MARKETING MANAGEMENT Chapter Four: Market Segmentation, Targeting and Positioning

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INTRODUCTION
Markets consist of buyers, and buyers differ in one or more ways. They may differ in their wants,
resources, locations, buying attitudes, and buying practices. Through market segmentation,
companies divide large, heterogeneous markets into smaller segments that can be reached more
efficiently and effectively with products and services that match their unique needs. Companies
today recognize that they cannot appeal to all buyers in the marketplace, or at least not to all buyers
in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and
buying practices. Moreover, the companies themselves vary widely in their abilities to serve
different segments of the market. Rather than trying to compete in an entire market, sometimes
against superior competitors, each company must identify the parts of the market that it can serve
best and most profitably. Thus, most companies are more selective about the customers with whom
they wish to connect. Most have moved away from mass marketing and toward market
segmentation and targeting— identifying market segments, selecting one or more of them, and
developing products and marketing programs tailored to each. Instead of scattering their marketing
efforts firms are focusing on the buyers who have greater interest in the values they create best.

The process of grouping customers in markets with some heterogeneity into smaller, more similar
or homogeneous segments. The identification of target customers groups in which customer groups
in which customers are aggregated into groups with similar requirements and buying
characteristics. It is a procedure that an organization goes through to segregate the market into
different groups according to the different characteristics which might need different products. The
Marketer, groups various people into segments on the basis of similar characteristics, tastes,
perception etc. so that they will have a similar view/response to a particular product launched
specifically for each segment.

STEPS IN TARGET MARKETING:

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Figure shows the three major steps in target marketing. The first is market segmentation— dividing
a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might
require separate products or marketing mixes. The company identifies different ways to segment
the market and develops profiles of the resulting market segments. The second step is market
targeting—evaluating each market segment's attractiveness and selecting one or more of the
market segments to enter. The third step is market positioning—setting the competitive positioning
for the product and creating a detailed marketing mix. We discuss each of these steps in turn.

LEVELS OF MARKET SEGMENTATION

Because buyers have unique needs and wants, each buyer is potentially a separate market. Ideally,
then, a seller might design a separate marketing program for each buyer. However, although some
companies attempt to serve buyers individually, many others face larger numbers of smaller buyers
and do not find complete segmentation worthwhile. Instead, they look for broader classes of buyers
who differ in their product needs or buying responses. Thus, market segmentation can be carried
out at several different levels. The following figure shows that companies can practice no
segmentation (mass marketing), complete segmentation (micromarketing), or something in
between (segment marketing or niche marketing).

Mass Marketing:

Mass Marketing Companies have not always practiced target marketing. In fact, for most of the
1900s, major consumer products companies held fast to mass marketing—mass producing, mass
distributing, and mass promoting about the same product in about the same way to all consumers.
Mass marketing is a market coverage strategy in which a firm decides to ignore market segment
differences and appeal the whole market with one offer or one strategy. The idea is to broadcast a
message that will reach the largest number of people possible. Coca-Cola at one time produced
only one drink for the whole market, hoping it would appeal to everyone. The traditional argument
for mass marketing is that it creates the largest potential market, which leads to the lowest costs,
which in turn can translate into either lower prices or higher margins. However, many factors now
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make mass marketing more difficult. The proliferation of distribution channels and advertising
media has also made it difficult to practice "one-size-fits-all" marketing.

Segment Marketing:

A company that practices segment marketing isolates broad segments that make up a market and
adapts its offers to more closely match the needs of one or more segments. Segment marketing
offers several benefits over mass marketing. The company can market more efficiently, targeting
its products or services, channels, and communications programs toward only consumers that it
can serve best and most profitably. The company can also market more effectively by fine-tuning
its products, prices, and programs to the needs of carefully defined segments. The company may
face fewer competitors if fewer competitors are focusing on this market segment.

Niche Marketing:

Within the global market segment is a series of niches. A niche is a group of consumers that have
product preferences that group them together. For example, if you sell sports cars, then you may
find that your global target market is males from the ages of 18 to 55. But, within that global
segment, you have niches of consumers that prefer red cars, cars with leather seats and cars with
racing pinstripes. A niche is a more narrowly defined group, usually identified by dividing a
segment into sub segments or by defining a group with a distinctive set of traits who may seek a
special combination of benefits. Whereas segments are fairly large and normally attract several
competitors, niches are smaller and normally attract only one or a few competitors. Niche
marketers presumably understand their niches' needs so well that their customers willingly pay a
price premium.

Micro marketing:

Segment marketing and niche marketing fall between the extremes of mass marketing and micro
marketing. Micro marketing is the practice of tailoring products and marketing programs to suit
the tastes of specific individuals and locations. When you dig deeper into the levels of a market
segment, you start to look for where your niches are located. These localized market segments are
used to determine where to do specific kinds of marketing and where product needs may be the
greatest. For example, if you find that the majority of the consumers in the red sports car niche
mentioned above are located in the southern United States, then your billboards and magazine
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advertising will feature red sports cars and you will try to stock as many red sports cars in that
geographic region as possible.

BASIS FOR SEGMENTING MARKETS

SEGMENTING CONSUMER MARKETS

There is no single way to segment a market. A marketer has to try different segmentation variables,
alone and in combination, to find the best way to view the market structure. The major variables
that might be used in segmenting are major geographic, demographic, psychographics, and
behavioral variables.

1. Geographic Segmentation:

Geographic segmentation calls for dividing the market into different geographical units such as
nations, regions, states, counties, cities, or neighborhoods. A company may decide to operate in
one or a few geographical areas, or to operate in all areas but pay attention to geographical
differences in needs and wants. It is common to localize products, advertising, promotions, and
sales efforts to fit the needs of geographical areas (regions, cities, and even neighborhoods).

2. Demographic Segmentation:

Demographic segmentation divides the market into groups based on variables such as age, gender,
family size, family life cycle, income, occupation, education, religion, race, and nationality.
Demographic factors are the most popular bases for segmenting customer groups. One reason is
that consumer needs, wants, and usage rates often vary closely with demographic variables.
Another is that demographic variables are easier to measure than most other types of variables.
Even when market segments are first defined using other bases, such as benefits sought or
behavior, their demographic characteristics must be known in order to assess the size of the target
market and to reach it efficiently. Demographic variables are easier to measure than most other
types of variables.

a) Age and Life-Cycle Stage:

Age and life cycle segmentation consists of offering different products or using different
marketing approaches for different age and life-cycle groups. Marketers must guard against

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stereotypes when using this form of segmentation. While certain age and life cycle groups do
behave similarly, age is often a poor predictor of a person’s life cycle, health, work or family status,
needs, and buying power. Consumer needs and wants change with age. Some companies use age
and life cycle segmentation, offering different products or using different marketing approaches
for different age and life-cycle groups.

b) Gender:

Gender segmentation calls for dividing a market into different groups based on sex. This
segmentation form has long been used for clothing, cosmetics, toiletries, and magazines. New
opportunities in this area are emerging such as automobiles, deodorants, and financial services.
There is an increased emphasis on marketing and advertising to women. Specialized Web sites are
becoming very popular with this group.

c) Income segmentation:

It consists of dividing a market into different income groups. Marketers for automobiles, boats,
clothing, cosmetics, financial services, and travel have long used this form of segmentation. Using
this form, marketers must remember that they do not always have to target the affluent. Other
income groups are also viable and profitable market segments.

d) Occupation:

Variables include; bankers, teachers, farmers, clerks, students, housewives, secretaries, etc. A
marketer can choose to specialize in the needs of one occupation group.

e) Education

Some primary education, Some high school education, College education, University education
etc.

3. Psychographic segmentation:

Psychographics are psychological profiles of different consumers developed from research,

sometimes referred to as A.I.O. (Attitudes, interests and opinion profiles. In psychographic
segmentation, buyers are divided into different groups on the basis of their:- Motives, Lifestyle

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and/or Personality characteristics. People within the same demographic group can exhibit very
different psychographic profiles.

Consumers can thus be sub-divided on the basis of the following psychographic variables.

a) Lifestyle

Consumers’ lifestyles are derived from their activities, interests and opinions. Each life style group
is influenced by different marketing mixes.

b) Personality:

Type of personality groups may include;

- Authoritarian

- Ambitious

- Assertive (positive/ optimistic)

- Self-confident

- Prestige conscious

- Extrovert/Introvert

4. Behavioral segmentation:

It involves dividing a market into groups based on consumer knowledge, attitudes, uses, or
responses to a product. Many marketers believe that behavior variables are the best starting point
for building market segments. In this respect, behavioral variables that are used to segment
consumer markets include:-

a) Occasion segmentation:

It consists of dividing the market into groups according to occasions when buyers get the idea to
buy, actually make their purchase, or use the purchased item. E.g. Occasions when public transport
is used mostly. Occasion segmentation can help firms expand product usage.

b) Benefit segmentation:

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It involves dividing the market into groups according to the different benefits the consumers seek
from the product. Companies can use benefit segmentation to clarify the benefit segment to which
they are appealing, its characteristics, and the major competing brands. They can also search for
new benefits and establish brands that deliver them. . Variables here include:-

- Economy (Low price)

- Medical (Decay prevention)

- Bright teeth

- Good taste, e.t.c. for toothpaste.

c) User status:

It can also be used to divide the market. Segments of nonusers, ex-users, potential users, first-time
users, and regular users of a product are potential ways to segment.

d) Usage rates:

These are another way that marketers segment markets. These categories might be light, medium,
and heavy user groups.

e) Loyalty status:

It can also be used to segment markets. Consumers can be loyal to brands, stores, and companies.
Consumers can be completely loyal, somewhat loyal, or not loyal at all. An amazing amount of
information can be uncovered by studying loyalty patterns. According to the loyalty status, the
buyers can be divided into:-

- Hard core loyals – Consumers who buy one brand all the time

- Soft core loyals – Consumers who are loyal to two or three brands

- Shifting loyals – Consumers who shift from favoring one brand to another.

- Switchers – Consumers who show no loyalty to any brand

Today there is a trend toward targeting multiple segments. Very often, companies begin their
marketing with one targeted segment, and then expand into other segments. This often boosts a

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company’s competitive advantage and knowledge of the customer base. One of the most
promising developments in multivariable segmentation is “geodemographic” segmentation based
upon both geographic and demographic variables.

SEGMENTING BUSINESS MARKETS

Consumer and business marketers use many of the same variables to segment their markets.
Business buyers can be segmented geographically or by benefits sought, user status, usage rate, or
loyalty status. Additional variables unique to this market would be business customer
demographics (industry, company size), operating characteristics, purchasing approaches,
situational factors, and personal characteristics. By going after segments instead of the whole
market, companies have a much better chance to deliver value to consumers and to receive
maximum rewards for close attention to customer needs. Within a chosen industry, a company can
further segment by customer size or geographic location. Many marketers believe that buying
behavior and benefits provide the best basis for segmenting business markets.

SEGMENTING INTERNATIONAL MARKETS:

Companies can segment international markets using one or more of a combination of variables.
The chief factors that can be used are: Geographic location, Economic factors, Political and legal
factors, Cultural factors. Many companies use an approach called intermarket segmentation. In
this approach, companies form segments of consumers who have similar needs and buying
behavior even though they are located in different countries. For example, the world’s teens have
a lot in common.

REQUIREMENT FOR EFFECTIVE SEGMENTATION

It is difficult to effectively cater for everybody in the market place, so businesses will aim their
products and services at specific parts of the market. After selecting a segment (of the market),
businesses should evaluate their choice carefully and ensure they have made the right decision. If
a business begins promoting products (at market segments) without a full evaluation, it is risking
wasting time and money. A successful market segment will usually meet the following criteria:

1. Measurability of Segment

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Before embarking on a sales strategy it is important to know the size of existing sales in that
segment. A firm also needs to know how product sales are growing in the chosen segment. If you
cannot measure the growth rate, it will be difficult to assess whether your chosen segment is
profitable. For example smart phone sales are growing rapidly but which segments of the market
are they growing in? And in which segments is growth stagnant?

2. Accessibility of segment

Accessibility is about communicating with your customers and being able to get things to them.
Communication is usually through the internet, TV, radio. However if target customers do not use
these things it will be difficult to communicate with them. Post is also a challenge unless you can
find out where people making up your market segment live. If you cannot target your segment
effectively through marketing communication then it is not viable as you will be unable to tell
them about your product or firm.

The other aspect of accessibility is being able to distribute your product to your chosen segment.
For example a shop based in South London is unlikely to get a large number of customers from
North England. In this instance the shop will have to reassess its chosen segment or think about
solutions to help accessibility such as selling to customers through the internet and mailing out
purchases.

3. Size and Suitability of Segment

Firms need to ensure that the segment is suitable. This means that the characteristics of the people
making up the segment, suggest the segment are likely to buy the product and have the spending
power to buy the product.

There needs to be an opportunity to increase product sales within the chosen segment. Using our
smart phone example, if the chosen segment contains people aged 20-30 and if we imagine 95%
of this age group own a smart phone, the chosen segment will probably need to be reconsidered.
This is unless the company feels that the segment would like to replace their existing smart phone
and have the money to purchase a replacement smart phone.

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Segment suitability also includes the size of the segment. If the segment is too small, potential for
sales growth will be limited. If is too large, it will be difficult to create marketing activities to suit
all of the groups included in the segment.

4. Clearly Defined and Distinguishable Segment

The chosen segments should be clearly defined to avoid doubt about which part of the market, the
firm's marketing activities are aimed at. Otherwise there is a risk that market activities will "spill
over" into different segments. If there is more than one segment, each one should be made up of
target markets which require specific marketing, due to differences in buying behaviour. For
example if married and unmarried men behave similarly when purchasing shoes, there is little
value in placing them in different segments. Differentiation refers to the degree to which a market
segment can conceptually be distinguished and has the ability to respond differently to different
marketing mix elements and programs.

5. Actionability of Segment

Even if all of the criteria listed above are satisfied a segment is unsuitable unless the business has
the resources to cater for the needs of the segment. Action ability is the degree to which effective
programs can be designed for attracting and serving a given market segment.

MARKET TARGETING
Targeting evaluates the attractiveness of each segment of its buying power, size, growth of the
market, competitiveness etc. Defending a target market requires market segmentation, “the process
of pulling apart the entire market as a whole and separating it into manageable, disparate units
based on demographics”. We then choose or come up with a particular strategy or a product itself
for each targeted segment. Target marketing makes the promotion, pricing and distribution of the
products or services in a particular segment. Target marketing provides a focus to all marketing
activities. Market targeting means to choose one’s target market.

Decisions involved in targeting strategy include

 which segments to targeting.

 how many products to offer.

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 which products to offer in which segments.

Market segmentation reveals the firm's market segment opportunities. The firm now has to
evaluate the various segments and decide how many and which ones to target. We now look at
how companies evaluate and select target segments.

EVALUATING MARKET SEGMENTS

In evaluating different market segments, a firm must look at three factors: segment size and
growth, segment structural attractiveness, and company objectives and resources.

Segment size and growth

The company must first collect and analyze data on current segment sales, growth rates, and
expected profitability for various segments. It will be interested in segments that have the right
size and growth characteristics. But "right size and growth" is a relative matter. The largest, fastest-
growing segments are not always the most attractive ones for every company. Smaller companies
may lack the skills and resources needed to serve the larger segments or may find these segments
too competitive. Such companies may select segments that are smaller and less attractive, in an
absolute sense, but that are potentially more profitable for them.

Segments structural attractiveness – Using Porter’s Five Forces Analysis.

A segment might have desirable size and growth characteristics and still not profitable. The
company should evaluate the long-run profitability of the market segment. Michael Porter has
identified five forces that determine the intensive long-run attractiveness of the whole market or
any other segment within it. These five forces are:-

For example, a segment is less attractive if it already contains many strong and aggressive
competitors. The existence of many actual or potential substitute products may limit prices and the
profits that can be earned in a segment. The relative power of buyers also affects segment
attractiveness. Buyers with strong bargaining power relative to sellers will try to force prices down,
demand more services, and set competitors against one another—all at the expense of seller
profitability. Finally, a segment may be less attractive if it contains powerful suppliers who can
control prices or reduce the quality or quantity of ordered goods and services.

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Company objectives and resources.

Even if a segment has the right size and growth and is structurally attractive, the company must
consider its own objectives and resources in relation to that segment. Some attractive segments
could be dismissed quickly because they do not mesh with the company's long-run objectives.
Even if a segment fits the company's objectives, the company must consider whether it possesses
the skills and resources it needs to succeed in that segment. If the company lacks the strengths
needed to compete successfully in a segment and cannot readily obtain them, it should not enter
the segment. Even if the company possesses the required strengths, it needs to employ skills and
resources superior to those of the competition in order to really win in a market segment. The
company should enter only segments in which it can offer superior value and gain advantages over
competitors.

SELECT TARGET SEGMENTS (TARGET MARKET

STRATEGIES):
When selecting their target markets, companies have to make a choice of whether they are going
to be focused on one or few segments or they are going to cater to the mass market. The choice
that companies make at this stage will determine their marketing mix and positioning plank. There
are four generic target marketing strategies.

Undifferentiated marketing: Undifferentiated marketing refers to an approach when a firm

produces only one product or product line and targets all of its customers with a single marketing
mix. The other term used for this approach is mass marketing. In Mass Marketing, the market
coverage strategy essentially ignores the market segment differences and goes after the whole
market with one offer. This marketing approach attempts to sell through persuading a wide
audience. Usually the idea is to broadcast the message with an aim to reach the largest number of
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people possible. Mass marketing focuses on media coverage such as radio, television and
newspapers. The idea is to maximize the exposure to the product. Examples of mass marketing
products are toothpastes, which are not made especially for one consumer group or segment and
are sold in huge quantities. Other examples are furniture, artwork, automobiles, residential
communities, cola drinks and personal computers.

Differentiated Marketing: The differentiated marketing refers to the approach of the firms, which
produce numerous products with different marketing mixes. These products are designed to satisfy
the smaller segments. In this approach, instead of marketing one product with a single marketing
program the firm approaches the different consumer groups with products customized for each
group. Most companies do this for specialization and to remain competitive. The differentiated
marketing essentially requires market segmentation and incurs a higher production cost, inventory
cost and marketing costs.

Concentrated marketing: The popular term for concentrated marketing is niche marketing. Another
term for the same is “Focused Market”. A niche market is a subset of the market on which a specific
product is focusing. Each niche market essentially defines specific product features such as product
design, price range, production quality and the demographics that is intended to impact. In niche
marketing, the firm essentially focuses. Niche marketing chooses a small segment provided it’s a
profitable segment. This approach is most suitable to smaller firms, which have lesser resources.

Micromarketing: This is the narrowest approach of targeting. It is most effective technique for
small business users to sustain, build and grow their own brand. It targets the potential customer
at the very basic and personal level.

MARKET POSITIONING
This is the act of designing a company’s offering and image to occupy a distinctive place in the
target market’s mind. I.e. The act of creating a difference between a company’s offer from those
of competitors. Positioning is the process of establishing and maintaining a distinctive place in the
market for the organizations’ product or brands. Positioning starts with the product, but positioning
is not what you do to a product. It is what you do to the mind of the customer. Positioning then is
how the product is perceived and evaluated by the target market, relative to competing products. To
the consumer perception is reality. That is why it is said that a marketing battle is fought in the

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minds of consumers. Marketers who attain a superior position in customers’ minds have won the
marketing battle.

CHOOSING A POSITIONING STRATEGY

Some firms find it easy to choose their positioning strategy. For example, a firm well known for
quality in certain segments will go for this position in a new segment if there are enough buyers
seeking quality. But in many cases, two or more firms will go after the same position. Then, each
will have to find other ways to set itself apart. Each firm must differentiate its offer by building a
unique bundle of benefits those appeals to a substantial group within the segment.

The positioning task consists of steps:

1. Identifying a set of possible competitive advantages upon which to build a position

2. Choosing the right competitive advantages

3. Selecting an overall positioning strategy.

4. Communicating and Delivering the Chosen Position:

1. Identifying Possible Competitive Advantages

The key to winning and keeping customers is to understand their needs and buying processes better
than competitors do and to deliver more value. To the extent that a company can position itself as
providing superior value to selected target markets it gains competitive advantage. But solid
positions cannot be built on empty promises. If a company positions its product as offering the
best quality and service, it must then deliver the promised quality and service. Thus, positioning
begins with actually differentiating the company's marketing offer so that it will give consumers
more value than competitors' offers do. To find points of differentiation, marketers must think
through the customer's entire experience with the company's product or service. An alert company
can find ways to differentiate itself at every point where it comes in contact with customers. In
what specific ways can a company differentiate its offer from those of competitors? A company
or market offer can be differentiated along the lines of product, services, channels, people, or
image. Companies can gain a strong competitive advantage through people differentiation—hiring
and training better people than their competitors do. Thus, Disney people are known to be friendly

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and upbeat. Singapore Airlines enjoys an excellent reputation largely because of the grace of its
flight attendants.

2. Choosing the Right Competitive Advantages:

Suppose a company is fortunate enough to discover several potential competitive advantages. It

now must choose the ones on which it will build its positioning strategy. It must decide how many
differences to promote and which ones.

 How Many Differences to Promote

Many marketers think that companies should aggressively promote only one benefit to the target
market. Each brand should pick an attribute and tout itself as "number one" on that attribute. Thus,
Crest toothpaste consistently promotes its anti cavity protection. A company that hammers away
at one of these positions and consistently delivers on it probably will become best known and
remembered for it. Other marketers think that companies should position themselves on more than
one differentiating factor. This may be necessary if two or more firms are claiming to be the best
on the same attribute. Today, in a time when the mass market is fragmenting into many small
segments, companies are trying to broaden their positioning strategies to appeal to more segments.
In general, a company needs to avoid two major positioning errors. The first is under positioning—
failing to ever really position the company at all. Some companies discover that buyers have only
a vague idea of the company or that they do not really know anything special about it. The second
error is over positioning—giving buyers too narrow a picture of the company.

 Which Differences to Promote?

Not all brand differences are meaningful or worthwhile; not every difference makes a good
differentiator. Each difference has the potential to create company costs as well as customer
benefits. Therefore, the company must carefully select the ways in which it will distinguish itself
from competitors. A difference is worth establishing to the extent that it satisfies the following
criteria:

Important : The difference delivers a highly valued benefit to target buyers.

Distinctive : Competitors do not offer the difference, or the company can offer it in a more
distinctive way.

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Superior : The difference is superior to other ways that customers might obtain the same benefit.

Communicable : The difference is communicable and visible to buyers.

Preemptive : Competitors cannot easily copy the difference.

Affordable : Buyers can afford to pay for the difference.

Profitable : The company can introduce the difference profitably. Many companies have
introduced differentiations that failed one or more of these tests.

3. Selecting an Overall Positioning Strategy

Consumers typically choose products and services that give them the greatest value. Thus,
marketers want to position their brands on the key benefits that they offer relative to competing
brands. The full positioning of a brand is called the brand's value proposition—the full mix of
benefits upon which the brand is positioned. It is the answer to the customer's question "Why
should I buy your brand?" Volvo's value proposition hinges on safety but also includes reliability,
roominess, and styling, all for a price that is higher than average but seems fair for this mix of
benefits.

4. Communicating and Delivering the Chosen Position:

Once it has chosen a position, the company must take strong steps to deliver and communicate
the desired position to target consumers. All the company's marketing mix efforts must support
the positioning strategy. Positioning the company calls for concrete action, not just talk. If the
company decides to build a position on better quality and service, it must first deliver that position.
Designing the marketing mix—product, price, place, and promotion—essentially involves
working out the tactical details of the positioning strategy. Thus, a firm that seizes on a "for more"
position knows that it must produce high-quality products, charge a high price, distribute through
highquality dealers, and advertise in high-quality media. It must hire and train more service people,
find retailers who have a good reputation for service, and develop sales and advertising messages
that broadcast its superior service. This is the only way to build a consistent and believable "more
for more" position. Companies often find it easier to come up with a good positioning strategy
than to implement it. Establishing a position or changing one usually takes a long time. In contrast,
positions that have taken years to build can quickly be lost. Once a company has built the desired

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position, it must take care to maintain the position through consistent performance and
communication. It must closely monitor and adapt the position over time to match changes in
consumer needs and competitors' strategies. However, the company should avoid abrupt changes
that might confuse consumers. Instead, a product's position should evolve gradually as it adapts to
the ever-changing marketing environment.

MARKETING MIX: CONCEPT OF 4PS AND 4CS

After successful market analysis, planning, and strategy, marketers must design a marketing mix
made up of factors the company can control to influence demand such as, product, price, place,
and promotion (the 4Ps). Marketing mix is defined as the set of tactical marketing tools (4Ps) that
a business blends to produce the response it wants in the target market. The picture below briefly
describes each of the 4Ps.

The 4Ps are used when referring to a business’s point of view, instead of the customer’s point of
view. There is another part to the marketing mix called the 4Cs. Marketers use the 4Cs in the
marketing mix to market in a more customer-centric way, rather that looking at how each aspect
of marketing is seen by a business. Each C correlates with one of the P’s. The 4Cs are customer
solution/value, customer cost, convenience, and communication. The picture below demonstrates
a customer-centric view (“YOU” in the middle) and the correlation, or replacement, of each P with
a C.

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The first P, product, is a good or service that satisfies the wants of a company’s target market.
When determining what the product will be, it must answer questions such as, what problem this
product will solve, is there a consumer need for this product, and/or what will be the components
of this product? This includes all items used in production to create the final product or service.
However, marketers must also consider who will purchase the product and what the customer
wants. Correlating with product is the first C, customer solution/value. Businesses sell products;
however, customers are buying value and solutions to problems.

The second P, price, is the amount of money customers must pay to obtain the product. It is the
amount charged by a business; for example, a bottle of shampoo that costs $6.99. Prices may be
adjusted by the business through discounts, allowances, and/or credit terms. Customers are
concerned with more than just the price of the shampoo bottle though. The second C, customer
cost, refers to the total costs of obtaining, using, and disposing of a product.

The third P, place, includes company activities that make a product available to target consumers.
This includes distribution channels, logistics, transportation, and locations offered. A company
could have many stores offering its products across the United States, but there are still locations
with consumers who will not be able to access that company’s products. This is most likely a loss
to the company. The third C, convenience, is important to consumers. The more convenient a
product or service is to the consumer, the better. Consumers will make purchases depending on
where, when, and how it is convenient for them; so marketers must take into account the

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consumer’s point of view here. For example, rather than businesses being concerned with locations
of stores, it might be more beneficial to think of consumer convenience and offer online shopping.

The last P, promotion, is defined as the activities that communicate the merits of the product and
persuade target customers to buy it. Two major factors for promoting are advertising and special
promotions. However, consumers want more from businesses than 30 second commercials on
television and/or radio to buy products. Consumers want two-way communication and
relationships with businesses which is the fourth C, communication. Consumers also want to be
engaged and feel a part of the business.

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