By Michael Hutak, 9 May 2002
Australian Financial Review
MARKETING 2002
Expect a more demand-driven market. So you'll need to earn the trust of customers.
AMERICAN CAPITALISM is in for a bumpy ride over the next two decades. Manhattan marketing guru Elliott Ettenberg says business priorities will need to shift from satisfying shareholders to delighting customers. This is not a rehash of the new economy's customer relationship management fad. It is the parting shot from one of the most influential forces on the US economy in the past half-century: baby boomers.
The Next Economy: Will you know where your customers are? by Elliott Ettenberg (McGraw-Hill, $56.95).
AMERICAN CAPITALISM is in for a bumpy ride over the next two decades. Manhattan marketing guru Elliott Ettenberg says business priorities will need to shift from satisfying shareholders to delighting customers. This is not a rehash of the new economy's customer relationship management fad. It is the parting shot from one of the most influential forces on the US economy in the past half-century: baby boomers.
"Forty-five to 55 is the peak spending age, and spending drops off sharply from there as people start to focus on savings and investment," Ettenberg said from New York. "And as we move through the first decade of the millennium the baby boomers are turning 50-plus, the kids have gone, they're moving to smaller quarters, working less, spending less and are starting to withdraw from the marketplace."
Ettenberg says the impact of the economic withdrawal of the wealthiest 28 per cent of the US population can't be underestimated. Faced with diminishing national savings, ballooning personal debt, shrinking customer loyalty and what Ettenberg calls "marketing impotence", companies will need to rebuild a bridge of trust between the discerning customer and brands that add value.
Ettenberg wants to reinvent marketing, which he argues is in terminal decline. In his latest book, The Next Economy: Will you know where your customers are?, Ettenberg says the way to rebuild the economy is to develop better, more accurate customer data.
He wants to see "concierge marketing", where consumers outsource their decisions to specialists who procure, package, deliver and administer purchases. Unlike conventional middlemen who represent producers to sellers, concierge marketers will represent buyers to sellers. They will charge for the service. But consumers, who have become disenchanted, will be happy to pay.
Ettenberg also forsees "horizontal co-marketing". Where in conventional vertical marketing, retailers and manufacturers share advertising and marketing costs, horizontal co-marketing means retailers, manufacturers and service organisations co-ordinate efforts - not around particular products but categories of consumers.
Ettenberg says our "new economy" is a transitional stage straddling the old - and his next economy. He argues that the postwar economy of the 1960s, 70s and 80s was driven by baby boomers and was based on products and services, eking out market share with a focus on efficiency. The new economy was built by "generation X geeks" who pushed technology to the forefront, and demonstrated the importance of information as a driver of economic growth. Success in the "gold rush" of the new economy was measured by time-to-market, but that deployment of technology has, says Ettenberg, failed to add value to our lives. No-one can afford to ignore the internet but the big mistake of the dotcom boom was that business saw it as a technological challenge. This has resulted in a selling interface between companies and consumers that is so unfriendly that it generates more frustration than it does satisfaction.
Ettenberg believes the key to selling in his next economy will be an economic, social and psychological problem - a marketing challenge. For the old categories of age and gender he prefers psychographic models of market segmentation, and endorses analytic models such as SRI's proprietary Values and Lifestyles typology (based on people's desires, beliefs, needs and attitudes) which allow marketers to access people's psychological make-up - something systems based solely on demographics or geographics are unable to discern.