Why the Marketing Mix is outmoded and needs replacing with 'the Customer Mix'by
Brands require a framework to enable them to become customer-centric - and the Marketing Mix, a concept created in the 1960s, is not it.
Acquiring and retaining customers is a war. The battlegrounds are the High Street and online. The casualties are traditional multichannel retailers, and the victors are the disruptors.
This can be evidenced by some of the brands that we don’t see any more on our High Street and those who have closed stores or been through administration and resurfaced as a paler version of their former self. This is a list that grows on an almost daily basis: House of Fraser, Clintons Cards, American Apparel, Jaeger, HMV, Blockbuster, Kodak, Brantano, Woolworths, Borders, Comet, Maplin and Toys R’ Us to name but a few.
The internet provided the opportunity for new brands and disruptors to come in and remove friction from the customers experience, making it easier to purchase products or services in the respective categories. Therefore, we need a new framework to enable us to become truly customer-centric in our approach, and my premise is that the Marketing Mix is not the best framework for success today.
Should we still be relying on a concept that was created in 1960? Conceived by American academic E. Jerome McCarthy it included four key aspects (the 4 Ps):
The above 4 Ps were subsequently complemented by three more aspects to make the 7 Ps: (McCarthy, 1960)
- Physical Evidence
What is the value of the Customer Mix and why should brands integrate its approach?
In the digital age, the balance of power has fundamentally shifted from suppliers (retailers and product manufacturers) to consumers. The main component missing from the marketing mix is customers, yet without customers, we have nothing.
Amazon puts the customer at the heart of what it does. It employs a customer experience ‘bar-raiser’ for every project, whose role it is to push the team and their approach to consider whether the project will deliver all it can for customers, or if the bar could be raised even further.
The internet has driven extreme choice, extreme price and extreme convenience, making the need for a framework that really puts the customer at the heart of every business essential.
What is the Customer Mix?
The Customer Mix is a framework that helps focus on driving customer lifetime value, by looking past the current transaction and thinking about what’s required not just to sell an item, but to keep the customer’s loyalty for future purchases.
What does each of the ‘W’s in the Customer Mix stand for – and most importantly – what do they mean for a multichannel consumer-facing business?
There is no ‘P’ in the Marketing Mix that deals with customers. In the Customer Mix we directly consider Who the different target customers are. You need to analyse your customer data to understand who your best customers are and create key customer segments. In customer-centric organisations, these customer segments are developed into customer personas.
Combined with Who, Why informs us on our target customer segments and their motivations. It prompts retailers, banks, car dealers, restaurants and all consumer facing businesses to consider not just why a customer wants a product or service, but why the channels used during the customer journey may be important to the purchase decision, as well as the fulfilment timeframe. An understanding of Why helps businesses to become more relevant to their customers by informing marketing, merchandising and product or service design decisions.
In my book, 100 Practical Ways to Improve Customer Experience, I provide an example of this in Chapter 1 ‘You Try, We Wait,’ with Net-A-Porter’s personal shopping assistants. They will deliver products to their extremely important customers (EIP-extremely important people) at their home on the same day that the request is made. They will then wait until the customer has tried on the pieces ordered and take back anything that the customer doesn’t want to keep.
This replaces Product in the marketing mix and focuses on what we believe our target customer segments will be most interested in purchasing. But it also goes beyond product, as What the customers want can include value, convenience and services. Sometimes products and services cannot be separated. One example is the many online subscription-based ecommerce sites that have appeared. The consumer isn’t just buying into the products provided, but the concept that they receive something in the post on a regular basis.
Replacing Place in the Marketing Mix, Where considers locations for fulfilment, and also locations for every other aspect of the customer journey including research and purchase. In a complex multichannel customer journey, we can no longer assume that a product is purchased in a store or at a PC and fulfilled by either home delivery or taken from the store at the point of purchase. What’s offered at a variety of locations may be important to a customer’s overall decision to purchase and remain a customer too.
An example of this is when an online grocery shopper can buy the same brands for a similar price from several supermarkets. In this case, having an app that allows the customer to add to their shopping list while they are commuting to work might be important, as might the grocer’s ability to offer click and collect at their supermarket.
Where leads consumer-facing businesses to question every aspect of their multichannel strategy. For instance, do their apps, mobile site and any other infrastructure support customers wanting to shop on the move, or complete transactions within the store, restaurant, bank on their own device? And do online-only businesses need to consider physical collection points for customers who don’t find delivery options convenient?
Combined with Where, When gives us a real sense of how important convenience is to the customer experience. But When is also important in its own right. Timeliness can be key to customer demand – particularly for products such as flowers, food or gifts, which may only be demanded if they can be fulfilled within a very specific timeframe. When can consider multiple points in the customer journey. Various clients of mine allow their loyalty cardholders early access to sales events, online and in store. When can also refer to marketing. Optimising your marketing and trading calendars and the timing of emails and other targeting efforts to maximise sales opportunities is crucial.
There’s no P for lifetime value or ongoing customer relationships in the Marketing Mix. In the Customer Mix this is crucial. Very few businesses have a dedicated customer retention role or focus. This correlates with the lack of any customer retention element in the marketing mix. Also, implicit in the What’s Next element of the Customer Mix is the idea that in modern retailing, customer loyalty can rarely be earned with a single transaction (which is why Amazon Prime exists and why it such a big driver of repeat custom).
Customer lifetime value is a crucial measure of a retailer’s success with its customers and should be an indicator of both future sales and profitability. Improving the value and longevity of customer relationships, involves considering some or all the other five W’s to allow all consumer-facing businesses to meaningfully engage with their customers.
Martin Newman is founder and chairman of a global e-commerce and multi-channel consultancy, Practicology, and a non-executive director for White Stuff. He has headed up multichannel operations for brands including Burberry, Ted Baker and Harrods. He is a global thought leader and advisor to the boards of numerous international brands.
100 Practical Ways to Improve Customer Experience by Martin Newman and Malcolm McDonald is now available.
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