By Christine Gibbs-Springer, Ph.D.
Principal Red Tape Limited, L.L.C.

The standard marketing mix developed by Jerome McCarthy in the 1960’s and known as the Four P’s — Product, Price, Place and Promotion is giving way to the Five C’s: Customer Value, Costs, Convenience, Customization and Communication.

Customer Value

The product is the basis of any business. Make it better or different and customers buy it. Today, that means value — creating value propositions which start broadly and then specifically emphasize benefits, attributes, or use. Customers compare the benefit to the price to decide how much value they get for their money. Value propositions offer more for more (Mercedes), the same for less (Frys Technology) , less for much less ( Outlet Malls) and more for less (Toys ‘R’ Us).

Cost

Price includes discounts, allowances, payment terms, and has traditionally added a "markup" in cost-based pricing. Value-based pricing determines price based on costs -the estimated value that the customer receives. For example, it doesn’t cost a theatre company more to put on a production for people in balcony seats or orchestra seats but those people receive a higher value for their purchase (a better view) and pay a higher price.

Convenience and Customization

Place - how products are distributed and made available to customers-is being influenced by customization and replaced by convenience. Some companies respond to the demand for customer-level marketing by offering customized products such as bicycles and automobiles to order. Others combine standard modules of products or services so as to attract niche markets or target customers. Customization need not stop there. Customer relationships are customized by selling two or more related products together, by offering customers individualized service such as daily vitamin prescriptions, by special packaging such as easy-to-open envelopes, by tailoring the timing, method of travel and cost of delivery, by enhancing ancillary services such as customized service packages and warranties, and by designing the payment terms and format of invoices to customer liking.

Communication

Promotion has meant advertising, public relations, sales forces and direct marketing. Today, means two-way communication through dialogues, interactive web sites, and call centers. Customers help themselves by downloading software from Cisco Systems. They do it themselves: Charles Schwab’s interactive trading site boasts more than 1.2 million customers. They design their own products at iPrint, a virtual printing and stationary shop where all customer transactions, including designing, ordering and proofing are done on line.

Sales forces are enhanced through the automation of record keeping and lead generation.