Shifting From The 4P’s To The 4C’s
Last week we looked at the main shifts in the current marketing landscape at moving from traditional to digital marketing Today we are going to throw a ‘rock’ at one of the mainstays of Marketing that being the 4P’s. As we shift from selling the 4P’s to commercializing the 4C’s.
The marketing mix is a classic tool to help plan what to offer and how to offer to the consumers. Essentially, there are four P’s: product, price, place, and promotion. Product is often developed based on consumers’ needs and wants, captured through market research. Companies control the majority of product decisions from conception to production. To establish a selling price for the product, companies use a combination of cost-based, competition-based, and customer value–based pricing methods. Customers’ willingness to pay, estimated in consumer value–based pricing, is the most important input that customers have in connection with pricing.
Once companies decide what to offer (product and price), they need to decide how to offer (place and promotion). Companies need to determine where to distribute the product with the objective of making it conveniently available and accessible to customers. Companies also need to communicate the information about the product to the target audience through various methods such as advertising, public relations, and sales promotions. When the four P’s of the marketing mix are optimally designed and aligned, selling becomes less challenging, as consumers are attracted to the value propositions.
In a connected world, the concept of marketing mix has evolved to accommodate more consumer participation. Marketing mix (the four P’s) should be redefined as the four C’s (co-creation, currency, communal activation, and conversation).
In the digital economy, co-creation is the new product development strategy. Through co-creation and involving customers early in the ideation stage, companies can improve the success rate of new product development. Co creation also allows consumers to customize and personalize products and services, thereby creating superior value propositions.
The concept of pricing is also evolving in the digital era from standardized to dynamic pricing. Dynamic pricing—setting flexible prices based on market demand and capacity utilization—is not new in some industries such as hospitality and airlines. But advancement in technology has brought the practice to other industries. Online retailers, for instance, collect a massive amount of data, which allows them to perform big-data analytics and in turn to offer a unique pricing for each consumer. With dynamic pricing, companies can optimize profitability by charging different consumers differently based on historical purchase patterns, proximity to store locations, and other consumer-profile aspects. In the digital economy, price is similar to currency, which fluctuates depending on market demand.
The concept of channel is also changing. In the sharing economy, the most potent distribution concept is peer-to-peer distribution. Players such as Airbnb, Uber, Zipcar, and Lending Club are disrupting the hotel, taxi, auto rental, and banking industries, respectively. They provide consumers easy access to the products and services not owned by them but by other consumers. The rise of 3-D printing will spur this peer-to-peer distribution even more in the near future. Imagine consumers wanting a product and in a matter of minutes receiving the product printed in front of them. In a connected world, consumers demand access to products and services almost instantly, which can only be served with their peers in close proximity. This is the essence of communal activation.
The concept of promotion has also evolved in recent years. Traditionally, promotion has always been a one-sided affair, with companies sending messages to consumers as audiences. Today, the proliferation of social media enables consumers to respond to those messages. It also allows consumers to converse about the messages with other customers. The rise of consumer- rating systems such as TripAdvisor and Yelp provide a platform for consumers to have conversations about and offer evaluations of brands they have interacted with.
With a connected marketing mix (the four C’s) companies have a high likelihood of surviving in the digital economy. However, the paradigm of selling needs to change as well. Traditionally, consumers are passive objects of selling techniques. In a connected world, the idea is to have both sides actively obtain commercial value. With increased consumer participation, companies are engaging consumers in transparent commercialization.
CMO Perspective – Dirk-Jan Van Hameren: Nike
To promote the launch of its cutting-edge new running shoes, Epic React, Nike developed a dazzling digital marketing campaign rich in content across a host of channels and touchpoints, including website, mobile, social media and video.
But perhaps the most striking element of the campaign is its immersive Reactland initiative that transports users into the heart of a virtual video game (complete with an Avatar of themselves) that allows them to experience the brand’s latest sole cushioning technology.
By using a seamless mix of social media engagement, a cutting-edge landing page that showcases the development of the technology, as well as its benefits, and immersive experiential marketing, Nike’s innovative approach to digital marketing offers a glimpse of what we can expect from brands the rest of this year, and beyond.
Result: The brand not long ago announced a share value increase of 7%, putting it back in direct competition with Adidas in the sneaker market, and its innovations like its Reactland campaign that help to drive this success.