The Four P's of Marketing on Ricci Street's Port 80: Docks: Marketing

Many products will continue to be made out of atoms. Traditional offline marketing will survive, just as live theater survived movies, radio, TV, and home recording. However, given even the few points below, the 4 P's need to get re-defined, don't you think?

Basics: What are the 4 P's

4 P's	4 C's
Product	Customer Solution
Price	Customer Cost
Promotion	Communication
Place	Convenience

The new economy has given us an incredible diversity of marketing models. We've got viral marketing, B2C marketing, affinity marketing, partner marketing, B2B marketing... the list goes on. With so many models, it can be easy to lose sight of the fundamentals. That could be a mistake.

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

The driving and restraining forces

What is causing the four P's to be redefined? What is holding back wide acceptance of the redefinitions?

Learn more about the challenges to effective new media marketing, the restraining forces.

The New Economy is being driven by a profound development: Individuals and companies worldwide are being electronically linked, a process as significant as an organism developing a nervous system. So it's no surprise that the rules of the game are changing. ...

1. Matter
2. Space
3. Time
4. People
5. Growth
6. Value
7. Efficiency
8. Markets
9. Transactions
10. Impulse

A disruptive antidote to the hierarchical, closed, supply-system, explicit, knowledge-driven, "We Know What You Want" ... world where many customers feel powerless. ...

We are closing in on the "tipping point" where COMsumers take complete control of their destiny by collectively owning their personal information assets.

The four "p"s of marketing are dead. Rather than products, customers value experiences. Rather than place, they will create relationships in the marketspace or the clicks-and-bricks interface – the "marketface." Prices can no longer be defined by sellers with the new price-discovery mechanisms. And promotion is being replaced by the forging of interactive relationships.

Sellers in any market thrive on convenience and imperfect information. That's how airlines, hotels and booksellers price their products. The Internet obliterates the companies' information advantage and hands it over to the consumer. That's what e-commerce is really about: crushing the pricing power of anyone selling a commodity product, which includes most goods and services in this country.

Product

All-new products. A product made out of bits and delivered over the Internet is a different critter than one made out of atoms and delivered in a truck. How much do you think a hundred-dollar textbook would cost if you downloaded it from the author, cutting out the editor, publisher, paper manufacturer, printer, truck driver, and bookseller? What about cutting out the marketer?

What are the differences between bits and atoms? Nicholas Negroponte, director of MIT's Media Lab, popularized the distinction several years ago in Being Digital.

The Internet changes the entire dynamics of publishing. When Stephen King's words can be packaged into a PDF file and downloaded by anyone with a computer in a few minutes, one must begin to question what his publisher, Simon & Schuster, is doing to earn its share of the income pie.

The forces of reaction: Reciprocal mans the barricades. They don't have any problem finding corporate partners in the old-media world. Will the old-media world find any customers for products wrapped in Reciprocal's encryption?

Founders Lose Out As Reciprocal Defaults On Loan (News Library only $$)
by Fred O. Williams
Buffalo News, October 25, 2001

Once the star of Buffalo's fledgling high-tech sector, Reciprocal Inc. has run out of money and time, leaving its original backers disappointed - and less wealthy than they were. Microsoft Corp. has foreclosed on a $10 million loan it made to the e-commerce company in March. The foreclosure erases a multimillion-dollar investment from Reciprocal founder Ronald Schreiber and about 30 Buffalo investors who believed the Buffalo company could become a giant of online commerce.

What about services? Even without video-conferencing, many services can be delivered in text or voice exchanges. What about text and voice at the same time? A veterinarian can do a lot of diagnosing at the other end of a video connection. A car mechanic can do a lot of diagnosing at the other end of an Internet connection.

the product or service to the customer

the customer to the product / service

the customer to the seller

the seller to the customer

Place

Very important online. It's world-wide and it's a web. A small business run out of my home can get customers from all over the world. From my home, I can shop at a small business run out of a basement in South Africa or an attic in Australia. I could never do that offline because I was stuck in Place.

Remember the marketer's mantra: location, location, location? What should it be now: links, links, links?

21st Century Markets: From Places to Spaces
by Peter Fingar, Harsha Kumar and Tarun Sharma
First Monday, volume 4, number 12, December 1999

Throughout history, markets have always re-created themselves, shifting the economic fortunes of those present at the creation. In this paper we discover how e-commerce alters the dimensions of time, place and form to alter fundamental notions of what a market is and how it operates. We explain what the shift from marketplaces to marketspaces means - and, what it portends. We look at new forms of intermediaries, cybermediaries. We explore the need for companies to appear in multiple, simultaneous roles in multiple, simultaneous marketspaces. Then we drill deeper to look at the business case for I-markets, their inter-enterprise business processes and the agile software needed to support new and changing business models. Armed with this framework, we move on to describe the key dimensions of strategy that companies will need in order to succeed as 21st century markets transform from places to spaces.

Place still matters, and will for a long time to come. However, the new economy operates in a 'space' rather than a place, and over time more and more economic transactions will migrate to this new space. People will inhabit places, but increasingly the economy inhabits a space. Your worst nightmare of a competitor is now only one-eighth of a second away.
--Kevin Kelly's New Rules for the New Economy

Price

guerilla shopping

You take your Internet-connected cell phone into a brick-and-mortar store and comparison shop between online and physical stores. You show some usually helpful store clerk at your local book shop a quote from Amazon and expect him to come down on his price.

Some say a product's price should equal costs plus a reasonable return. From a revenue management perspective, this is nonsense.

Lower prices are the main attraction of the Web for many people, especially corporate procurement and MRO departments. The B2B marketplaces are driving prices down, partly by overcoming Place, partly by lowering other transaction costs. Car sales people are not happy when customers walk in with printouts off the Internet.

The art of "revenue management" -- segmenting prices for different audiences and changing market conditions -- is only now taking its proper place among e-commerce sites.

Just as airlines created computerized systems to dynamically match pricing to availability and changes in supply and demand, e-commerce sites will need to deploy such sophisticated pricing systems to maximize their revenue and growth.

The application of disciplined tactics that predict consumer behavior at the micromarket level and optimize product availability and price to maximize revenue growth. ...

Determine the most effective way to price and allocate inventory to reach and every future consumer, each and every day, making real-time adjustments as market conditions change, with the consumer in real-time. ...

Communicate this information instantaneously to distribution and sale outlets which deal with the consumer in real-time.

Information goods have negligible marginal costs, and this will create possibilities for novel distribution and pricing methods. ...

We model competitive pricing between two companies that supply essentially equivalent services. ... One company charges a fixed fee per unit, while the other charges on a per-use basis. Each is interested in maximizing its revenue. We consider instances of the models that have stable competitive equilibria between suppliers along with situations that are unstable and, in the absence of collusion, lead to ruinous price wars.

The classic prescription for economically efficient pricing---set price at marginal cost---is not relevant for technologies that exhibit the kinds of increasing returns to scale, large fixed costs, or economies of scope found in the telecommunications and information industries.

Auction

Reverse Auction

Exchange

Definition | similar to NASDAQ, an exchange is a bid/ask system to buy or sell standardized items.

Ariba Exchange helps Net market makers create trading environments in which multiple buyers and multiple sellers interact along product or industry lines. ...

Exchanges ... provide better prices to both buyers and sellers by stripping away market inefficiencies and ensuring that buyers and sellers are getting the best price currently available on a national or global basis. These exhanges can replace the middleman in fragmented supply chains and can reduce transaction and search costs by bringing information, buyers, and sellers into a single, convenient virtual marketplace to conduct business.

Q Trading Floor is a dynamic pricing product based on securities and commodities trading that is perfect for large organizations looking to set up an Internet location for large numbers of buyers and sellers to meet together to exchange goods. Q Trading Floor is designed to facilitate high volume sales of standardized products, unfinished goods, or raw materials.

FairMarket is the leader in online, outsourced distributed selling solutions. We have assembled a network of over 90 sites, called the FairMarket Networksm, whereby sellers can distribute their quality merchandise across the Web's leading communities and portals. Our unique platform — a dynamic commerce infrastructure of hosted auction, fixed price, falling price and shopping-by-request technology — enables businesses to implement e-commerce functionality, increase revenue and strengthen brand.

Haggling

The seller programs "Chester" with the appropriate information and then "Chester" does the work. "Chester" acts on behalf of the seller and makes pricing decisions for that seller. These decisions are based upon a number of different factors, such as: a product's supply and demand, and previous bidding history. Also figured into the decision-making are factors about a buyer's behavior, their negotiation skills, and then some common negotiation strategies. This shows through in "Chester's" personality and character. The end result is an e-commerce solution that is a more efficient system focused on both moving inventory and maximizing profitability.

Haggleware must be out of business, so maybe it was an idea before its time. Here's an article about it.

Profile of Make Us An Offer Inc., a company with a site and software that allows consumers to electronically negotiate for retail products

Software "solutions"

The Auction Broker. The list of features should give you a behind-the-scenes look at the mechanics of dynamic pricing.

Promotion

The Internet is word-of-mouth on steroids. Viral. Magnetic. Check out Napster and Gnutella. There's a large market online that is invisible to traditional marketing. For how long?

Ron's Internet Marketing Tools - Your online resource for Internet marketing tools and tips and SEO information for website owners and webmasters.

Viral Marketing

Good products can spread online with a speed only seen before in the biological world, so viral marketing can yield big rewards. Just ask Hotmail, with the fastest-growing subscriber base in history.

ClickZ has frequent articles on viral marketing. Use the search box at the top of the home page.

I've heard of a new variant called "magnetic marketing" where the customers have to bring others to the site in order to create value for themselves.

Christopher Locke

Locke has thought through the implications -- specifically the control passing from the marketer to the customer. In these articles, he throws a big challenge at traditional marketers: give it up.


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modified: October 30, 2001 by Douglas Anderson http://RicciStreet.net/port80/docks/marketing/4p.htm