From the 4P’s to the 4E’s
From Product to Experience. Where product features and benefits used to be king, the focus must now expand to the entire experience of interacting with the brand, from the product itself to the experience of buying, trying, living and sharing the brand. Peloton clearly had a comprehensive experience in mind when it created its first bike. Far from the typical piece of exercise equipment that readily becomes the default clothes hanger, the company has successfully cultivated a unique lifestyle brand complete with telegenic instructors who offer guidance through social media, sexy, branded workout gear you can buy to match your favorite coach, individual and team competitions to build “stickiness”, in-person experiences, and more. Of course, the experience translates to a stronger revenue stream: besides the hefty price for the bike, Peloton is able to lock members into a monthly subscription fee, in addition to apparel purchases and fees for other experiences.
From Price to value Equation. When considering the cost of a product or service, the price point itself isn’t the only factor that’s relevant. Consumers are willing to pay for the full experience, as long as the benefits received outweighs the total cost of acquisition, including both money spent and effort required. Factors such as ease, convenience, speed, and social affinity are some of the drivers that impact the value equation and level of price sensitivity. Amazon’s Prime membership provides an interesting case study on the importance of looking at the total value equation. While the service commands a premium price, the bundle of benefits it offers – free shipping with no minimum, lightning-fast delivery, access to exclusive content – has become so popular with shoppers that the company has had to limit new memberships at times during peak holiday seasons. Clearly the value equation works well for members and for Amazon, building highly loyal customers who spend nearly 2.5 times more than non-Prime shoppers.
From Place to Everywhere. Enabled by digital and mobile technology, the new “place” is everywhere the consumer is, online, on-the-go, and yes, still in-stores. Shopping has become a 24/7 activity and the consumer wants it readily available wherever they are, at work, at home, at play, or in the stores. A clever, early example of this was with online grocer Peapod, for whom “everywhere” included the commuter train station. As part of its early launch strategy, the company added virtual billboard “stores” to the list of places where consumers could engage and shop. For the daily commuter, the convenience of ordering needed items from the train station billboards before boarding their train and having them delivered by the time they got home provided a convenience that was truly appreciated.
From Promotion to Engagement. No longer a one-way street where a brand message is broadcast through a handful of media vehicles like TV and print, promoting a brand today must be a two-way process that seeks to build an on-going relationship between the brand and consumer, one that strengthens the bond over time. One heart-warming example is Tide laundry detergent and its Loads of Hope program that offers free laundry services to families during disasters like Hurricane Katrina (when the program started) and helping Texans through the recent winter storm power outages. While not intended as a promotion in the traditional sense, this investment by the company provides not only a much-needed service, but ultimately will help to reinforce the brand relationship with those families and the millions of others who appreciate the unique engagement strategy.
After 50+ years, a makeover for the 4P’s of marketing is long overdue. The new Marketing 101 lesson in strategy mix should focus on the 4E’s of marketing in the digital age: Experience, value Equation, Everywhere, Engagement. Maybe we can get it into the curriculum at Wharton – what do you think, Prof. Lodish?