The first “P” can be considered to be a product or product strategy. But this is nothing more than positioning, which itself includes virtually all aspects of how a product is designed to be perceived by a consumer. Since positioning is strategic in the sense of determining where a brand should be in the minds of consumers vis á vis competition, once the positioning decision is made, there are just tactical marketing mix variables to set. This, then, is the “3 P’s.” And there is only one logical order for the 3 P’s and that is price, then place, then promotion.
As a restatement of a brand’s positioning strategy, a brand’s core benefit proposition suggests what pricing strategy it should use. If it’s offering more “benefit,” then a price skimming strategy (relative to its closest competitor) makes sense; if it’s offering more “value,” then a price penetration strategy would be most appropriate.
From the product strategy, i.e., the core benefit proposition and the pricing strategy, a brand can deduce its distribution strategy. Since a brand’s business model is influenced by price and place, a price skimming strategy generally implies selective distribution and a price penetration strategy generally implies intensive distribution. Yet many companies mix this up and try to make a profit selling a few low margin items.
Finally, promotion comes last. Advertising agencies won’t like this, but it’s the truth. Promotion is communicating the product, price and place strategies to the target market. That’s all. Too many companies look to advertising and promotion to rescue a brand in trouble when the problem lies in the core benefit proposition, i.e., positioning. Both push and pull promotion strategies can be used to communicate the core benefit proposition, but with advertising (a pull strategy) it seems easier to forget what promotion is for. This chain of logic suggests the synthetic marketing principle: Make the tactical marketing mix decisions in the order of price, place, and promotion.
He wants to replace the Four P’s with Four C’s.
Consumer wants and needs (vs. Products) You can’t develop products and then try to sell them to a mass market. You have to study consumer wants and needs and then attract consumers one by one with something each one wants. In most cases, you have to find out what people want and then “build” it for them, their way.
Cost to satisfy (vs. Price) You have to realize that price – is one part of the cost to satisfy. If you sell hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of conscience of eating meat, etc. One of the most difficult places to be in the business world is the retailer selling at the lowest price. If you rely strictly on price to compete you are vulnerable to competition – in the long term.
Convenience to buy (vs. Place) You must think of convenience to buy instead of place. You have to know how each subset of the market prefers to buy – on the Internet, from a catalogue, on the phone, using credit cards, etc. Lands End clothing, Amazon Books, and Dell Computers are just a few businesses who do very well over the Internet.
Communication (vs. Promotion) You have to consider the communication instead of promotion. Promotion is manipulative – it’s from the seller. Communication requires a give and take between the buyer and seller (that’s nicer). Be creative and you can make any advertising “interactive”. Use phone numbers, your web site address, etc. to help here. And listen to your customers when they are “with” you.
Developing a brand takes into account these considerations. Developing a brand is developing a promise. When you take into consideration the “4 C’s” noted above you begin the process of developing a brand! Custom Fit Online follows the “4 C’s” approach when developing a strategy for our clients. These principals can also be applied online.In order to profitably satisfy customer needs, the firm first must understand its external and internal situation, including the customer, the market environment, and the firm’s own capabilities. Furthermore, it needs to forecast trends in the dynamic environment in which it operates.
A useful framework for performing a situation analysis is the 5 C Analysis. The 5C analysis is an environmental scan on five key areas especially applicable to marketing decisions. It covers the internal, the microenvironmental, and the macro-environmental situation. The 5 C analysis is an extension of the 3 C analysis (company, customers, and competitors), to which some marketers added the 4th C of collaborators.
The further addition of a macro-environmental analysis (climate) results in a 5 C analysis, some aspects of which are outlined below.
Company Product line The image in the market Technology and experience Culture Goals
Collaborators Distributors Suppliers Alliances
Customers Market size and growth Market segments Benefits that consumer is seeking, tangible and intangible. The motivation behind purchase; value drivers, benefits vs. costs Decision maker or decision-making unit Retail channel – where does the consumer actually purchase the product? Consumer information sources – where does the customer obtain information about the product? Buying process; e.g. impulse or careful comparison The frequency of purchase, seasonal factors Quantity purchased at a time Trends – how consumer needs and preferences change over time
Competitors Actual or potential Direct or indirect Products Positioning Market shares Strengths and weaknesses of competitors
Climate (or context) The climate or macro-environmental factors are: Political & regulatory environment – governmental policies and regulations that affect the market Economic environment – business cycle, inflation rate, interest rates, and other macroeconomic issues Social/Cultural environment – society’s trends and fashions Technological environment – new knowledge that makes possible new ways of satisfying needs; the impact of technology on the demand for existing products.
The basic major marketing management decisions can be classified in one of the following four categories, namely Product, Price, Place (distribution) and Promotion.
Product: It is the tangible object or an intangible service that is getting marketed through the program. Tangible products may be items like consumer goods (Toothpaste, Soaps, Shampoos) or consumer durables (Watches, iPods). Intangible products are service based like the tourism industry and information technology-based services or codes-based products like cellphone load and credits. Product design which leads to the product attributes is the most important factor. However, packaging also needs to be taken into consideration while deciding this factor. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, continuous product extensions though innovation and thus differentiation is required and is one of the strategies to differentiate a product from its competitors.
Price: The price is the simply amount a customer pays for the product. If the price outweighs the perceived benefits for an individual, the perceived value of the offering will be low and it will be unlikely to be adopted, but if the benefits are perceived as greater than their costs, chances of trial and adoption of the product are much greater. Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. This may include any physical store (supermarket, departmental stores) as well as virtual stores (e-markets and e-mails) on the Internet. This is crucial as this provides the place utility to the consumer, which often becomes a deciding factor for the purchase of many products across multiple product categories.
Promotion: This represents all of the communications that a marketer may use in the marketplace to increase awareness about the product and its benefits to the target segment. The promotion has four distinct elements: advertising, public relations, personal selling, and sales promotion. Advertising may include using specialty packaging to showcase products, utilizing promotional products for your company, or online ads. A certain amount of crossover occurs when promotion uses the four principal elements together (e.g in film promotion). Sales staff often play a major role in the promotion of a product. So how does a marketer strategize to attain success in a marketing program, using these 4 P’s?
Offering specificity introduces the contextual customization of what needs to be done to address the questions raised in each of these 4 Ps of Marketing. What is it that the marketer is trying to provide value, through each of the “disguised value proposition” to the end consumer. In their very essence, the 4 Ps of marketing is actually a framework that allows the marketer to structure the value proposition of an existing product (or a new product at the time of launch) so as to garner the highest mindshare by distinctly structuring the same. However, that is easier said than done and many marketers fumble when it comes to playing with the real-life nuances and bringing out a crisp value proposition.
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