Download Get results with the new marketing mix

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Get results
with the new
marketing mix
By Chekitan S. Dev and Don E. Schultz
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The traditional view
and techniques have focused
motion. We believe it’s time for
of marketing assumes that an
almost exclusively on new
marketers to learn to implement
organization should start with its
customer acquisition and on
a new marketing mix. Time to
customers, learn their needs,
generating profitable transac-
take a different view of the value
and then try to fill those needs—
tions through cross-selling and
creation process in organizations
profitably and on an ongoing
upselling, rather than on building
by first building a customer-cen-
basis. But that’s not the way it
long-term relationships with
tric view and then integrating
really works today.
customers over time.
internal activities and processes.
Marketing, as it has evolved
In today’s interactive, net-
In the January/February issue
over the past half-centur y, has
worked, and customer-controlled
of Marketing Management, we
not been developed to satisfy
marketplace, we attribute much
proposed a new marketing mix,
customer wants and needs.
of marketing’s inability to live up
one that reflected the customer ’s
Instead, in too many cases, it
to the stated goals of “identifying
point of view rather than view-
has been used to assist firms in
and satisfying customer needs
point of the supplier or producer.
disposing of products and serv-
and wants” to the most common
Instead of defining marketing in
ices they have manufactured,
of all marketing management
terms of what it does, we
created, developed, or simply
concepts, the managerial rubric
defined it in terms of what cus-
wanted to vend at a profit. As a
of the four Ps—the focus on
tomers expect. We built a new
result, most marketing concepts
product, price, place, and pr o-
mix based on our demand-based
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EXECUTIVE
In our January/February Marketing Management article entitled “In the Mix,” we argued that
briefing
the four Ps are no longer a relevant marketing mix because they do not reflect 21st Century
market realities. We defined a new marketing mix to change your marketing thinking: SIVA,
which stands for solution, information, value, and access. This article describes the steps necessary to implement this
new marketing mix and profiles a pioneering firm that adopted SIVA and realized immediate results.
approach and called it SIVA—an acronym for these new customer-centric competencies and the order of their use: solutions, information, value, and access. The four imperatives we
proposed are: develop and manage solutions not just products, offer information instead of simply promoting, create
value instead of obsessing with price, and provide access
wherever, whenever, and however the customer wants to
experience your solution rather than thinking merely where
to place your products. This approach suggests new opportunities, leads to different conclusions, and fundamentally
changes the way you relate to customers.
Some marketers recognize the change and get it. Others
don’t. A recent full-page ad in The Wall Street Journal for SAP
AG bore the headline: “Your Customers Expect Your Entire
Enterprise To Revolve Around Them.” That’s impossible in a
four Ps-driven supply-chain-led environment, but it’s critically important if a firm is to meet customer demand. Further,
the four Ps are grounded in a manufacturing mind-set and
need to be adapted to reflect the service economy. Thus the
question for most marketing organizations is not “should
we change?” but rather “what should we change, when,
and how?”
Value Creation Cycle
If one were to visualize the way in which organizational
managers generally use the four Ps, it might look something
like Exhibit 1. Using the four Ps, the marketing manager
would start with the evaluation of an organization’s assets
base. Clearly, if an organization lacks assets, it most likely will
be unable to develop any type of marketing activity. We therefore assume the firm has assets it can leverage in some way.
The assets available to the marketing manager typically
include facilities, financial resources, raw materials, intellectual
capital, and the like. Such resources allow a company or organization to create something of value that it believes can be
exchanged in the marketplace at a profit. Using the four Ps, the
marketing manager takes an “inside-out” or “here’s-what-wecan-do” approach to marketplace entry and development.
Four steps or stages commonly are used, starting with the
identification of the corporate goals or what the management
of the firm wants to achieve. Goals are usually set in terms of
marketplace results or returns the firm wants to receive based
on the use of its assets. Commonly, the second step is to identify the organizational resources that can or should be used to
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achieve the firm’s goals. The third step is where the four Ps
start to emerge in earnest: Here, the organization develops
and distributes its products and services, making choices that
involve the product, the place or distribution, the promotion,
and the price. The final step in this internally oriented, marketer-driven system is, of course, how the organization measures the success or results of its program and the returns it
generates for its owners and shareholders.
This approach fits the four Ps approach to a “T.” It is based
on an internally driven system in which the marketer controls
all the assets, all the resources, and all the power. In short, the
marketer controls the system, sets the objectives, and determines the products and services and how and in what way to
distribute them. Most importantly, the marketer measures the
returns. So far, there’s not a customer in sight. In fact, if the
marketing organization manages its four Ps-related resources
right, customers never enter into the equation. They are superfluous and just get in the way.
Consider the alternative externally focused approach,
depicted graphically in Exhibit 2. This, we argue, is the way
marketing in a 21st century organization should be developed
and implemented.
The marketing manager in our approach starts with the
same asset base or the same resources shown in Exhibit 1. The
difference, however, is that he or she would take a market-
■ Exhibit 1
Asset based–organizational view
Set
corporate goals
Measure
corporate returns
Asset Base
Identify
corporate resources
Develop/distribute
products/services
Adapted from Cranfield University
driven rather than a firm-driven approach. The first step in a
true market-driven approach is to understand the market and
the customers based on true and deep customer insights.
From that point, the goal would be to identify and clarify
what customers value and determine whether the firm could
create those values using the organization’s assets and
resources.
The second step involves identifying or creating various
customer value propositions. That is, the marketing organization attempts to determine what customers want, need, and
value, and then focuses its resources and asset base on fulfilling those wants and needs.
The third step is just as simple. Rather than focusing on
products and services that could be made, assembled, or
developed, the organization finds ways to deliver the value
customers seek.
The fourth step is, then, almost a naturally occurring event
in which the organization measures the extent to which the
customer value was delivered, not just the returns to the corporation or marketing firm.
Looking at this rather simplistic example, four Ps proponents will argue that focusing on the customer and meeting
customer needs and wants is inherent in the traditional four
Ps process. They will say that research with customers must
be done before products can be made or that distribution
channels must be selected that fit a customer’s requirements.
And, while this rhetoric is good, in practice the four Ps
approach generally never gets started or implemented in a
customer-focused way.
The comparison of the two approaches here clearly illustrates, however, that the four Ps approach is internally driven,
organizationally focused, and ignores customers. That, quite
simply, is our point. The four Ps does not reflect the marketing
concept—it is simply a managerial tool that is driven by a
manufacturer-driven concept that cannot be supported in the
much more customer-oriented marketplace that exists today.
Stemming customer turnover has become the new marketing mantra and yet with the four Ps approach, that can never
happen. Taking a new approach to building the business for
and around the customer must become one of the firm’s core
competencies. Marketing must become a process in which all
the customer-touching elements are connected and aligned.
tion-generating activities of the organization. And that’s part
of the organizational problem of the four Ps.
Internal marketing, internal alignments, and internal systems are the tasks of the new organization. Today, much of our
internal marketing activity either doesn’t occur or falls between
the cracks in the firm—between marketing and HR for example, or between marketing and IT or between marketing and
operations. One of the greatest challenges to marketing is to
align and integrate the entire organization through processes
and systems, particularly the employees, channels, business
associates, and other stakeholders who actually deliver the
solutions the customers believe they are purchasing.
Finding the better, faster, cheaper, smarter way to get the
solution in the customer’s hands becomes the key imperative.
Once this thinking is in place, the employees of the firm then
need to be trained as problem solvers and value deliverers
with support from the marketers, who in turn need to become
knowledge providers and access creators.
Just Do It
Clearly, the question arises: Is SIVA just another clever marketing mnemonic device that reiterates what marketers are
already doing or have done in the past? We believe SIVA supports and builds on the true marketing concept—finding customer needs, wants, or desires and fulfilling them at a profit
to the marketing organization. The reason? SIVA suggests a
radically different approach to think, plan, and develop marketing programs. A case example of SIVA in action illustrates
the point.
Southern LINC is a division of Southern Co., the parent
company of several electric utilities operating in the Southeast.
Southern LINC grew out of a set of tools and technologies
originally developed by Motorola and chosen for use by
Southern Co. to replace aging dispatch systems being used by
utility companies.
■ Exhibit 2
Asset based–customer view
Understand markets
and customer value
Internal Activities and Processes
We have known all along that marketing efforts manage
only a portion of the customer experience. In most organizations, the sales force, customer service personnel, and frontline, customer-facing people do not report to marketing; in
fact, most do not consider themselves to be involved in the
marketing process. Yet, the quality of the experience customers have with a product or service, not just the quality of
the product itself or the delivery of the service, has much to
do with whether or not they return and repurchase. So, yes,
marketing is responsible for retention but not for the reten-
Measure the value
delivered
Asset Base
Create customer
value proposition
Deliver customer
value
Adapted from Cranfield University
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Recognizing the need for a highly reliable communication
network for the utility operations, the Motorola iDEN
(Integrated Digital Enhanced Network) technology was chosen as the solution for a mobile communication system for its
own internal use. The iDEN technology combines two-way
radio, cellular, paging, and Internet access through one integrated handset. Southern Co. recognized that the iDEN technology could provide more capacity than its operating companies required. This would allow them to sell the additional
capacity to provide a communication solution that would
meet the needs of other business and government users, providing additional revenue to Southern Co. The system was
built to cover 127,000 square miles across four states and was
designed to withstand adverse weather conditions and to
cover both the metropolitan and rural areas that the electric
utilities served. Southern LINC began offering services as
early as 1994, and officially launched commercial services
across the footprint in 1996.
Like many other technology-driven organizations, initially
the Southern LINC focus was on the products and services,
not on the customer benefits that the service provided. As
with most other telecommunications organizations, Southern
LINC was organized and operated
on functional lines. That enabled
the firm to develop the various
areas such as technology, finance,
operations, marketing, sales, and
so on quickly and efficiently.
Although the functional managers
worked well together horizontally
(i.e., technology managers met
with and worked directly with
customer service and the financial
team worked directly with the various product managers), Bob
Dawson, CEO, felt the organization was missing something. The
group held an annual meeting
where all functional groups came
together to plan the coming year,
but the focus was still on trying to sell what Southern LINC
had to offer.
Starting in 1998, Julie Pigott, vice president of marketing,
began to organize the annual planning meeting around teambuilding and cross-functional team interactions. That brought
the group together and created a common ground for product
and service development and delivery. But Dawson and Pigott
still felt the organization was missing a customer orientation.
Clearly, based on the annual gathering, the Southern LINC
functional groups wanted to become more customer oriented.
And senior management was encouraging them to do so. The
problem was they lacked a framework to help them start with
customers, rather than with products and services. Southern
LINC had discovered what so many other marketing organizations were learning, that the four Ps was an internally oriented approach to marketing. It focused on what the company
wanted to do, not what customers needed or wanted. No matter how much better Southern LINC got at managing the various marketing activities, their processes always started with
products and services, not with customers.
“At our annual planning meeting, we met as a group. We
worked together. We identified the common problems that
needed to be solved. We got the functional groups to agree on
what needed to be done. We generated a number of solutions
but, when it came time for implementation, something was
missing,” said Pigott in reviewing the 2003 meeting. Pigott
discussed the problem with Heidi Schultz, executive vice president of Agora Inc., the external marketing consultant to
Southern LINC.
Agora Inc. had been developing the concept of SIVA, and
Pigott and Schultz agreed to use the SIVA framework as the
basis for the annual Southern LINC planning meeting in
August 2003. The annual meeting was planned around the use
of the SIVA concept. In the opening sessions, Southern LINC
functional managers were
immersed in the approach as the
model for their future planning.
The impact was almost immediate. Dawson, Southern LINC’s
CEO, said he saw it in the discussions in the planning sessions
in the 2003 meeting. Rather than
talking about product improvements and enhancements, the
managers of the various functional groups began to talk about
customer needs: What are those
needs? How are they currently
being met? By whom, if not
Southern LINC? What does the
organization need to do to solve
customer problems and provide
solutions? “We began to look for
ways to provide what customers
wanted and needed, not to just find new or different or better
ways to tell prospects about the nifty new features that
Southern LINC was developing” said Rodney Johnson, vice
president of sales and distribution. Customer problems and
solutions became the issues for the discussion during the
intensive three-day planning program.
One of the key elements to emerge from the 2003 planning
meeting was the group consensus that, despite the improvements in the product offerings—such as enhancements in customer service, extensions, and expansions of the network—the
theme that kept running through all the manager’s discussions was: “We have to make it easier for customers to do
business with us.” Overall, the feeling was: “We’re still too
SIVA supports and builds
on the true marketing
concept—finding
customer needs, wants,
or desires and fulfilling
them at a profit to the
marketing organization.
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hard to do business with. We’ve developed truly novel and
efficient systems that serve our internal needs, but we may
have made it too complicated for customers. We’re not sufficiently customer-focused or customer-oriented. We’re better
than two years ago, but to compete as a regional player
against multinational competitors with deep pockets, we
have to be a company that anticipates customers’ needs
and steps up to meet them across the whole range of service
delivery points.”
These themes framed the objectives for 2004. Using SIVA,
six groups were formed to tackle key strategic initiatives
designed to:
• Understand the service needs of specific geographic and
industry segments and develop products/services accordingly. (S and I)
• Improve network coverage where needed. (S and V)
• Provide outstanding value by managing processes to
deliver excellent service at a reasonable cost. (S and V)
• Develop a long-term, integrated multi-channel distribution strategy. (I and A)
• Improve business process from a customer perspective.
(S, I, and V)
• Launch new products and services. (S, I, V, and A)
The six groups set about following the SIVA process.
Starting with customers, they identified the solutions customers wanted. They then looked at how well Southern LINC
provided those solutions. Next, they determined the information customers wanted Southern LINC to supply and the form
and manner in which those customers wanted it available and
delivered, not merely how Southern LINC wanted to distribute it. Then, they looked at value, not in the sense of cost benefit, but in terms of customer experiences. What was Southern
LINC doing that created customer problems or customer
concerns or questions? How could they reduce those problems
or issues, whether they came in the form and format in which
billing was done to the number of rings customer service
set as a goal for answering incoming customer telephone
service requests.
The total customer experience became the beacon for the
Southern LINC managers, more than the network or system
or reliability of the service. By looking at customers first,
Southern LINC managers began to imagine new ways to
expand and extend their services. And, of course, access
became a key issue. It was not just a case of how Southern
LINC wanted to reach their customers and prospects, it was
how the customer wanted to access the information and material they needed from the organization. It was also about how
the customer wanted to be served or the type of relationship
the customer wanted, not how Southern LINC wanted to
deliver the service or relationship.
The SIVA approach turned the organization upside down,
but not in a destructive, change-management sense. SIVA provided the process Southern LINC managers needed to understand their customers, to really know what they wanted,
needed, required, and would be willing to pay for. Best of all,
SIVA provided the framework for a horizontal planning system in which marketing became something the entire organization did, not something a group of functional marketing
managers did.
Is the SIVA system completed at Southern LINC? Not by a
long shot. During 2003, the Southern LINC managers identified dozens of issues to address. Some were capital intensive.
Some were cultural. Some were simply things that had developed as policies and procedures as the company had developed and grown that had never been questioned. And, some
were hold-overs from the regulatory environment that are the
roots of the communication and utility organization. All had
to be rethought and reappraised, not in terms of “how can we
fix them?” Instead, they should be thought of in terms of
“what solutions, information, value, and access do customers
want and how can we provide them?”
“It’s a whole new way of thinking for all of us,” commented
Pigott at the end of the 2003 planning session.
The Bottom Line
The SIVA approach continues to serve its purpose at
Southern LINC. It has helped a technologically driven
company move from a product and service focus to a customer orientation. It has brought the organization together
horizontally. Although the organization is still functionally
organized, as it likely should be, it has helped provide a horizontal process that allows various functional managers and
functional specialists to work across the organization to solve
customer problems efficiently and effectively. From a management view, it has helped the middle managers identify the
changes that need to be made. It has allowed them to take on
board, identify, value, and prioritize the recommendations
they now present to senior management for funding.
Most of all, however, SIVA has provided the catalyst for a
very strong and capable organization to move to the next level
of marketing thinking by building a better model. It allowed
the organization to escape the restraints of the internally
focused methodology of the four Ps and move to the customer-oriented SIVA approach better suited to the realities of
the 21st century marketplace. ■
About the Authors
Chekitan S. Dev is a marketing professor at Cornell
University’s School of Hotel Administration in Ithaca, N.Y. He
may be reached at [email protected]. Don E. Schultz
is a professor emeritus of integrated marketing communications (IMC) at Northwestern University’s Medill School of
Journalism, and the president of Agora Inc. in Evanston, Ill.
He may be reached at [email protected].
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