September 2014

The New 4Ps of Marketing

In this ‘Fast Take’ we examine how the traditional 4ps—Product, Price, Placement, and Promotion—are evolving in a world of real-time marketing and multiple screens.

In the process, we explore the emergence of a new 4Ps for marketing—Portability, Personalization, Proximity, and Presence—along with the imperative (and opportunities) they present to brands and marketers around the world.

3

WHAT’S INSIDE

The new customer journey: What brands need to understand to thrive in a real-time, multiscreen world

Portability: Applying the concept of responsive design to the entirety of the customer experience

Personalization: Using volunteered and implied customer data to create more meaningful content

Proximity: Going beyond latitude and longitude to create true contextual relevance

Presence: Integrating digital connectivity into the physical world

Case studies: Inspiring brand executions

THE NEW LANDSCAPE WHAT’S DRIVING THE TREND? Thanks to an expanding ecosystem of devices and technologies, marketing is evolving faster than ever. Almost everything is becoming connected to the Internet and brands face pressure to be accessible anytime, anywhere, across a fast-growing array of touchpoints.

So what are the new 4Ps?

Product, Price, Placement, and Promotion still matter but the new 4Ps enable us to expand upon and magnify their effects in an increasingly digital world.

These new 4Ps are:

• Portability of the customer experience across myriad devices and interfaces.

• Personalization of the customer experience using volunteered and implied data.

• Proximity, adding additional context based on where someone is both literally (e.g., geo-location) and metaphorically (e.g., customer journey).

• Presence, integration of digital interactivity into traditional media and everyday objects.

Mobility has disrupted digital’s status quo in unforeseen ways. The ‘one-size-fits all’ approach to content is a thing of the past; today brands must be accessible across many screens but they must also be relevant to the user behaviors these devices engender.

Consumer adoption of smartphones and tablets is the key driver of this trend. Better, more affordable hardware and cheaper, more plentiful data have created a culture in which consumers expect content to be automatically customized to their screen of choice. However, in this new always-on, internet-of-things world, literally everything has potential to be a screen and this complicates matters for brands considerably.

Complexity makes it tempting to resist change and it’s common to try to retrofit the new into the old—case in point, the websites of the early 90’s that looked so much like print brochures. But Moore’s Law ensures that marketing will continue to evolve at a faster pace than ever. The new 4Ps provide a familiar framework for brands to navigate this new world where change is the only constant.

4

THE NEW CUSTOMER JOURNEY

5

Gets a push message from

an app

Gets a beacon message from a POS display

Sees a beacon-triggered

personalized DOH message

Gets a sponsored

message from a smartwatch

Today’s always-on consumer is continuously bombarded with information, seeing thousands of brand messages per day.

The key to success is to create clarity amid the chaos, delivering the right experience to the right person at the right time across the many digital touch points of the journey—i.e., by behaving responsively.

Responsive Brands create successful relationships with the connected consumer by applying the principles of responsive design—i.e., real-time, contextual, multiscreen experience delivery—to all aspects of marketing, from start to finish.

Makes a mobile payment

Scans a QR code on a package

Sees a Twitter ad while

watching TV

Scans a product logo to

see an AR experience

Performs a visual search using smart

glasses

Performs a voice search using an app

Texts to a short code on a billboard

Searches for info on her

smartphone

Gets an alert from a fitness

tracker

Interacts with an in-store

kiosk

Responsive Brands are useful, usable, and relevant across the many diverse touchpoints of the new customer journey

PORTABILITY The imperative to behave responsively

6

Portability is about seamless experiences that make the customer journey faster, more enjoyable and ultimately more successful for consumer and brand alike. In essence, it’s about reducing friction in an increasingly frenetic world.

Responsive web design was the earliest and m0st obvious portability trend, but behaving responsively has evolved far beyond delivering digital content to smartphones and tablets. Truly responsive brands are the ones creating holistic content ecosystems that support the needs of real-time, multiscreen consumers, e.g.,

• The ability to initiate payments in real-time on a chosen device

• The option to start a video on one screen and continue it on another

• The opportunity to get customized product information through in-store screens

• The chance to get specialized offers and rewards based on your current location and your relationship with a brand

According to comScore, as of June 2014, smartphones and tablets accounted for 60% of Internet usage1 in the United States.

The concept of ‘mobile first’, i.e., using mobile devices as the starting point for designing digital content, is fast becoming a best practice for brands.

More than 50% of digital media is consumed using non-desktop devices, a percentage that will continue to grow as new screens evolve1.

It is vital for brands to understand how to create the right experience across new interfaces, not just in terms of usability, but in terms of content as well.

TOP PORTABILITY TRENDS

MOBILE-FIRST CONTENT STRATEGY

APP CENTRIC CONTENT DESIGN

Consumers spend upwards of 80%2 of their mobile time in native apps. This demonstrated preference for the streamlined and customizable user experience of apps impacts how brands invest their digital dollars in both media and content development.

Not only are brands accelerating the shift to in-app advertising, there is also an increased emphasis on developing branded native apps and in actively cultivating a high level of post-download engagement.

7

1.comScore, ‘Major Mobile Milestones in May: Apps Now Drive Half of All Time Spent on Digital’; June 2014 2.Flurry, ‘Flurry Five-Year Report: It’s an App World. The Web Just Lives in It,’, April 2013

PERSONALIZATION The end of the one-size-fits-all customer experience

8

Early tools like Google Maps catalyzed the sharing of personal data (e.g., physical location), in exchange for customized, real-time content (e.g., directions). These experiences opened us up to the idea that it might be OK to share a little non-personally identifiable data as long as we got something of value in return. The next wave of personalization came from social and service oriented brands (e.g., LinkedIn, Netflix, Amazon) that customized the content served based on observed behaviors from users such as people they followed, movies watched, products purchased, etc. Now we’re seeing personalization spreading to more diverse types of brands, with adoption most evident in Retail/CPG. Rather than simply using analytics to customize content, these brands are using data volunteered by users to create better experiences. The idea of consumers proactively exchanging data for customized content is particularly compelling in a world where the cookie is no longer the silver bullet and where consumers are more aware of, and concerned by, potential infringement on their privacy.

Warby Parker Virtual Try On

Shoe Dazzle Style Profile

Trunk Club Personal Shopping

The wearables market is expected to be worth 8.36 billion by 2018, and it’s just getting started1.

Brands early to the marketplace, like the Jawbone Up and Nike FuelBand, introduced consumers to the concept of owning their data and making something meaningful out of it. As wearables become increasingly sophisticated and integrated with mobile devices, personal data management will become more consistent and the practice of using it as a form of currency more common.

Consumers are becoming more aware that they produce data that can be exchanged with brands for something they value, such as directions, better content, tools that help us make better decisions, etc.

Now is an opportune time for brands to understand how to properly collect and solicit consumer data, and to determine how it can be used to improve the customer experience.

TOP PERSONALIZATION TRENDS

THE QUANTIFICATION OF THE SELF

MULTISCREEN SEQUENTIAL CREATIVE

Cross-screen analytics, driven by mobile’s cookie-less state, has evolved from the experimental stage into a viable (albeit nascent) medium. Hybrid statistical solutions designed for mobile are enabling a unified view of a single consumer across multiple devices and offering brands the opportunity to finally create a truly sequential narrative with media and content.

9

1. Markets and Market Report, ‘Wearable Electronics Market worth $8.36 Billion By 2018 ,’ October 2013

PROXIMITY Proximity extends the concept of location beyond latitude & longitude to include adjacency to places of interest and real-time events, because knowing where consumers are and what’s going on around them is almost as relevant as who a consumer is.

10

Latitude & Longitude Places of Interest Events & Circumstances

Latitude and longitude are the fundamental elements of proximity but the true value lies in including additional layers of location-oriented signals

Using location and ambient factors to create context

Lat Long only tells you so much—layering in other data (e.g., what’s happening nearby, places and things in the vicinity, who someone is, and their relationship with a brand) turns geo-coordinates from simple numbers to true relevance.

Understanding what is in a customer’s vicinity tells us a great deal about his or her needs state (e.g., they are likely to respond very differently to an offer message from Target when standing in the store vs. when sitting in their living room).

Real-time events add an additional layer of valuable context to proximity. Weather, seasons, events, and many other types of dynamic circumstances, when combined with geo-location and proximity to places of interest, supercharge the standard notion of location.

Proximity is a standard element of search and display campaigns, but, as brands begin to understand the influence that proximity has on consumers, it’s becoming applied more frequently to the content itself.

Consumers will soon fully expect the website of a hotel to look very different when viewed on a smartphone while standing in its lobby vs. when they booked on their home PC.

Proximity enables a brand to truly be where the customer is, and to create just the right experience in the moment.

As consumers spend more and more time on geo-aware mobile devices, brands must move beyond simple geo-targeted media and develop full proximity strategies that extend to digital content and brick and mortar experiences.

TOP PROXIMITY TRENDS

PROXIMITY INFLUENCING CONTENT AND MEDIA

MASS UPTAKE OF BEACONS AND SENSORS

Today, 200 million iOS devices can serve as proximity transmitters and receivers1 and brick and mortar brands are rolling out beacon programs to track the movements of consumers and send hyper-targeted alerts.

The catch? Beacon messages must come through an app, problematic for brands struggling to maintain a loyal app user base. Even so, expect mass adoption of beacons on the brand side, as well as increasingly positive receptivity from consumers, as beacons are used to reduce friction in the journey. 11

1. Business Insider, ‘BEACONS: What They Are, How They Work, And Why Apple's iBeacon Technology Is Ahead Of The Pack,’ May 2014

PRESENCE Thinking beyond the browser

WEARABLES

Smart glasses, smartwatches, fitness trackers, and smart

clothing

The true value of wearables will likely come from the data they deliver to other interfaces (e.g., a fitness tracker delivering activity information to a smartphone app) or the experiences they trigger on larger screens (e.g., a smartwatch triggering a DOH screen to display a custom message as a user passes by).

CONNECTED AND CONVERGENT SCREENS

Interactive in-store experiences, lobbies, and showrooms

Interactive screens are becoming commonplace in brick and mortar settings, providing access to the tools and information of the .com world in a bigger visual palette. These connected and convergent screens augment in-store experiences with deeper levels of informational detail that can be customized by proximity to a mobile device and navigated at a distance by gesture or glance.

SOCIAL MACHINES

Social machines will greatly reduce friction by customizing the product dispensed or the service rendered to each unique user—e.g., the fridge that orders milk when you’re running low, or the coffee cup that alerts you that you’ve maxed out on your caffeine consumption for the day. Soon the idea of an object of any kind not being interactive will be unthinkable…

Vending machines, appliances, kiosks, and everyday household objects connected to

the internet

12

As everyday objects connect to the internet, a new world of marketing possibilities emerges. There’s no clear blueprint for what brand experiences look like through a vending machine or a smartwatch, making it an opportunity for early adaptors to set the standards.

As the internet of things comes to fruition, consumers are expecting that even the most simple, everyday objects will provide some element of interactivity.

For brands, this is a golden opportunity to create new interactive touchpoints via previously static stops along the customer journey.

TOP PRESENCE TRENDS

13

MOBILE AS AN ACTIVATOR

The most compelling thing about smartphones is that they rarely, if ever, are out of reach. This fact, coupled with innate device features like SMS, Bluetooth, and NFC, make them the ideal activation tool for formerly static media, taking broadcast, print, POS, and digital and traditional OOH, and turning them into interactive mediums.

It will be increasingly rare to see a piece of traditional media that is not activated in some way by a mobile device.

Many brick and mortar brands are installing large format digital screens to augment the customer experience and supplement customer service efforts.

Unlike earlier versions devoted largely to marketing messages, these screens offer real utility, enabling customers to browse inventory, customize products and experiences, share their choices, and, in many cases, complete transactions.

LARGE FORMAT IN-STORE SCREENS

WHAT THIS MEANS FOR BRANDS Best Practices For Marketers To Capitalize On The 4Ps of Marketing

Brands Must Behave Responsively Content must be useful, usable, and contextually relevant on the three standard screens—smartphone, tablet, and desktop—but also on many other new digitally-enabled interfaces. Hence, digital infrastructure and strategy must be as flexible as possible to support delivery to the screens that matter now and those that will matter in the future.

Customers Expect Something In Return For Their Data Customers are increasingly aware that they produce data and that it has value, and are progressively expecting content and experiences relevant to who they are, where they are, the device they are using and their relationship with your brand. Providing opportunities for them to proactively share their data with you will be essential to success.

Proximity Is More Than Latitude And Longitude Knowing where someone is and what’s around them will be a standard element that defines your content. But the metaphorical meaning of proximity (e.g., where someone is in the customer journey) will have just as great an impact on your strategy. ‘Smart’ customer experiences that are contextualized according to each user’s unique relationship with the brand will simply be the status quo.

Brands Must Think Beyond The Browser The Internet of Things is still nascent but, eventually, everything will be a digital touchpoint, from a bathroom mirror to the vending machine in the company lounge. Getting your content there will be less of a technical challenge and more of a creative one. Now is the time to experiment with how you will collect data through these new mediums and how that data will be applied to creating and delivering content. 14

15

16

Amazon’s understanding of portability—i.e., of making the brand accessible in the most useful, usable way possible—is clearly evident in the new Fire Phone.

The Fire is a brilliant example of Amazon extending the customer experience of Amazon.com to the consumer in a more integral way. Visual shopping tools coupled with delivery by Prime woven tightly into the UI bring a level of convenience that far surpasses what the Amazon app is able to provide.

PORTABILITY: Amazon Fire Phone

From the launch of mobile payments in 2009 to the debut of a responsively designed website in 2012, CEO Howard Shultz & Co continuously strive to create a customer experience that exemplifies portability.

In 2014, rumor has it that Starbuck will be rolling out iBeacon in its stores, enabling seamless delivery of reward points and debiting of payments. There’s also speculation that consumers will be able to earn points through transactions with 3rd party brands. These and all Starbuck’s mobile innovations to date illustrate a keen understanding of modern retail in which ease of use and on-demand access to the brand are valued at a premium by customers.

PORTABILITY: Starbucks

PERSONALIZATION: Trunk Club

17

PERSONALIZATION: Warby Parker

Trunk Club ushers new shoppers through a series of questions designed to get to the root of one’s personal style. Measurements, brand preferences, and quizzes designed to assess subjective tastes result in a curated collection of clothing delivered monthly to your home.

Trunk Club’s business model is exemplary of the move towards using customer-supplied personal data to create a better customer experience and, in this case, a more personalized service.

Warby Parker’s practice of encouraging the consumer to share data enables the brand to create a more curated experience and a frictionless journey. Customers upload their prescription info online and then have the option of doing a virtual try on and having sample frames shipped to their home, or, they can walk into one of the brand’s many popup showrooms to find which frames they like best. Sales reps can then tap into a complete history of a customer’s shopping data whether it’s a wish list, past purchases, or the prescription info they entered on the website.

PRESENCE: Coca-Cola Fair Play Machine

18

PRESENCE: Cadbury’s Facebook-Powered Vending Machine

Coca-Cola’s Happiness Machines are some of the earliest examples of the social machine phenomenon. The most recent, shining example is the Fair Play project where two machines were installed outside separate entrances to a Milan soccer stadium. Fans could not get a drink for themselves—rather, they were encouraged to dispense a free soft drink to fans of the rival team on the other side of the stadium.

The Fair Play machines exemplify Coca-Cola’s Buy The World a Coke mantra and underscore the power of presence when integrated into formerly static elements of the customer experience.

The Facebook powered "Joy Generator” launched by Cadbury Australia analyses a customer’s Facebook profile and uses the information to automatically assign him or her a candy bar flavor.

Like Coca-Cola’s Happiness machines or Oreo’s 3D cookie printer the Joy Generator uses social interaction and physical machinery to create branded awareness “moments”. However, we predict that over the next 18-24 months we will start to see personal data used to enable more functional human/machine interactions and more digital interactivity triggers built into everyday objects from refrigerators to washing machines to in-store price check scanners.

PROXIMITY: L'Oreal's Location-Based Beauty Tips

19

PROXIMITY: Duane Reade and iBeacon

Visit the homepage of beauty brand L’Oreal on a desktop, smartphone, or tablet and you will notice a unique use of location to drive product recommendations. Is it blazing hot where you are right now? You might see recommendations for SPF-enriched products. Overcast days might trigger tips for a cheery makeover to boost your spirits.

L’Oreal’s inventive approach to content and location shows a keen understanding of how where you are influences your needs state, and hence, your purchase decisions. We predict you’ll see more and more brands using location to modify .com content across all device platforms in a granular, geo-location specific way.

A more advanced example comes from Duane Reade, the largest drugstore chain in Manhattan where iBeacons have been installed in ten locations. When a consumer who has the Duane Reade app installed approaches one of the pilot locations, the beacon will connect and trigger push notifications, including offers based on previous preferences and even product reviews for items they browse in the store.

The campaign launched May 1st, 2014—results are still forthcoming—but Duane Reade’s early investment in beacon technology shows a clear understanding of how important proximity marketing is poised to become for retail brands.

It was easier when our biggest worry was “Does it work in Internet Explorer on a Mac?” Those days are gone for good. Faster, cheaper data, mobile devices, social media, and the internet of things have changed marketing forever.

And that’s a good thing.

Not only can we be where the customers is, we can be there in the right way, in the right place, at the right time on whatever device makes best sense in the moment.

There’s no clear blueprint for this constantly evolving ecosystem but a few key concepts light the way.

THE NEW 4PS: KEY TAKEAWAYS

Put handles on your content: There’s no definitive way to know what platforms you will have to port your content to in the future so the near-term recommendation is to create as modular and flexible digital architecture and strategy as possible to ensure that you can extend your brand to the interfaces that matter both now and in the future.

Make it contextual: As consumers become more consistently connected via digital, they are bombarded with more media, confronted with more choices and presented with more opportunities. Brands must focus on applying volunteered and implied data to create content and cross-screen experiences that are more contextualized to real-time circumstances and the unique needs of the customer.

Think beyond the browser: Thanks to mobility, brands can connect with consumers in real time through multiple touchpoints in the physical world. Some of these opportunities are more tangible than others, such as wearables, where the standards of content and media are still evolving. The essential principle for brands to keep top of mind is that the customer experience need no longer be confined to a browser window—multiple touchpoints in the physical world should factor into digital marketing strategy as a matter of course.

20

Thank you!

For questions or more information, please contact:

Rachel Pasqua, Head of Mobile, MEC North America

Rachel.Pasqua@mecglobal.com