Marketing Profs

It's been 40+ years since E. Jerome McCarthy published Basic Marketing, the business book that introduced the 4 Ps (product, price, place/distribution, and promotion) to the world. The categories still hold true, but what was once the leading edge has drastically evolved.

Web 2.0 has also had an impact on the paradigm by changing what product definitions look like, and how things that are sold as "free" can make money. So while the 4 Ps are a good start as buckets, let's update them for today's era and discuss what you need to be doing to keep your mix both relevant and impactful.

Here's my take on what's happening... and some ideas on what you need to do to win your market.

Product

While chip speeds and data transfer rates have gotten faster, our desire to shape what we buy has increased. Product definition is changing as communications speed up, and Web 2.0 models allow this to be easy, fast, and interactive.

Seems to me that this is the ultimate dream: everyday people using their spare cycles to create content, solve problems, even do R&D for you. Consumer needs, desires, and dreams are bubbling up—from blogs, two-way Web sites, influencer communities, customer councils, people who are involved in do-it-yourself electronics and crafts (Make zine, etsy.com), to the usual—focus groups, trade show input, quantitative customer surveys, registration forms, and other traditional methods. There are an abundance of venues in which users can help shape innovations in your product line and for your next generation.

Product innovation, can play on a much larger field. If customer-created photos (iStockphoto) or video (YouTube) or mobile experiences (veeker.com) can be created and shared, then the notion of ideas can be extended. In the WinMarkets blog, we've talked about customer input into innovation via the Lego model, at Six Apart, and at Sprint. All three companies are finding ways to innovate their product offer based on user input.

You can virtually know the desire of the many or the individual even though the wealth of data available frequently feels miles deep and impossible to get through. Getting good ideas is not the critical challenge. Discerning the winning idea among the many is the key.

Think about how this changes the terrain going forward. I propose it means the following:

• Increased competition: What took you years and focus groups to design will take your competition much less time if they are able to harness user power.
  
  
• A shift of emphasis from generation to filtration: When this model allows many new ideas, then the cost of solving problems and of generating content will go down. It also means the cost and the need for filtering will go up. You will need to filter not only for what's good versus what's bad but also for what fits your strategy. Not every idea will work given your asset base, your strengths, and your differentiation. The challenge will not be to find the smart people or ideas but to find a way to teach your whole company to filter on the same set of ideas.
  
  
• Segments drive the portfolio. Sorting your customers into natural segments will allow you to filter ideas based on who is sending them. Then companies will need to look for ways to glean intelligence from this segmentation to decide what to offer and what to toss. BMW, "The Ultimate Driving Machine," kept producing different models to address different segments so it could cover multiple price points, both genders, and all ages. The MINI was born of a desire to the reach the aspirations of 20-somethings.
  
  
• Harness gender differences. It's amazingly clear that when technology companies lead with engineering, they typically don't understand the women's market. But given how much women influence purchases, they must. Women make 80% of all buying decisions. They control $7 trillion in purchasing power. By 2010 they'll control more than $13 trillion in private wealth. And that's just in America. Globally, women's soaring economic power is changing business forever. Companies that tune in and find a way to specifically listen to this market can win.
  
  Having been an avid runner a lifetime ago, I am impressed today with the shift Nike has executed. Five years ago, Nike still made its women's shoes on male-based models. Today its women's stores for fitness gear stock a mind-blowing array of fabrics, materials, and cuts that recognizes the multipurpose needs of women's lives. They aren't just doing the "matching color" but really fundamentally thinking about physiology and use requirements.
  
  
• Change communications and your Web platform to be interactive. I remember reading an article about a Nike ad located in Times Square where customers could dial commands and change the footwear that appeared. This (over the top) moment is a small example of the way we will be doing customer interactive, two-way messaging between marketers and consumers. While it's not yet perfect (people who vote on something may not necessarily buy that same something), it is going to become a powerful way of both designing and creating offers. I think it will also form our affinity and brand association. Not everything will be co-created in the future, but tapping into the collective experiences, skills, and ingenuity of hundreds of millions of consumers around the world is a complete departure from the producer-versus-consumer innovation model so common to most corporations.

Companies can be, should be, will be listening more deeply than ever before. Those that invite consumers to tell them about their product use experience—the positive and the negative—and their dreams and aspirations will be the ones that can set the agenda in the market. And that's the next wave of product innovation.