Integrated Marketing Workbook: Chapter 3

Other chapter for review:
Chapter 1: Some Basic Understandings About Integrated Marketing

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Chapter 3: The 4 Ps and the 4 Cs: A Refresher

(sample chapter does not include illustrations)

The heart of integrated marketing is a systematic and coordinated application of the 4 Ps (product, price, place, and promotion), or if you prefer, the 4 Cs (customer, cost, convenience, and communication).

As stated earlier, the 4 Ps (or Cs) represent the four variables that institutions manipulate as part of their integrated marketing plan. It is important to note that while there are 4 Ps and 4 Cs, not all Ps and Cs are of equal merit. In fact, three of the Ps and Cs are strategic and emanate directly from your mission and vision. The final P and C are tactical and focus most directly on messages.

The ongoing debate

Some folks get all excited about differences between the 4 Ps and 4 Cs. In reality, however, there is little real difference. Granted, the 4 Ps tend to be institutional-centric. They are more top-down. The 4 Cs, on the other hand, tend to be more marketplace-centric. They are more responsive to the marketplace and your customers. However (and this is a big however), when applied well, either approach will move your institution ahead dramatically. My recommendation is to spend more effort on the application of either approach and less time debating the merits of one approach over another.

With that preamble in place, let's take a quick look at the 4 Ps and 4 Cs.

Product … and customer

The first P is product, the offer you make to prospective students, donors, and other audiences. In the case of students, your product is the sum of the academic, social, physical, and the values/spiritual dimensions of your institution. For a college or university, your student-related product involves:

What is taught (curriculum and other dimensions)
How it is taught (faculty, teaching technology, style of teaching)
Support services (counseling and career advising)
Campus life (clubs, athletics, activities, residence life)
The campus environment (facilities, landscaping, signage and perimeter marking aesthetics)

Your product also involves the opportunities that a student has upon graduation. The ability to land a great job, or gain entrance into a graduate school of choice, is an important part of your product offer.

For donors, your product might involve specific giving options, giving amounts, opportunities for involvement aside from giving (serving on committees), involvement in student recruiting, etc.

Interestingly, issues of reputation and prestige are also part of your product for both students and donors. Students, especially those that are not place-bound, are more likely to attend a well-regarded institution than one that is not. Donors, in the same manner, are more willing to give, and willing to give more, to institutions that are more well-known.

As noted earlier, the 4 Ps have an institutional perspective. The college or university often decides what is taught … or how … and when. With today's interest in and understanding of the marketplace, it is not surprising that the 4 Ps have been modified. The first P, product, has a more market-sensitive counterpart: customer.

Keeping the customer central in any discussions about integrated marketing is extremely helpful as colleges quickly learn that their success is less about what they want to teach and more about what customers (students) want to learn.

A pivotal understanding

I have long felt that a curriculum that is in-tune with the students in your marketplace is the most important marketing asset of all. Programs that are sought after by students and differentiated from those offered by your competitors are much more valuable than a better price or even a better promotion plan. What happens, however, is that most colleges and universities tend to very similar programs. As a result, students and donors differentiate on other variables such as price/cost, place/convenience, or promotion/communication.

We will spend quite a bit of time in Chapter 4 looking at options for differentiating your curriculum.

Price … and cost

The second P is price. Traditionally, colleges and universities have focused on only one aspect of price: the cost in dollars to attend. However, as with most marketing issues, things are more complex then they might first appear. In fact, there are several "price" issues that should be addressed.

First, there is gross price. This is your top-line, or sticker price, calculated in dollars, that many students and families use to compare one college to another. As we know, students and families seldom look beyond the initial sticker price and fail to recognize that this cost is often reduced through financial aid. Furthermore, they tend to focus solely on tuition and often ignore substantial fees.

Second, there is the net price, or the price after aid. Again, this is calculated in dollars. This price tends to be fluid and depends heavily on federal, state, private, and institutional forms of aid including gifts, scholarships, grants, loans, work study, etc. Most students need to be fairly far along in the recruiting process before they get a sense of what the emerging net price might be. Also, there is a big difference to students between a net price that has been reduced through gifts and grants and one that has been reduced through loans.

Next, there is the reservation price. This is a barrier or price point, as often psychological as real that families just will not cross. Sometimes this barrier is based on a family budget or savings. Sometimes it is psychological. Usually it is both. Ultimately, if the college cannot get its net price below the reservation price, the student and the family will balk and walk.

In the parallel universe of Ps and Cs, price is mirrored by cost. In most cases, they largely address the same issues.

As you think about price issues, remember that students are not only looking at your cost and what they think you are worth in their mind, but they are also comparing you to a set of competitors and trying to make the same, often very difficult, calculation.

Pricing strategy options

In Richard S. Ruch's Higher Ed, Inc.: The Rise of the For-Profit University, we learn that a basic pricing strategy for the University of Phoenix is to price its programs less expensively than the privates in the marketplace, yet more expensively than the publics.

In the same manner, you might consider different pricing options for different programs and sites. For example, you might consider setting your price above your competitors if:

You are a well-branded institution
Your cost to recruit a student is lower than competitors
Your market is not overly sensitive to price
Your programs are in high demand (be willing to charge an overage for high demand programs)
Your programs are the only option in a marketplace
Your programs are at full capacity

At the same time, you might consider setting your prices just below your primary competitors if:

You are not a brand
Your cost to recruit a student is higher than competitors
Your market is sensitive to price changes
Your programs are not in high demand
Your programs are not the only option in a marketplace
Your programs are not at full capacity

Non-dollar costs

Another set of costs that must be calculated are called "non-dollar costs." For example, suppose the institution is in an unattractive area; students will perceive this as a non-dollar cost. Or perhaps from students' perspective, it is too large, too small, too Catholic, or not Catholic enough. These and dozens of other variables may also be calculated as costs--non-dollar costs, but costs nonetheless.

There is a curious relationship between non-dollar costs and product mix. If a student is not satisfied with some aspect of your product, that dissatisfaction is often translated into a non-dollar cost. For example, while the quality of the faculty is a primary component of academic product, if students feel that faculty are not available to them as first-year students, students will translate that aspect of product into a non-dollar cost.

Interestingly, the cumulative impact of these non-dollar costs often has a greater impact on the final decision of where to attend, or at a later date, whether or not to persist.

Costs, benefits, and the importance of value

Before we continue with the remaining Ps and Cs, we need to examine a subtle but important aspect of price: value. As human beings, when we consider the cost of something, we also calculate, perhaps subconsciously, what we will get in return. We want to make sure we are getting a good deal for our money or time. We call this the relationship between the perceived cost of something and the perceived benefits we will receive "value."

It is important to understand this relationship between costs and benefits. When we make a decision, we add up the perceived dollar and non-dollar costs of doing something and put this on one side of an imaginary scale. Then we add up the perceived benefits and place them on the other side of the scale. If the costs outweigh the benefits, we don't do it, because we are not getting a good deal. But if the benefits outweigh the costs, we do it, because we are getting a good deal. When students say, "You cost too much," what they may be saying is that you are not worth the cost; the value isn't there. In their minds, they do not perceive enough benefits for the costs--dollar and non-dollar--that they must incur.

Importantly, it is the student, donor, or other customer who defines costs, benefits, and ultimately value, not the institution. This is particularly true when we look at non-dollar costs. The only way to truly identify non-dollars costs for a particular audience is to conduct market research.

Place …and convenience

Of the 4 Ps, place has usually been bound to geography--the physical location where a college or university does what it does. If your target audiences perceive your place as attractive, rich in cultural and learning resources, or fun, place can be a powerful part of your marketing mix and can be used to offset other parts of your mix that target audiences find less attractive. For example, suppose your facilities are not terrific. You might help balance this weakness by emphasizing your great location, say, Santa Barbara. However, if your place is viewed as inconvenient, distant, or unsafe, the overall impact of place is negative and you need to emphasize the other Ps instead: price, product, and promotion.

For some students, place centers around the notion of convenience. The place is accessible. It is within an easy drive time. There is parking. This aspect of place is important to students--typically adults and commuters--who are more place-bound. The best way to evaluate the marketing impact of your place is to ask target audiences the effect it plays in the decisions they make. You may discover, for instance, that students may not be that interested in your primary location (where your main campus is). However, they may be quite willing to attend classes at an off-site campus or even an international location. At the same time, you may discover that donors are reluctant to travel to West Texas to attend a banquet, but will gladly attend receptions you sponsor in Dallas or Fort Worth.

It is possible to change how your target audiences view your place. I remember a publication from a consortium of colleges and universities in northern Ohio that sought to position their place, Cleveland, as a great benefit. "Some colleges have pretty ponds," the copy exclaimed, "while we have a great lake." The piece then went on to discuss the many resources available in Cleveland including world-class internships, entertainment, and cultural opportunities. In another example, Columbia struggled for years with its location in New York City. Now, it proudly identifies itself as "Columbia University -- New York City."

Keep in mind that place has been expanded to include time, or when a college or university does what it does. This is particularly important for institutions who are interested in meeting the needs of adult students who often work during the day.

Place has also been affected greatly by distance learning, Internet-delivered curriculum, cable TV, and other electronic wonders which allow institutions to shift place (and time). Rather than place, some colleges prefer to think in terms of the corresponding C, convenience. In other words, they try to make it as convenient as possible for students to visit, attend, enroll, or for donors to give. Recently, the wife of a close friend received an annual fund solicitation from her alma mater. After she wrote the check she discovered that the college had not enclosed a return envelope for her to use. Rather than use one of her envelopes, she simply tore up the check. That institution lost a donation because it didn't make it convenient for her to give.

Promotion … and communication

The final P and C are promotion and communication. In many respects, promotion and communication involve how well you get the word out on the other three Ps. In other words, how well you build awareness and generate response. As you know, a sophisticated communication or promotion plan can involve a variety of channels.

As stated at the beginning of this chapter, promotion tends to be downward, almost as if the college or university is on a mountain top shouting at the marketplace. When one tactic doesn't work, the college simply cranks up the volume and promotes a little more loudly. Two ads don't work; let's try three. Ten thousand search pieces didn't get the class; let's go with 20,000.

Communication, on the other hand, tends to be two-way and typically involves active listening (research) and remembering (message modification, even segmentation). In a marketplace oversaturated with messages, colleges that effectively communicate, rather than simply promote, will have an important edge. The final P and C, unlike their predecessors, are wholly tactical. They focus on messaging, building awareness, and generating response.

Key questions related to the 4 Ps and 4 Cs

The following questions are designed to help you explore issues and develop strategies that make you more market sensitive:

Questions you should ask related to product/customer:

What is our product?
How do we know our product is in demand?
What product mixes do we offer for different kinds of students?
How willing are we to adopt a more marketplace-sensitive curriculum?
What are the demonstrated outcomes of our product?

Questions you should ask related to price/cost:

How much do we charge for our product?
How does this cost compare with competing institutions?
Do we clearly and demonstrably offer a better value?
How effective is our financial aid program?
What non-dollar costs most concern students, alumni, and donors? How do they weigh these non-dollar costs when they calculate value?
What strategies have we implemented to determine, evaluate, and negate non-dollar costs?

Questions you should ask related to place/convenience:

Where are our programs and events offered?
Are people willing to take classes and attend events in those places?
Do people find these places inviting, attractive, convenient, and safe?
What segments of our target market perceive our location as positive; what segments perceive it as negative?
What other places might serve us better?
What alternative, electronic-based delivery modes are available?
Are our programs offered at a time that students, donors, and other target audiences find attractive?
Does this place or time compete with other potential conflicts (job, family obligations, and traffic patterns)?

Questions you should ask relating to promotion/communication:

To what media (TV, radio, advertising, direct mail) are our audiences most likely to respond?
How do our promotional activities compare to those used by our competition?
How do we evaluate the effectiveness of our media plan?
What media can give us an edge?

A final reminder

If you are only interested in addressing promotion and communication issues, then you are not working on an integrated marketing plan. At best, you are working on an integrated marketing communications plan. Furthermore, if you do not do the research a priori and show willingness to segment messages, you are more likely undertaking a promotion plan.

Colleges and universities that are only willing to address promotion (and unwilling to address product, price, and place issues) have made a decision to focus on tactical issues rather than strategic ones. While this may buy them some time, sooner or later issues of product, price, and place must be addressed either in your integrated marketing plan or in your strategic plan.

A complete glossary of terms

If you are interested in a comprehensive overview of marketing, brand marketing, and strategic terms, take a look at Appendix B.

Key Points

Rather than debating the nuances between the 4 Ps and 4 Cs, choose one approach and execute

Product/customer, price/cost, place/convenience are strategic issues and must emanate directly from your strategic plan

Promotion/communication is a tactical issue and is chiefly involved with getting the word out on strategic decisions related to the other 3 Ps and 3 Cs

A valued and differentiated curriculum is your most important marketing asset

When calculating price, don't forget to anticipate the impact of such non-dollar costs as location, aging facilities, poor or no reputation

If you are only willing to address promotion or communication, you are not really doing integrated marketing. At best, you are doing integrated marketing communications

Discussion Questions

Carefully consider the differences between the 4 Ps and the 4 Cs. What are the chief differences between the two? Which orientation seems most appropriate for our integrated marketing plan? Why?
On which of the 4 Ps will we meet the most resistance? How can we overcome this resistance?
On which of the 4 Ps, if any, are we particularly vulnerable in the marketplace?
How important is our brand as part of our product offering? If we do not have a strong brand, what is preventing us from building a stronger brand?
How cost/price sensitive is our market? What strategies have we undertaken to reduce this sensitivity?
Which non-dollar costs most negatively impact student recruiting and fundraising?
How does our value compare against our major competitors?
What is the number one reason that nonmatriculants give for not attending our institution?
Why do donors sometimes give once, but not again to our institution?
How have we used promotion and communication strategies to overcome product, price, and place issues on our campus?
How well do we coordinate our media mix?