Related Reads:
Product vs. Consumer – 4Ps or 4Cs of Marketing
Price vs. Cost – 4Ps or 4Cs of Marketing
As we discussed in previous posts (links above) that producers need to forgo the first two very important parameters of the 4Ps of marketing framework and move on to the new consumer centric framework – 4Cs of Marketing – for offering a successful marketing mix. This needs switching sides from being a seller to be a buyer. To continue on the other Ps of marketing, now we discuss the third and the next important parameter of 4Ps of marketing mix – Place – which must be considered from a consumer’s point of view.
Place, traditionally, has always been looked upon as a marketplace where merchants make themselves and their offerings available. It is a physical space where products are stored and demoed to the prospects and then offered on exchange of either other goods or some currency. This model has worked for years. Traders used to take their goods to places where there was demand. They used to face the perils of pillage and plundering of goods and currency while enroute. Things changed and routes and trade channels became easily accessible and legalized. What remained was that the consumer had to travel to the closest marketplace and buy goods. Producers always gathered at a particular place and catered to customer needs. This also made customers travel far places to acquire goods that were only available there. For example: Herbs are not available everywhere but at certain places and customer travel to get them for medical reasons.
In a transaction of goods exchange (either exchanged with goods or currency), a transaction has about 5 essential steps. Next section describes them from two different perspectives.
Sellers
1. Producing or buying in bulk the goods they plan to sell
2. Storing the goods to fulfill the demand
3. Transporting goods and making them available in the marketplace based on demand
4. Demonstrating / displaying their goods to attract customers
5. Negotiating with customers
6. Exchanging currency for goods sold
From a seller perspective, the price of products and services should be set so that they make a profit after considering all the above factors. Many a times, the price of goods increase where the availability is scarce. Supply and demand also plays a role but primarily, sellers or producers price their goods and services without considering cost for the customer. Also Read: Price vs. Cost – 4Ps or 4Cs of Marketing.
Above was a pretty simple example of how producers can reach a marketplace to sell their goods but in today’s market where global consumers are the size of the pie, producers use many strategies to make their products reach their customers. They use distributions channels to wholesalers to retailers as the middle-men where they offer in bulk to distributors who in turn offer in lesser bulk to wholesalers and so on, making the goods reach in single units to the end consumer. The above also explains the difference between a customer and consumer. Customer for retailers is also the consumer here. This helps consumers buy what they are looking for at many shops and outlets in their nearest market. This is the method used by most of the producers – before the advent of ecommerce. Let us look at the buyers perspective below.
Buyers
To make a purchase, buyer must do the following:
1. Know the marketplace for goods and traveling to the marketplace
2. Roam the marketplace for selecting goods and examining them
3. Negotiate prices for the goods they need
4. Pay for goods with the method preferred by the vendor (cash, credit, goods, etc)
5. Take the goods and traveling back to their premises
6. For defective goods, repeating the above cycle if exchange is needed (reverse supply chain – out of scope for this article).
If we see from the above, customer has to spend so much time to roam around the market to see various products and make a decision. She also has to negotiate prices if it is an unorganized market (such as road-side vendors ready to bargain rather than a retail shop with discounted and fixed MRP). Then, pay for the goods with the preferred way of payment and then carry the goods to her place. This is a highly inconvenient process and the Internet and ecommerce just solved many problems for the consumers. At the same time, they also raised many concerns and problems to be solved by marketeers.
Marketing professionals have to think how to demonstrate their products online. Some are easy to do some are difficult. Think perfumes and other intangible goods. Then they must find a way to make consumers pay the way they want to and that too securely using methods such as credit cards, debit cards, cash (cash on delivery). Next they must think of shipping the goods to them with the safest and fastest method. All this needs thinking.
Amazon did a great job in making this a reality. It never manufactured goods (until recently) but concentrated on this very important C of marketing – convenience for the consumer. It saved on cost by not investing in shops but only warehouses and shipping what consumers wanted to buy by paying securely through ecommerce – the way money moves online.
Thus, discarding this P of marketing – place – may not be a stretch. Marketplace has slowly become a virtual marketplace where consumers can even try dresses, check out the demos of various goods and order securely with a click with one day shipping all from their closet. Now that is convenience. Though the virtual marketplace may not entirely replace the stores, but for many goods, it already has and it needs marketing attention to focus on how convenient it is for the consumer to procure the goods rather than focusing on which place they should set-up their shop.
