When it comes to Marketing, nothing else will happen if you don’t get The Four Ps right.
It’s all about the fundamentals (it always was, it always is). And while I think the new “P” (which is “participation”) is just as important as the original Four Ps, you need that right marketing mix to get yourself to the point of marketplace success where “participation” starts playing an important factor.
Let’s review The Four Ps of the Marketing Mix:
Just remember, if you don’t get the price right, nothing else will save you.
Pricing is critical, and when you make it arbitrary, strange or not clear and obvious to your consumers it causes tremendous friction and skepticism. Think about your local car mechanic: You walk into the garage because you have a problem with your car, the mechanic takes a look, then looks at you and randomly pulls a price out of the air that seems like an arbitrary combination of the parts required, the time it will take to fix and the potential amount you may be able to pay based on the type of car your drive, the clothes you wear and the neighborhood you live in.
That seems fair, right?
The service industry struggles with this as well, because the financial model is built around a “time is money” business model. The companies that get this model right are the ones who find the healthy balance between what seems like an arbitrary dollar amount and the actual value delivered. This is where the airlines (well, most of them) get it all wrong.
Here’s a personal example…
Since January, I’ve travelled close to 85,000 miles (according to TripIt). Most of those trips are either full-fare economy flights or executive class. (I rarely travel on the cheapest flights because they are difficult to change and have too many penalties attached to them). In recent months, many airlines have (once again) changed their policies where instead of charging a simple “change fee” when you need to move your flight, they now charge you the flight fare difference (granted they sometimes charge you both a change fee and the fare difference).
This causes tremendous friction.
As a frequent flyer and loyal customer to a specific airline (so that the points can be accumulated for status) it is incredibly frustrating and stressful to have no idea what the outcome of a phone call or interaction at the actual counter might be when a flight needs to changed. In one instance, I had a full-fare executive class flight that was priced at over $6000. I needed to change the flight from a direct-flight, mid-day to a red-eye with stopovers, and the airline wanted to charge me over $1600 as that one ticket was now priced higher (obviously because it was closer to the departure date than when the first one was purchased). Funny enough, had I downgraded to a lower pricing/status structure, they would have owed me money.
Always watch your pricing.
“Whatever the market will pay” may feel like the right pricing strategy, but in order to remove the true friction and maximize profits, always focus on the different types of customers you have, what their specific needs are and how you can best accommodate them. There are very few people who don’t believe in fairness when it comes to business. The net result is that the buyer and seller both feel like value was delivered and that both sides profit from the outcome. It’s when that scale tips in either direction too far that problems arise (or when people feel like they are blatantly being taken advantage of).
Pricing (like the other Four Ps) is about finding the right (or perfect) balance. Pricing is not about surprises, uncertainty, consumer stress and the perception that it is arbitrary and changes from person to person and moment to moment. It’s why people hate airline, gas stations and other pricing structures that are both mysterious and highly artificial.
Social Media won’t save you if your products and services aren’t priced perfectly for the marketplace.
What types of pricing nightmares/models make you crazy?