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The End of the Mass Market

Goodbye Mass Market, Welcome Nanomarket. Today's increasing diversity has transformed the mass market into what some researchers call the "nanomarket". Marketplaces are fragmenting into tiny pieces due to an explosive growth in consumer segments, preferences, tastes and lifestyles that's beyond the measuring ability of traditional demographics. This implies the need to look at the marketplaces in a new way.

Demographics alone no longer work in a mass market that's more or less dead. Today's marketplaces are individualized, customized, and personalized. The implication is that the producers and sellers --companies, manufacturers, marketers and retailers-- need to adapt to the new realities of the Internet Era.

Many companies, however, continue to operate on old beliefs based on demographic data, and it's leading to a disconnect between companies and consumers. Many advertisements, for example, continue to portray women as married, stay-at-home moms in a world where an increasing number of women stay single into their 40s, become single moms by choice and take on primary-breadwinner roles within their families.

Amid such shifts, simply saying your campaign targets women 18 to 49 has become meaningless. Demographics today don't tell you the whole story, marketers know that old demographic targeting isn't working for them. It gives them nothing.

Big companies are going deeper into consumers' heads to understand what drives them to buy--and this, in turn, is driving market research methods such as ethnography. Ethnographers are cultural anthropologists who observe how consumers use products and services in their natural environments. They write reports using the words and phrasing of the people they study, and the information helps companies figure out the behaviors and reasoning behind people's purchasing decisions.

Instead of boxing their customers into one profile, large companies are segmenting customers into ever-narrower lifestyle profiles and categories to understand their core values. They're targeting the 20 percent of customers who generate 80 percent of their business, based on the Pareto Principle.

Electronics retailer Best Buy, for example, now focuses its business on five customer profiles instead of trying to broadly tailor its marketing to fit every customer profile. Most entrepreneurs, however, still try to be everything to everyone by targeting a wide demographic. Focusing on a specific, high-value profitable target audience, and then doing everything you can to engage them, requires a change of mentality for the mass-market marketers.

Demographics aren't becoming obsolete, they are just taking on a new role as marketers get smarter in how to apply them. Entreprenuers have understode that there are other ways of looking at your customers. Consumer attitudes will replace demographics as the basis for marketing execution, and companies will have to incorporate attitudes into their databases the same way they have used demographics in the past. Today you have to speak with lifestyle relevance to your customers to get their attention. Understanding lifestyles is crucial to understanding your customers.

Two things are necessary for understanding customers, one is intuition and the other is data mining. Market research is used to gather customer household income, age and other lifestyle information that helps make marketing and product-design decisions. The Internet is a great tool for learning about your customers. It's much more up-to-date than an old demographics list.

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