Magazine article Editor & Publisher

Whoever Stays Closest to the Customer Will Win

Magazine article Editor & Publisher

Whoever Stays Closest to the Customer Will Win

Article excerpt

Whoever Stays Closest to the Customer Will Win

The challenge facing newspapers is to become market-driven. While this is an overused phrase, it is not an overused strategy, and it is this lack of a marketing perspective that is responsible, at least in part, for the current dilemma facing newspapers.

What does it mean to be market-driven? It means thinking of the business through the eyes of the customer. While newspapers have a special challenge because they have two customers--advertisers and readers--these two segments are linked. The attractiveness of the newspaper to an advertiser is directly linked to how well the newspaper can deliver the consumers that advertiser is looking to reach.

Nonetheless, for too many years, the newspaper has not fully reflected the demands, requests, desires, needs, fears and wishes of its readers, and the newspaper has often abused and even overcharged its other customer, the advertisers.

This lack of a customer focus has simply caught up with the newspaper industry. It is easy to see how some newspapers lost touch with their customers and their customers' needs, which opened the door to competitors, including electronic media and direct marketing. To regain ground, newspapers need to look at their two customers -- the consumer and the advertiser -- as one market whose changing needs must be met.

Let us start with the changes in the consumer. Significant demographic shifts, including a sharp rise in the number of dual-income households and a significant decline in the number of leisure hours (from 26 hours per week in 1973 to 14 in 1986, according to data from the Rand Corporation and Louis Harris & Associates), mean that more consumers are seeking convenience in much of what they want in products and services.

Clearly, consumers' shopping behaviors have really changed also. There was a day when one-stop shopping was truly important and thought of as convenient. Department stores and supermarkets with their broad selection but narrow depth of assortment were preferred. Today, however, many consumers have redefined convenience as getting what they want the first time, more depth than breadth.

We have also seen the increasing importance of "value" and a consumer who is willing to "unbundle" purchases, buying at the store with the best prices on branded goods. As products mature and achieve wider and wider distribution, their easier availability makes specific branded items less of a factor in store loyalty.

Although branded products still predominate as an assurance of quality, specific brand names in some categories have become less potent since customers have learned from experience that real differences among brands within a relevant set are not substantial. For example, today's consumers may be more concerned about the form -- e.g., powder vs. liquid laundry detergent -- than the brand within a set of acceptable brands.

As a result, consumers are able to find branded products at almost any store and are willing to forgo buying their usual brand for the opportunity to save on price. Consumers now buy paper towels, detergent, disposable diapers and baby food from a discounter; health and beauty-aids from a discount drug store; and fresh produce and meat from the supermarket. Shopping trips are now defined as weekly shopping, fill-in shopping, and value-driven shopping.

In response, the retail environment has changed dramatically over the last 10 years. Many local and regional retailers have all but disappeared through acquisitions. Manufacturers have bypassed traditional retail outlets, selling their goods directly to consumers, as evidenced in the surge in retail outlet malls.

Most retail formats have found it difficult to adapt to this environment. Many have matured, some are extinct. Today's successful survivors exploit tightly focused formats. These include:

* The specialty mall shop: Narrow and deep merchandisers -- the most prominent example is The Limited

* The power merchants: Broader in category, include Toys R Us, Kuppenheimer

* The value discounter: Wal-Mart now virtually defines this format

The traditional everything-under-one-roof giants. …

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