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Understanding the Foundations of Marketing - the Three Cs and the Four Ps

Bergstedt, Randall

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ACSM's Health & Fitness Journal: September 2010 - Volume 14 - Issue 5 - p 38-40
doi: 10.1249/FIT.0b013e3181ed5bb7
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In Brief

Being a fitness or health professional you often may not consider the function marketing plays in your organization. You may think it is the creative guys who manage your Web site and create advertisements. But an understanding of the marketing function and applying a basic process to creating a marketing strategy and tactics can make a huge difference in your organization. It will help guide decision making for big things like partnerships or new growth initiatives. It also can help guide the more tactical decisions surrounding pricing, staffing, new equipment, or advertising.

THE THREE Cs - STRATEGIC MARKETING

Kenichi Ohmae created the three Cs model of strategic marketing, and it creates a simple framework for you when developing any type of strategy. It consists of the company, the customer, and the competition, which are the three critical components to creating a successful strategy. Briefly, the company must be able to execute the strategy, the strategy must meet a customer need, and differentiation from the competition must be achieved.

The 3 Cs could be phrased as the following three questions:

  1. Company - Is this something our company (organization) can create, develop, or deliver successfully?
  2. Customer - What does the customer need, and how can we meet that need whether expressed or latent?
  3. Competition - What is the competition doing in this area, and how can we differentiate ourselves?

THE COMPANY

The term company is used to refer to any organization, even if it is not necessarily a corporation. The important concept is this organization provides the foundation for activities including facilities, funding, or staffing.

As it relates to possible strategy, it is important that the company is capable of executing the strategy and that the strategy is compatible with the culture of the company. An overaggressive strategy of expansion can cause a company to spread its resources too thin and fail.

THE CUSTOMER

We have all heard the sayings, "the customer is king" and "the customer is always right." Our strategies must provide our customers with a product or service that meets their needs, or they will not be repeat customers or refer others.

It used to be said, "Build a better mousetrap and the world will beat a path to your door." But what if nobody wants or needs your better mousetrap? Strategies that are customer focused and build better "mousetraps" for "moustrappers" are always the most effective.

THE COMPETITION

Have you ever been to a great restaurant but never went back? Usually, it is because the next time you need food, you have other options you prefer. Maybe the food is better, maybe it is less expensive, or maybe it is simply closer to your home.

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Understanding the competitive landscape and how your customers perceive your offerings compared with your competitors' is critical in developing strategy. For the purposes of strategy development, competition must be defined broadly. If you are in the business of healing sports injuries, your competition includes physical therapists, chiropractors, massage therapists, orthopedists, acupuncturists, medication, or even doing nothing. That may seem like a long list, but it is important to understand what your customer might view as possible solutions to their need and that it might be provided by an organization or business that is different from yours.

THE THREE Cs ROLLED TOGETHER INTO A STRATEGY

Now let's look at some "home run" strategies and some strategies that business executives wished would disappear.

Porsche versus Volkswagen

A highly successful strategy of launching a series of luxury vehicles that share the parent company's brand name (Cayenne and Panamerra), but enter new automobile categories, worked for Porsche. However, it was a miserable failure for Volkswagen when they tried to go upscale with the Phaeton. Clearly, Porsche understood that their company could develop an SUV and a 4-door sedan that would beat the competition and meet a customer need, even if that customer need might be to show off that they could afford a $100,000 SUV. Volkswagen was capable of developing a fine car called the Phaeton (you probably don't remember their $60,000 sedan), but it didn't differentiate itself from the many other $60,000 sedans, and customers clearly decided they preferred a Mercedes, Lexus, BMW, Jaguar, or Audi. They got the company part right but missed on their competition and their customer.

RIO versus Apple

RIO was the market leader in MP3 players in the 90s and early 2000s. Their strategy was to make their MP3 players smaller and add memory to incrementally improve the process of downloading CDs to your computer and transferring songs to your MP3 player. Then, Apple decided to get into the music business (not just the MP3 player business) with their strategy of seamlessly integrating the music buying, storing, and playing experience through iTunes and their iPod. Apple clearly had the corporate culture, resources, and connections to execute the strategy. It met the consumer need for a better music buying experience, and it was far superior to any offering from the competition.

THE THREE Cs FOR YOU

For any new strategic initiative, make sure you understand your organization's (company) skills, resources, and capabilities.

Before embarking on a new strategy, talk to your customers and get their feedback and perspective. It is amazing how much we can learn about new strategic opportunities by asking customers what needs are not being met, by our organization or by our competitors - especially when we use a broad definition of competitors.

Finally, understand your competition and their strengths and weaknesses. Make sure your strategy doesn't solve a customer need for $1 when your competitor solves the same need for 10 cents. Being able to beat your competitors' offerings is critical in the development of a successful strategy.

THE FOUR Ps - TACTICAL MARKETING

The four Ps are frequently called the Marketing Mix and are much more tactical in nature than the three Cs. Getting an understanding of the three Cs first allows us to successfully create business tactics.

  1. Product - What is the product we provide?
  2. Price - What price do we charge for our services?
  3. Promotion - How are we going to promote our services?
  4. Place - Where or how are we going to get our product into the market?

In your role, you may not have control over one or more of the elements of the marketing mix. For instance, if you are working at a therapy clinic, your location (place) is set.

Product

Product can be viewed very broadly, and sometimes, it is helpful to view it as the benefit provided, not the product or service. For example, if you are a therapist, is your product therapy? Maybe it would be better defined for your clients as healing or even the elimination of pain.

The story of the railroads' financial troubles is well documented because they were in the "railroad" business, and they didn't understand that the product they provided was transportation, not railroads. They could have become leaders in the automobile and airplane businesses, but they defined their product so narrowly that they were surpassed by those industries.

Price

Price is a critical component of your marketing mix and, to a great extent, defines your business. If you are in a for-profit venture, it also defines profit margins. Typically, there are two successful pricing positions - low cost and high volume or high cost and high value. Of course, high cost, high value, and high volume is the most profitable of all.

Promotion

This is the area of the marketing mix that has changed the most because of technology. The printing industry, the advertising industry, television, magazines, and newspapers have had to dramatically change their business models in recent years. Digital printing now makes it cost effective to run 100 flyers, when the minimum used to be 5,000. A freelance graphic designer has access to the same computing power and software as the biggest ad agency. Advertising has gone from yellow pages and newspapers to Google adwords, the Internet, Facebook, and YouTube (do you have a YouTube channel yet?).

The ability to promote your product and your company to customers and potential customers has never been cheaper, more efficient, or allowed for more depth. It is now possible to post a video for free, explaining exactly the services you provide while highlighting your unique offerings.

Place

Traditionally, place referred to physical location. If you were in the clothing business, you had to decide if you were going to sell to boutiques, Nordstrom, or Target. Those retailers typically don't allow you to sell to all three, so your tactics had to address your target distribution.

Now it also refers to cyberspace. For personal trainers, the only "place" they could deliver their services was in a gym - a health club, home gym, or personal training center. Now, there are trainers offering their services online to clients they haven't met.

Place is a critical part of the mix in expansion and finding appropriate locations, whether physical or in cyberspace, to deliver your product.

THE FOUR Ps ROLLED TOGETHER INTO A TACTICAL PLAN

Let's revisit the iPod/iTunes example from earlier. They got the product right with simple delivery of music to an attractive easy-to-use MP3 player, iconic white headphones, and easy to download iTunes software. The price for the MP3 player was about the same as RIO's, but consumers could now choose to buy only the songs they wanted for $1 - brilliant. Buying songs in cyberspace, and iPods just about anywhere, made it easy. Finally, the Apple promotion machine is in a class by itself with advertising, public relations, online promotion, and product placement on TV.

THE FOUR Ps FOR YOU

The critical issue for developing marketing tactics is that all four components are addressed. Leaving one out can doom a fantastic business. The best product, at the right price, in a fantastic location, that no one knows about is probably doomed. Creating a tactical marketing plan based on the four Ps ensures that you don't ignore a critical component of your mix, while simplifying the process.

FINALLY…

Don't be intimidated when you realize you need a marketing plan. In the time it took you to read this article, you could have sketched out the basic beginnings of your marketing plan by using the simple outline of the three Cs to support your strategy and the four Ps to create your plan.

© 2010 American College of Sports Medicine.