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Consider something as basic as health care. In the old days, you had your doctor, your hospital, Blue Cross, and perhaps Aetna/US Healthcare, Medicare, or Medicaid. Now your hospital has to compete with freestanding clinics set up by its own doctors, not to mention other hospitals in the same town plus satellite operations from hospitals in the next county or the next state. Even national hospital brands such as the Mayo Clinic and the Cleveland Clinic create localized competition. The Mayo Clinic, based in Minnesota, has facilities in Scottsdale, Arizona, and Jacksonville, Florida. The less well-known but equally highly rated Cleveland Clinic now has locations outside its native Ohio in Florida, in Toronto, and even in Abu Dhabi. You want health insurance (And who doesn t ) If you live in New Jersey, you have your choice of six large companies: Aetna, AmeriHealth, Cigna, HealthNet, Horizon BlueCross BlueShield, and Oxford. That seems like a choice any well-informed consumer could make. Oh, we should mention one thing: these six companies offer no fewer than 100 different plans. (By the time you wade through all those choices, you ll have a raging migraine!) And stand by for the latest from Washington: the Obama administration has big plans to offer its own brand of health insurance.
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It s gotten so confusing that magazines like US News & World Report have taken to rating hospitals and HMOs to make our choice easier. Want to know the top-rated plans as of 2009 Check out http://www .usnews.com/listings/health-plans/commercial. The federal government and almost every state publish health-care report cards for the public. You ll find physicians and hospitals listed according to clinical outcome measures, as well as member satisfaction, administrative data, and professional/organizational data. Maybe you prefer a private source for your medical information. HealthGrades.com is the leading independent health-care ratings organization. To guide you to better care providers, HealthGrades has reports and ratings on 750,000 physicians, 5,000 hospitals, and 16,000 nursing homes. It s gotten so confusing that people aren t worrying about getting sick. They re worrying more about where to go to get better.
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Let s say you re in the market for a new CD player and recorder, speakers, and earphones. So you wander into your local Best Buy and spend some time in the audio aisle. You ll find no fewer than 21 choices: Bose, Chestnut Hill Sound, Coby, Crosley, Denon, Harman Kardon,
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Insignia, ION Audio, Klipsch, Logitech, Numark, Panasonic, Philips, Pioneer, Polk Audio, Sharp, Sonos, Sony, Stanton, Technics, and Yamaha. (Do your ears hurt yet ) Given the fact that most components can be mixed and matched, that means you have the opportunity to create more than 100,000 different audio setups. (Now we know your ears hurt.)
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What we just described is what has happened to the U.S. market, which, of the world s markets, has by far the most choice (because our citizens have the most money and the most marketing people trying to get it from them). Consider an emerging nation like China. After decades of buying generic food products manufactured by stateowned enterprises, China s consumers can now choose from a growing array of domestic and foreign brandname products each time they go shopping. According to a recent survey, a national market for brand-name food products has already begun to emerge. Already China has 135 national food brands from which to pick. Some markets are far from emerging. Countries like Liberia, Somalia, North Korea, and Tanzania are so poor and chaotic that choice is but a gleam in people s eyes.
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The Law of Division
What drives choice is the law of division, which was described in The 22 Immutable Laws of Marketing. Like an amoeba dividing in a petri dish, the marketing arena can be viewed as an ever-expanding sea of categories. A category starts off as a single entity computers, for example. But over time, the category breaks up into other segments: mainframes, minicomputers, workstations, personal computers, laptops, notebooks, and pen computers. Like the computer, the automobile started off as a single category. Three brands (Chevrolet, Ford, and Plymouth) dominated the market. Then the category divided. Today, we have luxury cars, moderately priced cars, and inexpensive cars; full-size, intermediate, and compacts; sports cars, hatchbacks, coupes, hybrids, diesels, four-wheel-drive vehicles, SUVs, RVs, minivans, crossovers, and suburbans (station wagons on steroids). In the television industry, ABC, CBS, and NBC once accounted for 90 percent of the viewing audience. Now we have network, independent, cable, satellite, and public television. Today, a wired household may have 900 channels from which to choose (CNN on channel 25, the Golf Channel on 145, Encore Westerns on 353, Animal Planet HD on 757). With all that, if you flip through the channels to try to find some27
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