The Extent to Which the 4Ps Marketing Model Can Be Applied to a New Overseas Market - Essay Example

Analysis of the 4Ps marketing model and its relevancy for a new overseas market: The case of Four Seasons Hotel and Resorts BY YOU YOUR SCHOOL INFO HERE DATE HERE Introduction It has been offered that the 4Ps model associated with the marketing mix, including emphasis on product, price, place and promotion, are crucial when turning a business idea into a successful practice (Bennett 1997). The 4Ps model is a conceptual framework that allows managers to identify specific consumer needs and wants, how best to communicate the value of a product or service, distinguish from competition, and determine how to best maximise business profitability. It also assists in determining the strategic direction of the firm marketing its products with regard to how well a firm can distinguish its competitive position and achieve revenue growth. Despite the general business world agreement that the 4Ps model is critical to achieving marketing success, the model does have weaknesses that should be identified. This essay explores what constitutes the dynamics of the 4Ps model and whether it is relevant for a business that will be entering a new overseas market. The essay utilises the case study of the Canadian-based Four Seasons Hotel and Resorts, a luxury hospitality company catering to the higher resource consumer, to determine whether this model can be effectively applied to a market outside of Canada. Exploring the model’s dynamics and relevancy The product dynamic of the 4Ps model focuses on emphasising product attributes or benefits that are distinct from competition or that can provide value to consumers. Product emphasis involves a business asking what customers genuinely want from the product, what features are necessary to fit certain consumer needs, how the product should look, quality aspects or what differentiates it from competing offerings in a similar category (Kotler 2012). In business theory, all products maintain a specific life cycle, a period by which a product moves from introduction through eventual decline with periods of growth and maturity whilst the product maintains high demand levels and where demand levels-off before an eventual decline in sales volume and demand (Sudarsan, Fenves, Sriaram and Wang 2005). The goal is to extend a product’s life cycle. In Canada and the United States, two similar markets, the Four Seasons offers opulent dining opportunities for the high resource consumer, providing high quality, premium food products with an aesthetic flair to improve the consumer experience during consumption. Such food products include oysters on the half-shell, fig-stuffed quail, Wild Boar Bolognese and even Steak Tartare (The Four Seasons 2014). Many luxury markets that seek opulent dining and high-priced, luxury accommodations adhere to characteristics known as conspicuous consumption. This is a phenomenon where consumers seek consumption of luxury products as a means of illustrating to others in society that they have achieved wealth and social influence (O’Cass and McEwen 2004). There is a theory in psychology which supports this, known as downward social comparisons, whereby when a person believes they are superior to others, their self-esteem and general well-being improves (at the psychological level). In general, people want to believe they surpass others in the social environment (Taylor and Brown 1988). Therefore, many luxury consumers that seek opulence are attempting to send the perception that their social status has improved, which fulfils a psycho-social need for societal superiority that drives their consumption of luxury products. Therefore, according to the 4Ps model as it relates to product emphasis, the Four Seasons must determine what consumer really demand from its products and then attempt to create a finished product that will fulfil these expectations. For example, using culinary skills to create a very ornate and aesthetic product (such as using garnishes and creative plating techniques) builds consumer satisfaction about the quality of their food product purchase. If the company did not follow the relevancy of the product aspect of the marketing mix, simply offering hamburgers or chicken wings as relevant food options during a hospitality stay, consumers would likely find no fulfilment in choosing the Four Seasons brand and seek another competitor with a greater focus on food opulence. This tends to justify that product attributes, differentiation and appearance as part of product emphasis along the 4Ps model is relevant and accurate. However, is this relevant for a new overseas market, such as the United Kingdom? Research indicates that the recession in the UK has changed consumer behaviours and that the post-recession consumer is much more thrifty and frugal in an attempt to simplify their lifestyles and avoid over-indulgence (Flatters and Willmott 2009). The concept of frugality has become chic and many consumers are looking toward lower-priced, private label brands to save money. Hamstra (2009) even states that growth in private labels is outpacing major brands by a factor of 300 percent. Hence, in the UK, consumers might want less magnificence and lavishness when selecting dining options during a high-cost hospitality stay as a matter of changing cultural dynamics. Hence, if the business world is to justify the 4Ps model, The Four Seasons would have to theoretically offer different products to meet unique characteristics of an overseas market, determine what differentiates these offerings from competition, and consider how it can be valuable to a foreign consumer. The Four Seasons, in a different overseas market, might offer lower-cost food products (such as the aforementioned hamburger and chicken wings) to give consumers dining choices that are aligned with their changing preferences. Such activities on behalf of the Four Seasons Hotel and Resorts do not refute the viability of the 4Ps model between one domestic market and a foreign market. In fact, it justifies it. In order to ensure that customers are attracted to a brand, in relation to product, the firm must consider consumer needs and then develop a product offering that will best satisfy these needs and values. The 4Ps model clearly asserts that this is a fundamental aspect of product emphasis and it seems relevant both domestically and overseas. In terms of place, the 4Ps model also appears to be relevant. Place is determining convenient distribution methods of a product or service, whether a product will need a sales force, and determining what competition might be doing in terms of delivering the product or service. Domestically, urban regions are often saturated with competition, other luxury-based hotels and resorts that provide similar services. Market research of real-world consumers might have indicated that when seeking dining opportunities, they like to eat outside of the facility they have chosen to procure their hospitality stay. This would serve as the foundation for opening, for example, an independent Four Seasons restaurant to better cater to visitors and tourists that want to see the city. Coupled with quantitative financial results that show limited consumer demand for in-house dining, it could prompt a completely different distribution methodology to absorb higher facilities management costs to provide consumers with their demanded off-site dining expectations. Overseas, however, market research may show that tourists may be more loyal toward the hotel or resort in which they are staying and want a holistic experience that includes accommodations, food and recreation within a single facility. Therefore, customers may be dissatisfied in an overseas market if the Four Seasons did not offer a wide variety of food and activities in the hotel and, therefore, not make future purchases. Again, as with product, the Four Seasons might have to develop a more holistic business model to provide a plethora of products and services to consumers to satisfy a more reclusive customer profile. This, again, justifies the relevancy of the 4Ps model in relation to place as a legitimate consideration for profit maximisation, building customer relationships and loyalty production, and giving the business a better brand reputation. In terms of promotion in the 4Ps model, it deals with how best to communicate with existing and potential consumer segments. This aspect considers how to reach customers, the right timing for promotions, and considering competitive advertising tactics (Constantinides 2006). When attempting to justify or refute the validity of this model, one can consider Singapore as an overseas market for entry by the Four Seasons. Singapore is a very collectivist culture where loyalty to the group and consideration of social opinion very influential in consumption decisions (Hofstede 2001). Therefore, to maximise consumer interest, it might be necessary to use advertising that uses social situations in its imagery or messages about how the Four Seasons brand can improve one’s social standing. The Four Seasons, in this market, might consider promotion as a means of creating an emotional connection with the brand by appealing to social needs and motivations that drive consumption decision-making in this country. In Canada, where consumers are much more individualistic, simply communicating the opulence of the establishment or the quality of service might attract more individualist consumer segments. Therefore, much like product and place, the 4Ps model is justified for its relevancy when considering a domestic and foreign market. The model suggests that decision-makers at firms like the Four Seasons must adjust their promotional strategy and communications strategies to fit market needs and preferences in a way that maximises impact of the brand. In overseas markets and the domestic market, this luxury hospitality company must make changes to how it communicates messages to align them with market characteristics in different regions of the world. The 4P model asserts that a marketer cannot utilise the same promotional strategies homogenously and must consider how to improve effectiveness of advertising or integrated marketing communications strategies to extend the service or product life cycle and gain more consumer motivations to consume from the brand rather than competition. Finally, in terms of price on the 4Ps model, the model insists that pricing must consider value perceptions of the product or service to desired consumer segments, whether the customer is price-sensitive, what competition is charging, or even whether discounts or price promotions will make the brand more viable and profitable. In Canada, a growing luxury segment might not be price-sensitive, but demand superior quality of services before they will make a final purchase decision. Therefore, pricing of the hospitality stay can be aligned with quality and consumer willingness to pay high prices, thereby justifying a higher pricing model. Customers would likely not reject the pricing structure of the Four Seasons in this country, therefore a marketing decision-maker might place more emphasis on promotion or product development in order to provide a hospitality stay that is deemed by consumers to be even more superior to competition. In India, as a new overseas market, consumers might be more price-sensitive and make luxury purchase decisions. In this market, it might be very expensive to procure luxury bedding and high quality food products which raise operational expenses considerably higher than in the domestic market. Therefore, pricing is offered at high structures though as a product of offsetting substantial supply-chain related expenditures. When offered in India, however, revenues may drop as consumers defect to lower-priced competition which would make Four Seasons reconsider its luxury pricing scheme in order to attract more market demand. The firm might adjust, as a result of pricing problems, its operational model to reduce costs (such as lowering labour and payroll or using less-quality bedding materials). As a result, the firm passes on a lower price structure and, through this, builds loyalty in a different capacity than in the North American domestic marketplace. Price as a concept of determining how to structure a business model, as offered by the 4Ps model, is yet again justified as a relevant model for best satisfying customers and building a profitable business. Exploring potential weaknesses of the model With all four aspects of the 4Ps model being justified through examination of the Four Seasons case, there is one notable weakness of this model. The model does not assert which element of the marketing mix is more critical for a business in building a brand that will have high demand and consumer interest. A study conducted by Hakansson and Waluszewski (2005) found that place and promotion along this model were most critical for providing consumers with perceived value where price and product are merely an outcome of these factors. The 4Ps model tends to insinuate that all four dimensions of this model are just as relevant when considering the target market and does not provide guidance for which dimensions should receive more business consideration. For example, using the Four Seasons example again, it might be the promotional ability of the hotel and resort to provide consumer information about why the hotel is a larger value than competing hospitality companies that provides it with greater revenues and bookings. The Four Seasons might be operating in a market where consumers have such high financial resources that they are not considering price, only the opulence and ostentatious factors of the stay to satisfy personal self-indulgence needs. This same market may not care much about in-house dining opportunities or engagement with customer service staff, but only want their every pleasure-seeking need fulfilled. Therefore, if the brand promotes heavily that its service is humble and self-sacrificing whilst also sending the message of luxury furnishings and extravagant architecture, customers will come to learn about the value benefits of the business through advertising methodologies. The 4Ps model, as an augmentation, should provide discussion about which dynamics of the model are most relevant and need the most significant contemplation by business decision-makers responsible for building a brand. The model should give guidance to decision-makers in the marketing function about potential scenarios that could impact business decision making and how this is relevant to each factor in the model. See Figure 1 for the model as it currently exists in relation to the target customer segments. Figure 1: The 4Ps Model Source: Aboud, J. (2014). Developing and implementing a customer-focused marketing strategy. [online] Available at: http://attainmarketing.com/blog/2010/02/developing-and-implementing-a-customer-focused-marketing-strategy-a-recipe-for-success/ (accessed 5 December 2014). Whilst the model in Figure 1 illustrates the dynamics of each aspect of the marketing mix, it does not provide knowledge of various conditions that could impact which of the 4Ps are most critical for a business to consider. The model should be augmented with additional market condition criteria that will increase or decrease the level of relevancy for each factor of this 4-part model. For example, a supplementary listing to the right of the model showing market factors and their relationship to the model could assist in providing guidance by how each element is deliberated upon. Figure 2 illustrates such a supplementary augmentation. Figure 2: The augmented 4Ps model Whilst Figure 2 is only a conception, it provides a guidance framework by which to modify the model so that decision-makers can determine how best to build a brand based on the external environment. There is ample room for future modification and enhancement, using more research-supported market conditions as supplements, however it does provide how the 4Ps model could be strengthened to provide more productive knowledge about how a business should go about developing emphasis for each category of the model (from a percentage view). Business leaders, such as small business owners, that have limited experience in the marketing function and rely on these models to assist in determining a brand management, product-based or promotional strategy will not recognise without experience what drives internal marketing responses to changing market conditions. A more detailed model showing how market factors impact decision-making could be very beneficial for smaller business marketers (especially) that forbids them having to waste precious labour resources (or even financial capital resources) toward aspects of the marketing mix that are not necessarily relevant to their business. Conclusion As shown, the 4Ps model is very relevant and justified which was illustrated by the example of the Four Seasons Hotel and Resorts business model. Whether domestic or overseas, the model provides a relevant framework and guidance about what factors of the firm’s most valuable assets and strategies (product, price, place and promotion) should be considered when attempting to build a profitable and relevant brand in the minds of consumers. Even though domestic versus foreign markets have different consumer-based, economic-based, or culturally-based characteristics (to name only a few), the 4Ps model allows for effective consideration of the entire business model and how it should be structured to provide consumers with a valuable product that will bring loyalty, profit and potential growth whether in competitive markets or non-competitive markets. Though its weaknesses are rather insignificant, there is room for augmentation as shown by this essay that could be of better benefit for the inexperienced marketing decision-maker. References Bennett, A.R. (1997). The five Vs – a buyer’s perspective of the marketing mix, Marketing Intelligence and Planning, 15(3), pp.151-156. Constantinides, E. (2006). The marketing mix revisited: towards the 21st Century marketing, Journal of Marketing Management, 22, pp.407-437. Flatters, P. and Willmott, M. (2009). Understanding the post-recession consumer, Harvard Business Review, July. 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