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Wholesell Changes

One look at the marketing methods in play when this magazine started and you'll wonder how anything ever got sold. One look at the future and you might see products selling themselves.
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To borrow from a popular ad campaign circa 1977: You've come a long way, baby. Like Alice gazing through the looking glass, it's a mind-bender to look at the world of marketing in 1977, when coupons, contests and sidewalk sales dominated small-business promotions. Back then, the typical campaign went something like this: You ran an ad or coupon in the newspaper and, if you were lucky, an AM radio station in your area sent a DJ for a live broadcast during your promotion.

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AM radio? Yes, you read that correctly. FM radio was fairly new in 1977, and there were only three national TV networks. Today's media glut didn't exist, and big-time promotional marketing was the exclusive turf of conglomerates. Your options were limited, not to mention prohibitively expensive. "You had to compete on a huge scale for mind share," says Rob Osler, director of brand strategy at Leonhardt:Fitch, a branding and design firm in Seattle. "It created significant barriers to entry for new players."

Many of the marketing tools we take for granted today were either new or nonexistent in 1977. Auto-makers were testing a new idea called the rebate. Marketers were figuring out how to target direct mail. Computers took up entire rooms, and scanning equipment was a novelty. Data mining was futuristic, and promotions were tailored to the masses. The arrival of desktop computers in the 1980s gave entrepreneurs added marketing sophistication and cost control, while corporations began cluing into the power of sponsorships, branding, tie-ins and loyalty programs, as well as the connections between all of them. The Super Bowl was becoming a marketing event, and AT&T's "Opportunity Calling" campaign, which let consumers collect points on long distance calls to buy merchandise, signaled something new and exciting.

Technology: First it leveled the playing field. Where's it headed now?
Money: Capital was scarce 25 years ago. Here's its state today.
Management: Trends are multiplying fast. What will stand the test of time?
Marketing:Technology and personalization will rule this arena.
Franchising: Get ready . . . the golden age of franchising is upon us.

Getting Technical

Of course, the transformation of the Internet into a global marketing tool changed everything. Suddenly, entrepreneurs had a cost-effective way to compete directly and track consumers individually. At the same time, marketing campaigns were becoming even more sophisticated, with tie-ins, cross promotions, branding and product placements. For example, look at Survivor, where contestants can win a Mountain Dew or items from Target. The show sells merchandise online, and contestants appear on talk shows as well as in ads and magazines. "The business of promotions has gone past high art," says Ralph A. Oliva, executive director of the Institute for the Study of Business Markets and professor of marketing at Smeal College of Business Administration at Pennsylvania State University in University Park, Pennsylvania.

So what will the future hold? Technology, particularly wireless, will have a great impact on promotional marketing. Cell phones and PDAs are morphing into one device, wireless laptops are becoming a reality, and the majority of U.S. consumers are expected to have digital TV sets by 2007, letting them use their TVs as computers, and vice versa.

At the same time, marketing will turn into a game of one-on-one marketing, in which companies will perfect the art of data mining to gear coupons and special offers to each consumer's particular buying habits. Amazon.com's ability to track visitors and instantaneously pull up a host of related products that might also interest them as they surf the site is a sign of more things to come. "Intertainment"-the combination of entertainment and interactivity-is taking hold, and it will only get more sophisticated in the future. "Successful sales promotions on the Web need to be 'intertaining,'" says Jake Schroepfer, president and CEO of advertising agency DDB Worldwide in Dallas, which helped Pepsi move its Pepsistuff redeemable bottle-cap promotion out of stores and onto the Web, where relationships can be built with consumers on their terms.

"The most effective promotions are the one-on-one targeted promotions that deliver value to customers when they need [it] and in a way that actually enhances the brand," says Perry Lowe, a marketing lecturer at Bentley College in Waltham, Massachusetts, and president of the Lowe Group of Companies, a marketing consulting firm specializing in strategic new product development. Direct mail, telemarketing or spam that isn't personalized is already looking antiquated. "Those days are going to be quickly ending," Lowe predicts, "as people see the advantages of the one-on-one relationship."

A look at marketing milestones coming in the next 25 years:

2005: One-on-one marketing becomes the norm. General direct mail and spam looks old-fashioned. Wireless devices and broadband connections open new ways to target consumers.
2010: HDTV in the majority of U.S. homes makes TV an increasingly interactive marketing experience. Broadband and wireless devices allow marketers to sell to consumers in real time.
2015: Marketers have perfected the art of data mining to reach consumers quickly with value-added promotions based on each person's unique buying patterns. Branding and advertising are fully interactive and targeted one-on-one.
2025: 100 percent interactivity, all the time. Entrepreneurs are gathering cheap, super-sophisticated customer data for quick, personalized up-selling and loyalty-building opportunities in a wireless world.

Just for You

Combine the one-on-one marketing trend with the blurring lines between advertising and promotion and news and entertainment, and we'll have a completely different media landscape by 2015. TV shows, for example, will be able to run product placements that are geared toward individuals. So while you may see a character on your favorite TV sitcom wearing an Eddie Bauer logo, your neighbor will see him wearing a Gap logo because that's the brand your neighbor prefers. Even more, we'll be able to order every product we see. "Consumers will be able to determine what information they want at any time on any product or service and will instantly be able to communicate," Lowe predicts.

Interactive marketing will open up new opportunities for entrepreneurs to get in front of consumers, but progress doesn't come without a price. Entrepreneurs will have to find innovative ways to reach consumers immersed in a world of one-on-one marketing. If a consumer's favorite brand of ice cream knows that she always buys Neapolitan and can target her with value-added deals based on that information, there's going to be less incentive for her to try the competition. "It will be harder to enter markets, harder to get people to switch brands," Lowe says.

Perhaps the biggest challenge ahead for businesses, however, will be treading that fine line between helping consumers and annoying them. How much one-on-one personalized marketing consumers will tolerate remains to be seen. After all, one person's convenient special offer is another person's annoying invasion of privacy.

Will consumers feel too manipulated by individualized promotions and rebelliously tune marketers out? No one knows where the line will be drawn, and companies will learn by trial and error over the next five to 15 years. "The danger marketers will face is in over-targeting people," Osler says, adding that there will be a shift toward using technology to find those 20 percent of customers who are generating 80 percent of the business. "Small-business owners can reward those who use their product or service the most."

So what will an integrated promotional marketing campaign look like in 25 years? While it's hard to predict given that technology evolves daily, it's a sure bet that entrepreneurs will gather super-sophisticated data about their customers to personalize up-selling and loyalty-building opportunities in a wireless world. Branding will be a lot more interactive. Lowe envisions a world where everyone will wear an all-in-one device akin to the Dick Tracy wristwatch that connects them to everything all at once. It'll be 100 percent interactivity, all the time. Promotional marketing certainly has come a long way, baby. Now it will be fascinating to see where it goes.

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Chris Penttila is Entrepreneur's "Staff Smarts" columnist.

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This story appears in the May 2002 issue of Entrepreneur. Subscribe »