Home » Develop Market Strategy Tools

Develop Market Strategy Tools

4P’s theory

 
4P marketing theory is summed up as a combination of four basic strategies, namely Product, Price, Place, Promotion. Because the English prefixes of these four words are all P, plus Strategy, so referred to as “4P’s”

The Marketing Theory of 4Ps (The Marketing Theory of 4Ps), the 4P theory was produced in the United States in the 1960s, and emerged with the introduction of the marketing mix theory. In 1953, Neil Borden coined the term “marketing mix” in his inaugural speech at the American Marketing Institute, which means that market demand is more or less affected by The influence of the so-called “marketing variables” or “marketing elements”.

In 1967, Philip Kotler in the first edition of his best-selling book “Marketing Management: Analysis, Planning, and Control” further confirmed the marketing mix approach centered on 4Ps, namely:
 

Product

Pay attention to the function of development, require the product to have a unique selling point, and put the product’s functional appeal in the first place.
 

Price

According to different market positioning, formulate different price strategies. The pricing of products is based on the company’s brand strategy and pay attention to the gold content of the brand.
 

Place

Enterprises do not directly face consumers, but focus on the cultivation of dealers and the establishment of sales networks. The contact between enterprises and consumers is carried out through distributors.
 

Promotion

Many people interpret Promotion as a “promotion” in a narrow sense, but it is actually very one-sided. Promotion should be a series of marketing activities including brand promotion (advertising), public relations, and promotion.
 

6P theory

 
In the 1980s, marketing has been greatly developed in the depth of theoretical research and the improvement of the discipline system, and the concept of marketing has made new breakthroughs. In 1986, Philip Kotler published “On Big Marketing” in the Harvard Business Review (March to April). He proposed the concept of “big marketing”, that is, on the basis of the original 4P combination, two Ps are added: “Political Power” (Political Power) and “Public Relations” (Public Relations). Two other skills must be mastered. One is political power, which means that the company must know how to deal with other countries and must understand the political situation of other countries in order to effectively market products to other countries.

The second is Public Relations. Marketers must understand public relations and know how to establish a good image of the product in the public. The proposal of this concept is a new development of marketing strategy thinking in the 1980s. In Philip Kotler’s own words, this is the “fourth wave.” In the summer of 1984, he said at Northwestern University in the United States: “I am currently studying a new concept, which I call’big marketing’: the fourth wave. I think the orientation of our discipline has evolved from distribution to sales. Then it evolved into marketing, and now it evolved into’big marketing'”.
 

10P theory

 
Immediately, Philip Kotler suggested that in order to become proficient in “4P’s” (which he calls tactical), you must first do another “4P’s” (which he calls strategic):

The first “P” is “Probing”. This is a medical term. When a doctor examines a patient, he is exploring, that is, an in-depth examination. Therefore, the first “P” of strategic 4P’s is to explore the market, who the market is composed of, how the market is segmented, what is needed, who are the competitors, and how to make the competition more effective. The first step taken by a real marketer is to investigate and research, that is, Marketing Research.

The second “P” is “partitioning”, that is, dividing the market into several parts. In every market, there are different kinds of people (customer groups), and people have many different ways of life. For example: some customers want to buy a car, some want to buy a machine tool, some want high quality, some want good service, and some want a low price. The meaning of segmentation is to distinguish between different types of buyers, that is, to segment the market and identify different customer groups.

The third “P” is “Prioritizing”. When you cannot meet the needs of all buyers, you must choose those buyers who can meet their needs to the greatest extent. Which customers are most important to you? Which customers should become you The goal of selling the product? Assuming you go to the United States to sell silk women’s clothing, you must understand the American market, and you must distinguish different types of buyers, that is, various types of female customers. You must give priority to or choose the type of customers that you can meet their needs. .

The fourth “P” is Positioning. Positioning is that you must establish a certain image in the minds of customers. Everyone knows the reputation of certain products. If you think that the “Benz” brand car has an excellent reputation, it means that this brand has a high market position; while another car has a bad reputation, which means that it has a low market position. Therefore, companies must decide what kind of image you intend to establish for their products in the minds of customers. Once the product has been positioned, the tactical 4P’s mentioned above can be used.

If a company wants to produce the best machine tools in the world market, then the company should know that its products should be of the highest quality and high price, its channel should be the best distributor, and the promotion should be the most appropriate Advertise in the media, and print the most exquisite product catalogs, and so on. If I do not set this machine tool as the best machine tool, but only as an economical machine tool, then I will use a different marketing mix. Therefore, the key is how to determine the status of your product domestically or internationally.

In Kotler’s understanding, there should be an 11th “P”, which he calls “People” (People). This P runs through the entire process of marketing activities and is a guarantee for the success of the previous 10 Ps. The P incorporates the internal marketing theory of the enterprise into the marketing mix theory, advocating that managers understand and master the trends and laws of employee needs, solve the actual difficulties of employees, and appropriately meet the material and spiritual needs of employees, so as to motivate employees to work. . The theory of “big marketing” shifts the marketing mix from tactical marketing to strategic marketing, which is of great significance and is called the “second revolution” of marketing.
 

7P theory

 
As with the marketing of tangible products, after determining the appropriate target market, the focus of service marketing is also to adopt the correct marketing mix strategy to meet the needs of customers in the target market and occupy the target market. However, the service and service market have several particularities, which determine the particularity of the service marketing mix strategy. In the process of formulating service marketing mix strategies, scholars have added 3Ps to the traditional 4Ps based on changes in the external marketing environment. They are Participant, Physical Evidence and Process Management.

Participant in the marketing mix means the human element, which plays the role of delivering and receiving services. In other words, it is the company’s service staff and customers. In modern marketing practices, the company’s service personnel are extremely critical, and they can completely influence customers’ perceptions and preferences of service quality. Especially in the service industry, the quality of personnel is uneven, and the quality of service performance cannot meet consistent requirements. Personnel also include customers who have not purchased and have purchased services. Marketing managers not only have to deal with the interactive relationship between the company and purchased customers, but also have to take into account the behaviors and attitudes of unpurchased customers.

Physical Evidence can be interpreted as “the display of goods and services themselves even if the things being promoted are closer to customers”. The importance of tangible display lies in the fact that customers can get tangible clues to realize the quality of service you provide. Therefore, the best service is to turn the inaccessible into a tangible service.

The process of Process project management hong kong refers to the “process that customers must go through before they get service.” Furthermore, if customers have to wait in line before getting the service, then the time spent in the process of delivering the service to the customer is an important consideration.

The difference between 4Ps and 7P is mainly reflected in the last three Ps of 7P. On the whole, 4Ps focuses on early marketing’s attention to products and is the basis of physical marketing, while 7P focuses on the services promoted later Marketing’s attention to services other than products is the foundation of service marketing.

In terms of the marketing process, 4Ps focuses on the macro-level process, from the birth of the product to the price setting, and then through marketing channels and promotional methods to make the product finally reach the consumer. This process is rough and does not Consider the details of the marketing process. In comparison, 7P adds microscopic elements to these macro levels. It begins to pay attention to some details in the marketing process, so it is more detailed and more specific than 4Ps. It takes into account the customer’s waiting when purchasing, the customer’s own consumption knowledge, and the customer’s requirements for the personnel contacted during the consumption process.

From the standpoint of standing, 4Ps can be said to be put forward from the perspective of business owners, while 7P is more inclined to the consumer side. On the side of business owners, they tend to ignore some of the needs of customers, and sometimes such neglect is fatal. 7P completes this neglect of business owners. Although it is not complete, it should at least give business owners a reminder: the needs of customers cannot be ignored.

In terms of marketing targets, the 4P portfolio focuses on the promotion of products, while the 7P portfolio focuses on persuading customers. 4P pays more attention to the marketing strategy of pushing, while 7P pays more attention to the strategy of pulling.
 

4P+3R theory

 
Since the 1980s, people have begun to realize that the quality of market share marked by customer loyalty has a greater impact on profits than the size of market share. Therefore, the company’s marketing focuses on how to retain customers and how to make them buy related products. How to get them to recommend the company’s products to their relatives and friends, and how to improve customer satisfaction and loyalty. This gives rise to the new marketing mix theory of 3Rs+4Ps. The 3Rs are customer retention and related sales. (Related Sales) and customer recommendations (Referrals).

The philosophy of “customers are always right” should be replaced by the idea that “customers are not all loyal”. Marketing efforts are more focused on providing services to consumers, relying on interpersonal communication media to disseminate company information, and reducing huge amounts of investment in promotion and advertising. The new marketing mix emphasizes the coordination and cooperation between the various departments of the company and makes full use of the most advanced electronic media. Figure 1 shows the marketing mix redefined by 4Ps+3Rs.

⑴ Customer retention (Retention). Customer retention refers to maintaining and retaining existing customers and obtaining stable income by continuously and actively establishing long-term relationships with customers. According to research findings, for every 5% increase in customer retention, the company’s profit margin will increase by 75%, and the cost of attracting a new customer is more than 5 times that of retaining an old customer. As regular customers become familiar with the company’s products, the marketing costs for such customers will be reduced, and therefore, in the long run, the profit margin of the company’s sales of such customers’ products will be improved.

⑵ Related Sales. Since regular customers have built up confidence in the company’s products, the advertising and promotion costs will be greatly reduced when new products are sold. At the same time, regular customers are not very sensitive to prices when buying new products from the company. Therefore, the profit margin of related sales tends to be relatively high. The important reason why Inauto provides free customer service is that the company expects to sell related products to these customers in the future and obtain considerable profits. In fact, Inauto’s growth mainly comes from product upgrades and sales of related products.

⑶Customer referrals (Referrals) refers to the fact that regular customers have a heartfelt love for the company’s products through their understanding and use of the product and comparison with other products, which leads to brand loyalty to the company’s products. Old customers will be very enthusiastic to recommend products they have used or are using to their relatives and friends. The so-called good things should be shared and described with you. This is the realm. The customer’s publicity is more credible and more effective than the company’s own advertising.
 

The emergence of 4C

 
In the consumer-centric business world, one of the biggest challenges faced by manufacturers is: This is a society full of “individualization”, and the forms of consumers are very different. With this “consumer-oriented” society, With the advent of the “center” era, the traditional 4P marketing mix seems to have been unable to fully comply with the requirements of the times, so marketing scholars put forward new marketing elements.

In the “Advertising Age” in 1990, Mr. Lautrand put forward a new point of view corresponding to the traditional 4P: “The 4Cs of Marketing.” It emphasized that companies should first put the pursuit of customer satisfaction in the first place, and products must meet customer needs. At the same time, to reduce the purchase cost of customers, products and services must fully consider the purchasing power of customers when developing products and services, and then pay full attention to the convenience of customers in the purchase process, and finally implement effective marketing communication with consumers as the center. 4C means:

1) Customer’s needs and wants;
2) Cost and Value to satisfy consumer’s needs and wants;
3) Convenience to buy;
4) Communication with consumer.

Some people even think that “4C” should be used to replace “4P” in marketing activities in the new era. However, many scholars still believe that the “4C” proposal only further clarifies the basic premise and guiding ideology of the corporate marketing strategy. From an operational level, it is still necessary to conduct specific operations through marketing activities represented by “4P”. Therefore, “4C” only deepens the “4P”, rather than replacing the “4P”. “4Ps” is still the most concise and clear interpretation of the marketing strategy portfolio so far.

In fact, 4Ps and 4Cs are complementary rather than substitutes. For example, Customer refers to replacing “products” with “customers”. It is necessary to study the needs and desires of customers first, and then design, produce and sell the service products that customers decide to buy; Cost refers to replace “costs” with “products”. “Price”, understand the cost that customers are willing to pay to meet their needs and desires, and then formulate a pricing strategy; Convenience refers to replacing “location” with “convenience”, which means that customers should be as convenient as possible when formulating a distribution strategy; , Refers to the use of “communication” instead of “promotion”, “communication” is two-way, “promotion” whether it is a promotion strategy or a pull strategy, it is a linear communication method.

4Ps marketing theory actually studies marketing issues from the perspective of management decision-making. From the perspective of management decision-making, various factors (variables) that affect corporate marketing activities can be divided into two categories: one is the uncontrollable factors of the company, that is, the market that marketers themselves cannot control; the marketing environment includes micro-environment and macro-environment. Environment; the second is controllable factors, that is, products, trademarks, brands, prices, advertisements, channels, etc. that marketers can control themselves, and 4Ps is a summary of various controllable factors:

Product Strategy (Product Strategy) mainly refers to the way that companies achieve their marketing goals by providing a variety of tangible and intangible products suitable for consumer needs to the target market. This includes the combination and application of controllable factors such as variety, specifications, styles, quality, packaging, characteristics, trademarks, brands, and various service measures related to the product.

Pricing Strategy mainly refers to the way that companies achieve their marketing goals by setting prices and changing prices in accordance with market laws, including basic prices related to pricing, discount prices, allowances, payment terms, commercial credit and various A combination and application of controllable factors such as pricing methods and pricing techniques.

Placing strategy mainly refers to the way that companies choose distribution channels and organize the physical circulation of commodities to achieve their marketing goals, including the coverage of channels related to distribution, commodity circulation links, intermediaries, network setting, and Combination and application of controllable factors such as storage and transportation.

Promoting Strategy mainly refers to the way that companies use various information dissemination methods to stimulate consumers’ desire to buy and promote product sales to achieve their marketing goals, including advertising, personnel sales, and business promotion related to sales promotion. The combination and application of controllable factors such as public relations.

The combination of these four marketing strategies is usually called “4P’s” because the first letter of English is “P”.

The research on marketing from the perspective of corporate marketing functions was concentrated before the 1930s. Arch Shaw first proposed the idea of functional research in the Economic Quarterly in 1912. At that time, he summarized the functions of middlemen in product distribution activities into five aspects:

(1) Risk sharing, (2) Commodity transportation, ⑶ Fund raising; ⑷Communication and sales, ⑸Assemble, sort and reprint. Weld also conducted research on marketing functions in 1917, and proposed classifications of functions such as assembly, storage, risk-taking, rearranging, sales, and transportation.

As of 1935, a scholar named Franklin Ryan wrote an article that pointed out that the existing functional research had proposed 52 different marketing functions, but did not explain the two major hidden problems in the distribution process: one is Which functions can increase the time, place, ownership, and possession of commodity entities? Second, what are the main functions that business operators should undertake in the distribution process?

Franklin believes that: on the first issue, there are mainly five functions of assembly, storage, standardization, transportation and sales; on the second issue, business operators should mainly perform two functions: taking risks and raising marketing capital. Functions.

The research on marketing from a functional perspective directly leads to the research on marketing strategy combination. Neil Borden (Neil Borden) put forward the “marketing strategy combination” in 1950, emphasizing the overall planning and coordination of various marketing elements starting from the realization of the company’s overall marketing goals, and the manager of the company is “the combination of various elements.” “Combiner”, this is an important idea to improve marketing efficiency from a management perspective. He summarized the relevant factors of the company’s marketing activities into 12 aspects, including:

products, brands, packaging, pricing, research and analysis, distribution channels, and personnel sales. , Advertising, business promotion, point-of-sale display, after-sales service, logistics, etc.;

Later, Foley summarized these factors into “basic factors” related to the offerings and “tool factors” related to sales activities; there will be some later Marketing scholars have proposed different combinations of marketing strategies, such as: Albert. W. Frey’s binary combination: one is the supply factor, that is, the factors that are closely related to the buyer, such as products, packaging, and brands , Prices, services, etc.; the second is methods and tools, that is, factors that have a closer relationship with the enterprise.

Such as distribution channels, personnel promotion, advertising, business promotion and public relations; Lazer and Kelly (Lazer & Kelly) ternary combination: one is the combination of products and services; the second is the combination of distribution channels; the third is information and The combination of promotional methods and so on. Until 1960, Jerome McCarthy (Jerome McCarthy) proposed the famous “4P’s” combination.