Companies bow to the dictates of the new-age consumer and the competitive market and switch to one-to-one marketing
WELCOME to new-age marketing. Where companies greet the customer at his doorstep, create products to suit his needs and are tuned in to every nuance of their approval/disapproval. Thank-you mailers and birthday cards, frequency rewards, airline miles, club memberships, customer preference cards and sales mail in disguise are clogging mailboxes and wallets. "The battle is no longer for the customer's pocket. It's for his heart," says Sandeep Goyal, president, Rediffusion DY&R. "A whole new marketing paradigm is taking hold. The focus is shifting from mass marketing to database marketing to one-to-one relationship."
The latest gimmick out of the bag of marketing tricks? Or a trend dictated by harsh market reality and the changing profile of the customer?
Indeed, some of the old articles of faith marketers swore by are losing their sheen. Price cuts, promotional add-ons and exchange offers are passe. Who cares for that 25 per cent extra in your toothpaste? For the free hot & sour sauce with the jumbo bottle of tomato ketchup? Can this ever stop the customer from experimenting with a new brand in the market? Instead the lesson marketers have learnt is that customers don't really bite every bait they dangle. Price cuts often lead them to ignore the 'usual price' and wait for the next discount and then stockpile. Sometimes, price cuts even destroy the future market.
As exchange offers have done to an extent. Stifled the colour TV market by turning potential TV buyers into exchange consumers, says Rajiv Karwal, vice-president, LG Electronics. Add-ons too are no longer plus points. Be it the Philips five-in-one offer of a TV, stereo, iron, mixer-grinder, rice-cooker or Sansui's much-touted TV-fridge-washing machine offer.
Market reality is forcing this shift to per-sonalised marketing. "You chose a Bata earlier because there was no Woodlands or Ree-bok; a Maruti because there was no Opel, Cielo, Honda or Lancer," says Ravi Santhanam, executive director, Hindustan Motors. Competitive pressures are building in an overcrowded market for most products—from small-ticket purchases like soaps, creams, toothpastes, shoes and branded apparel to big ticket items like luxury cars. With a dozen-odd players in every product line, brand loyalties are becoming fickle.
Also changing is the customer's world-view. No longer a passive receiver of goods and services, the new-age customer is a more aware species. Who wants to know where his product comes from, what its ingredients are, whether it's genuine, safe and honest. He carefully evaluates his need for the product and wants to minimise pre-purchase dissonance. "In such a scenario, the challenge before companies is to market customised goods to specific customers in homogenous segments. You have to sharp shoot, not carpet-bomb," says Santhanam. It's the strategy he's using for Mitsubishi Lancer. Sales team armed with CD-ROM laptops tour prospective customers, address their queries about the new product. "In the mass market of yesteryears you could afford a lower hit rate, not today when the battle is for high customer share in a niche market," says Santhanam.
And so relationship marketing concentrates on customer share, not marketshare. Worldwide consumer researches show that the top 25-30 per cent customers bring in 70-75 per cent business; the bottom 30 per cent contribute only about 3 per cent. Consumer companies, therefore, are under tremendous pressure to retain customers. "If you can't hold on to your customer in the current scenario, you're doomed," says Goyal. "Relationship marketing enhances the consumer retention index. Considering that it costs seven times more to acquire a new customer than retain an existing one, companies are going all out to woo existing customers," says Jagdish Kapoor, MD, Samsika Marketing.
Keeping this reality in mind, companies like Ushafone, Skycell, Essar and Max Touch are connecting with customers via discount cards, personalised services and club memberships. Others like Pond's, Levers, L'Oreal and Mitsubishi are surfing the interactive route. In Mumbai, Chennai, Hyderabad, Delhi and Bangalore, Pond's runs not just interactive kiosks but a telephone helpline, a write-in cell along with a 24-hour website for the Internet savvy. Interactive CD-ROMs is but the next step.
At the L'Oreal customer advisory cell, service manager S. Bakshi not only tenders free advice on the phone but also patiently hears out anxious queries. At special theme parties in Mumbai night clubs, L'Oreal personnel apply hair mascara for free. The company holds special hair festivals for a peek into the customer psyche. "Whenever there's an in-store programme there's a definite upswing in sales," says Geoff Skingsley, its managing director.
Allied Domecq, makers of the Teacher's brand of Scotch, fly in professionals from Scotland and invite special customers to Scotch-tasting sessions. "This interaction with the customer tells us how he thinks, what he prefers and why, how he regards the competition and how he rates us," says Ramesh Mani, marketing director. This has enabled the company to identify its target clientele, formulate its pricing and marketing strategy and convey to the consumer the value of genuine Scotch.
"Real-time, meaningful and rich dialogue are the benefits of relationship marketing," says Sanjay Mani, account-director, Madison DMB&B. These companies are using one-to-one relationships to increase customer satisfaction, boost sales, measure investment return on each customer, track sales history and buying habits, get alerts on changes in spending, recovery and frequency habits. Customers too are revelling in this new-found glory. "Elle selected my shade out of thousands of entries.
Naturally I've a soft corner for the brand," says Sabah. "I'd always wondered what the ceramides, collagen, elastins and alpha-hydroxy acids were all about. Now I know," says 49-year-old Krishna Wagle, thoroughly impressed with Pond's interactive efforts. If relationship marketing is all about goodwill, image and bonding with the customers, then it sure has made a good beginning. And a work begun well is work half done.