Net's Reach Even Extends to 4 P's of Marketing

FRAMINGHAM (07/17/2000) - Every business school graduate and marketing manager has learned the four P's of marketing: product, price, place and promotion. The paradigm was one of control, simple and unidirectional: Firms market to customers. We create products and define their features and benefits, set prices, select places to sell products and services and promote aggressively through advertising, public relations, direct mail and other in-your-face programs. We control the message.

But the Internet transforms all these activities.

Products. Products are now mass-customized, service-intensive and infused with customers' input and individual tastes. Companies must constantly innovate, and product life cycles are shorter. Customers now participate in creating products, and products are becoming experiences. As a result, the old industrial approaches to product definition and product marketing are dying.

Price. Dynamic markets and pricing are challenging vendors' fixed pricing.

Through the Web, customers can find ways that allow them to state what they're willing to pay and for what. "If you deliver this afternoon, I'll pay A. If I can buy this quantity, I'll pay B." Or "I'll accept certain defects and pay C.

If someone else will pay D, then I'll pay E." As buyers and sellers exchange more information, pricing becomes fluid. So markets, not companies, will price products and services.

Place. Every company now competes in two worlds: a physical world (marketplace) and a digital world ("marketspace"). Within a decade, most products and services will be sold in the marketspace.

A new frontier of commerce is the "marketface," the interface between the marketplace and marketspace. For example, some companies have both physical stores and an online presence (clicks and bricks). Customers of Gap Inc. can buy clothes online; if the clothes don't fit, they can return them to a physical store. Or they can browse the Web at their leisure and take printouts of desired items to the store. The Gap has even installed Web lounges in some stores where customers can place orders.

Promotion. Advertising, promotion, publicity, public relations and most other aspects of corporate communications are archaic concepts. They exploited one-directional, one-to-many and one-size-fits-all media to communicate "messages" to faceless, powerless customers.

But with the Net, customers have the power. They have access to more comprehensive information about products. Customers participate in a multidirectional, one-to-one and highly tailored communications environment. So they, not you, control the marketing mix. They choose the medium and the message. Rather than receiving broadcast images, they do the casting. With companies such as Epinions.com, customers create online public opinion with one another, rather than just getting messages from earnest PR professionals.

Marketers are losing control.

The Net changes most aspects of marketing. When customers go online, everybody communicates - in multiple directions - and marketers can no longer control the four P's.

Don Tapscott is chairman of Digital 4Sight and co-author of Digital Capital (Harvard Business School Press). Contact him at dtapscott@digital4sight.com.

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