2P's - 2C's

I love to teach those new to marketing about the principles of marketing and this semester is no different.  And while I like the classic textbook, fillled with information and descriptions of the 4P's:  Product, Price, Placement and Promotion I cannot help but want to have them think differently about the "P's".

Take Product, for example, and begin to think more about the needs and wants of the Customer - This is "C1".  What about Price, young marketers today are bombarded with "SALE" signs everywhere.  Online, printed material and in-store tags are covered with them - so it is no wonder why some of my students believe that dropping the price is what a marketer should do as step 1.  So for "Price", lets first think about the value curve and what ask yourself:  "What will the customer pay for and what is the overall Cost-to-Serve?", this is "C2".

Start with these 2P's and think differently about what Product and Price really mean to a marketer.

How to Grow when Demand is Flat

As a boater and someone who loves being in the water, I love my TAG watch.  But over the last 4 years I have watched TAG Heuer make market moves that puzzle me.   Once considered a “premium product” found only at higher-end stores and under lock and key, the company wanted growth and in 2008 they entered into online retailing; “Okay…”, I thought and in the months and years that followed I then began to observe another shift in TAG’s management behaviour and that was they then looked to their current retailers and added to their volume requirements.  “Okay…”, more products with the no change in demand and guess what happens to price?  “Down”, you say, “Right”, it comes under pressure and retailers cut prices to make their volume commitments.  While back at TAG Headquarters they haven't realized it at this early stage but retailers will be silently annoyed at their dropping margins and arrogant OEM stance.  This dismay is then conveyed to the territory representative or distributor, who in turn relays it to upper management; meanwhile more months go by.  Fast forward another year or two and the once higher-end retailers become fed-up because now prices are dropping and they are left to compete with others who are in an overstock position too and with the OEM and their online retailing presence!

What to do?   Well, I believe that a premium priced product needs to stay as such and so I first look to the demand side of the equation.   Either the OEM finds new markets to fill their increased production or reduce the amount produced and raise prices instead.  No executive wants to hear that!  But the OEM needs to keep their retailers happy and that cannot be done if they can’t make money with a proper profit margin. 

Okay, so let’s change the approach and look at the product side for a moment.  Any OEM needs to ask themselves:  "Where is innovation with the product"?  The new bands sure look good but what about the technology or the product itself?  My latest TAG is fairly new but as I look back at all 3 that I have from the last decade I don’t see much change (except in the band); and there lies an opportunity.  Sorry to pick on TAG, but I don’t wear a Rolex, and they too fall into this example, like many more……

Regardless of which decision any OEM makes… standing still isn’t one of them!