Traditional marketing is composed of the 4 Ps, which include product, price, place, and promotion.
Briefly, promotion is what most people perceive as marketing, and it involves the communication of a value proposition to potential buyers. Product includes to the the attributes and characteristics of what is being sold. Price encompasses everything a consumer trades in order to acquire and utilize the product (or service). Place relates to distribution or delivery of a product (or service). Promotion involves communication of a value proposition that resonates to potential buyers.
What about customer centricity? How do the 4 Ps relate to customer centric marketing?
Modern customer centric marketing is heavily rooted in data, and the core metric of customer centricity is Customer Lifetime Value (CLV). CLV can be calculated generally as the product of customer acquisition (penetration), transactional margin (value), transactional frequency (usage), and lifetime (tenure). These business metrics (penetration, value, usage, and tenure) are the fundamental building blocks to most business models. These building blocks also align fairly well to the 4 Ps of marketing and may be captured in specific customer centric attributes.
Promotion is about communication of a message that ideally resonates with potential clients. This activity corresponds with penetration in a business case. Depending on the type of business the audience (the denominator in calculating penetration) may be a general population, a targeted subset, or a captive customer base. How many are reached or convert becomes the numerator. Penetration is a measurement of the effectiveness of promotion.
Promotion-related customer centric marketing data:
- Flag whether or not a customer (or prospect) was targeted for a given promotion
- Flag whether or not a customer (or prospect) responded with the desired action (e.g. open, click, subscribe, purchase, etc.)
Product (or Service)
Product is the value being offered through a bundle of features and characteristics. In some cases, it may be a portfolio of products, such as retail store that offers various products for sale, plus specialist advice, plus vision care, plus prescription drug fulfillment. Product relates to usage. Once someone becomes a customer, his level of usage will be a major contributor to his value. It may serve as a multiplier of direct transaction value (e.g. items in basket, frequency of transactions, etc.), a diversification of portfolio coverage (e.g. groceries and oil changes), or it may serve as a measure of behavioral lock-in (e.g. visits to a gym with subscription membership) . Usage is a measurement of product performance.
Product-related customer centric marketing data:
- Item-level transaction detail (i.e. order items)
- Session and activity logs
Perhaps the most obvious mapping of one of the 4 Ps of marketing is that of price to the business model driver of value. Price is what a consumer trades off in exchange for a product or service. It is the consumer’s expression of what a product is worth. It includes the actual price tag of the good, the potential maintenance or lifetime cost of ownership (or usage), the expense of procuring the good, and even the opportunity cost of not purchasing other goods or services instead.
Price-related customer centric marketing data:
- Amount paid for goods, or more specifically, the margin on each of those items
- Transaction-level attributes (e.g. discounts, coupons, payment terms, payment method, delivery method)
Place is about distribution or delivery of goods and services. It most closely relates to the tenure element of a customer centric business model. This can include both the initial point of sale and channels of ongoing transaction opportunities for delivering products and services. Place is about the customer relationship from initial awareness through to purchase, loyalty, advocacy, and ultimate sunset.
Place-related customer centric marketing data:
- Channels of interaction
- Date of acquisition in order to perform analytics by acquisition cohort. (Cohort analysis is particularly valuable in customer centric marketing as it enables the comparison over time of customer activity at similar points in the overall lifecycle.)
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Originally published at crookedchimney.com on November 30, 2016.