Written By Masters Student at Lund University
The past couple of years have brought an increase development of the information and communication technologies. The new "Internet era" has had a serious impact on many aspects from the nowadays living, including the contemporary marketing, leading to the affirmation of a new discipline - Internet marketing. The increasing usage of the Internet and other types of digital media as a support to the existing marketing tools that have emerged, have affected the way on which companies communicate with their customers. Furthermore, customers have acknowledged more about their role, power and influence they can have over the companies within this area.
In addition to this transition, there have been some implications that reflected on the marketing mix. This paradigm has gone all the way through the process of evolution in marketing theory and has been a constant subject of discussion in both, the academic literature and managerial practice (Dominici, 2009). This ongoing debate of whether the traditional 4P's marketing mix is still applicable and valid in the 21st century and in the field of Internet marketing has led to a vast of controversies between many authors and practitioners.
The purpose of this paper is to discover how the new technologies transformed the traditional marketing mix. At first, a theoretical background and the criticism of the 4Ps model will be presented. Secondly, the outcomes of the new "Internet era", the internet marketing will be described. Before reaching a conclusion, discussions is going to be conveyed regarding the elements of the traditional marketing mix (4Ps) and how/why are they altered to 4C's in the new environment.
The first author that used marketing mix is McCarthy (1960), which refers to it, as "4P's" (product, price, promotion and place) and is understood as a mean of translating marketing planning into practice (Bennet, 1997). Since it's presenting in 1960, McCarthy used the marketing mix in order to discuss marketing manager's framework - "concentric circles with the customer surrounded first by the 4Ps and then by the environmental forces that affect marketing strategy development" (Anderson & Taylor, 1995).
Throughout the years, many questions were raised regarding the validity of the marketing mix in the 21st century. A study conducted by Rafiq and Ahmed (1995) implied on the high level of dissatisfaction with the 4Ps paradigm. Different authors launched attacks on this model because of its lack of strategic elements and internal orientation (Ohmae, 1982, Robins, 1999), which led to developing alternative frameworks such as or Boom and Bitner’s (1981) 7P's framework, more suitable for the service marketing area and Bruner's 4C's (1988)- concept, channels, costs and communication.
One of the most influential critiques of the marketing mix is given by Lauterborn (1990), who claims that the elements of the marketing mix should be also seen from consumer's point of view. This alludes that more emphasis should be put on customer wants and concerns (Dennis, Fenech & Merrilees, 2005). Therefore, Lauterborn came up with the "Four C's" - customer value, cost, convenience and communication, a model that is equivalent to the traditional 4Ps, but viewed from customer perspective.
The explosive growth of Internet, alongside with the expansion of the commercial networks and services has resulted with an increasing number of Internet users (Aldridge, Forcht & Pierson, 1997). Many innovative companies tried to take the advantage of the new generation technologies, needed for modifying the key elements of the marketing mix, and with the ultimate goal of achieving a leading role the revolutionary digital world (Peattie, 1997). The use of the Internet and the digital media as supporting pillars in crafting the marketing activities has led to a new discipline called Internet marketing.
Varadarjan and Yadav (2009) noted that according to one examination of the literature, the terms Internet marketing, interactive marketing, e-commerce and online marketing to large extent are used interchangeably. Therefore, they define the term interactive marketing as: "the use of an information infrastructure network and devices connected to the network for mediating interactions between an organization and its customers in the context of activities and processes employed by the organization for creating, communicating and delivering products that offer value to customers in an exchange."
Within this new environment, the focus of the marketers has shifted towards understanding and satisfying individual and personalized, rather than collective needs, while placing more emphasis on customer's retention, customer service and relationship marketing (Constantinides, 2002). In addition to this, the customers' behavior patterns are altered to a new level in which they have become better informed, individualistic, wired and require a greater degree of control over the marketing process (Hoffman, Novak & Schlosser, 2000). Moreover, they value this personalized approach and choose products that can be adapted instantly to their ongoing shifting needs and desires (Constantinides, 2002).
With the establishment of interactive marketing as an important theoretical and managerial practice, many people have again brought up the question regarding the inadequacy of the McCarthy's model. As reasons for raising this question were marked the lack of interactivity and personalization, lack of community building, as well as the well-know statements regarding the model's internal orientation and lack of strategic elements (Costantinides, 2006). Hence, the supporters of this thesis (Mosley-Matchett 1997; Evans & King 1999; Chaffey et al. 2000; Schultz 2001; Constantinides 2002) favor new approaches and some of them propose different alternative models such as 5W's (Mosley-Matchett, 1997) and 4S's (Constantinides, 2002) that more suitable for the changing society.
However, the Lauterborn's 4C model (described previously) is more simple (Dennis, Fenech & Merrilees, 2005) when compared to new models and can be used when deciding on marketing issues. Furthermore, its customer-orientation is its main characteristic and based on the Constantinides's (2002) suggestions that in the Internet era, the customer is the focal aspect. Therefore, in the following section, discussions regarding the transformation form McCarthy's 4P's into Lauterborn's 4C's.
The first element of the traditional marketing mix is the product. According to Kotler and Armstrong (2009), a product is "anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need".
Some of the important differences that the Internet brought to the products are the customization and personalization - two integral processes that give power to customers in designing their own product that will satisfy their needs and wants (Thirumalai & Sinha, 2011). By providing "the right content in the right format to the right person at the right time" (Tam & Ho, 2005), companies are trying to provide solutions to their customers, rather than selling them a single product. With this, the companies create value - "the net worth to customers from buying and using seller's product" (Woodruff, 1997) and reflect closeness to their customers, generate appreciation of benefits that are desired by customers in terms of style, choice, uniqueness etc (Dennis, Fenech & Merrilees, 2005).
The second element of the traditional marketing mix is the price - "everything given by the acquirer in terms of money, time and effort to obtain the product "(Yudelson, 1999). However, price is just one of the costs that need to be bear in mind, when a customer wants to buy something (Olivedia.com, 2011). During the purchasing process, many different types of costs such as those for searching the product, transportation, usage costs can occur.
Today, the by Internet ordering, the customers' transportation costs can be eliminated (Cheng & Nault, 2007). Furthermore, low search costs relating to using the Internet for search information prior purchasing are highly-relevant factors that affect the use of the Internet (Jepsen, 2007).
Promotion is the third element of McCarthy's marketing mix. Bunn and Banks (2004) define the promotion as a set of tactical marketing techniques that are formed within a strategic framework, with the ultimate goal of adding value when reaching specific sales and marketing objectives.
Traditionally, the process of communication was consisted of: advertising, sales promotion, direct marketing, public relations and personal selling (Winer, 2009). This traditional model was founded on the belief that marketer has the whole control of the information flow from the company through the media, to the consumers. Furthermore, these mass media-based tools create one-way communication that is based on informing, telling and educating audiences with an ultimate goal to sell the product (Ballantyne, 2004).
According to Fill (2006), the new technology has given a rise to a number of different media and enabled new interactive forms of communication. Furthermore, he argues that beside the traditional promotional methods, many other radically different methods have emerged that provide opportunities for people to interact with those organizations with whom they are willing to be involved and to whom they give permission to send messages. Moreover, this shift towards interactivity and digital themes (Winer, 2009) is referred to as a "hypermedia" environment (Hoffman & Novak, 1996) and had a drastic impact on the nature of the communications model (Hoffman & Novak, 2009).
The dialogue with the customers is hold through various new media. Internet advertising, m-commerce, podcasts are just few outcomes from the Internet revolution (Winer, 2009). None arguably, the most important media of nowadays living is the social media. Kietzmann et al (2011) argue that the development of the Facebook, Twitter and other sites represents a substantial and pervasive change in the ways of communication between organizations, communities and individuals. They also suggest that this event represents a huge challenge for firms, mainly because many established management methods are not suitable to deal with the customers who expect from firms to listen, engage and provide feedback to their needs.
Convenience is Lauterborn's last element of the marketing mix. Instead of focusing on the ways in which companies manage inventories and "placing the products where they want them to be"(Dennis, Fenech & Merrilees, 2005), the objective of the last C is to make the purchasing process of a good as convenient as possible for the customer (Hamilton, 2005).
In the online marketing, everything is about convenience. The Internet provides an opportunity for customers to purchase their products from their homes (Smith, 2003). Moreover, it eliminates regional and local protections and allows consumers to buy from anyone in any region of the world (Kung, Monroe & Cox, 2002).
A major challenge in the e-commerce is the fact that goods have to be available quickly to the customer. For that purpose, the internet marketing has caused the process of disintermediation - "removing the middleman to deal direct with customers instead through agents, distributors and wholesalers", which allows companies to interact more directly with their customers and develop a deep understanding of when and where do customers want the products and services (Chaffey, 2009).
The rapid development of the information and communication technologies has lead to establishing a new discipline - the Internet marketing, in which an emphasis is placed on the interaction between customers and companies, with an ultimate goal of delivering the products that provide value to consumers. Furthermore, this transition had serious impact on the traditional marketing mix, resulting with a lot of criticism and improved frameworks. Since the consumer is the focus of the new society, a better model is found in Lauterborn's 4C's.
Today, it is not about the products, but their value to the consumers. People are trying to find ways to become different from the crowd and the solution lies in customization and personalization. Furthermore, not just the price, but the costs for this solution are extremely important and the Internet has brought options to browse and find the most economical solution to their problems, without leaving their homes. The last thing alludes on the convenience for them that provide them with an opportunity to buy regardless their location and the time frame, directly from their desired company. With this, the process of communication is on a new level, a dialogue between B2C that will allow companies to listen and respond to the customers' needs.
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