Before we can begin to truly understand what direct marketing is and what it isn't, we'll have to blow up some old paradigm thinking about the famous four P's and the Marketing Communications mix. So, before you read on, please be prepared to challenge everything you thought you knew about marketing. As long as Principles of Marketing classes have been taught around the world, the famous 4 P's have been the course's centerpiece. The 4 P's or the "Marketing Mix" are an organizations strategy related to Product, Place (or distribution), Price, and Promotion. We'll be discussing the 4 P's throughout this class (in a new and relevant way) and focusing in this lecturette on the "P" of Product. Today, we live in a radical and constantly changing global marketplace. Exponential increases in information processing capabilities and technology enhancements have altered traditional markets. In fact, it's safe to say that what worked in the past simply will not work today. The 4 P's as traditionally viewed, aren't relevant for today. We need to consider global changes and major paradigm shifts in order to create a relevant new perspective on the famous 4 P's. The exponential gains in technology referred to above, such as the process of digitalization, have rendered product oriented advantages short term at best. This has enabled many competitors to quickly enter the market and match the newest technology. It ultimately transfers all the power to the consumer who now has many choices. Yes, today, it is a customer driven global marketplace. Many excellent texts have been written which well describe this phenomenon. "The Great Marketing Turnaround" by Rapp and Collins describes the changes I'm speaking about as a great paradigm shift from a market driven economy to a customer driven economy. Peppers and Rogers, in their book, "The One to One Future" describe it as a new one to one economic system with personalized media which aims to gain greater share of customer business, one customer at a time. The traditional mass marketing strategies which aim for some percentage of market share yield ineffectual results because the smartest of marketers are no longer mass marketing, but rather, seeking to understand unique, distinct, customized, individualized customer needs. Once identified, the One to One marketer will deliver products and services which meet the highly personalized needs of the consumer. Technology today, enables any competitor to quickly emulate or improve upon any product innovations and quickly eliminate any product oriented competitive advantage. It is therefore necessary for marketers who wish to remain in business, to move away from traditional product oriented thinking toward developing preferred and insulated customer relationships, those which are insulated from the ultimate price wars (a result of the product parity created by many competitors who have relative ease of entry into almost any global market). To simplify the above, think back (only just a few years) to when we were marketed to on channels 2, 4, and 7 and marketers told us, in monologue fashion, why we "needed" their products and services. They utilized creative and emotional appeals to try to create a sense of need. These old consumer behavior manipulations won't work today. These methods are totally non measurable, but more importantly, today's consumer who is in control of information and has choices, will not be manipulated (at least this is true of most of our highly desireable customers). Nothing will turn a customer away faster than traditional manipulative selling techniques. Have you ever heard the old saying, "When we get the first order, the relationship begins" ? Well, today we must recognize that we'll never get the first order until the relationship is first established. To better explain the paradigm shift referred to above, focus on three specific elements; technology, competition, and customer. You see, technology enables any competitor to match our product advantages, improve upon them, and offer them at lower prices, (with lightening speed of course).Ultimately, the consumer has many choices for need satisfaction and all other things being equal, will seek out the lowest price. Needless to say, I'm attacking traditional thinking related to the first "P" of the Marketing Mix, namely, the "P" of Product. In my humble opinion, there is no such thing as a long product life cycle today. When CD Rom drives were introduced for example, they had about a 1 ½ year life cycle (2x drives). We've progressed to 4x, 8x, 16x, 32x, and who knows where else by the time of this writing These extensions of the original product innovation only have approximately 3 month product life cycles. In fact, if a profit isn't generated during the initial product launch period, (during the first three months) sufficient enough to recoup all the R&D costs, the product introduction is considered a failure and huge losses can result. Let's look at another example. When Apple Computer introduced the Macintosh in 1984, its user friendly operating system was a significant product oriented advantage (remember that this is 1984). The product oriented advantage lasted roughly seven years, or until the introduction of Windows. I believe that the rapid technological advancements which we see in our world today, that if Apple had introduced the Macintosh in 1999, Microsoft would have responded with an answer by the next trade show. Traditionally, manufacturing companies have sought out to reduce manufacturing costs and "eek" out a profit through cost plus based formulas. Volume and economies of scale were the objectives. Today however, any manufacturing advantage can also be easily matched and improved upon. Why be the technology leader spending millions on R&D just so your competitor can say "thanks" and quickly knock you off? Don't think that patents can protect you either, it's certainly very easy to alter product offerings slightly enough so as not to infringe on patents. Just look at how Microsoft used Windows to emulate the user friendly Mac O.S. So, back to the famous first "P" of Product. We've been taught for years (and in many schools across the country) to create superior products and deliver them in volume to masses of consumers. We must recognize that today there aren't mass markets to draw from, only specialized niche markets who are demanding customization. There's no question, it's a great time to be a consumer. We never have to buy anything at full price. We have cola wars, burger wars, rebates, low financing, and many other downward spiraling price wars scenarios. Ultimately, when we play the "product game", there is no way to sustain lasting competitive advantage.