Rethinking the Marketing Mix from the Customer’s Perspective
Dumping the marketing mix is tough. It’s like replacing well-worn shoes or pair of jeans. When something is comfortable, it makes it even more difficult to toss it aside for something new that could take years to break in to the point of comfort.
However, we are at a point where we need discomfort because comfortable is not working.
We are all familiar with the marketing mix: Product, Place (i.e. Distribution), Price and Promotion. It is drilled into our heads in college and it is reinforced with corporate structure. The problem with the marketing mix is that it does not consider the customer, it only considers the product. Perhaps with the advancement of technology, we should have better predicted that a 58-year old concept might require rethinking.
Thought leaders like Bob Lauterborn, Philip Kotler and Koichi Shimizu have argued for years (since the mid-90s) for a customer-centric model known as the Four C’s: Customer, Convenience, Cost and Communications.
The Four C’s function like this:
- Customer: How can you satisfy customer needs or wants? It is virtually impossible to sell whatever it is you want to make (even Apple can’t do this.) You must sell what people want to buy (this is what Apple does best.)
- Convenience: It doesn’t matter how or where you want to distribute your products and services. It only matters where people want to buy them. If it is not convenient to buy, they will go elsewhere.
- Cost: Customers care about the cost to satisfy their needs and wants. They do not care about the cost of your raw goods, manufacturing and margins that leads you to a price that satisfies you or your shareholders.
- Communications: Is your message relevant to the customer? If not, they will ignore you. Are they reciprocating with an action? If they are but you are not, they will move on to someone who will.
Determine the Four C’s Before the Four P’s
I don’t think marketers are ready to shift away from the marketing mix—it’s what is taught as marketing theory. Until marketing textbooks make the move from internally focused to externally focused marketing (which I am all for, by the way), it will be what new marketers understand and the cycle will never be broken.
I would like to suggest that the Four C’s become the precursor to the marketing mix. Figure out first what it is customers need and/or want and then satisfy it. The beauty of customer-centric marketing is that a company is continually providing products and services that satisfy customers, which leads to loyalty.
People say, “Customers don’t know what they need.” I disagree and I think it’s an excuse. People—especially business buyers—always know what they need or want. The challenge is that they don’t always vocalize their needs and wants and if they do, it’s often not in an “easy to lasso” manner. That’s why listening has become very important in business. It’s also why marketing is a science.
There’s Been A Power Shift
Mass marketing was designed to sell mass-produced products and the marketing mix developed in the early 50s and 60s made sense: top-down and inside-out. The norm was management-decided products and push communications and, unfortunately, that’s how many companies still operate today.
With the advent of the computer, Internet and now social media, it is almost impossible to keep one’s marketing head buried in the proverbial sand. Times have changed, customers have gained control and they aren’t going to give it back.
The Four C’s in Financial Services
Since I have really simplified the Four C’s, let’s look at how this works in one of the most regulated industries, financial services.
- Customer: The need for investments that support green and sustainable causes I believe in
- Convenience: The ability to invest and trade anytime, anywhere
- Cost: The chance to invest with low minimums and without hidden fees
- Communication: The opportunity for online two-way communications with financial advisors
Becomes…
- Product/Service: Green (Green Century Funds) and Sustainable Funds (Calvert Investments)
- Place: Online and mobile investing and trading (E*Trade)
- Price: Low minimum accounts without service fees (Charles Schwab)
- Promotion: Two-way communications via social media (Vanguard)
Easy, right?
[Image Source: NorCal Blogs]
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Easy? Never. Critical? Never more so. Great post Beth!
I certainly agree that we (marketers) need to consider the relevance and effectiveness of the 4Ps. I at least talk to my clients about including a fifth P – Positioning (how you brand yourself in this age is of equal or greater importance than the other Ps). But since you’re talking about the 4 Cs (which I totally buy in to, btw), I’d like to suggest considering a fifth C: Conversations. Conversations (as they are facilitated by social media) become as much a part of your marketing mix as anything else. How are you starting and participating in conversations to build relationships, brand awareness and loyalty? I’m certainly building Conversation planning into the marketing mix with my clients.
Great post!
Glenn
I think the idea of determining the C’s before the P’s is quite logical, however, I’m not sure I’d throw out the idea that customer’s don’t know what they want. The Sony Walkman, 3M’s PostIt notes, Yellow Tail wines and more recently, Apple’s iPad are classic textbook examples of a company delivering what customers didn’t know they needed. It’s the idea that an over reliance on customer research leads companies to mirror the competition, which diminishes distinction and lowers prices. Aside from textbooks, it’s thesis put forward in the book The Blue Ocean Strategy. Certainly, I am not advocating abandonment of customer research, but another step to the C process for thinking larger than the current space; it’s the demand generation side of marketing.
Frank Strong recently posted..Confessions and Media Relations
Great points Beth. Love the 4 C’s. That’s a great way of simplifying things.
I do not agree with Frank’s points though. The innovations, such as the Sony Walkman, 3M Post It, and iPad were created by listening to the customer’s needs. The Walkman was created because people were traveling around with boomboxes on their shoulder, PostIt because peoples lives were cluttered, and the iPad because more and more people just used a computer for research and entertainment in a personal way.
Those were all responses to the 4 C’s. We desperately need to move away from the marketing drum beat of the 1950s.
Great post!
Kevin Ekmark recently posted..Faking Social Media How to Ignore Your Fans
Beth, great post and I would have read it anyway but your focus on financial services marketing made it especially relevant for me.
What you write is rational and contemporary and who wouldn’t agree with it? But your example of the fourth C–Communication: The opportunity for online two-way communications with financial advisors–assumes that this two-way communication is a given. Unfortunately, today, it’s still to be determined.
Advisors who are regulated by the SEC, FINRA and state regulators launch their social presence today in an environment of significant ambiguity. Here’s an update on my AdvisorTweets blog: http://www.advisortweets.com/blog/social-media-regulation-round-up-sec-sweep-and-finra-to-revisit-guidance
This ambiguity explains why investors find so few of their advisors active and engaged online. As non-regulated social finance innovations continue to launch and resonate with investors, we think it’s critically important for advisors to in fact take part in two-way communications online, within parameters that are known and understood.
It’s such an interesting time to watch financial services providers evolve to continue to provide value and demonstrate that value using the mix of communications modes that the rest of us take for granted.
Tom, thank you! Yes, never easy. It’s a complete mindset shift.
Glenn, do you consider conversations separate or different from communications? Part of the challenge is that marketers are not typically taught communications theory, it’s usually reserved for PR and communications majors. So, two-way communications doesn’t come naturally. Or, is looked at as “how can I control this two-way communication to make a sale.” Times have certainly changed and conversations are a large part of brand equity.
Frank, I had a netbook before iPads existed. Why? Because I was tired of lugging my laptop around. While the iPad is creative, it’s not innovative. Perhaps it’s just my background, but I was marketing computers with touch screens in a B2B setting before Apple did anything with touch screens. Apple is great at taking existing technology and making it user-friendly, portable, etc. and creating a buzz around it all. I totally agree that often customer research can lead to “me too” products and services, but often (and you and I have discussed this) it’s because the research is biased and leading. On the flip side, products that are innovative (i.e. no ready-to-buy market) tend to take a TON of marketing budget to create a need and they tend to fizzle out fast. So then, the million dollar question is how can companies stay innovative and yet fulfill customer needs/wants? If I had the answer, I’d be rich! This is the fun, excitement, and challenge (brain bending in a good way) of being a marketer today.
Kevin, yep, I agree that many of the products held up as innovative really are not. That’s why Apple is so darn successful—they are stealthy. Sometimes just watching and listening leads to solving a customer want/need.
Pat, I am a big fan of your blog and have learned a lot from you…thank you for that! Indeed, two-way communications is still very new for the industry. I think Vanguard is doing a great job in leading the way. As a customer, I have had more interaction with them on Facebook in the past six months than I have in the past 10 years. Do they need to provide me with financial advice there? Heck, no! I wouldn’t do that publicly anyway. What they do provide me with is an on-going financial education in real-time that never existed before…and that makes me loyal. In my research of SEC and FINRA, I never came across a statement prohibiting public two-way communication. FINRA tends to be rather loose from that regard. The smart financial services companies, like Vanguard, will benefit from taking a risk with social media. I don’t just mean using social channels for push, which is what a lot of advisors are doing (playing it safe until they figure it out, maybe?), but actual engagement within regulation. Definitely an exciting time!
Hi Beth
Yes, I usually separate Communications from Conversations. Don’t get me wrong, I really like your definition of Communications: “Is your message relevant to the customer? If not, they will ignore you. Are they reciprocating with an action? If they are but you are not, they will move on to someone who will.” To me, this might include Conversation, but it also encapsulates messages, value propositions, or positioning statements that the company pushes out to its audience through tools like email, PR, and even advertising, for the purpose of eliciting a response, as you have accurately described. To me, that’s a one-way, promotional type of Communication. I’m not saying that’s bad. In fact, quite the opposite. However, I really try hard to get my clients to think about Conversations separately from Communications or Promotions. Primarily because two-way ‘Conversations’ is a new way to think about marketing. Conversation tools such as social media are for just that – two way Conversation to develop relationships and engagement, NOT for delivering a message or value proposition to elicit a response. I think it’s possible and even advisable to consider ALL of this Communications, but for me (and it may be just me), I really want businesses to understand that they should not be using social media (Conversations) to push out a message. They should be using it to engage and listen. That’s why I separate them.
Again, I think technically this is all part of your definition of Communication, but for the purpose of client education, I like to talk about them separately.
Great post, again, though. We need more people talking and thinking like this.
Glenn
Ah, Beth, my chance to say you are unique. Steve Jobs has famously noted that Apple did not do research for the iPad and it’s hard to argue there was a space for “tablet PCs” prior to the iPad, even if they existed in niche markets. PostIt notes were designed to be bookmarks. Yellow Tail drew criticism from wine connoisseurs — the markets for those products didn’t exist and customers certainly weren’t asking for them.
But my point maybe lost in an argument over examples. My point is, in addition to the 4C’s innovative companies also need to ask, “What needs do my customers have that they aren’t asking for?”
Frank Strong recently posted..Confessions and Media Relations
Glenn, thanks for circling back and sharing more of your insights on conversation. Just to note, it’s not “my” definition of Communications, it’s a long-standing IMC definition. I don’t agree that all social media tools are for conversation only. There are companies that have been successful with using social channels without conversation. Not a ton, but a few. I think the future of communications will include one-way and two-way conversations, the key for marketers will be to know when, why, where and how to utilize them in an appropriate manner. [I am still a firm believer that traditional marketing isn’t dead.
]
Frank, I am not unique at all, just have a different background than others. What’s important is that we all bring different experiences with us and it is talking about them as a whole that will further the marketing industry. Regarding the iPad, the PC market has always been ahead. I saw my first “mini” laptop in the late 90s. A European sales manager at the company I worked at had one. At the time, I thought it was crazy because laptops weren’t the norm in the office, let alone one so darn small. That said, Apple ROCKS with design and functionality. They are most gorgeous products out there! I don’t know much about Yellow Tail, would love to know what they did differently in the wine industry.
I think you would really like Ernan Roman’s new book, “Voice of the Customer Marketing.” He talks about exactly what you mention and how to use research to get there.