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Marketing’s 4 Ps: The Consumer Angle Summary Marketing is everything sellers do to place their product or service in the hands of potential customers. In this program, we deeply explore the 4 Ps of the marketing mix, and reveal how people are integral to all elements of the marketing plan, including branding and positioning strategies.

Key points: Identify what marketers do to create a comprehensive marketing strategy to get consumers to buy the products the company is selling. Learn the definition of Product, Price, Place and Promotion as they relate to the marketing mix. Explore case studies that illustrate what companies do when they focus on a particular element of the marketing mix to sell their product. Understand the role of market research to the marketing plan. Examine the concept of positioning, its intent, and what it looks like in action. Learn what a brand really is, and how companies use it to sell a product that may or may not have any relevance to what the company’s or product’s strengths are.

Marketing’s 4 Ps: The Consumer Angle Introduction What do People Want? ―Give people what they want.‖ That’s key to business success, right? But, we don’t always say what we want—or even know what we want. And sometimes, companies try to tell us what we want. Companies bring thousands of new products to market annually. But without marketing strategies that consider what consumers want, people probably won't buy enough of a new product for it to be successful. Researchers could use brain scans to try to understand what people really want, but that approach isn’t necessarily foolproof – or economical. Instead, marketers usually try to get answers from consumer interviews, focus groups, and even hidden cameras. They use that research to try to create marketing strategies, and that means more than just memorable advertising or slick sales pitches. Marketing is everything sellers do to place their product or service in the hands of potential customers. They use the 4Ps of the marketing mix, and, when successful, make people integral to all elements of the marketing plan, including branding and positioning strategies.

Primary Market Types When a company plans to market a product, it must decide whether to focus on a mass market or niche market. A mass market is the largest potential number of consumers who could buy a product. Examples include paper towels, cell phones, and everyday shampoo. A niche market is a small, distinguishable segment that can be uniquely served with a certain product or service. Examples include a line of organic cosmetics for people with sensitive skin, a gourmet grocery retailer for chefs, or a dog-walking service for a specific neighborhood.

Market Research To define the size and characteristics of a market -- that is, to learn how many people might buy a product, and what those people are like -- a company can use many types of quantitative or qualitative research. Qualitative research is usually conducted with small numbers of consumers. Common types include focus groups, one-on-one interviews, and behavioral observation. The research results are not analyzed with statistical techniques, but are usually interpreted by a professional market researcher. Quantitative research, by contrast, is done with large samples of the population and uses statistical techniques to draw conclusions.

Understanding the consumer--and knowing how many of them will buy a product--is key to creating the right product and marketing it to capture the most potential sales. Marketing teams often conduct qualitative and quantitative interviews throughout the life of a product. This helps them to remain in touch with who their consumers are and what they want. And the results of the research are used to help develop and refine the marketing mix.

Marketing’s 4 Ps: The Consumer Angle What is the Marketing Mix? An Overview The marketing mix is the combination of strategies and activities that companies use to sell their goods and services. Often called "the four Ps", the marketing mix includes product, price, place, and promotion. The product is the item or service that people buy to satisfy a want or need. In the case of chocolate-covered cornflakes, the product is the food itself. The company makes many decisions about the product, including what it should look, taste and feel like, and how much of it should be sold in a package. Price is how much a customer pays for the product. The selected price, if too high--or even too low--will affect how well the product sells. The word "place" refers to the location where a product can be purchased. It could mean a physical store on the street, or a virtual store on the Internet. Marketing managers have to decide which stores should carry the chocolate-covered cornflakes-supermarkets, convenience stores, online grocery stores, or directly through TV commercials and catalogs, for instance. Promotion represents all of the ways a company communicates with a customer. Promotion has many elements, including advertising, public relations, publicity, merchandising, sales promotion, and direct mail. The chocolate-covered cornflakes company might put commercials on during certain television shows, design unique packaging and supermarket aisle displays, or mail coupons to potential buyers' homes.

The Consumer’s Role The market research methods we mentioned earlier are vital to the development of the marketing mix because research can help reveal what people want. In fact, consumers are so central to the process--from market research and product development to their integration into the 4 Ps--that people might even be called: The fifth "P" of marketing. By focusing on the people who buy, a company can pick the right features for the product, the right price and distribution outlets, and the right words and approaches for promoting the product. So while "building a better mousetrap" is one way to sell a product, it's usually not the product itself that has the most value in marketing. Nor is it just writing the best jingle. What holds the most value is what the consumer thinks about the product. So marketing is all about creating beliefs to drive buying. So whether they are focused on the product, price, place, or promotion, successful marketing strategies and tactics center on consumer beliefs.

Marketing’s 4 Ps: The Consumer Angle Marketing Mix: Elements Explored Product A product is what the company has to offer, whether it is something tangible, like cornflakes, or a service, like lawn fertilizing. It's anything that can be offered to satisfy a market's want or need. Successful companies consider the product's form, functionality, features and benefits from the consumers' point of view. CASE STUDY: 3M CORP. 3M Corporation turned a small square pad of yellow paper into a billion-dollar multinational brand. They did it by focusing on the function of the product. The Post-It note line includes a large variety of shapes, sizes and colors for assorted uses, as well as clever designs and smells targeted to different personalities. The common feature of all of them, of course, is the capability to easily stick almost anywhere and be completely removed again. 3M didn't build its Post-It Note reach by creating a random set of price points, entering the most possible distribution channels, or running a splashy Superbowl ad. Instead, the marketing team looked for people. What do office workers, students, teachers, and graphic designers all have in common? They are people who often seek more organization for their lives and work. 3M built its product to fill those people's needs. After analyzing the demands of the consumer, 3M expanded its product line. In addition to the original little square pad, the company has introduced Markers/Flags, Creative Shape Pads, Easel Pads, and Super Sticky Notes under the Post-It brand name. The newest innovation in the Post-It Note product line is PC Notes software. And even their software comes in different versions with different features for different target markets. By making "people" the focus when marketing Post-It Notes, 3M created a diverse product line to suit the needs of a wide range of potential buyers, turning its unique invention into a billion-dollar brand. Products that were designed expressly to fit people's needs surround you. Take this educational program you are watching right now, for instance. What role did a marketer take in its creation? Who are the people the program was designed to satisfy? Is it for the students? The teacher? Or both? Does it match the class curriculum or add to it? How did the company who produced the material decide on its content? Or its packaging? Many companies find success by focusing the product aspect of their marketing mix on what people need and want.

Marketing’s 4 Ps: The Consumer Angle Marketing Mix: Price Price, another key component of the marketing mix, refers to the amount of money charged for a product or service. Profits go to those who charge the right price. But there is no one right price for every customer. When assigning a price, marketers must know more than how much the product costs to make and distribute. They must ask many questions about the marketplace: How much is charged by the product's direct competitors? How should the price compare to similar products of different sizes and varieties? How much is the customer willing to pay? Consider a company that markets cell phones. For $300, it can sell a phone with a lot of features. But some people can’t or won’t pay $300 for a phone. That means lost sales for the cell phone maker. There are many pricing strategies a cell phone company might use to maximize their potential sales and profits. Layered Pricing: One common pricing strategy is to offer a line of models ranging from, say, $29 to $300. Each phone is basically the same, but some features are missing or ―deactivated‖ in the lower-price units. This strategy, however, still misses out on consumers willing and able to spend MORE than $300 for a cell phone. Luxury Pricing: Another marketing tactic is to offer a ―luxury‖ product with an exorbitant price--perhaps one with embedded jewels or a fashion designer’s name. This appeals to people who want their accessories to display a certain social status. This phone could command several times the price of the basic unit. Price Skimming: is frequently used when products are first launched. Marketers can set artificially high prices to "skim" profits by selling to the consumers most willing to pay a high price for what they believe to be an innovative product. Skimming is often done with name-brand or high-technology items. Once the marketing team believes the most eager consumers have purchased the product, the price is lowered so that it appeals to more mainstream customers. In this marketing game, the consumers willing to wait the longest to buy a new product are usually rewarded with the lowest price. Market penetration pricing: is based on a more price sensitive consumer. This strategy is to set a low initial price to penetrate the market quickly and widely so the product can reach the mass market and fend off competition that might not able to price its products so low. Many companies find success by using the pricing aspect of their marketing mix to appeal to the maximum number of people who could buy their product. A mental shortcut we consumers sometimes use to judge products and services is ―you get what you pay for.‖ In other words, many consumers believe that higher price means a better product. But is the ―price-equals-quality‖ assumption valid? Or might you be paying for something else--like a name, or convenience, or some other attribute?

Marketing’s 4 Ps: The Consumer Angle Marketing Mix: Place The third "P" of the marketing mix is place, which refers to how a product gets to the people who will buy it. It's often called the ―distribution strategy.‖ The two basic types of distribution are: Direct, where a company sells straight to the consumer Indirect, which typically involves wholesalers and retailers

If a company doesn't offer its product or service at the right place and the right time, fewer customers will buy it. Marketers must think about how much it costs to sell through those locations. Some stores will charge placement fees and others will require low prices that could make the company unprofitable. In addition, a marketing team must consider the places the target market would be most likely to expect to buy the product. You might think that the ultimate goal in distributing a product in as many locations as possible. But many placement strategies are specifically designed to limit distribution outlets. CASE STUDY: DELL COMPUTER Dell Computer began its business by selling PCs directly to consumers, while most competitive PC makers were selling through distributors and mass-market retailers. To address customer needs, Dell's business model went beyond product design. By advertising in magazines, selling directly to consumers over the phone, and later, through an online store, Dell fulfilled customer needs such as customization, personalized service and support, and quick access to the latest technology. At the same time, Dell used its direct customer relationships to research consumers' needs and requirements so it could continually refine its product offerings. Although Dell was usually not in retail outlets where people normally shopped for PCs, the company earned a competitive advantage by focusing on a "place" strategy that offered people a more direct and personalized experience. Other companies that might seek to intentionally limit distribution of their products include makers of gourmet foods. They understand that their potential customers might have a different perception of a product if it's sold in an average grocery store that caters to the mass market. Most marketers, however, will try to use their resources to achieve as wide a distribution network as possible to costeffectively be wherever their target market expects them to be. Makers of everyday soaps, toilet tissues, and canned fruit do their best to be in every supermarket and convenience store that sells to the mass market. But they probably won't sell in boutique stores where consumers are looking for upscale products. Similarly, the makers of books, videos and CDs will try to identify every possible outlet where their audience might be motivated to purchase. It could be a mass market or niche store, Website, or directmail catalog targeted to people with specific tastes and preferences. Many companies find success by focusing the place aspect of their marketing mix on the unique behaviors and expectations of the people who will buy the product.

Marketing’s 4 Ps: The Consumer Angle Marketing Mix: Promotion Promotion is the marketing strategy that includes advertising, selling, public relations, trade shows, direct mail, and other communication techniques--even the messages on packaging. Successful promotions are intended to change beliefs or increase awareness, knowledge, and purchase intent among potential buyers. Promotion is often the most obvious element of the marketing mix. CASE STUDY: CHARMIN In the past, Proctor and Gamble promoted its Charmin brand toilet tissue by relying on newspaper coupons and TV advertising. From 1964 to 1985 Mr. Whipple blanketed the airwaves with a familiar slogan - ―Please, don’t squeeze the Charmin.‖ While Charmin still promotes its products with traditional methods, it has also created more innovative promotions. More recently, the brand set up free public restrooms in New York’s Times Square. The restrooms were luxurious, clean and featured Charmin tissue products. More than 400,000 people used those restrooms in one month, making a more personal impression than any TV commercial ever could. As an added benefit, 20 million viewers in one month watched the nine Internet videos about the restrooms. Most of the viewers were at least a generation younger than ones who had watched the original Mr. Whipple ads.

Focus on technology Technological inventions have played a major role in the development of marketing promotions. From the ads created for radio commercials nearly a century ago to the virtual stores in online worlds today. Hewlett-Packard once sponsored an online contest for the best video featuring an HP calculator. This type of promotion helped people--potential consumers--participate directly in the creation of the promotion. The promotion made the people watching the videos become aware of HP's product, and to believe the brand's technical calculators were not just for math majors, but also for people just like themselves. Using an online virtual world as a promotional arena, IBM built a replica of one of its Research Centers, and Coldwell Banker opened a virtual office to sell real estate. These promotional tools promoted real-life products in a setting more familiar to a younger target market, an audience that might otherwise consider IBM and Coldwell Banker as brands meant for older people. Text messaging and video downloads have offered new opportunities to replace mass marketing with niche marketing. Ad campaigns sometimes combine Web data with location information so people with cell phones get messages when they are near a certain store. Purchase of a product or service becomes more convenient for those people and makes the advertising more personal--and therefore more powerful. Of course, it may also be perceived as intrusive or excessive, even by people who signed up for the service. Many companies find success through promotions that help people get involved with the product, gain awareness and knowledge, and develop beliefs. As you can see, people are an integral part of the marketing mix. More complex strategies, such as positioning and branding, should concentrate on people as well.

Marketing’s 4 Ps: The Consumer Angle Positioning to the Consumer Positioning Positioning is a complex marketing strategy that attempts to define how people should perceive a product. A product’s position refers to a buyer's beliefs and feelings about the product when comparing it to similar products. When considering a purchase, we usually try to find a place in our minds for the product to fit. For instance, when we think "potato chips" we might think "occasional snacks." But when we think about "potato wedges" we might think "part of a dinner." The marketing of these products--from where you find them at the store to how much they cost and what their package says, helps you to draw those connections. Marketers use positioning to tell consumers why the product is relevant to them. Perceptions of what a product is--or how it should be used--are often manipulated to make people think a certain way. CASE STUDY: SUNKIST A common position for candy marketed is as a guilty pleasure--tasty but not good for you. To alter this belief, Sunkist positions some of its candy as a healthful, natural snack. The marketers did this by researching people who would not eat a product labeled as candy or give it to their children but who also don't compare the ingredients or nutrition data to candy before they purchase it. Just using the word "snack" changes some buyers' perceptions of the product. Now, the product isn't competing against candy, but an entirely different category of products. It’s perceived as something fun and tasty when compared to nearby healthful, natural snacks. The way people perceive the product's position changed everything about it. Sunkist proved it could sell virtually the same product to different types of people by positioning the product in two seemingly different categories. Starbucks is another example. A generation ago, coffee was served mainly for breakfast, not as a snack, and that coffee was the regular "cuppa Joe‖, not a latte. Then came Starbucks, which repositioned the entire category of "coffee" by turning it into an everyday treat. The company changed people's perceptions of coffee’s role in their lives. Specialty coffee became an all-day beverage, and Starbucks cornered the market with names like Frappuccino, venti and grande, which added a feeling of specialness for consumers. The product didn't change, but how people perceived their need for it changed.

Marketing’s 4 Ps: The Consumer Angle Branding for the Consumer Branding is a complex marketing strategy with interesting origins. Brands began as simple identifying marks. Ranchers branded their cattle. Craftsman put a mark on their works. The mark was a short cut for their signature. Today, logos mark brands. They are carefully created by marketers and designers to establish specific thoughts and attitudes about a brand. A brand is that symbolic expression of all the information and expectations that people associate with a specific product or service. It is a promise to people of what kind of product, price, and place to expect. A brand is to a product what personality is to a human. Branding gives things human qualities. People often describe a brand in human terms. They might say a brand is wholesome, innovative, imaginative, rugged or sophisticated. Advertising pioneer David Ogilvy theorized that people buy products because of the brands' particular personality or image… and the closer the connection between the brand and the people it's intended for, the better. Case Study: Porsche Imagine seeing a small, shapely car covered by a tarp in a driveway. Without a known brand you might say it’s a sports car. If I asked you to describe how it makes you feel, how likely it is to break down, or what its personality is, what could you say? But when you know the brand name is Porsche…you will probably be able to say a lot more. Without ever driving, touching, or seeing the car in person, you might describe a Porsche as luxurious, high quality, powerful, or fast. That's because the brand has made that promise in its advertising, its promotions, its product development, and its pricing strategies. You might describe the Porsche personality as young, bold, daring or a host of other human characteristics. Porsche's brand managers have targeted people who see themselves as having that same personality, or who aspire to have those characteristics. Porsche is what marketers call a ―lifestyle brand.‖ The brand conveys a set of lifestyle values that consumers want to be associated with or believe reflects who they are. The marketer’s focus isn't on the product itself as much as it's on the people who see themselves in it. The value of a brand is that it exists independently of the product it is on. That value can be transferred to other products so long as consumers believe that the brand and product can go together. The brand and not the product itself are the decision driver. For instance, the Porsche has brand qualities that can be transferred to other goods, not just cars. Consider a plain brown leather wallet. What is its personality? How much do you think it costs? What's the quality of the product? What does it say about the owner? Now consider the same wallet with an embossed Porsche logo. Does that wallet look more expensive? Now what does it say about the owner? Does it convey the idea of being well-made? Companies often find success by developing a brand that reflects and speaks to the aspirations of the people who they are marketing to.

Marketing’s 4 Ps: The Consumer Angle Conclusion People are at the heart of marketing strategies for product, price, place and promotion and for branding and positioning. It can take years, or even decades to create a strong brand. But while brands may strive for consistency, people change. Marketers continually stay in touch with the people they see as consumers so they can: understand what the brand means to consumers; position the product so it makes sense to consumers; and ensure consumers are at the core of their decisions for all elements of the marketing mix. Will new generations see the Porsche brand as old-fashioned? Does setting up shop in a virtual world diminish the credibility of a brand? That's for people to decide. And armed with that knowledge, marketers decide what to do next.

Marketing’s 4 Ps: The Consumer Angle Review Product is the item or service that people buy to satisfy a want or need. Successful companies consider the product's form, functionality, features and benefits from the consumers' point of view. Price is how much a customer pays for the product. Profits go to those who charge the right price, which often is unrelated to the cost of the product. Many pricing strategies exist to attract different kinds of customers. Place refers to the location where a product can be purchased. If a company doesn't offer its product or service at the right place and the right time, fewer customers will buy it. Promotion represents all of the ways a company communicates with a customer. It includes advertising, selling, public relations, trade shows, direct mail, and other communication techniques. Successful promotions are intended to change beliefs or increase awareness, knowledge, and purchase intent among potential buyers. Market research is vital to the development of the marketing mix because research can help reveal what people really want. Positioning attempts to define how people should perceive a product. It’s intent is to shape a buyer's beliefs and feelings about the product when comparing it to similar products. A brand is that symbolic expression of all the information and expectations that people associate with a specific product or service. It is a promise to people of what kind of product, price, and place to expect. Companies often find success by developing a brand that reflects and speaks to the aspirations of the people they market to