A New Definition of Marketing
Many people routinely define marketing as the “4 P’s”: product, pricing, place, and promotion. The author never uses the 4 P’s definition of marketing. Except perhaps for product, the 4 P’s definition of marketing concentrates on the tactical aspects of marketing such as pricing, distribution, and advertising and promotion. While tactics are certainly important, the marketing strategy, including in particular target marketing and positioning, must be appropriate in order for the tactics to have effect.
- Marketing is managing perceived value.
The author’s definition of marketing is managing perceived value. Managing perceived value incorporates both the strategic and tactical areas of marketing. Frances Farrow, executive member of the board of Virgin Atlantic, described how their marketing focuses on managing value to the customer “...the customer viewpoint remains the heart of our companies’ origins...[We evaluate opportunities by asking:] Are we meeting a gap where there is a need? Does it offer consumers a better deal? Can we offer both substance and a unique Virgin flair across many consumer touchpoints?”21
To attain high value perceived by target customers, it is necessary to think strategically and design or position the product or service for a target group. It is also necessary to think tactically, for example, by communicating the product or service position effectively to the target customers.
Products with on-target design that no one knows about do not sell. Products that are communicated widely but that have poor design may sell once, but not again. There is a saying in advertising, “Great advertising makes poor products fail even faster”—since people are persuaded to try them and find they do not like them.
Perceived value per unit can be increased with managerial attention, and it can also be decreased through managerial inattention. However, for any level of costs, the higher the perceived value, the stronger the company’s position in the market, both now and in the future.
While CVA® depends on both perceived customer value and costs, much of this book concerns perceived value because managing the value perceived by the customer should be the primary purpose of all marketing and branding efforts.