The changes which are occurring in the marketing practice Essay Example

Monieson (1990), marketing as a distinct discipline was only recognized in the latter part of the 19th century. At the turn of the 20th century, marketing was mainly concerned with the exchange process, where two or more parties engage in value transactions to satisfy their respective felt needs (Boone and Kurtz, 1977). This means that marketing's primary focus was purely on transactions and exchanges. Sheth, Sisodia and Sharma (2000) suggest that in the 20th century, the traditional marketing function gradually shifted from mass marketing to segmented marketing. Since then, research has largely focused on consumer marketing, with studies in the field of consumer behaviour aimed at enhancing marketers' understanding of how consumer choices are constructed.

Studies focusing on customer-centric strategies have been conducted by several researchers, such as Allen (2002), Bettmen, Luce and Payne (1998), Holt (1995), and Wells (1993). These studies have led to an increasing interest in achieving and enhancing customer focus through market segmentation, as highlighted by Firat and Shultz (1997) and Wedel (2002). The concept of segmentation, which involves classifying customers into groups based on their needs, characteristics or behaviour, was first introduced by Smith (1956) as a rational approach to target consumers or market products.

Marketing gurus in the organizational context recognized the shift from a production-centric mindset to a focus on the consumer, leading to the development of market orientation (Kohli and Jaworski, 1990; Narver and Slater, 1990). They advised organizations to concentrate on their markets for lasting profitability. However, Kahn (1998) challenges that merely adopting a market orientation and fulfilling the needs of segments may not suffice in an intensely competitive global economy. Instead, enterprises must continually improve products to

align with customer needs by enhancing customer relationships. The idea of building relationships with customers prompted changes in marketing philosophy and methodology.

In the 1970s and 1980s, service industries began to evolve with the inclusion of customers in marketing and developmental activities. This led to the concept of relationship marketing, which stresses the importance of a close relationship between the service provider and customer. Relationship marketing was first introduced by Berry in 1983, and later authors such as Gronroos, Gruen, Gummesson, and O'Malley and Tynan broadened its dimensions to include individualized marketing.

Firat and Shultz (1997) stress that as competition increases, marketers define smaller and smaller segments, including niche segments. Moreover, modern consumers are becoming more diverse (Kotler, 2000), calling for marketing strategies that better meet individual needs. In other words, marketers now see the benefits of targeting specific groups - even down to the individual customer - with tailored marketing programs. By doing so, they can successfully differentiate themselves from competitors. Peppers and Rogers (1993), pioneers of 'one-to-one marketing', believe that establishing one business relationship at a time can provide significant benefits for both customers and marketers.

Peppers and Rogers (1993) suggest that the increasing heterogeneity of modern consumers promotes one-to-one marketing as the future of marketing and business philosophy. One-to-one marketing, under the relationship marketing paradigm, is an individualized program tailored for each customer. It involves establishing a learning relationship with each customer, starting with the most profitable/valuable one. The central proposition for any business in a one-to-one environment is the share of customer, as opposed to market share. By focusing on this, marketers can reduce waste in marketing expenses associated with unprofitable customers and increase

marketing efficiency, customer value, and profitability. Rogers and Peppers (1995) explain that a share of market approach involves selling as much of a firm's products to as many customers as possible.

The goal of share of market is to reach a large group of consumers with product offerings, while share of customer aims to retain current customers by improving customer service, communication, and differentiation. Figure 1 and 2 illustrate both approaches, with the horizontal axis representing the number of customers targeted and the vertical axis representing the consumer needs addressed. However, reaching a large group of consumers with generic product offerings may not meet individual preferences, according to Rogers and Peppers (1995). Christopher, Payne, and Ballantyne (2002) agree that organizations must meet precise customer requirements rather than simply offering endless options.

Langdon and Bruce (1997) emphasize the growing sophistication and complexity of consumers, highlighting the importance of marketers understanding how to generate value for them in order to satisfy their desires. Conversely, Rogers and Peppers (1995) illustrate the share of customer approach in Figure 2, which aims to customize offerings to perfectly match individual customer preferences. Christopher, Payne, and Ballantyne (2002) stress that the key to one-to-one marketing is understanding each customer's economic importance.

The concept of one-to-one marketing entails targeting individual customers, assessing their potential lifetime spending, and adapting the marketing strategy accordingly. Unlike the conventional approach that emphasizes market share, this method prioritizes customer share. According to Peppers and Rogers (1997), one-to-one marketing involves selling as many products as possible to a single customer over their patronage, rather than attempting to sell as many products as possible across the market within a specific time frame.

According to

the source, one-to-one marketing is essentially treating customers in a unique manner (p. 415). This definition implies that one-to-one marketing is equivalent to personalized marketing, which involves monitoring an individual's transactions over an extended period of time (i.e., tracking repeatedly).

One-to-one marketing involves estimating the lifetime value of a customer, managing interactions with that customer, and measuring their business across different products. For example, an independent florist may initiate a one-to-one communication with existing customers by sending a reminder letter before a birthday or anniversary, in hopes of acquiring useful information and gaining a larger portion of the customer's share of wallet. By offering helpful reminders and making the flower shop an indispensable, pleasurable, and effortless place to do business with, the florist engages in effective one-to-one marketing tactics.

The main objective of florists is to increase sales from individual customers by utilizing the information gathered during their patronage (Rogers and Peppers, 1995). This approach enhances customer value and profitability while also providing a competitive advantage over other florists. Providing exceptional service can generate positive word-of-mouth publicity, resulting in more referrals and contacts (Gurau and Ranchhod, 2002). One-to-one marketing is gaining popularity among businesses nowadays.

According to Buttle (1996), one-to-one marketing has emerged due to its potential for long-term financial benefits. The development of this type of marketing is driven by two economic arguments; firstly, customer retention costs less than acquiring new customers (Rosenberg and Czepiel, 1984) and secondly, prolonged engagement between the organization and the customer leads to increased profitability for the organization (Christopher Payne and Ballantyne, 1991). Peppers and Rogers (2000) also argue that modern technology has accelerated personalized marketing practices. One-to-one marketing can be

implemented using various technological tools such as the internet. Sannella (1999) supports this view stating that the internet improves marketers' ability to customize communication with each customer leading to better customer relationships. Hence, delivering relevant content at an opportune moment generates substantial returns for web marketers while improving quality of service for customers on the World Wide Web.

Dou and Ghose (2002) noted that the proliferation of e-commerce on the Internet has significantly expanded one-to-one marketing practices. The internet is now an ideal medium for genuine one-to-one marketing since it caters to each customer's specific requirements and personalizes products based on their preferences, even when multiple customers are being served simultaneously.