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19.2 The Internet and the Marketing Mix

Learning Objective

  1. Learn how the four Ps of marketing have been influenced by the Internet.

McCarthy’s four Ps of marketing are product, price, placement, and promotion. Developing technology, naturally, has an effect on all of these, and the Internet in particular has seen fundamental shifts not only in the means available to promote products but also in the placement, or distribution, of products. Although tools for research, retention, distribution, and product creation have changed dramatically, the fundamental principles of marketing still guide strategyA set of ideas that outline how a product line or brand will achieve its objectives. This guides decisions on how to create, distribute, promote, and price the product or service..

Products and Services

Products and services are what a company sells. From fast-moving consumer goods to digitalAvailable in electronic form; able to be manipulated and read by a computer. products such as software to services such as consultancy, the Internet has allowed for a plethora of new products.

Technology allows for mass customization of products, seen in a growing trend of letting customers customize goods online before they are created. For example, NIKEiD (http://nikeid.nike.com) and Converse (http://www.converse.com) both allow customers to create their own trainers based on a number of preset options, which will then be manufactured to the customer requirements. In a similar fashion, computer products can be built to specifications, as the costs of offering this type of service to customers is reduced by the Internet.

Figure 19.2

Converse allows customers to create their own shoes.

Digital products can exist because of the Internet. The very framework of the Internet allows for products such as software and digital music to be distributed. The Internet as a distribution medium is what makes these products possible.

Price

With customers able to easily access pricing information from a number of suppliers, the Internet is growing a market of near-perfect competition.Michael E. Porter, “Strategy and the Internet,” Harvard Business Review 9, no. 3 (March 2001): 62–78. The prevalence of search engines and of shopping comparison Web sites, such as http://www.pricerunner.com and http://www.nextag.com, make it easy for customers to compare product prices across a number of retailers. The temptation for companies to differentiate themselves on price has led to decreased prices for many commodities, from the regularly reduced pricing of books on Amazon.com to ticket prices on low-cost airlines such as EasyJet (http://www.easyjet.com) in Europe.

Placement or Distribution

Particularly for digital products and services, the Internet gives companies access to a global marketplace. Product distribution and markets no longer have to be dictated by location. With efficient delivery and shipping channels, products that are not digital can also benefit from a far wider marketplace. The Internet allows the basic foundations of mail-order businesses to flourish online with a catalog that is cheaper to produce and update and cheaper to distribute: a Web site. In the travel industry, travel agents stopped issuing paper tickets as of May 31, 2008.“The End of the Paper Airline Ticket,” USA Today, June 1, 2008, http://www.usatoday.com/travel/columnist/grossman/2008-05-30 -paper-tickets_N.htm (accessed June 20, 2010); “Fact Sheet: Electronic Ticketing (ET),” International Air Transport Association, June 2010, http://www.iata.org/pressroom/facts_figures/fact_sheets/Pages/et.aspx (accessed June 23, 2010). Nearly all airplane tickets are now e-tickets.

Note

An API is an application programming interface. Essentially, an API gives instructions and rules for communicating with another program or database. This allows, for example, different companies and developers to build different front-end systems that all communicate with the same database.

Technology such as APIs (application programming interfaces), SOAP (simple object access protocol) services, RSS (really simple syndication), and XML (extensible markup language) allow information and services to be distributed throughout the world. For example, the API for a hotel reservations database, Starfish Luxury Travel Distribution (http://starfishinteractive.com), allows a diverse range of Web sites to offer instant online bookings for hotels in the inventory. Partners with booking engines include http://starfishinteractive.com, http://www.spaworld.tv, and http://www.timesonline.co.uk.

This is both a huge opportunity and a huge challenge for businesses. On the one hand, it can allow niche products and markets to flourish in a global space. On the other hand, it can be tempting for a marketer to try to reach too many markets at once. A global marketplace is also not yet fully supported by national banking and tax legislation.

Promotion

The Internet as an information and entertainment medium naturally lends itself to be used to promote products. The online promotional mix is an extension of the offline but with some significant differences: online promotion can be tracked, measured, and targeted far more sophistically than offline. Advertising, personal sales, promotions-based marketing, and public relations are tacticsSpecific details or parts of a strategy that will contribute to accomplishing a goal. Can be methods or actions. that can all be conducted through the online medium.

New Ps and New Marketing

Well-known marketing guru Seth Godin says that marketing is actually about five elements:

  • Data. That which we observe (and made easier to gather and mine through the use of the Internet).
  • Stories. Everything you do and say.
  • Products (services). The physical manifestation of the story.
  • Interactions. All the tactics a marketer can use to “touch” the prospect or customer.
  • Connection. The end goal; creating a relationship.Seth Godin, “Five Easy Pieces,” Seth Godin’s Blog, June 25, 2008, http://sethgodin.typepad.com/seths_blog/2008/06/five-easy-piece.html (accessed May 12, 2010).

But Seth Godin is not the only smart marketer challenging the four Ps. Idris Mootee put forward four new Ps for marketing in the connected environment:

Personalization

Databases and the use of cookies to remember Web visitors allow for online experiences to be tailored to particular Web visitors. Amazon makes use of personalization to recommend books to customers based on their past purchases.

Participation

With the growth in social media and consumer-generated content, customers are demanding, and taking, a stake in the brandsA distinctive name or trademark that identifies a product or manufacturer. that they use. Savvy companies can encourage participation through onsite reviews and allowing customers to upload images and video, and all companies should be aware of the many ways that consumers are participating.

Peer-to-Peer Communities

Peer-to-peer communities can be seen to work with customer participation. Through social media, existing customers can be a company’s greatest asset or greatest detractor. Equipping an engaged and active customer base with the tools to spread a message should be an integral part of a long-term eMarketing strategy.

Predictive Modeling

The connected nature of the Internet allows for every action online to be tracked, measured, and stored. Huge amounts of data, both anonymous and identifiable, are being stored daily. Analysis of these data can provide insight into solving marketing problems. For example, in PPC (pay-per-click) advertising, data are gathered that over time will indicate the optimal keywords and maximum CPC (cost-per-click) bids for effective bidding.

Godin’s five marketing elements are reminiscent of The Cluetrain ManifestoA set of ninety-five theses organized as a call to action for businesses operating within a newly connected marketplace.’s premise that “markets are conversations,” and both highlight the importance of marketing as people talking to people. This is not a new phenomenon brought on by the World Wide Web. Instead, the Web has served to act as a global focus group, with participants eager to share their thoughts, discoveries, likes, dislikes, and any other sentiment.

Mootee’s four Ps focus on what technology brings to the original marketing mix. Technology has allowed for mass customization, not just in marketing messages but also in content and product creation. It has seen brands that allow customer participation in spreading and even creating their messages and products succeed. The growth of social networks online and the recognized importance of product reviews in the buying cycle are reflected in peer-to-peer communities. Lastly, the Internet is useful in tracking and gathering data, which can be mined and analyzed for opportunities for growth.

What recent approaches to marketing strategy have in common is one growing theme: customer-centric marketing.

The strength of the Internet is demonstrated in the way it underlines connections. The very fabric of the Internet is based on hyperlinks—being able to link from one document to another. These technical connections are mirrored in the need for marketing to appeal to customer’s feeling of connection in the social sense.

Customer-centric Marketing

Customer-centric marketing infers that by understanding the needs of the customer first and foremost, business outcomes will be achieved. Looking at the marketing mix from a customer-centric perspective should result in products and strategies that are meeting the needs of potential customers, as opposed to a need to invest in expensive, interruptive advertising to convince customers of a need that they do not have.

Products

Products and services should be designed from a customer perspective based on their needs.

Price

When considering pricing from a customer perspective, it is tempting to believe that the lowest price is best. While that can attract customers in the short term, focusing on the value of the product and the services offered with it is a better strategy for long-term growth. The customer approach to pricing considers value. The key is to build a long-term cost advantage.

Placement

The customer-centric approach to placement recognizes that you cannot dictate the manner in which customers find you online: from the search engine and keywords they could use to find your service to the browser and device they are using when accessing your Web site.

Promotion

The Internet was not created as a marketing tool: it was created to share information. The number of people accessing the Internet, the amount of time spent online, and the commerce that takes place online make it an attractive marketing environment.

Key Takeaways

  • The following are the traditional four Ps of marketing:

    1. Products and services
    2. Price
    3. Placement or distribution
    4. Promotion

  • The following are the new four Ps of marketing, according to Idris Mootee:

    1. Personalization
    2. Participation
    3. Peer-to-peer communities
    4. Predictive modeling

  • Seth Godin argues that marketing is about five elements:

    1. Data
    2. Stories
    3. Products (services)
    4. Interactions
    5. Connections
  • The growing theme is customer-centric marketing.
  • Customer-centric marketing infers that understanding the needs of the customer is first and foremost.

Exercise

  1. Think of a situation where the traditional four Ps may not work in today’s marketing landscape.