09 October 2007

Differential marketing

“All consumers are NOT created equal. Some are vastly more profitable than others, and the marketers who succeed in an increasingly brand-hostile and technology-driven environment will be those who know how to capitalize on the difference.”

Although this quote came from Garth Hallberg’s book All Consumers Are Not Created Equal from way back 1995, I’m sure its philosophy is applicable today. Perhaps, even more so, as there are many more brands in the marketplace today than there were in 1995, a great many of which are technology-driven. To many marketers, today’s markets are truly hostile places for their brands.

As most experienced marketers know, old mass-market strategies of ‘one strategy fits all consumer segments’ are ineffective today. Consumers are now showing their true colours – each colour demanding full attention from the brand marketer. A move towards customised strategies to win over individual consumers seems to be the only answer.

Needless to say, the job for marketers has become difficult and less reassuring… setting them off in a quest to find (a) why consumers buy what they buy; (b) why consumers are more flexible in their preferences for brands – and less brand loyal; and (c) how a brand could profit from such an overwhelming marketplace.

One way to do this is to adopt neuromarketing techniques by putting (representative samples of) consumers under MRI scanners while exposing them to various brand messages, designs and colour options. If the pre-frontal cortex of the brain (which is apparently responsible for eliciting/controlling excitement and happiness) lights up, there is a likelihood that consumers will respond favourably towards brands that carry similar messages, designs and colour options… generating future sales.

But, besides being expensive and inconclusive (no one is sure if its results are accurate), neuromarketing is cumbersome to implement. For starters, it needs an MRI lab – with high-end medical equipment and trained technicians. In India, this type of investment is a far cry from what market research agencies are prepared for. No wonder neuromarketing has yet to find a place among Indian marketers.

That’s why I’ve always felt that Garth Hallberg’s philosophy of treating consumers differentially through ‘differential marketing strategy for brand loyalty and profits’ is an excellent idea for Indian marketers.

Differential marketing, a carryover from DM (direct marketing) and a precursor to today’s CRM (customer relationship management), is both a meaningful and a profitable marketing practice. It is information-based, with a good deal of data analysis and mapping at its processing centre. It relies on data generated from consumer sales and is, therefore, based entirely on facts from consumer response to brands (as opposed to experiments in neuromarketing). You can’t get any more accurate than that.

Differential marketing is not difficult to implement and can be adopted easily by small businesses. It requires small investments in information technology, a few data-entry operators, a programmer at the most… apart from a scientific-minded marketer. If consumer data-capture mechanisms are in place, the job is really half-done.

Alas, Indian marketers have been slow in responding to differential marketing as most of them don’t have adequate consumer/brand data in their hands. Even if they did, they don’t seem to be applying enough analytical techniques to mine information from their data banks – a fact that surprises me as we have some of the best marketing talent in the world. Instead, many Indian marketers have jumped directly to CRM, burning their fingers in huge investments with little returns.

Indian advertising agencies have shunned the differential marketing philosophy entirely. As usual, they have preferred to rest on their creative laurels rather than on accountability for building consumer relationships with brands. Even Garth Hallberg’s own agency in India, Ogilvy & Mather, has been reluctant in using this philosophy.

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