When E. Jerome McCarthy (Harvard University) wrote the book Basic Marketing in 1960, he probably did not foresee the level of influence of the 4Ps model that he introduced based on the concept of marketing mix.
4Ps – Basic framework, The original 4Ps at that time was understood as follows:
- Product: Products are shaped from the basic needs of consumers.
- Price: The decision on product price depends on the production and operating costs of the company itself and the position of the competitor's product in the market.
- Place: How the product is distributed.
- Promotion: Types of product promotion.
Nearly half a century has passed, there have been many articles presenting arguments and criticisms that the 4Ps are too outdated and not enough to create a solid foundation for a marketing strategy in the new century. And there are also a series of other marketing models (such as 7Ps, 4As…) introduced to replace the position of 4Ps in the marketing world.
Yet the 4Ps continue to exist in most marketing classes, from short introductory courses to advanced university courses and even in MBA programs for future business leaders.
The reason the 4Ps have survived for nearly half a century is because they have covered all the elements of a marketing strategy in the simplest yet most comprehensive way. Of course, the 4Ps are now defined more broadly than they were originally to better suit the times.
• Product: Manage product/service elements (brand, function, quality, appearance, packaging, accompanying services, warranty policy...) and plan to develop products/services to the market.
• Price: The decision on product price, in addition to production and operating costs, also takes into account other factors (current prices of competitive products, promotional prices, prices for dealers, prices applicable to other forms of payment...) to determine the listed price for the product.
• Place: Select and manage trade channels so that the product reaches the target market at the right time and develop the logistics and product transportation system.
• Promotion: Introduce and persuade potential markets to use the company's products through various forms of promotion (advertising, personal selling, public relations, press or Internet...).
This makes sense because the most essential thing for a business is to have a product or service to bring to market.
Once the product is available, the manager will start to consider the pricing policy. The pricing policy may affect the distribution system of the product.
For example, an expensive product would not be displayed in a grocery store in a working class area or vice versa.
Finally, after determining the product distribution policy, the manager will decide what types of promotion to promote the product sales. All of the above policies are built with the target market in mind (see the 4Ps combination diagram in marketing strategy).
In theory, if a business can perform any of the 4Ps better than its competitors, it will have a competitive advantage – a sign of a successful marketing strategy – be more popular with customers and become more successful.
However, in reality, businesses always have difficulty in gaining a competitive advantage to make a difference, to create a breakthrough in the current "forest" of brands. Some businesses realize that if they try a little harder in forming product policies - if they really satisfy customers' needs, make customers truly satisfied - they will have a competitive advantage. And more importantly, businesses realize that customers are willing to pay a little more for better service or to receive products with added value.
Businesses also realize that if their products are presented better than their competitors, they will be able to differentiate their products while promoting them and attracting the attention of customers. The key to success for businesses in building a marketing strategy based on the 4Ps framework is that they must realize that the customer is the focus, the target market is the focus while the 4Ps revolve around it.
3Cs – Customer-centric
If all businesses were implementing marketing strategies, manufacturing, and trying to satisfy customers systematically and without making any mistakes, customers would realize that:
• Basically the products and services are the same.
• Pricing policies are always competitive and are becoming more and more competitive as businesses seek to grow and gain market share from each other.
• Businesses are trying to improve their product distribution policies, find ways to expand market coverage and improve their logistics systems. And finally, consumers will find that they can buy any product anywhere.
• The success of product promotion policies is not in the hands of businesses because customers are the ones who decide what information they will receive through what form and whether they believe that information or not. Businesses can invest a lot of money in a TV commercial but their potential customers can change the channel immediately when they see the commercial. So when all products are the same, the distribution system is everywhere, the prices are extremely competitive and customers are the ones who decide the success of a promotion policy, what can businesses do?
First of all, businesses must realize that today a successful marketing strategy must first reach and engage with customers (Customer engagement).
This means that any marketing strategy of a company must be designed to strengthen and build a stronger brand. To be able to engage with customers, a company’s products must satisfy or exceed the expectations (not just the needs) of customers in the product’s field.
To do that, businesses must do a good job of understanding customer expectations and what customers really want. In determining customer expectations, businesses should not be constrained by reality but be ready to accept new things, only then can businesses identify their real opportunities in the market.
According to a recent study by Robert Passikoff (New York University), in the past 10 years, customer expectations have increased by 27% while businesses have only been able to meet 8% of them. Customers always expect more and if they are not skillful in forecasting customer expectations, businesses will get information like "wanting the best, most modern products at the cheapest price".
But there is one truth that businesses should remember: Yesterday's “Wow” is tomorrow's expectation and next week's “so what”. Customers will expect more from you if you do your job well and once you do your job well, you cannot stop but must continue to promote it.
Approaching and engaging with customers is also through meeting their expectations, which gradually builds customer loyalty. Loyal customers bring many benefits to businesses.
First, it generally costs less to retain a loyal customer than it does to attract a new one. Second, loyal customers, in addition to using the company’s products regularly, are more likely to be persuaded to use another product from that company. And finally, loyal customers also recommend the company to their friends and relatives.
However, building customer loyalty is a complex and long-term task. Businesses should know that if customers know you, it does not necessarily mean they will choose you, and even if they choose you, it does not necessarily mean they will be loyal to you. Therefore, the 3Cs model does not stop at building customer loyalty but continues to return to the first step: continue to find ways to approach and engage with customers.
Combining 4Ps and 3Cs
The 4Ps are a good foundation to help business leaders understand the components of a marketing strategy. The 3Cs offer a different perspective, building a marketing strategy to gradually gain customer loyalty. To have a successful marketing strategy, businesses should take customer loyalty as their goal.
Through the 3Cs, businesses can understand and even predict the criteria and trends that make customers more loyal to them. And then use the 4Ps to set up policies on products, prices, distribution systems and promotion in the best way. Companies like Google, Toyota, Starbucks or Apple have long realized that identifying and predicting the factors that customers like (preferences) is extremely important and they have built successful marketing strategies based on these predictions.
