Impact of Innovation on the 4p's of Marketing

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Abstract

The purpose of this paper is present a current update on the impact of innovation on the four P’s of marketing strategy.  The update will include an analysis of the marketing strategies of non-legacy auto manufacturer companies (i.e., Tesla and Google) that are developing, testing and launching self-driving (or SDV) technologies.  Some observers estimate limited availability of this “disruptive technology” by 2020 with wide availability to the public by 2040.  

We will examine two non-legacy companies (Google and Tesla) in terms of the traditional 4 P’s of marketing strategy – product, place, price and promotion, as well as, other key strategic marketing practices these companies have used to research, develop and integrate self-driving technology in their product offerings.  We will present legal, regulatory and other implications, and introduce significant challenges that remain.

As the disruptive technology of self-driving vehicles has advanced over the past few years, and even the past few months, the implications on customer needs and wants will be examined.  Consideration must be given to the impact of driverless vehicles on legacy manufacturing companies marketing mix (Ford and General Motors).

Additional work needs to be completed in area of market demand, customer preference, safety concerns, and, federal, state and local policy and regulatory issues over a medium to long-term time frame as challenges remain about the rate of change and the scale of its impact.

Table Contents

1. Executive Summary
2. Definition of the 4 P’s of marketing strategy

1. Product
2. Price
3. Place
4. Promotion

1. Introduction to the self-driving vehicle (SDV)

1. What is a self-driving vehicle?

1. Marketing strategy analysis of non-legacy automakers

1. Google
2. Tesla

1.  Marketing strategy analysis of legacy automakers

1. Ford
2. General Motors

1. Implications

1. Safety
2. Capacity
3. Mobility and access
4. Vehicle diversity
5. Cost of ownership
6. Market demand and customer preference
7. Societal and urban transformation
8. Liability and insurance
9. Regulatory and public policy
10. Data privacy and security

1. Future trends and changing customer behavior
2. Conclusion
3. Bibliography

2.  Definition of the 4 Ps of marketing strategy

The four Ps in marketing strategy are product, price, place and promotion.  These are the four factors a company must consider when planning and executing its marketing strategy.  The four Ps are widely recognized as the “marketing mix.”  To meet the constantly changing customer needs and preferences in a highly competitive and global market, a company must continually analyze and modify its product, the price, the place and promotion mix as needed (Linton, 2015).

2a. Product

A product must meet the needs and preferences of a company’s customers.  A company must conduct and integrate qualitative and quantitative research findings to identify those needs and preferences and obtain feedback after the purchase to confirm that they were satisfied.  A  company must determine how well the product is performing compared to its competitors.  There are several practices to improve product performance, if needed.  A company may choose to add innovative SDV technology features that are preferred by a target segment, improve quality, change product packaging or offer the product in different sizes, quantities or shapes in order to satisfy customer needs or preferences (Linton, 2015).  Product life-cycle considerations should be analyzed and included in the company’s strategic and marketing plan.  Improving and/or sustaining the product or brand’s competitive advantage is of critical importance (Peter & Donnelly, p. 763, 2013).

2b.  Price

Product price represents value to the customer.  Manufacturing, operating costs and projected profit margins are key factors that the company considers when it prices its products.  A company must determine whether its product’s price offers greater value in comparison with it’s competitors’ pricing strategy.  A company must recognize and respond to changes in the marketplace, like new SDV technology, in order to improve or sustain competitive advantage.   Other pricing considerations may include incentives, like discounts offered to customers, retailers and distributors (Linton, 2015).  Price strategy is important as it directly impacts customer demand and the profit margins achieved by the company (Peter & Donnelly, pp. 178-181, 2013).

2c.  Place

To make decisions about place, the company determines where customers purchase or will purchase their product.  If the company sells consumer products, distribution channels may include retail stores, direct mail or the Internet.  If the company sells products to other businesses (B2B), the company must decide whether to offer them directly through a sales force, on the Internet, indirectly through distributors, or a various combination of all.  Geographical location is a factor to consider.  The company may determine that offering products locally will reduce its operating expenses or it may determine it needs that offerings in other regions may be profitable (Linton, 2015).  In many markets, the distribution channels may be well established.  Ford and General Motors, for example, distribute their autos through independent dealer networks.  Unless there is a reason to change channels, the traditional channel will often be the most appropriate alternative (Peter & Donnelly, p. 764, 2013).  Tesla and Google are examples of new entrants to the auto industry market that will threaten the existing legacy automaker distribution channel.

2d.  Promotion

A company promotes its products and brands to make customers and prospects aware of them, and build preference and loyalty.  A company can promote products through a variety of  channels, including advertising, direct mailings, web site content, newsletters or press releases.  To promote its products effectively, the company communicates the product benefits that are most important to customers (Linton, 2015).

3.  Introduction to the self-driving vehicle (SDV)

        Auto accidents cost time, money, and most of all, lives.  Every year, many people die on American roads, almost all because of driver error (Whitaker and Lieberman, 2015).