Disadvantages of Mass Marketing

A mass marketing strategy begins with the assumption that all individuals in this market think and act alike, and are identical in other ways as well. While this assumption is usually incorrect, there may be such a thing as a “mass mind,” but that is unusual (see Chapter Twenty Three). As Xenophon, Drucker, and Captain von Schell have made plain, for the most part those we lead are not at all alike.

For mass marketing to be effective, the product or service and environment would have to be such that the desire or need is the same and that it is perceived identically by all ages, incomes, geographic locations, and cultures. Certain basic commodities—electricity, gas, or water, for example—may have these attributes. However, even with such commodities, issues of belief, religion, culture, or national honor may mean that communications about these products cannot be identical. Approaches you might think of as no brainers may provide unpleasant surprises if you try them with some groups.

The members of a tribe living in the jungles of South America have very short life spans due to a disease that is common and unique to them. Government scientists investigated and found that the disease and early deaths were due to a microscopic worm that lived in the particular wood from which these people build their huts. Simple solutions to the problem: don’t build homes using this type of wood, or move to another location, or both. This was explained to the tribe. Problem solved, right? Wrong. The location and the wood are integral to custom, culture, and religion. The people understood the issue perfectly, but preferred doing what they’d always done and staying in the same place. The scientists had to find another solution. Clearly all people are not the same and must be led differently.

The Solution for Marketers and Leaders: Segmentation

Segmentation refers to categorizing a market by common features, which define wants, needs, and any other critical characteristics. This is a very important concept that researchers discovered on the firing line over the years. You can’t be everything to everybody.

Different markets and people have different wants, needs, values, and interests. Recently my wife and I were at an upscale department store in an expensive part of town looking for a particular china pattern. We found one that was close, but decided that it wasn’t quite what we wanted. We decided to look elsewhere.

On the way home, we stopped to buy kitchen cleanser at an entirely different type of retail outlet located in a shopping center. It was a national brand store, known primarily for value, not upscale merchandise. We certainly weren’t looking for china. To our surprise, we noticed that the store sold china. Even more surprising, we saw the exact brand of imported china that we had deemed “close” at about 50 percent of the upscale store’s price.

Why the price difference? Those who shop at the upscale store do so because of its image for high quality and frequently exclusive merchandise. This china appeared to be of high quality. The wholesale cost to both stores was probably identical, or nearly so. However, for the upscale department store a low price would seem incongruous with high quality and exclusivity unless it was a special sale. At a low price, they might not have sold much (or much more), and in any case it would have hurt the store’s exclusive image to present such an offering. In any case, the upscale department store felt that the china fit with its other product lines, so long as it charged a comparably high price. We thought it worth the money when we saw it there, and we seriously considered buying the set.

The other store sold value merchandise, be it kitchen cleanser or china. As long as it was perceived as good value and sold at a relatively low price, the product would sell. The wholesale price paid allowed the retailer to charge a price that fit its general “good value for the money” image.

Here we have an identical product selling at two entirely different retail outlets at considerably different prices. The demographics and the expectations of the customers at both stores are different. Had the two stores chosen an identical selling price, one that was simultaneously perceptibly higher than the standard fare of the value store and lower than that of the upscale department store, probably neither would have sold the product successfully.

Segmentation has other advantages for a marketer. By concentrating efforts on one or more selected parts of the market, a marketer can concentrate on the things that are most important to the individuals in these market sections. This is a fundamental principle of all strategy, not just marketing strategy. In this way, a marketer avoids spreading resources, which are always limited, over all markets. It means being strong in a limited number of segments as opposed to being weak everywhere.

What Segmentation Means for the Leader

Segmentation coincides with Drucker’s belief that human beings are different and must be treated differently. The 2008 presidential election provides a useful example of how different groups of people are approached differently.

The United States is made up of a host of different cultures, geographic areas, religions, occupations, and other divisions. Even though there are certain common interests, these different segments must be approached differently. Both candidates tried to do this.

The concept of appealing to different groups in their preferred way and in accordance with their interests is correct. However, the leader must be careful to maintain a consistent story, even if the story is presented with a different emphasis to different groups. Barack Obama, for example, told a group of American Jews that Jerusalem should remain the undivided capital of Israel and intimated that he intended to move the American Embassy in Israel from Tel Aviv to Jerusalem. Speaking on CNN the next day, he “clarified” and modified his stance significantly. Even after winning the election, he is still facing criticism for his apparent flip-flopping.¹

What the leader or marketer says or promises can’t change with different groups or the leader loses credibility. This is easier with smaller groups, more difficult with larger groups located around the country or around the world.

The Basics of One-on-One Segmentation

In 1987, three of my students won an award sponsored by the Philip Morris Corporation for a marketing plan they developed. They and I were invited to New York City to receive the award. Among five other groups of students similarly honored was one led by a young communications professor, Martha Rogers. Little did I know that six years later Martha would catapult to the top of the best-seller list with her partner, Don Peppers, with a book called The One to One Future.² Like most revolutionary concepts, the basic idea is simple. It is to concentrate on providing services or products to one customer at a time by identifying and then meeting their individual needs. It then aims to repeat this many times with each customer, thereby forging powerful lifelong relationships. This is one on-one segmentation and it is a near perfect example of segmentation and the marketing approach to leadership.

The more you know about those you lead, the better, and only with full knowledge can you can lead them well. The bare basics are each person’s name, family, and facts about their life and interests. Drucker followed his own advice in this. I was surprised at how much Drucker knew about each of his students. My wife, Nurit, met Peter at the first party at the beginning of my first year. I’m sure he met many people that evening. He spoke with her a few minutes and then went on. The following year, we again attended the annual party. At one point, Nurit saw Peter and went to greet him, saying only, “You probably won’t remember me, but—” Before she could finish, he replied, “Of course I do. You’re Nurit Cohen, Bill Cohen’s wife.”

One head of a senior government school memorized the names of all of his new officer students, members of their families, and their general interests from a book with photographs and names that had been mailed out to incoming students. At their first social gathering, he greeted more than three hundred attendees—every officer and family member—by name and was able to say a few words about something of interest to each although he had met few of them.

To say this impressed these senior officers is an understatement. The following day he told his assembled students that in addition to wanting to meet their spouses, he had done this with instructional intent. First, he wanted to emphasize that all leaders must know everything they can about their subordinates. In addition, he wanted to prove that it could be done by any leader who was committed to do it, and without any special memory devices.

Maybe you don’t need to go as far as this leader did to learn about the people you work and interact with or to prove a point. However, knowing and understanding people underlies Drucker’s marketing approach to successful leadership.

Interacting with Staff in the Workplace

If Peter had interacted with his students only in the classroom, I doubt that he would have known them as well or had the same impact on them. Drucker never passed up the opportunity to interact with his students outside the classroom. He not only attended such university events as the beginning of school year party, he attended almost every school event to which he was invited—and he was invited to many. I have seen professors of far less stature than Peter who declined invitations from their own universities to participate in school activities, apparently because they considered themselves too important or too busy. Peter, a documented workaholic, was never too busy. Consequently his students interacted with him frequently, and he with them, even when not taking courses from him. This continued after graduation. In this way, Peter was able to stay abreast of his students’ activities throughout their professional lives. It seems to me that, after I had graduated, every time we talked the first thing he wanted to know was what I was doing. Remember the one to-one marketing concept as conceived by Peppers and Rogers. My relationship with Peter was a lifetime relationship because of his efforts as much as my own.

Drucker practiced what he preached. He knew that meeting people face to face and talking with them was essential to good leadership. Some years ago, Tom Peters and Robert Waterman popularized the technique they called MBWA (“management by wandering around”).³ This is not a new technique. Julius Caesar didn’t call it that, but that’s what he did. In politics and on the battlefield, he wandered around seeing for himself what was going on and learning the name of even the most junior subordinate. In modern times, successful senior executives have followed this model. Robert W. Galvin, CEO and later chairman of the board of Motorola, knew the value of getting to know his people. He told his managers, “I believe we in top management must circulate.”⁴ Under his leadership, Motorola’s sales grew from $216.6 million to $6.7 billion. Douglas D. Danforth, then chairman of the board at Westinghouse, echoed his sentiment: “The better the CEO knows his key people personally, the better he will be able to correctly estimate their strengths.”⁵

However, while wandering around, you need to be careful that you don’t take authority away from the middle management leaders between you and the people you meet. Still, by seeing and being seen, you greatly increase the effectiveness of communications up and down the line. You learn what’s right and what’s wrong, which allows you to correct problems right away. You can dramatize your ideas and what your goals to your workers. That way the word gets around—fast.

Perhaps even more important, you learn more about who your people really are. A human being isn’t only the owner of certain skills, possessor of a certain reputation that may or may not be deserved, recipient of a certain amount of money, and holder of a certain position in your organization. Any subordinate is much more: a man or woman of flesh and blood, someone’s spouse, boyfriend or girlfriend, child, parent. Each has hopes, dreams, problems, victories, defeats, and opportunities. Each has unique qualities, abilities, capabilities, and limitations. Faced with a certain situation, each will usually react characteristically. Each has the potential to contribute much to your organization, or to commit errors that can drag your organization down and even cause it to fail.

Of course, you can’t lead only by wandering around and talking with people. Simply walking around, as good a technique as it is, isn’t the only way of interacting with those you lead at work. There are many job related activities that cut across organizational lines and for which you do not need a permanent organization, including committees and teams created to solve specific problems, do planning, bid contracts, or handle any of a number of other activities. Many companies take on tasks that are primarily for the benefit of organizations outside the company. Some take place on the company’s premises and on company time. Community fund drives and savings bonds drives are a couple of examples. It really doesn’t matter where these activities are conducted. Many companies simply assign these tasks to an assistant or to the most junior member of the organization. To me that is a waste of an excellent opportunity to get to know, and give leadership experience, to some of your younger managers. It is also another opportunity to interact with and get to know those you lead.

Interacting with Staff Outside the Workplace

There are more ways to get to know your people, and many of these are activities you can initiate yourself or can assign others, depending on your position. These include social activities, professional activities, or some that are a combination of both. All of them help you observe and get to know your people in a wide variety of situations and allow an opportunity for one-on-one segmentation.

Many require a number of management and leadership roles, and that’s good, too, because it gives you an opportunity to observe your people in action and see how they perform as leaders in different roles. I once worked for an executive who used such opportunities to test the leadership potential of the managers reporting to him.

Parties, such as those Drucker attended, are examples on internal social activities. However, they are but one example. There are also company picnics, sporting events, management clubs, retirement and award ceremonies, and more. All of these activities require someone to organize and run them. If your subordinates know that you use these activities to help you decide about future promotions, you’ll probably have many who will volunteer for the jobs.

These activities provide powerful opportunities for you to learn more about those you lead, but you must be careful not to let them take your focus away from the organization’s main mission. Done correctly, they can support the mission because by knowing and understanding your people well, you will be able to develop and make the best use of their talents.

Off-Duty and Unofficial Meetings

Sometimes they get it right on TV, sometimes not. If you watch TV even occasionally, you are familiar with the many dramas or sitcoms that center around lawyers, law enforcement, newsrooms, or other types of businesses or professions. Many of the scenes occur after work and socially in bars. What the television people get right is the amount of work done in these unofficial settings. Such meetings really do take place, and in these relaxed atmospheres, leaders get to know those who work for and with them.

Herb Kelleher was one of the most dynamic and charismatic CEOs of modern times. Fortune even suggested that perhaps he was the best CEO in America.⁶ Kelleher probably came to know his people better than any other company leader at Southwest Airlines through his frequent after work meetings with his employees at the bar. However, he never overlooked an opportunity, no matter what the setting.

At his retirement, the pilots’ union took a full-page advertisement in USA Today thanking him for his job as CEO. Kelleher knew many of his thousands of employees and called them by their first names. Said one, “He’s just the most fantastic and incredible leader. . . . He knows everyone.” Kelleher actually hired one pilot, “Joe,” at a 7-11.⁷

The Function of Segmentation in Leadership

Segmentation is as important in leadership as it is in marketing. It means knowing that every one of your followers is different, and you must know and understand these differences to lead them effectively. For communication purposes, segmentation of your employees is essential, especially in a large company. However, the objective is one on one segmentation and a lifetime relationship. This is what Drucker practiced, and this is in part what he meant by leadership being a marketing job.