Megatrends in consumer marketing

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FACULTY WORKING
PAPER NO. 945

Megatrends In Consumer fytarketing
Jagdish N. Sheth

Gollaae of Ccmmercs and Business Administration
Bureau of Economic ana Sissinttss Research
University of liiincis. Urbana-Champaign

BEBR

FACULTY WORKING PAPER NO. 945
College of Commerce and Business Administration
University of Illinois at Urbana-Champaign
April 1983

Megatrends in Consumer Marketing

Jagdish N. Sheth, Professor
Department of Business Administration

I
Megatrends in Consumer Marketing

Jagdish N. Sheth

Abstract

This paper identifies seven marketing megatrends as a consequence
of changing demographic characteristics and technological advancements.
They are: dual mass consumption (affluent and average); personalized
consumption; role blurring for self sufficiency; time-place universality;
dominance of wants over needs; pluralistic specialty markets; and one
stop hassle free shopping.

The paper also recommends several strategies to corporations for
survival and growth in the turbulent times. These include focus on
the market, controlling costs, broadening the horizon, decentralization
of the company, and pluralistic ways of doing business.

MEGATRENDS IN CONSUMER MARKETING

Jagdish N. Sheth
University of Illinois

INTRODUCTION

A number of fundamental and mostly irreversible demographic as well
as technological changes are taking place right in front of our eyes.
Unfortunately, many marketing practitioners don't see them even though
they are living through them partly because these changes are
evolutionary rather than revolutionary and partly because of their
preoccupation with tactical operations, annual budget battles and
continuous reorganizations.

At the same time, the emerging demographic and technological
changes are as dramatic and significant as the postwar baby boom and
move to the suburbs which took place in the decades of the forties and
the fifties. One can almost directly attribute failures of basically
good companies such as W. T. Grant and A & P to blantant neglect of
market changes. Similarly, decline in sales of such good basic products
as coffee, electric iron and family magazines can also be directly
attributed to changes in the market place. In my opinion, many companies
and industries today are facing similar challenges created by the emerging
demographic and technological changes.

Accordingly, the purpose of this paper is to examine fundamental
changes in consumer values and buying behavior as a consequence of
demographic changes and technological innovations. First, we will

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summarize the demographic and technological forecasts and their funda-
mental impacts on consumer behavior. Second we will develop a list of
marketing megatrends which are likely to be the driving forces in
consumer marketing. Finally, we will suggest strategies of survival
for companies and industries in light of these megatrends.

DEMOGRAPHIC AND LIFE STYLE CHANGES

Demographic changes can be summarized in terms of three fundamental
changes :

1. Maturing of America. There is almost a unanimous consensus among
all the demographers that America is clearly shifting from a nation of
young adults to a nation of mature adults. For example, the median age
in 1980 was 30 years and it is expected to be 42 years by the year 2050.
Similarly, we are witnessing the present migration from the baby boom to
the baby bust era. This is indicated by the replacement of 18 to 34 age
segment as the biggest buying segment by the 30 to 40 age segment in the
population.

This aging of America is directly attributed to the ever increasing
life expectancy (69 years in 1960 to 74 years in 1980 and nearly 80 years
in 2000) as well as ever declining fertility rate (3.8 children in 1960
down to 1.8 children in 1980 and stabilizing at 1.7 children by the year
2000) . It is expected to generate the largest growth in the 30 to 45 age
segment and the second largest growth in the 65 and above age segment.

2t Dual-Income Households.. A second major change is the emergence of
dual income households in which both husband and wife are wage earners.

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For example, more than 50 percent of women are now in the work, force.
This has resulted in redefinition of the family roles of bread winners
and homemakers.

It is anticipated that most American families will be distributed
on a bimodal basis on the income continuum. Those who believe in the
traditional family roles of husband as the bread winner and wife as
the homemaker are likely to experience a sharp decline in their real
income whereas those who adopt the more contemporary roles of
dual income earners will experience a sharp increase in their real
income. In short, it is very likely that there will be a decline of
the middle class as we know today. In its place, we are likely to
evolve a two class society - the Affluent and the Average.

3. Nontraditional HouseholdSo A third major demographic shift is the

sharp increase in nonfamily households such as singles (single adult),

mingles (multiple adults of same sex) , and single parent (divorced or

separated family) households. For example, 22 percent of all

househlds were single adult in 1980, and they are expected to increase sharply

by the year 2000. It would appear that more adults prefer to live alone,

or establish households on the basis of friendship instead of kinshipo

In the process, the average size of the household is expected to decline

sharply (from 3.6 in 1960 to 2.8 in 1980 down to 1.8 in year 2000). In

short, households will become more and more atomistic.

As a consequence of these three major demographic changes, it is
my belief that we will experience the following changes in household
life styles and values.

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1. Individualistic life styles. As more and more adults live alone
and/or establish households on a friendship rather than kinship basis,
it is inevitable that people will be able to manifest life styles
which are not constrained by the family norms and desires of other
members of the family. In the process, household consumption
activities are likely to be reshaped from household to per capita
basis. In short, more and more consumption will be personalized

to each individual.

Even in the traditional family households, one would expect
increase in individualistic life styles as career or work related
schedules generate more conflicts in getting together at the same
time. For example, when both husband and wife are professional
workers, it is very likely that business obligations as well as
travel away from home will diminish the chances of eating dinner
together.

2. Adult-Oriented Life Styles. Maturing age of the population,
emergence of single adult households as well as formation of
households on a friendship basis all indicate decline of children's
presence in the household,. It is expected that this should result
in an increase of adult oriented life style, both at home and away
from home situations. For example, more and more adult programming
is patronized at home through network as well as cable television.
Time Driven Life Styles. As the population matures to the prime age,
it has by definition more activities to perform but within the same
time limit. This is because the activity curve over the life cycle
from birth to death tends to peak at the middle years. At the same

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time, we are an affluent nation both in terms of average annual
income and personal wealth. It is, therefore, inevitable that
America will become a nation of time poor, money rich households.
In short, more and more people will substitute time as the scarce
resource in place of money, resulting in establishing priorities
for products and services based on how much time they will save
rather than how much money they will cost. For example, more and
more people tend to call by long distance phone rather than write
letters. Similarly, they travel by air rather than by car for long
haul distances*

TECHNOLOGICAL CHANGES AND BUSINESS FUNCTIONS

Along with the demographic changes, there are also significant
technological changes taking place which impact on the supply function.

The primary technological change is the emergence of the electronics
age of mankind. It is a direct substitute for the electromechanical
technologies which began with the Industrial Revolution. It is also
having an impact on the chemical technologies in many fields such as
food processing, pharmaceuticals and photography.

Unlike the previous technologies identified with the industrial era
(mechanical, electromechanical and chemical), the electronics technology
seems to possess several unique features which all impact on the business
functions.
Low Entry-Exit 3arriers

First, it is a relatively low capital technology. Therefore, practically
anyone with an invention or expertise can think of starting his or her own

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businesSo This is clearly manifested by the emergence of the Sillicon
Valley Industry in California as well as numerous high technology
industrial parks in and around major research universities. In other
words, the electronics technology has immensely lowered the barriers
of entry and exit which will foster greater competition in all industries.
Global Perspective

Second, the electronics technology can be located in virtually any
location. It requires much less dependence on such natural resources as
water, air, and energy. All it needs is skilled labor and supply of
manmade resources „ Therefore, it is a worldwide technology rather than
limited to those geographical areas which have unique natural resources.
This also means that a company must take a global perspective with respect
to manufacturing and distribution of its products and services.
Functional Integration

Third, the electronics technology seems to have the capability of
improving productivity (output to input ratio) of business functions
considerably greater than any previous technology. By integrating
many separate and specialized functions such as orders, shipping,
billing and collection as well as requiring lower capitalization, it
tends to generate sharper declining experience curves in manufacturing
and marketing of products and services resulting in lower unit costs.
Enhanced Quality at Lower Cost

Fourth, it appears that the electronics technology is unprecedented
in its capability to offer a highly reliable maintance-free product or
service as compared to the electromechanical and even the chemical
technologies. For example, teoday's electronic calculators and watches
are not only cheaper but infinitely more reliable in their functionalities

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than their counterpart eLectromechnaical products. Similarly, you can
today buy an electronic telephone wibch will give a more reliable dial
tone and perform other telecommunication functions at far lower costs
than its counterpart electromechanical telephones „

The enhanced quality at a lower unit cost is not limited to the
electronics products themselves. It appears that it pervades all business
functions. For example, computer aided design (CAD) and computer aided
manufacturing (CAM) are enabling suppliers to offer greater variety of
nonelectronic products at lower costs. Similarly, the inventory costs
and shipping time are dramatically reduced with the use of computerized
physical distribution in most consumer goods industries. Even professional
services such as banking, accounting, legal and consulting services
are upgraded in their accuracy, timeliness and reliability with the
computerized work methods. Indeed, it is no exaggeration to state that
the microprocessors are performing routine business functions far more
reliably and at considerably lower costs than human beings.

Finally, the electronics technology has made it economical to
utilize alternative methods of selling and promotions targeted at
highly specialized and fragmented segments of the market. For example,
it is possible to target and customize direct marketing efforts at the
individual consumer level with computerized mailings. Similarly, today
it is possible to explore telepromotions as alternatives to mass advertising,
and telemarketing as alternative to personal selling.

In my opinion, these four attributes of the electronics technology
(low barriers, global perspectives, functional integration and higher

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quality at lower cost) are also likely to bring about the following
supply-driven changes in the market place,

1 . Responsive to Market Changes

With the integration of information functions such as storage,
processing and transport functions, the elctronics technology has
significantly reduced the time and space distances in market transactions
between the buyers and the sellers,, For instance, today it is possible
to respond to demand changes on a real time basis if a company has
computerized order processing and inventory management procedures. Even
in highly volatile industries such as fashion or emergency husiness, it
has become possible to reduce the time and place gap between production
and consumption functions „

Consequently, this has encouraged more and more companies and
industries to become market responsive and customer oriented rather
than driven by production capacity or resource constraints.

2. Niching and Market Fragmentation

Lower entry and exit barriers as well as more cost efficient
production and marketing of smaller orders has enabled more and more
companies to become market or product specialists. It is, therefore,
possible to engage in nitching strategies and still remain profitable.
The consequence is that the mass markets are getting more and more
fragmented. The diversity of products and services is rapidly in-
creasing in practically every industry from fast food restaurants
to university education; and from home appliances to fruits and
vegetables. In the process, the traditional economic concepts of

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competition such as oligopoly and monopolistic competition are becoming
obsolete and replaced by new emerging realities of market framentation
and product specialization as competitive market structures.

3. Single Vendor, One Stop Businesses

The electronic technology's capability to integrate business functions
as well as to provide enhanced quality at lower cost are likely to
encourage companies and industries to redefine their missions and businesses
so that the customer does not have to make separate choices of suppliers
and brand names for related products and services „ For example, banks,
brokerage houses, and insurance companies are all planning to redefine
themselves into financial services business. Similarly, cable, television,
motion pictures and game computer industries are all redefining themselves
into entertainment business,. Also, hospitals, medical insurance, and
physical fitness are all getting integrated into the wellness business.
Finally, computer data processing, telecommunication and newspapers and
television metworks are also getting integrated into a single information
industry.

MEGATRENDS IN CONSUMER MARKETING

The demand-oriented demographic changes and the supply-oriented
technological changes in consumer marketing are so dramatic that they
must be called megatrends „ Furthermore, these megatrends in consumer
marketing are highly universal in their impact on diverse consumer
products, companies and industries. Finally, these megatrends are
likely to persist well into the 21st century.

I have identified the following seven megatrends in consumer marketings

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10 Dual Class Mass Consumption. With the decline of the traditional
middle class as a consequence of career oriented, dual income and
adult-oriented life styles, it is my belief that the single class mass
consumption society will be more and more replaced by a dual class mass
consumption society consisting of the affluent and the average classes.
For the first time, it will be possible to offer high priced, premium
products and services to a much bigger segment of the total population
than ever before possible. In other words, what was within the reach
of a handful of filthy rich people in the society will be within the
reach of as much as 20 to 25 percent of the total population.

Consequently, companies which specialize in premium products and
services will find that the growth potential for their products is
enormous . At the same time, they will be able to utilize mass marketing
tactics and reduce their marketing costs per unit of transaction.
Therefore, these companies will also have greater profit potential.
Examples include premium cars, custom built homes, luxury products
such as boats and satellite dishes, as well as home appliances.
Furthermore, the same process is likely to benefit premium retailers
such as Dayton-Hudson, Neimann-Marcus , and others „

At the same time, it will become more and more difficult to survive
for those companies who offer mass market functional products and services.
As the single class mass consumption society partitions itself into a
dual-class mass consumption society, it is inevitable that the total market
share of functional products will decline resulting in intense price
competition to protect or increase market shares. It is my expectation that
lower market shareholders in the mass markets will not survive resulting in

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market consolidation,, This is already evident in the home appliance
industry where today only a handful of manufacturers are surviving. A
similar possibility exists for the automotive industry including the
aftermarket for replacement tires, batteries and accessories „ For
example, a major retailer (J.C, Penney) has recently announced that
they will get out of appliances and automotive services business.
Even K-Mart has experienced difficulties in its autocare program.
Witness also the packaged goods business at both the manufacturing
and the retail levels c Among grocery manufacturers such as Pillsbury,
General Foods, General Mills, Nabisco, Procter & Gamble and many others,
one observes a good deal of jockeying for position by mergers and
acquisition as veil as abandoning major product lines in order to
consolidate their positions of market strength„ The same reality is
emerging in the retail food chains such as A & P, Jewel, Kroger,
Safeway and particularly many regional chains such as IGA.

2. Personalized Per Capita Consumption With the emergence of non-
traditional households as well as dual income career oriented life
styles, it is inevitable that most products and services will be demanded
and consumed at a per capita level rather than shared at the household
level. Furthermore, as we continue to increase living standards, it
will become more and more possible to afford products and services which
are personalized rather than standardized.

In particular, per capita consumption is likely to grow for consumer
durables, professional and personal services, leisure, and packaged foods
industries. It is my belief that the concept of a family car is likely to

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give way to a personal car. Therefore, the demand for station wagons
should decline and demand for personal cars should increase over time. In
other words, the issue facing the automobile industry is not just the size
of the automobile but also the type of the car demanded by the market
place. Similarly, cameras, radios, television sets and other brown
goods are also likely to become per capita products.

Professional and personal services such as insurance, health care,
legal and financial services must also be redesigned so that they are
offered on a per capita basis rather than per household basis. This is
already evident in the banking and medical services.

Third, as we shift food preparation to food consumption at home
as well as from family dinners to individual eating habits for all
the three meals, it is inevitable that grocery manufacturers will
have to innovate new packaging sizes and ready to serve foods, which
are better suited for personal consumption rather than household
consumption. These include cereals, soups, chees, bread, meat and
all other staple foods.

Fourth, the leisure market including entertainment and recreation
must shift from family to individual consumption. For example, it
is very likely that each member of the family will watch his or her own
television or cable programs rather than together as a family partly
due to time constraints and partly due to increasing individualism.
Therefore, television programming in both content and timing needs to
shift from prime time family programs to all time presonal programs.
This will be necessary even for television news programs,, For example,

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it will be more and more difficult for the American family to get together
at or after the dinner time to watch the Walter Cronkite show as they
did for a generation. In short, network news will have to be offered more and
more on a continuous basis including on a 24 hour basis,,

Similarly, recreation activities are likely to become highly
individualistic and personalized. It is likely that each member of
the family will engage in a different recreation activity even when
the family is together at home. For example, the young adults may
play videogames or program the personal computer while the parents
exercise at home. The individualism in outdoor recreation will be
manifested even more. For example, tennis, racquetball, fitness centers,
shopping, eating out are all likely to compete for individual attention.

3. Role Blurring for Self Sufficiency. Increasingly, consumers are
likely to become more and more generalists as they manage and control
their own life,, It is my expectation that the old concepts of the
homemaker and the breadwinner which resulted in functional specialization
are likely to become obsolete. Therefore, women will become shoppers
and buyers of financial services, technical products, and other
male oriented products and services „ Similarly, men are likely to
become shoppers and buyers of household products such as laundry detergents,
grocery foods and vacuum cleaners. Finally, young adults will learn how
to shop, and manage households along with learning to cope with school
education and computers.

The consequence of this role blurring to become self sufficient is
that most marketing practices will have to become universal in content.

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This includes media, advertising, product displays, sales personnel,
retail promotion, closing and opening hours as well as all support
services such as refund, exchange, credit financing and other activities.
They will have to be designed so that they appeal to all age and sex
groups o

4. Time-Place Universality. Partly due to the demographic changes

and partly due to the technological changes, it will become increasingly

common to disassociate from the time and place separations of work,

home and shopping activities „ As Toffler has pointed out in his Third

Wave, it is becoming popular to work at home as we shift from the

industrial to the post-industrial society. It is also becoming increasingly

popular to shop at home through electronic shopping and direct marketing.

In my opinion, it will become more and more common to blurr the task
driven time and place boundaries between work, home and shopping
activities. Consequently, marketing of consumer products and services
will have to be offered on a 24 hour continuous basis. It will be also
offered through multiple and often nontraditional channels of distribution
as well as at home through electronic marketing programs , In short, for
the first time in marketing history, consumer will go to the market and a
marketer will go to the consumer at the same time0 This is quite different
from either the wagon days when the marketer went to the consumer, and the
more contemporary shopping mall days in which the consumer comes to
the marketer^ The specific place Df transacting with each other will be
primarily determined by the trade offs of costs and benefits to each party.

In general, however, it is my expectation that nontrsditional multiple

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channels of distribution will become more the norm rather than the
exception. For example, telephone and other utility services may be
procured from the supermarkets and other convenience locations0
Durable appliances as well as automobiles may be bought at home
through electronic shoppingo Financial services may be offered
without personal interactions and from a long distance through
telemarketing programs. What is suggested is only a tip of the ice-
berg. Eventually, it is very likely that the boundaries between shopping,
specialty and convenience goods will become blurred sufficiently to
change the whole pattern of retailing institutions 0

5. Dominance of Wants over Needs. As the society progresses on
Maslow's need hierarchy from physiological and safety-security needs
to love, affection and self-esteem needs, it is inevitable that
psychological wants will increasingly dominate the consumer
motivations over and above the physiological needs , It is no
exaggeration to state that as an affluent nation, America is a
want driven rather than a need driven society.

It will become increasingly difficult for companies to survive and
grow as the consumer markets shift from need driven to want driven markets
due to several reasons. First, products acquire want driven utilities
through their associations with socioeconomic and other reference groups
or with imageries and personalities, rather than through their inherent
functional benefits. Therefore, wants are harder to engineer in
products and services0 Indeed, it is precisely this shift from a need
driven to a want driven society which is largely responsible for the
failure of technologically driven products and marketing programs. It

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will, therefore, require more and more understanding the psychology of
the markets rather than the physiology of markets.

Second, people are likely to be more divergent on what they want
as compared to what they need. It will therefore, become increasingly
difficult to mass market want driven products and services „ Market
segmentation and market specialization will have to be learnt in
place of product specialization and mass marketing. Indeed, it will
become increasingly necessary to utilize pull strategies in place of
push strategies in marketings

Finally, wants are more dynamic and volatile,, Unlike needs which
are fairly stable and consistent over longer time periods, wants tend
to rise and subside much faster „ Therefore, it clearly suggests that
consumer marketing will increasingly manifest shorter and shorter
product, image, and competitive positioning life cycles „ Indeed, it
means that consumer marketing companies will have to plan major
technological and marketing innovations with shorter payback periods.

The emerging evidence of shorter life cycles particularly for
those products and institutions which are positioned on want dimensions
is massive. Examples include magazines, recreation, entertainment
and fashions which are all more want driven rather than need driven
industrieso They also include newer retail institutions such as
specialty chains, party selling and supermarkets.

6„ Pluralistic Specialty Markets. Pluralism in our values, life styles
and behavior is likely to increase due to greater tolerance for individual-
ism and personalized consumption. Furthermore, the electronics age permits

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marketers to profitably cater to smaller and smaller market segments.
Therefore, it is my expectation that the next two decades will see
increasing desire not to assimilate unique market segments in the
mainstream mass markets but to cater to their needs and wants as
specialty segments. These include ethnic groups such as Blacks,
Hispanics, Orientals, and Asians as well as more traditional European
ethnic groups. It also includes other unique market segments such
as the handicapped, foreign tourists, people who work at home, farmers,
and other unique occupations such as truck drivers and traveling
salespeople. They all have unique needs and wants either due to
biogenic needs or due to unique settings in which they live or work.

As we become pluralistic, it is obvious that the potential market
out of these segments will increase. Furthermore, as the economies of
scale in manufacturing and marketing are achieved at lower and lower
capacity levels due to the electronics technology, it will become more
and more interesting for consumer marketers to treat these segments as
separate specialty markets „

The trend is already here. For example, cable and television programs,
and other entertainment media are catering to some of these specialty
markets o Similarly, food companies are increasingly marketing ethnic
foods both in the retail food chains as well as in fast food restaurants „
Witness the emergence of theme restaurants.

7. One Stop, Hassle Free Shopping,, As the society becomes increasingly
time driven on the one hand, and as the marketers increasingly broaden
their business definitions, it is likely that consumers will prefer one stop

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hassle free shopping and procurement of products and services.

This trend has been there for several years now, as witnessed by
the emergence of shopping malls and neighborhood shopping centers.
However, the future is even more pronounced toward this hassle free
one stop shopping in which the traditional location and supplier
boundaries between durables and consumables, and between products and
services are also likely to disappear.. The emergence qf hyperstores is
here0 For example, it is very likely that more and more dry goods such
as home appliances, electronics products, perfume, and apparel will be
bought and sold at a neighborhood Kroger or Safeway stores along with
groceries , Similarly, financial services such as insurance, tax
preparation, real estate, stocks and shares as well as money management
services will be transacted in a Sears store,, Finally, practically
all products and services are likely to be shopped and procured from
the privacy, convenience and comfort of the home through electronic
shopping.

HOW TO SURVIVE MARKETING MEGATRENDS

Both demand driven and supply driven changes are massive and
unprecendentedo It is, therefore, inevitable that consumer marketers
will have to cope with these changes and become more and more adaptive
to the changing environments. Those who resist or ignore the inevitable
are likely to be swept away by these megatrends. Those who pay attention
and adapt are likely to grow and survive in the future.

But how does one cope with these marketing megatrends? In my opinion,
it will require a change in the corporate culture. It will require

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accepting new philosophies of management and adopting new functions
and operations. It will require breaking traditions.

The following are some of the suggestions to inculcate a new corporate
culture.

1. Focus on the Market , With the maturity of the consumer markets
(experienced consumers and powerful competitors) it is absolutely
essential that marketers constantly search for win-win situations
between the company and the market place. This will mean striving to
deliver more value to the consumers without jeapordizing corporate
profitability. It means subordinating technology to customers. It
means bending the organization (products, distribution, promotion) to
fit the market place rather than bending the market place (customers,
intermediaries, competitors) to fit the organization^

While this is an obvious and a deceptively simple rule of
survival, it is as difficult as breaking a habit or going on a diet:,
Large corporations have a way of creating and perpetuating the
bureaucracy (traditions and work procedures) , Often, it will require
a change in the top management team who can see the forrest while
gazing at the trees.

2. Control Your Costs. With the lowering of entry-exit barriers

as well as global competitive perspectives, it will become necessary

for management of large corporations to identify cost structures separately

for each product-market cominations. With very large and diverse

product portfolios, it becomes very difficult if not impossible to

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identify and trace various cost components. Furthermore, these costs
should include all functional activities which are associated with
procurement, manufacturing, marketing and management overheads. It will
require greater financial controls and development of on-line real
time information systems. The two most common methods of cost control
which have become increasingly popular are functional consolidation and
automation. The former is an effort to retrain the specialists into
generalists while the latter is to replace the specialists by
microprocessors.

3. Broaden your Horizons. It will become increasingly necessary to
understand competitive forces outside the industry. These are more
commonly associated with substitute technologies and with the customers
including end users producing their own products and services rather
than buying from the market place. At the same time, it will become
increasingly necessary to redefine businesses more broadly than in

the past. For example, packaged food companies must redefine their
businesses as the market shifts from a food preparation to a food
consumption society. Similarly, banks must redefine their business as
financial services as the electronics technology by-passes the regulated
geographical franchises. Finally, consumer appliance companies need to
redefine themselves as shopping goods companies as people begin to buy
computers, video games and casette tape recorders from the same appliance
dealers.

4. Decentralize the Organization. The span of control vs. cost of
control are all encouraging more and more decentralization of the
corporation^ It is, therefore, possible to provide greater autonomy to
individual product-market divisions without losing the span of controls

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The result is that one can easily eliminate as many as two levels of
management ranks from the organization without jeopardizing the
coordination and control objectives „

In general, it is desirable to break up the monolithic organization
into separate lines of business (profit or cost centers) based on the
commonality of manufacturing, distribution and/or product life cycles.
Not only is the decentralized organization more cost effective, it also
enables the corporation to better focus on the market and thereby
become responsive to changing market wants.

5. Practice Pluralistic Philosophy. No single marketing approach is
likely to be sufficient in the future simply becuase markets are becoming
more and more divergent with respect to both the wants and needs as well
as the buying power. Therefore, a single way of doing business is
unlikely to appeal to all market segments „

It will be necessary for most large companies to offer multiple product
lines with significantly different price points and market their products
through multiple channels of distribution as well as develop relationships
with mulitple suppliers. For example, consumer durables such as consumer
electronics and appliances are likely to be increasingly produced by the
same company with significant functional differences under two or thres
different brand names with significant price differences. Similarly, a
single brand name is likely to be distributed by many different retail
channels such as department stores, specialty shops, chain stores,
discount houses and catalog stores. Finally, most retailers will find
that offering the same assortment of dry goods or grocery products

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through separate outlets will be necessary. For example, grocery
chains such as Jewel Companies sell through box stores (self service)
as well as through Superbazaars (full service). Similarly, Dayton-
Hudson (full service) has a successful alternative retail channel
called Target (self-service) .

By following these five rules, a company is likely to survive the
turbulent times „

:CKMAN

1DERY INC.

JUN 95

e N MANCHESTER,
j.To-IW INDIANA 16962 J