Study on: Study by:

The New -

5 Ps of Marketing

Varun Oberoi XLRI (Marketing & Research)

Small Introduction why its needed:

Since how long we all have been studying the same old 4 Ps of marketing available and written by our great author dear sir Philip Kotler. But, hasnt the world really changed in the in the last couple of decades and changing further with an different pace altogether, so there is a need of adding and changing the meaning of Ps I dont Author a superlative treaty on the urgent changes necessary for marketing to be viable in times of dramatic change. Don't be a Casualty of the Revolution. The travel industry should have been listening 15 years ago. Apple was. He even addressed the topic to the travel industry when he presented the keynote address at the 1995 Travel and Tourism Research Association meeting in Bal Harbour, Florida. His target? Marketings venerable Five Ps:
y y y y y

Product Price Packaging Place Promotion

If you were thinking there were only Four Ps (excluding packaging) you are really out of touch. The Four Ps were introduced as the key elements of the marketing mix in 1960 times have changed your business

school really should have invested in new textbooks.

If you happen to be a bit more cutting-edge, you may even subscribe to the concept of adding a Sixth P People to the mix. (This has been an integral component for social computing strategists. Todays world) A completely new approach to marketing was required to shift from a product orientation to a brand orientation. Highlights of four key factors necessitating the need for marketing revolution: y y y y

Globalization of Competition Real-time Technology or social media emergence. The Demand for Agile Management Changing Economic Structures

Chaos Calls, Navigating the New, there is no better time to understand the wholly original and still relevant case that the New Five Ps should be:
y y y

Paradox Perspective Paradigm

y y

Persuasion Passion

Hopefully the document will provide marketers with a renewed vision of the future not just from a time perspective, but one that may be even more applicable in 2012 Mastering the New Five Ps of Marketing How Not to be a Casualty of the Revolution It was the best of times. It was the worst of times. Thats how Charles Dickens began his novel entitled A Tale of Two Cities and its a perfect description of our current state of affairs. These are the best of times because, as we advance into the twenty-first century we will encounter many, many exciting opportunities in all areas, from new forms of distribution systems to new kinds of communication systems like interactive television. These are the worst of times because rapid change is always unsettling. Nature of Revolution

1. 2. 3. 4.

Globalization of Competition Revolution in Technology Revolution in Management Revolution in Economy

The first revolution is globalization. This revolution is not something that is just happening in Detroit or California or even the United States. This revolution is widespread from Tokyo to New York. From Beijing to Paris. What globalization means is that we are competing with everyone, everywhere in the world.

The second major revolution is in the area of technology. This is not an abstraction; it is something that touches all of us. Computers and electronics have altered everything about our lives: The new word is social media connection and everyone seems to be getting the hold of it. The ATM machine has replaced the bank teller; electronic mail and voice mail have given us the ability to communicate with anyone, anywhere, 24 hours a day. It used to be that only doctors were on call 24 hours a day; now everyone is.

A third revolution is happening in the area of management. Todays management buzz words are reengineering, downsizing and eliminating hierarchy. In todays management revolution, small, flexible organizations have the advantage, while large, cumbersome bureaucracies are finding it more and more difficult to retain a leadership position.

Finally, we are undergoing a revolution in our basic economic structure. The essence of this change is a shift from hardware to software. This is a shift from factories and capital-intensive assets to knowledge-workers whose primary assets are ideas not bricks and mortar. One way to put this in perspective is to realize that in the hardware business of computers it took Apple Computer ten years to grow from zero to a billion dollars in revenue. In the software business of ideas, movies and licensing, it took Jurassic Park less than one year to reach a billion dollars in worldwide revenue.

Revolution Chaos, Change - The future aint what it used to be. Of course, the exciting part of this enormous change is that revolutions produce victors as well as victims. Victims vs. Victors of the Revolution Victims IBM GM Sears Akers Stempel Brennan Microsoft Chrysler Walmart Victors Gates Iacocca Eaton The Waltons

While Akers was removed from IBM because of a spiraling decline in growth and profits, Bill Gates at Microsoft was amassing double digit increases in revenues and profit. While Stempel watched the market share of GM erode from 35.6 to 34.2 percent in three years, Iaccoca and Eaton increased Chryslers market share from 12.3 to 14.5 percent. While Sears was struggling, Walmart was flourishing. So whats the difference between the victors and the victims? In order to be a victor, one has to master the New 5 Ps of Marketing. As most of you know, the traditional 5 Ps of Marketing include the elements of Product, Price, Packaging, Place and Promotion. Armed with a strategy in each of these areas, a person can put together a marketing plan. The Old 5 P's of Marketing
y y y y y

Product Price Packaging Place Promotion

Packaged Goods Concept of 5 P's of Marketing 10% Allocated to:

y y y y Place Price Packaging Product

90% Allocated to Promotion:

y y y y Positioning Advertising Sales Promotion PR

In the packaged goods category, the general belief is that the fifth P, Promotion (which includes positioning, advertising, sales promotion and public relations), accounts for about 90 percent of the marketing equation. In the automotive category, on the other hand, the Promotion component is seen to be much less important. In fact, according to Ben Bidwell, former president of Chrysler Corporation, in automotive marketing, Advertising accounts for only 10 percent of the marketing equationand thats only if its bad. In the automotive category, the picture of the 5 Ps of Marketing is very different from the one we saw in the packaged goods model. Here, Product and Price are the two key marketing elements, with the promotion component only a small percentage. Automotive Concept of 5 P's of Marketing 50% Allocated to Product

25% Allocated to Price:

y y y Pricing Incentives Re-pricing

8% Allocated to Packaging:
y y y In-store Environment Total Ownership Experience Warranties

8% Allocated to Place:
y y Dealers Distribution

8% Allocated to Promotion Now that we have reintroduced you to the traditional 5 Ps of marketing, we need to translate some of these 5 Ps into the automotive vernacular.
y y y y

Product is obviously the vehicle. Place means everything about the distribution system the number of dealers, the geographic location of the dealers, the strength of the dealers, etc. Pricing includes MSRP as well as repricing activities such as rebates, incentives or leasing subsidies. The Packaging P takes a bit more explanation. Sometimes automotive companies drop this P altogether and limit themselves to the 4 Ps of Marketing. However, my contention is that the Packaging element for automobiles will become increasingly important. This is the software, not the hardware component of the business. Packaging includes the in-store environment, the total ownership experience and other elements such as warrantees and after-sales service. Both Saturn and Infiniti have enhanced their marketing activities by focusing on these Packaging Elements. Why New Age Requires New 5 Ps Old Stability New Chaos

Fast Growth Economy Less Competitive

Slow Growth Economy More Competitive

In the past, these Traditional 5 Ps of Marketing served marketers well, but todays environment requires a new set of 5 Ps of Marketing. The old 5 Ps were based upon a world dominated by stability, a fast growing economy and much less competitive environment. We need a new set of 5 Ps to help us succeed in a world where chaos has replaced stability, where the fast-growing economy has slowed and a global competitive environment demands even greater improvements in effectiveness and efficiency. The New 5 Ps of Marketing include words that are more abstract and conceptual than the tangible hardware of the traditional 5 Ps. The new 5 Ps include Paradox, Perspective, Paradigm, Persuasion and Passion. What Are the New 5 P's?
y y y y y

Paradox Perspective Paradigm Persuasion Passion

Paradox 1. Paradox
'A statement or proposition which, on the face of it, seems self-contradictory, absurd, or at variance with common sense. Though, upon investigation or when explained, it may prove to be well founded or essentially true.' - Oxford English Dictionary

The first P is Paradox. In the automotive world, just as in the world at large, we are surrounded by paradox. In fact, I started this paper with a paradox It was the best of times; it was the worst of times. Good managers and leaders must master paradox. We must master short-term objectives without diminishing long-term results. We must have a global perspective, and focus on the details. One of the most interesting paradoxes in the automotive world is the fact that though advertising represents only 5 percent of the marketing equation, so much time, energy and effort are spent in changing advertising agencies. Why did 18 automotive companies put their advertising account into review during the past 24 months? Clearly this is a paradox. The European automotive companies were especially active. Virtually every European automotive account changed agencies in the past 24 months. The real paradox, of course, is that the more things change, the more things stay the same. Volvos old ad agency Scali, McCabe, Sloves is now Mercedes new agency. European Agency Reviews/Changes Nameplate Alfa Romeo BMW Jaguar Porsche Saab Length of Tenure 5 Years 18 Years 6 Years 6 Years 2 Years Previous Agency Ross Roy Ammirati & Puris Geer DuBois Fallon McElligot Lord Einstein Current Agency Conquest USA Mullen Oglivy & Mather Scali, McCabe, Sloves Goodby, Berlin & Silverstein Angotti, Thomas, Hedge

Mercedes Benz 10 Years McCaffrey & McCall

Audi Volkswagen Volvo

2 Years 34 Years 23 Years

DDB Needham DDB Needham Scali McCabe

McKinney & Silver Berlin Wright Cameron Messner Vetere Berger Schmetterer McNamee

By comparison, the Asian Automotive companies looked pretty stable with only three agency changes, and one of these Infiniti could be considered a consolidation putting the two Nissan accounts at the same agency. Asian Agency Reviews/Changes Nameplate Isuzu Infiniti Subaru Length of Tenure 3 Years 2 Years Previous Agency Hill Holiday Wieden & Kennedy Current Agency TBWA Chiat/Day Temerlin McLain

11 Years Della Femina, Travisano Goodby, Berlin & Silverstein

Among the domestic manufacturers, Jeep consolidated its account at Bozell, and Oldsmobile after a three month review decided to stay with its agency of 60 years, Leo Burnett. Domestic Agency Reviews/Changes Nameplate Jeep Eagle Length of Previous Tenure Agency 6 Years CME Current Agency Bozell

Oldsmobile 60 Years Leo Burnett Leo Burnett The real paradox is that frequently, even after all the changes are made, the same people end up working on the business. This has been especially true for Jeep, where essentially the same people have worked on this piece of business despite three different names on their business cards. But, what does this tell us about how to master paradox? How To Master Paradox 1. Find the opportunity within the paradox 2. Exploit the opportunity The most interesting thing about paradox is that paradox always contains within it an opportunity. In order to master paradox, you first have to find or identify this opportunity and then exploit the paradox. Clearly, the opportunity created by all the agency reviews and changes was an opportunity for smaller agencies to get a car account. But lets look at another automotive paradox and see how we can master it. The paradox is: All cars are the same; all cars are different.