust economic cycles created by insatiable demand over heating national economies, manufacturers could do no wrong.
Following the 1950s, where communication was relatively simple and it was so much easier to reach the customer, something new took hold. In the 1960s, competition became more intense; distribution became the key to success.
1960s-1970s: the distribution and sales-driven economy
Here we enter a new period, a time when supply and demand were almost equally balanced. The key to survival lay in establishing geographic markets and selecting the needs of those markets. In other words, the battle between manufacturers was volume-based. The name of the game internally was 'tell 'em to make more', and externally to 'sell, sell, sell' more.
The first part of selling your goods was to make as many of them as you could. Secondly, selling was about getting your goods into the marketplace; the goal here was to ensure distribution by developing the logistics to get goods to market. Distribution also occurred by developing the retail and wholesale outlets to ensure availability in the main street or out of town stores. Finally, distribution occurred by persuading customers at the point of sale to part with their money. Selling and promotional offers became the tools to leverage money out of an unsophisticated customer's wallet.
Organizations developed sales forces to ensure the customer bought their goods. Door-to-door salesman was trained in techniques to 'close that sale'. It often didn't matter whether the customer wanted, needed, or could afford the product - the name of the game was commission and volume. The same held true for the promotional offers to get the unwary customer to buy - hard selling and hard-driving offers were the order of the day. The communication mode was sell, sell, sell.
'Talking at’ the customer
Public relations agencies also came into their own with another version of sell, which was hype, hype, hype. It was no longer good enough to tell the journalist that a product was now available. With competition for editorial space becoming intense, it became critical to spin new, brighter, bolder and more exciting stories around a product or service. This was the PR version of sell.
Both telling and selling have one thing in common: They 'talk at' the customer. Identifying customer needs was an incidental means to an end. Of course proficient sales people recognized the importance of customer needs and lifetime relationships. However, the era's sales literature was crammed with technique after technique for winning the order. Virtually every sales conference awarded prizes to staff winning the greatest sales volumes, not the greatest retention rates of customers.
The level of sophistication of sales, promotional and PR techniques was high. However the understanding of customers, markets and relationships, especially lifetime relationships, left a lot to be desired. Something else was needed. That something again was driven by competition.
As competition intensified and the customer became more sophisticated, something remarkable took place: a paradigm shift. Competition created a shift in the way organizations dealt with their customers which:
• led to the creation of new departments called marketing
• shifted the thinking away from tell and sell
• moved the thinking and communication strategies away from push
• began the processes that ensure customers want the product and are prepared to pay for it, look for it, remain loyal to it in other words a pull strategy.
Organizations stopped focusing on how to shift the product, and started doing things for the now all-powerful customers in their target markets. They realized that to get the customer to buy from them, the product had to meet the customer's needs and be 'right first time'.
Marketing began to act as the interface between the business and the customer. Customer service programs kicked in to ensure maximization of any face-to-face contact in retail outlets and verbal communication on the phone.
By the end of the 1960s, the focus had changed from 'it', the product, to 'you', the customer. The next decade was to be very exciting.
1970s-early 1980s: the quality and mass marketing economy
The customer became king in the 1970s. In the new customer driven economy, there was a reversal of the supply driven economy. Supply now exceeds demand and customers were faced with an increasingly sophisticated and diverse choice of products and services, all vying for their attention and wallet.
The door opened for the marketing professional to meet and create the need for their particular product and services. The way was clear for quality philosophies and practices to take hold, first in Japan, then in Western companies. The path was open for customer service initiatives to create the 'feel good factor' and sales in the retail outlets.
At first the steps taken by the new disciplines were tentative. For example, mass marketing was gradually developed as an art form through a heavy reliance on mass means of communication. Quality moved from being just another initiative to driving all the processes of a business. Customer service only gradually came to be seen as a 'way of life'.
Marketing was responsible for identifying target markets, identifying the products that would satisfy those markets and putting in place the plans to deliver the right product at the right price in the right place with the right promotions. And so the four P's were born: product, price, place and promotion.
In a gung-ho fashion, with the advertising agencies happily recommending massive spend, marketing began to establish itself as the driver of organizations - externally.
Marketing directors took over from sales directors in importance in organizations. Advertising agencies grew and grew in importance and stature in the business world. Clever design and copy, jingles, themes, logos, brand names - all took hold as the way to promote products, services and occasionally corporate identity as well.
With this newly found power, marketing could fundamentally change the way of communicating with customers. Marketing's role was not one of telling customers what to do, or selling them something they may or may not want. Marketing's role was to find out what customers wanted and to meet their needs.
The central driving force of marketing became the development of the customer base using a strategy of creating awareness, purchase, repeat purchase and ultimately, a level of loyalty in the customer that extended to recommending the product. Marketing became responsible for developing the concept of the 'ladder' of customer loyalty.
In the early days of marketing, it was enough to get the customers up the first few lungs of the ladder. Getting large groups of customers to buy the message was sufficient to generate enough interest for customers to want to purchase products or services.
Mass markets required mass marketing techniques. With large marketing budgets and the consequent hype around the advertising and promotional spend, the level of precise targeting was minimal. In retrospection, the heyday of big spends of big campaigns in big markets with big results did not last long. For perhaps only a decade, mass marketing ruled supreme.
Late 1980s-mid 1990s: the customer service and niche marketing economy.
Throughout the 1980s, customers became more sophisticated, as products and services became more sophisticated. And quality had done such a good job in reducing time to market that the ever more demanding customer could ask for more 'new, new, new' products and services.
Caught in the trap of meeting ever more sophisticated tastes, marketing began to segment the target markets into smaller and smaller sections and to drive the development of products and services for these niche markets. However, with unsophisticated ways of identifying and reaching individual customers, niche marketing was seen as the best way of maximizing the spend and minimizing the impact of increasingly intense, often international, competition.
At the time, lumping customers together seemed like a logical way of communicating with them; however, try squeezing two individuals together. It's impossible. Individuals remain individuals, no matter how many labels are put on them. Whether based on social labels (for example blue collar, used by marketing in its early days) or even the lifestyle labels (like "aspirer's", still used by the psychologists and advertising agencies today) these provide only crude methods to help marketing departments do a job of communication.
What is interesting is that the level of customer sophistication had been created through the very process of marketing and advertising. As marketing and advertising professionals plied their trade they became forced to concentrate on putting ever more sophisticated messages about their products to persuade customers to switch from competitors or to stay loyal.
Climbing the ladder of success.
To overcome the shortfalls of niche marketing, organizations began the journey of taking their customers with them up the loyalty ladder. Customers were being seen as more, much more than the route to their wallet. They were being treated to ever increasing levels of 'friendly' service. The role models were retailers Nordstrom in the US and Marks and Spencer in the UK, both of whom are famed for their legendary stories of customer service.
Marketing changed its focus from the 1970s' short-term focus on getting customers to 'buy' the product (by trading on the imagery created by advertising and promotion) to a longer-term focus on getting them to 'buy-into' the brand and even the corporate identity (through building up brand values and corporate reputation).
Customer loyalty became the new buzzword and securing buy-in for the long-term became the goal. One of the most obvious new methods was the loyalty scheme. Whether free air miles every time you fly, or loyalty cards with various discount or bonus points every time you buy, the basic system didn't vary much. Visit a Toys 'R Us, fly any airline, shop in a supermarket or department store and there was likely to be a loyalty scheme in place. The basic idea was that if we look after you and reward you for staying with us, then you will look after us and choose to shop with us rather than a competitor.
However, everyone was offering loyalty schemes. And at the same time, customers' tastes, needs, wants and desires were being fuelled by increasing choice on offer, increasing levels of technological sophistication, increasing levels of democracy throughout the world and with the global boom of the eighties.
So instead of 'keeping up with the Joneses', a customer wanted to be treated as a special one. And marketing mowed beyond 'buy-in' to getting as close to a customer as a friend.
5. Being friends
Just as mass markets had become niche markets niche markets became ever smaller. Although this paradigm shift finally occurred in the 1990s, the concept actually originated in the late 80s with the relationship marketing model, based on databases of increasing sophistication and power. Ultimately, when tied to the ability to target customers with individually laser-printed letters, or talk to them on a 24-hour basis from call centres, database marketing moved to relationship marketing. Friends now become best friends or 'customers of one'.
6. Become best friends
1990 to 2000 and beyond: ‘customers of one’ has arrived and is here to stay
Don Peppers and Martha Rogers led the way with the 'one-to-one future', published in 1994. It painted a whole new world based on creating lifetime relationships. It showed the massive benefits of 'life time value' (LTV) of keeping a customer. It showed how to use database information to target specific messages to a customer who was happy to give you their needs and wants so you the supplier could make their life easier. And making life easy is the goal of all organizations according to the one-to-one relationship theory.
Marketing to customers of one is fine as a concept. The reality is that we live in a global village of billions of people. If marketers were to treat every individual as a critical target market, they need new tools which technology can provide. The advances in this area enable marketing to achieve levels of sophistication and specialization unimagined only a few years before. Database marketing can yield an amazing amount of detail about individuals, their addresses, needs, purchases, desires, credit ratings and almost anything else you could think yet this is still only a very young science.
According to Andrew Wileman and Michael Jary, authors of Retail power plays - From trading to brand leadership, we've only just begun to tap the full benefit that technology can bring; 'Compared with producers, retailers have frequent direct contact with customers multiplied across a wide range of shopping transactions. With advances in in-store and central database management technology, one of their most valuable assets is the ability to understand shopping behaviour, target marketing investment and build loyalty down at the level of type customer groups and even at the level of individual customers.
'Many product retailers now have much of the technology in place and are awash with customer data, but using the data in an effective way is still in its infancy.'
Think global, act local.
This now-overused catch phrase sums up the incredible shift that has taken place from national, international and even multinational companies to truly global companies, global alliances and global supply and distribution, all linked to serving individual customers in specific geographic locations. And again, technology has had a major part to play.
What does acting local mean if not looking after people who have specific needs, wants and desires? Thanks to the incredible power and sophistication of technology to create one-to-one interfaces, companies became able to 'mass customize'
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