Listen to your customers

If you are selling a product and your market share hasn’t increased with all available operational resources, the next growth strategy for your business would lie in introducing a totally new product which is different from the original so that it attracts other customers.

But first, you must ask the market what is it they want? In marketing terms this refers to switching your marketing mix from 4Ps to 4Cs. The 4Ps model focuses on ‘Product, Price, Promotion & Placement’ whereas the focus for a 4Cs mix is ‘Customer, Cost, Communication & Coverage’. Please note, Ps and Cs may be represented with different words by different experts, but in general they follow the same philosophy. Ultimately, these mixes have the same concept but with a different focus. 4Cs are all about altering business thinking in a mirrored effect from old business modules. If you communicate (not promote) your product in a language the customer can understand, you are more likely to generate interest from buyers who hone in on your particular product as opposed to similar ones in the market.

Consumers have a plethora of options available to them today and the cost of the production line capacity that delivers their needs, is not a relevant factor in their purchasing decision. It’s simple – customer priorities aren’t the same as a business’ core objective. Lets use a very simple example, implemented by a mobile handset manufacturer, so we can compare these models (deliberately ignoring other complex operational variables as the objective is just simply to make a point). The 4Ps approach: a production line has the capacity to produce 1000 units per year with the bulk cost of a unit in black being $1 each. The business sells a maximum 40% of these units at $3 each. This focus is driven by the production capacity at lower unit production costs. From a marketing perspective, this business has a 4Ps model. With a 4Cs approach and an understanding of the above, we would conduct market research with prospective customers and based on the findings, we alter the production line by introducing different colours. Lets keep running black at 50% but introduce units in other colours like 20% pink, 20% blue and 10% silver. With this re-colouring scheme, the production cost would increase to let’s say $1.10 per unit. But, you market the blue and pink to a particular group of customers at $2.50 each and silver to the higher end of market at $4 each. Naturally this will generate more sales at slightly higher costs per unit. The idea behind this is to generate a better yield organically.

Obviously, these are very generic examples and the real scenario involves a comprehensive business planning process. In line with this example; when Apple launched iPods in various colours all at the same cost, it took just a small amount of time before each colour in the previous model were sold by merchants on e-bay at different costs. This perfectly demonstrates that the median price of each colour was determined by overall consumer demand.

Dom Ogun
Head of Strategy