Mass Marketing and Mass Customization Essay
Mass Marketing and Mass Customization
1. Stragetic Marketing
In its strategic role, marketing focuses on business’s intentions in a market and the means and timing of realizing those intentions. The strategic role of marketing is quite different from marketing management, which deals with developing, implementing, and directing programs to achieve designated intentions 1.1 Concept of strategic marketing
As shown above, the marketing function plays at different levels in the organization. At the corporate level, marketing inputs (competitive analysis, market dynamics, and environmental shifts) are essential for formulating a corporate strategic plan. Marketing represents the boundary between the marketplace and the company, and knowledge of current and emerging happenings in the marketplace are extremely important in any strategic planning exercises. At the other end of the scale, marketing management deals with the formulation and implementation of marketing programs to support the perspectives of strategic marketing, referring to marketing strategy of a product/market. This time, marketing strategy is developed at the business unit level.
Marketing’s Role in the Organization
Role of Marketing
Provide customer and competitive perspective for corporate strategic planning Corporate marketing
Assist in the development of strategic perspective of the business unit to direct its future course Strategic marketing
Formulate and implement marketing programs
Together, the strategic three Cs form the marketing strategy triangle. All three Cs-customer, corporation, and competition- are dynamic, living creatures with their own objectives to pursue. If what the customer wants doesn’t match the needs of the corporation, the latter’s long-term viability may be at stake. Positive matching of the needs and objectives of customer and corporation is required for a lasting good relationship. But such matching is relative, and if the competition is able to offer a better match, the corporation will be at a disadvantage over time. In other words, the matching of needs between customer and corporation must not only be positive, it must be better or stronger than the match between the customer and the competitor. When the corporation’s approach to their customer is identical to that of the competition, the customer cannot differentiate between them. The result could be a price war that may satisfy the customer’s but not the corporation’s needs. In summary, marketing strategy, in terms of these three key constituents, must be defined as an endeavor by a corporation to differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer needs in a given environmental setting.
1.2 Example for marketing strategy
1.2.1 Around the World
There are a lot of corporations succeed in marketing strategy. The most highlight one is Samsung. Just a few years ago Samsung was struggling to catch up in the smartphone market. Now it makes more of them than anybody else and has Apple on the back foot, in addition to being the world’s largest technology company by revenue. Samsung’s aggression has gotten it into trouble in the past, losing a high profile case to Apple for imitating its design. But the reputation hit and the fine were a small price to pay. The company pivots and produces quickly, coming out with a variety of devices. It sees what the market responds to, pushes successes, and kills failures. And now, rather than just providing a cheaper and lesser iPhone, it’s differentiated itself with larger screens, different features, successful marketing, and delivering what consumers want. The Note is a perfect example. The company found through market research that Asian-language speakers in particular wanted a device that they could hand-write on, because drawing characters is easier with a pen. The result was a combination phone/tablet (“phablet”) that’s been an unexpected hit.
In Vietnam, the marketing strategy has just started in 2006 (as Vietnam joined WTO). Therefore, marketing strategy could count on the fingers of one hand. But there still are some corporations do that. As we know they are ICP, THP, and Vinamilk… To Vinamilk, at the beginning, Vinamilk just paid their intension in distribution. But later, the most important thing that they concerned about is to build the trust and quality (especially after the melamine incident) As the quality is acquired, Vinamilk makes a further step forward in building the trust in their customers. In order to do that, they aim to produce milk from domestic initiative through developing and supporting farmers in their dairy herds. After the melamine incident, it makes a positive impact on Vinamilk. So that Vinamilk can make a further step to increase customers’ awareness in products’ quality. In 2011, Vinamilk went in making trust by cooperating with well-known milk and nutrition research centers. In that way, Vinamilk can be more proactive in meeting the milk and nutrition which suited the Vietnamese. 2. Mass marketing
Mass marketing is a market strategy in which a firm decides to ignore market segment differences and appeal the whole market with one offer or one strategy. Companies use mass marketing to promote a single product or service to as many people as possible without differentiating how various segments of the market might respond. For example, a fast-food chain might offer the same hamburger promotion at all of its franchises to create a demand for its new product. The idea is to broadcast a message that will reach the largest number of people possible. By reaching the largest audience possible, exposure to the product is maximized. In theory, this would directly correlate with a larger number of sales or buy in to the product. It is the technique of trying to spread our marketing message to anyone and everyone who are willing to listen. It enables us to reach a wide range of services to take any job that comes on our way. Some examples of mass marketing strategies would be direct mail, yellow page ads, billboards, radio ads, free dinner seminars, etc A mass market is a general population which can be targeted at wide for the sales and marketing of a product. A mass market is broad in nature and is not categorized by demographics.
For example – Automobiles – cars and two wheelers, usually target the mass markets with heterogeneous ages, locations and preferences. . However these mass markets can be further diversified into smaller segments. Products which target a mass market generally vary their promotion strategies according to the market. Example – An automobile company or a telecom company targets a mass market. However each individual might have a different preference for automobiles or telecom service providers. Does within the mass market, there exist individual segments. A smart marketer will try to promote his product to the biggest chunk of the mass market. For example – In soft drinks, Pepsi is targeting the youth, but on the other hand coke is targeting whole families through defining values. Thus coke has a bigger market and it is a more widely recognized brand when compared to Pepsi. 2.2 Purpose
The purposes of undifferentiated marketing are several. Mass marketing focuses on high sales and low prices. It aims to provide products and services that will appeal to the whole market.It announces the presence of your small business and products to the general public and attracts as many eyes to the brand as possible. By doing so, it allows you to gauge which segments of the market are most interested in your brand and adjust your marketing to target them more specifically. Mass marketing also saves the expense of market research and targeted campaigns by allowing you to reach the market as a whole and fine tune your efforts later on once revenue is comfortably consistent.Henry Ford realized this when he created the Model T. Before him, the automobile was a niche product for the wealthy. Ford developed a vehicle that was accessible to all and made millions. The reason mass marketing strategies work at all is because at any given time, there is approximately 3 percent of the market that is actively looking for what it is you have to offer. For example, 3 percent of people are actively in the market, as we speak, for a new car, a new home or maybe even a new advisor. Mass marketing strategies rely on this 3 percent to give you a return on your investment. To be successful utilizing these strategies, you have to invest a significant amount of time and money upfront to see any response. Many advisors spend a lot of years and money competing with other advisors
in their market over this small “need help now” market.
Mass marketing has its origins in the 1920s with the inception of mass radio use. This gave corporations an opportunity to appeal to a wide variety of potential customers. Due to this, variety marketing had to be changed in order to persuade a wide audience with different needs into buying the same thing. It has developed over the years into a worldwide multi-billion dollar industry. Although sagging in the Great Depression it regained popularity and continued to expand through the 40s and 50s. It slowed during the anti-capitalist movements of the 60’s and 70’s before coming back stronger than before in the 80’s, 90’s and today. These trends are due to corresponding upswings in mass media, the parent of mass marketing. For most of the twentieth century, major consumer-products companies held fast to mass marketing- mass-producing, mass distributing and mass promoting about the same product in about the same way to all consumers. Mass marketing creates the largest potential market, which leads to lowered costs. It is also called overall marketing.
For certain types of widely consumed items such asnecessities, furniture, artwork, automobiles, residential communities, soft drinks and personal computers,…mass marketing approach makes the most sense. Typically, things which are perceived to be necessary to the consumer are subject to mass marketing. Resources of mass marketing provide cost-effective marketing solutions for small and micro businesses, including start-ups. For example, toothpaste isn’t marketed to one particular market segment.It is sold in huge quantities. A company or individual who manufactures toothpaste wishes to get more people to buy their particular brand over another. The goal is that when a consumer has the option to select a tube of toothpaste, he would remember the product that was marketed. Often, this type of general appeal is supported by positive, emotional settings, and a great many reinforcers at the point of purchase. Walk through any supermarket, and you will observe hundreds of food products that are perceived as nearly identical by the consumer and are treated as such by the producer, especially generic items. Many mass marketed items are considered staple items. These are items people are accustomed to buying new when their old ones are used up.
Even “products” like politicians and services from professions such as law, chiropractic and medicine, are subject to mass marketing. A company that sells affordably priced products that appeal to a wide variety of consumers. Mass market retailers are not necessarily known for selling durable, high-quality merchandise or for having exceptional customer service, but they do meet consumers’ wants and needs, at reasonable prices. Examples of mass market retailers include big box stores such as Target, Sam’s Club and Best Buy, as well as brands like Levi Strauss and Gap, and e-retailers like Amazon. Supermarket, drugstore, mass merchandise and warehouse chains, are all considered mass market retailers.
2.5 Shotgun Approach
The shotgun theory is an approach of mass marketing. It involves reaching as many people as you can through television, cable and radio. On the Web, it refers to a lot of advertising done through banners to text ads in as many websites as you can, in order to get enough eyeballs that will hopefully turn into sales. An example of shotgun marketing would be to simply place an ad on primetime television, without focusing on any specific group of audience. A shotgun approach increases the odds of hitting a target when it is more difficult to focus.
2.6 Strategy “All things to all people”
It is the technique of trying to spread our marketing message to anyone and everyone who are willing to listen. A truckload of general advertising is done to the mass market in the hope that some of them will hit a target. It enables us to reach a wide range of services to take any job that comes on our way; and ultimately we become a “jack of all trades and a master of none”. Mass marketing quite simply targets the masses without any concern over addressing different needs and desires of different segments of the population. Mass marketing can be effective for products that are helpful to the majority of people. Advertisers often combine more than one type of ad around a single theme or slogan to help the product become more familiar with consumers. Companies aim mass marketing at the total market for a particular product. With an un-segmented strategy a firm develops a single marketing mix – one combination of product, price, promotion and distribution. Companies that adopt mass marketing take an undifferentiated approach that assume that all customers in the market have similar need and wants that can be reasonably satisfied with a single marketing program. Coca-Cola, for example was available in only one flavor and in one type of bottle. Another example of mass marketing was Henry Ford’s offer to consumers of only one car Model-T in just one color.
2.7 Advantages and disavantages
Product Life Cycle
A mass marketing approach may offer an advantage in cases where a product has reached the end of its life cycle. A product’s life cycle charts its course within a consumer market, from its first appearance on the market to increasing sales followed by its eventual decline in popularity or demand. A decline in sales typically marks the end of a product’s life cycle, regardless of what type of marketing approach you used. At the beginning of the life cycle, businesses may use mass marketing approach to obtain the most sales possible from targeted consumer markets. Once sales start to slow, these marketing approaches show little potential for increasing sales. By using mass marketing approach at the end of a product’s life cycle, businesses may increase the likelihood of sales by making a product available to other market sectors.
Economies of scale
When applying the mass marketing approach, the companies are able to produce in large scale. This requires that companies have to invest in the modern equipment, improve leadership. Moreover, the production processes need to be standardized in order to gain the economies of scale. For example: Advertising messages by mass media can reach millions of viewers in a single showing, and economies of scale make mass distribution cheaper than regional deliveries
Spreading of risk
When investment in capital is scattered, the companies can minimize changes of demand. For example, if one segment is crashed, this is likely to be compensated by other segments.
Brand awareness and value
When applying mass marketing approach, your brand will appear in many segment markets. This will help your company build a strong brand. For example: Hoang Anh Gia Lai has been a wood manufacturing company since 1990. In 2009, this company invested in estate and succeeded quickly thanks to this famous brand
When applying mass marketing approach, companies have to implement the promotion strategies such as: advertising, public relation (PR). For example: when introducing toothpaste product P/S, Unilever implements advertising campaign on national television channels, even on local television channels. According to experts, brands that are as large as P/S, are advertised 30-40 times in a single day on VTV3 channel. The price of a single advertising range is between 7 million vnd to 40 million vnd in accordance with advertising time. It is just a single channel; in fact, P/S has also been advertised on VTV1, VTV2, and many local channels such as DRT… And in addition, Unilever also has to pay for banner cost, labor cost… And P/S is also a single Unilever’s product. Therefore, Unilever spends millions of dollar a day on advertising. Research and development cost and fierce completion
Today, technology has become the most important factor in business. This factor is vital factor especially for market leaders. In many cases, the new products of competitor are able to dominate market, even are able to make your products disappear. For example: Kodak is a photography company. While Kodak is competing with Fuji, a photography company from Japan, the invention of digital camera almost makes those companies to be in bankruptcy. Another example, Unilever and many detergent manufacturers are anxious about the invention of ultrasonic washing machine. This may lead to the disappearance of Omo (products of Unilever)
Market research cost
Today, when the supply of many commodities overcomes the demand, the society changes from manufacturer society to consumptive society. The marketing concept also changes. The manufacturers, now, have to find out the needs of customer, and try to satisfy them. The manufacturers no longer pay attention about how to find out markets to sell their products, therefore, they try to produce as much as possible. And in order to satisfy diverse needs, companies have to spend much time and money on market research activities such as population census, level of economic growth, demography, culture, polity, national policy… 3 Mass customization
Mass customization was first popularized in 1993 by B. Joseph Pine II in his book “Mass Customization – The new Frontier in Business competition” and defined as “developing, producing, marketing and delivering affordable goods and services with enough variety and customization that nearly everyone finds exactly what they want” Indeed, mass customization did not become a tangible innovative business trend until the second half of the 2000’s thanks to rapid manufacturing and information technologies and more structured customer-manufacturer interaction methods A completed definition appeared. Mass customization, in marketing, manufacturing and management, is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization. Mass customization has become particularly important within the fashion industry, where there is an increasing demand for personalized clothes, handbags, shoes etc.
3.2 Characters of mass customization
• It is an evolution of mass production, which seeks to answer customers’ needs, requirements and wishes for having individualized and personalized goods and services. This also implies the production of high quantity at low costs. • It leverages on new information technologies and innovative manufacturing processes to ensure high volumes at low cost; It produces goods and services to meet individual customer’s needs with near mass production efficiency”
3.3 Key success factors of mass customization
Customer sensitivity. Refers to customer demands for individualized and customized products, which depends on two main factors: 1) Degree of customer’s sacrifices (how much he is willing to pay and how long he is willing to wait); 2) Firm’s ability to produce according to customer’s specifications within a reasonable time and cost limits. Process amenability. Manufacturing technology and information technologies must be available for mass customization systems and products must be designed to be customizable. Competitive environment. Market conditions will support competitive environment. Being the first to implement mass customization in a particular industry may lead to gaining competitive advantage but when mass customization becomes more common, there are fewer opportunities to achieve that. Organizational readiness. Organizational readiness refers to the firm’s attitudes, culture and resources. The firm’s management should be open to new ideas and aggressive in competitive advantage and the promotion of a culture through the development of networks, new products and process technologies.
In 1996, Dell drew people’s attention to completely-new computer marketing strategy called “Build-to-order”: Marketers must first consult with customers to determine their requirements, then realize exactly what customers need and finally, use the information in product design processes. Dell Computer was also eager to use this method very successfully in building a database for their website. They allowed individual customers to assemble and purchase computers and accessories directly via the website www.dell.com. In 2000, Dell’s revenue reached $ 50 million per day. In 2001, Dell surpassed IBM to become the multinational computer technology company having the largest market share in the world. The success of Dell shows trends and demands to shift from mass production to mass customization. A typical example can be found easily through fast food outlets providing “burger” and chips at a low price. However, until 1995, this model became backward to market growth. Therefore, McDonald’s quickly shifted from mass production to customer requirements. McDonald’s added meatballs, pizza, sandwich, apple pies and ice cream to their menus. Moreover, the menu is suitable for each country and is written in many languages. For example about Big Macs (hamburgers sold by McDonald’s) in India where the majority of people are Islamic, pork is replaced with lamb on the menu, and drinks also diversify with beer and wine beside Coca Cola , Pepsi and 7 Up . The size of the glass also varies by regions: large glasses of water in the U.S. and smaller glasses in Asian countries. The present success of McDonald all over the world shows a good change in their strategy.
3.5 Advantages and disadvantages
Benefits to the economy
Applying the method “build to order”, no goods are actually made until the buyers send an order. Unwanted and out-of-date products, which are wasted to our limited resources, are eliminated. Because mass customization uses “build-to-order”, which requires a very short lead time from the receipt of the customer’s order to the delivery of the product, speedy response and perfect coordination of all types of input is necessary. Therefore, it would be suitable for the company’s functional departments such as procurement, manufacture, assembly and logistics to be addressed which market nears the customer. Specalization will save our resources because it reduces cost and time despite of mass production. Blue-collar workers (people who do physical work in industry) in developed countries will benefit as they have more jobs in their local without going to any far countries. Manufacturers, who always want to sell to large populations of developing countries, believe that their local subsidiaries are able to independently meet the needs of that market without direct producing from parent company. Therefore, developing economies will also benefit as more knowledge-based jobs moved to their countries.
Benefits to manufacturers
By applying mass customization and “build to order” strategies, products are only manufactured when a customer order is received. As nothing is produced until an order is received, there are huge saved successes to be harvested by eliminating of unsold goods, goods in process and raw materials. In the case of Dell, payment is collected upfront when the customised order is received. Therefore, the company’s cash flow position improves and financial risk is reduced. Tseng and Jiao (1996) pointed out that in high volume production; mass production shows an advantage due to the economy of scale. However, with low to medium volume production, where production quantity cannot give remarkable result to buyer’s profits, customers are willing to pay more because their special and divers needs are satisfied. Consequently, small and medium enterprises, that have difficulty achieving economy of scale, have the most to gain from mass customisation. In taking a customer order, closed information about the customer’s preferences is collected thus generating a profile of the customer. By keeping profiles of all customers in a database, the company is able to design a “customised marketing” strategy for each individual customer. More importantly, knowledge of the customer’s profile allows the company to better manage the relationship it has with the customer. This stage also helps the company reduce the cost for market research.
Benefits to customers
The most obvious benefit to the customers is that goods that can meet the exact needs and wants of an individual are available at prices comparable to those of standard mass produced goods. Fiore et al. (2001) state that in the fashion apparel industry, the process of configuring and designing clothes by themselves proves to be a stimulating experience. The sheer novelty, intriguing application of advanced technology such as body scanning and pleasure from involvement in the creative process may prove as desirable as the apparel itself. As build to order becomes the norm in industry, customers can expect shorter lead-time to delivery. Long wait for goods due to out of stock situation would no longer occur.
Drawbacks for the customers
A major concern of customers is whether there would be higher prices for customised product. In short to medium term, pricing would likely be higher than mass produced goods. In the longer term, when mass customisers compete among themselves, prices are expected to fall. A key disadvantage of customised goods is the difficulty in comparing between suppliers. Different suppliers rarely offer the same options for their goods. Therefore, some benefits of sharing information between customers are lost. Consequently, the lack of comparison and competition may result in higher prices for customised products than mass-produce ones. Suppliers are likely to apply value-based pricing rather than cost-based pricing. In value-based pricing, price is set based on the feeling value that customers think about goods. In cost-based pricing, the price is set based on the actual cost of production. However, this disadvantage to the customer is an advantage to the manufacturer who gains a higher profit on customised product. Because the customer is given multiple choices product, identifying the real cost of the customized product may prove difficult. When the number of product options increases, so does the complexity of cost estimation. To separate the risk of costing, manufacturers may place higher profit on all features of the products. Lack of product knowledge by some customers may result in wrong details and unwanted products. There is also increase in the performance of the customised product due to lack of comparison. Helping customer to learn how to configure the products is an additional unpredicted cost. Entering into the privacy of customers can be a major concern. Personal information is extracted during product detail stage and set database. The information is then sold to other suppliers without previous agreement of the customers; this company may have to be faced with punishment.
Drawbacks for manufactures & the economy
Although there are many substantial researches into the subject, there are very few actual successful organisations that a working framework can be modelled coherently. A key problem of mass customisation is deciding on the options for customers. Gilmore and Pine (1997a) warned that customisation options should be restricted to limit options for customers to choose, in order to avoid wasteful efforts. Another difficulty is too definite the amount that the customer is willing to pay for functional goods. Mass customisation faces the hard task of changing their organisational structure and culture. When the progress go wrongly, factory productivity and capacity planning can be seriously affected. The complexity of supporting multiple types of product can result in increased cost due to: lower worker, higher machinery cost and higher inventories of goods in process and finished goods. Other concerns are constant re-training demand, production delays and product quality issues. Substantial investment in information technology is required to create the close relation between all organisation’s value chain and external suppliers and intermediaries. As information technology becomes obsolete (out-of-date) fairly quick, keeping the information infrastructure can increase cost. Approriate market players, whose strategy is to focus on small part of the market, will be the biggest losers. Mass customisation organisations are able to enter all parts of the market, at mass production pricing. Market manufacturers that do not change will not survive. Michael Cox, chief economist at the Federal Reserve Bank of Dallas, in concurrence with Toffler lamented that “If you don’t customize, you’re going to lose business in today’s marketplace.” (Wall Street Journal, April 29, 1999, pp. A1). Finally, we may have a remarkable situation, where the market is dominated by a few super efficient mass customisation organisations. Entering into the privacy of customers can be a major concern. Personal information is extracted during product detail stage and set database. The information is then sold to other suppliers without previous agreement of the customers; this company may have to be faced with punishment.
4 Mass Marketing and Mass Customization
-to appeal to an entire market, create the largest potential market and reach the highest turnover. -Delivering goods and services at prices low enough that nearly everyone can afford them.
-to meet consumers’ diverse and changing needs at near mass production prices. -Delivering affordable goods and services with enough variety and customization that nearly everyone finds exactly what they want.
-using one basic marketing strategy to approach the entire market. -using different methods designed to target each specific population segment.
Because Mass Marketing is a market coverage technique that does not distinguish or recognize any substantial differences between customer segments, it only use one basic marketing (single marketing mix) strategy by utilizing mass distribution and mass promotion to appeal the entire market place. On the contrary, mass customization uses many different methods to satisfy each specific customer segment. There are 4 types of mass customization (which are Collaborative Customization, Adaptive Customization, Transparent Customization and Cosmetic Customization) and in each type; the company has different ways to communicate with customers. For Collaborative Customization, the company works in partnership with individual customers to develop precise product offerings to best suit each customer’s needs. For Adaptive Customization, the company produces standardized products that are customizable by the end-user. Transparent Customization is where the company provides unique products to individual customers without overtly stating the products are customized. And Cosmetic Customization produces standardized products but market the products in different ways to various customers.
-utilizing mass distribution and mass media.
-using technologies such as computerization, internet, product modularization, and lean production.
Mass marketing tries to spread the marketing message to anyone and everyone who are willing to listen and let its products/services known by the greatest number of people so that it can reach potential customers. Therefore, mass media and mass distribution are good tools for the strategy. Businesses can reach the mass market with advertising messages through a variety of media. Radio is the oldest mass market medium. Television quickly took a dominant role as the mass medium of choice of a large number of businesses. Television remained the most effective means of reaching mass market audiences until innovations in technology and the Internet began to change the game around the turn of the 21st century. Newspapers are also a traditional mass market medium, although not as effective as radio or television due to the regional or biased nature of individual publications. Mass customization concentrates on using technologies (such as computerization, internet, product modularization, and lean production) in order to make products that really meet customer’s needs and be able to quickly produce an item only when an order is received.
-standardized products built to inventory.
-long product life cycles
-standardized modules assembled based on customers’ needs.
-short product life cycles
Mass marketing aims to attract all kinds of buyers by producing and distributing the one best product at the lowest possible price; no product is made specially for one person or a group of people. Therefore, the products must be standardized to make sure that the vendor can sell their goods to a large number of customers. Typically, things which are perceived to be necessary/essential to the consumer are subject to mass marketing. It focuses on products that have little change in customer’s demand, so the life cycles of products are long. In mass customization, products are made to satisfied different customer segment, it also have standardization but for modules to be assembled and made complete products based on customer’s need. Because the mass customization produces goods in response to volatile market demand, the life cycles of products is short.
-Economies of scale.
-Economies of scope and customer integration.
An economy of scale means the decrease in unit cost of a product or service resulting from large-scale operations and it plays an important role in mass marketing. When applying the mass marketing approach, the companies are able to produce in large scale. Advertising messages broadcast over mass media can reach millions of audiences in a single showing, and economies of scale make mass distribution cheaper than regional deliveries. Economies of scope are conceptually similar to economies of scale. Whereas economies of scale for a firm primarily refers to reductions in the average cost (cost per unit) associated with increasing the scale of production for a single product type, economies of scope refers to lowering the average cost for a firm in producing two or more products. In mass customization, the product customization concepts and design schemes are determined and agreed between customers and manufacturers. Moreover, by sharing demand and supply information, supply chain partners can better utilize production resources in response to volatile market demand. The integration of customer in manufacturing really helps to make products with reasonable and affordable prices.
6. Customer involvement
-customers are passively involved in the value chain.
-customers are actively integrated into the value chain.
In Mass Marketing, products are made before there are orders from customers and they just receive products’ information through mass media like newspaper, TV or internet; then make decisions to buy goods or not. In other words, mass marketing is where the vendor offers a product on a ‘take it or leave it’ basis, so customers are passively involved in the value chain. In Mass Customization, there are many applications including software-based product configurations that allow end-users to add and/or change certain functionalities of a core product. This involvement of the customer in the design and production stage means that the customer becomes a “prosumer” as described by futurologist Alvin Toffler in the 1970 book, ‘Future Shock’. The “prosumer” is producer and consumer in concert, defining and producing the product. This type of customization is called Collaborative customization and the customers are really involved in the value chain of products.
7. Type of business
-small and medium enterprises.
To carry out a mass marketing strategy, a company must have a strong finance to pay for heavy advertising costs, establishing brands and. The company has to pay a large amount of money on mass media for keep its image in public eyes. Whereas, in mass customization, thanks to the build-to-order method (products are only manufactured when a customer order is received), the company can reduce the cost of a customized products and avoid unsold products. Moreover, the company creates specific marketing strategies to reach different customer segments, so it can really understand the customer’s needs and keep good relationship with them. This also helps the company reduce the cost for market research. This is an advantage for small and medium enterprises to start their business with limited resources.
5 Which one is dead?
Mass marketing strategy is trying to reach market in greater areas by using single marketing strategy. The advantages of this strategy is in terms of low cost in production costs and tends to masters market monopolistic ally – as well as – can close all markets from competitors. In the past, mass marketing was a relatively common and successful approach. The classic example given is the Ford Motor Company with their standard offering of the Model T Ford, which is the only product they sold for many years and it was only provided in one color (black). Nowadays, mass marketing is facing to the death because of several challenges below:
Various segmented market and different demand of customer
Today’s marketplaces are individualized, customized, and personalized. A single product offering, therefore, cannot fully satisfy the diverse needs of all consumers in a market and consumers with unsatisfied needs expose businesses to challenges by competitors who are able to identify and fulfill consumer needs more precisely. In fact, markets for new products typically begin with one competitor offering a single product, and then gradually splinter into segments as competitors enter the market with products and marketing messages targeted at groups of consumers the original producer may have missed. These new competitors are able to enter a market ostensibly controlled by an established competitor because they can identify and meet the needs of unsatisfied customer segments. In recent times, the proliferation of computerized customer databases has worked to drive marketing toward ever-more-narrowly focused market segments
The ineffiecience of communication to customer
Mass marketing is an attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media. Also called undifferentiated marketing, it maximizes products advertising to consumers. Unlike niche marketing, that targets markets and audiences via research and analytical techniques; mass marketing advertises products to a large audience. Until recently, marketers have pretty much taken a “mass media” approach to their efforts: Blast out as many marketing messages as possible on every medium available as often as you can afford it. In an era when it’s not really possible to learn anything about the audience and their tastes, this crude shotgun method of attack is pretty much the only option. Mass marketing tactics are really just slightly more sophisticated versions of standing on the street corner yelling at people who walk by, hoping that some small percentage of them might be interested in what you have to say.
The development of the Internet and social media
Traditionally mass marketing has focused on radio, television and newspapers as the media used to reach this broad audience. By reaching the largest audience, exposure to the product is maximized. In the new millennium, the Internet – a mass communications medium- is more and more developing. Besides, it also changes the way people approach new products. The Internet has allowed people to reach out to each other and becomes a powerful force of one. Through ‘world wide web’ and social media, customers are able to connect with others who have similar interest, share experiences about products, complain about poor performing products or even become brand advocates.. Thereore, customers – not mass maketing tools – have influence on their decision buying products themselves. The Mass marketing could be coming to an end replaced by a new era of personal marketing. The businesses should make the right marketing strategy to approach their targets.
Mass marketing is old school marketing. No longer can businesses afford to blindly send large volume of the same messages to unqualified recipients. Nor can they afford to treat each customer to same way. Yet many businesses still practice these useless exercises. Plenty of businesses practice bad marketing on a regular basis. It’s wasteful and it produces negative effects. With an unfocused target, the wrong people will get the wrong message. As a result, marketing dollars will be wasted. Prospective elients may look unfavorably on your business because you appear to be careless, desperate, or just plain clueless, and no one wants to work with a business like that. Customers can’t be treated anonymously. One of the keys to successful marketing and sales understands your customer’s needs and pains, and how to better serve them. Personalized marketing will help businesses address these customer needs. Today, when more and more industries move towards creating markets of one, the satisfaction of increasingly individualized consumer demand is a challenge faced by many manufacturing organizations.
Consequentially, this situation has led to a rapid growth in the attention given to mass customization for the fulfillment of individual consumer requirements. Customer co-design and integration are the keys to mass customization. This is the core element that differentiates mass customization from other strategies like lean management or agile manufacturing. With today’s information technology, mass customization customers can be included into the value creation chain by defining, configuring or modifying an individual order. Though an interactive website customers can configure specifications of the product or service, packaging and even delivery options. The use of build-to-order methods, where an item is not constructed until an order is received, is an important factor in minimising the cost of a customized product. Mass customization is a reality because it is an attractive strategy for both manufacturers and customers. Producers are able to reduce their inventories and manufacturing overhead costs, eliminate waste in their supply chains, and obtain more accurate information about demand. Including the customer in the product design also establishes an individual contact between the manufacturer and customer, which offers possibilities for building up a lasting relationship. Mass customization technologies make it possible for companies to create a cost efficient value chain, while increasing flexibility towards answering customers’ needs from heterogeneous market demands. In this way, companies pay more attention in delivering products and services, and, instead of focusing just on acquiring new customers, they concentrate on building lasting relationships with the existing customers. Involving customers into the company’s value creation process increases their sense of contribution in the end product and brings real first hand customer knowledge. Small and medium enterprises comprise most of the world’s manufacturing sector.
In addition to feeling intense pressure from low-cost international competitors, these organizations have to deal with rising raw material cost, customers demanding high quality service, support, and product variety. Mass customization has snuck up on many of us. It has happened gradually and has moved from industry to industry without carrying the “mass customizing” label. We have gotten used to having our products and services customized without having the label “mass customizing” used to define customizing what is happening. We take mass customization for granted. We turn on our computer, click on “Word,” choose our favorite font, our color of the day, and the stationery that we think will impress our reader, and within seconds we are creating a document that we have quickly and effortlessly customized to meet our personal desires. We believe that mass customization has great potential to be a source of sustainable financial and strategic advantage. Today’s market characteristics and competitive challenges favor mass customization in many industries and market situations. We invite managers to learn more about this strategy and investigate how a customized mass customization approach can suit their businesses better.