What Are Product-Based Marketing Strategies & Customer-Based Marketing Strategies?

One of the most well known models of marketing management is known as "the 4 Ps" of the marketing mix. The first and foremost of those 4Ps is the Product, and it was thought that success was based on offering the right product at the right price, place and with the right promotion. Another well known marketing adage tells that the customer is king. Strategies built around products and strategies built around customers are not mutually exclusive, and although one or the other may be better suited for a particular situation they often work well in combination.

Product-based marketing is built around the idea that if you build a better mousetrap the world will beat a path to your door. Building a cheaper mousetrap will work, too. Product differentiation and low-cost based strategies are classic examples of product-based strategies. Some strategies are better suited for some products than others. For example, high-tech companies can command high premiums for products if no competitor can offer the same capabilities, while products for which little differentiation is possible, such as table salt, is more likely to compete on price or placement.

Customer-based strategies are built on the realization that it is often easier and more lucrative to keep an existing business relationship instead of acquiring a new customer every time you have to make a sale. Customer-based strategies are also motivated by the realization that some customer segments are more profitable than others. Loyalty programs and products tailor made to customers' specifications can be used to strengthen relationships, while customer segmentation is used to identify, and please, the more profitable segments.

Brand-led strategies may seem to offer a third potential competitive edge to marketers, but brands often act as a reinforcement for either product- or customer-based strategies. For example, a product can be sold at a higher price than an otherwise identical competitor, or it can be sold at the same price while commanding a greater market share. Or, using a customer-based strategy, the brand may be used to increase customer loyalty.

The original, product-focused 4P model was advocated by prominent marketer Jerome McCarthy back in 1960, so it is no wonder it had to be updated to keep up with the changing times. Although many different possibilities for a fifth P have been suggested, "People" is the one most commonly accepted. This comes from the realization that, important as it is to have a good product -- at the right price and the right place, with a convincing promotion -- the sale will not happen without the people.