Former Professor Koichi Shimizu's 7Cs Compass Model

From 4Ps to 4Cs

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Before discussing about 7Cs Compass Model, inevitably we need to understand the contents of 4Ps and 4Cs. Not matter whether the marketing model is 4Ps, 4Cs or 7Cs, it is not only for the academic research but also can be effectively applied for the marketing management. A good model can be applied for a long period even the outside environment has been changed. However when the changes are too much and out of the expectation of its inventor, the model needs to be entirely revamped to suite these changes. In 1973, 4Cs is introduced at such background - from high-growth to low-growth economics while 7Cs compass model introduced by Professor Koichi Shimizu is to more precisely explain the essential factors of low-growth economics in 1980.

Professor E. Jerome McCathy (1960) summarized the marketing models compiled by other famous professors namely Edward W. Cundiff, Richard R. Still, Robert J. Holloway, Robert S. Hancoch, William Stanton, William M. Pride, O.C. Ferrel, John A. Howard, Albert Wesley Frey, William Lazer and Eugene J. Kelley and introduced the influential 4Ps model. The contents of 4Ps model are not much different from that of other models but 4Ps (Product, Place, Promotion, Price) can be easily remembered and applied to guide the marketing activities.

The 4Cs model is based on the 4Ps. The 4Cs is a customer-centric approach while the 4P is a product-centric approach. The 4Cs makes more sense since marketing focuses on satisfying customer satisfaction. Philip Kotler, the expert of marketing, says that marketing must focus more sharply on the customer. He convincingly argued that the seller's paradigm of the four Ps - product, price, place and promotion - should become the four Cs ( Consumer, Cost, Commnication, Convenience ) of a buyer's or customer's mix as propounded by Robert Lauterborn (1990) in an interview with Mazur (1991-2).

In a customer-oriented marketing mix, product becomes commodity - the product for the consumers or citizens; price becomes cost to the customer and includes time and energy cost; place for the customer is channel and promotion becomes communication. Some might argue that this is a mere play on words, but it does portray a massive shift in marketing management thinking, philosophy and strategy. The issue is not what words are used but what is the best way to offer value to the user. Interestingly, the customer charters that are now proliferating are also examples of a paradigm shift toward customer satisfaction as a priority.

The four elements in the 7Cs Compass Model

A formal approach to this customer-focused marketing mix is known as "Four Cs" (Commodity,Cost,Communication,Channel) in the Seven Cs Compass Model. The four Cs model provides a demand/customer centric version alternative to the well-known four Ps supply side model (Product,Price,Promotion,Place) of marketing management.

"P" category (narrow), "C" category (broad), "C" definition

"P" category (narrow): Product, "C" category (broad): C2) Commodity

"C" definition: (Latin derivation: commodus=convenient) : Co-creation.It is not "product out". The goods and services for the consumers or citizens. Steve Jobs has been making the goods with which people are pleased. It will not become commoditization if a commodity is built starting.

"P" category (narrow): Price, "C" category (broad): C3)Cost

"C" definition: (Latin derivation: constare= It makes sacrifices) : There is not only producing cost and selling cost but purchasing cost and social cost.

"P" category (narrow): Promotion, "C" category (broad): C4) Communication

"C" definition: (Latin derivation: communis=sharing of meaning) : marketing communication : Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity,internal communication,SNS,MIS.

"P" category (narrow): Place, "C" category (broad): (C5)Channel

"C" definition: (Latin derivation: canal) : marketing channels. Flow of goods.

From 7Ps to 7Cs

At the time of booming economic, the marketing professionals are not likely to ask the question if their products can be sold out or not. As illustrated by the left column of the below figure, producers produce massive products for the targeting purchasers and persuade the potential customers by practicing promotions and display the products at right places after deciding their prices. As a result in conjunction with the external environmental profiles, more profits are realized by selling out these products.

But at the time of economics downturn, as illustrated by the right column of the below figure, companies or corporations produce the convenient commodities for the consumers or citizens with the consideration of the total marketing cost, and first of all gain their consents through the sufficient communications and then their confidences by selecting the effective channels in conjunction with the uncontrollable external circumstances. This is the way to survive in the period of low growth economics.

We can find out a dozen of marketing jargons for high growth economics like managerial marketing, social marketing, ecological marketing and de-marketing, etc. Their basic philosophy is Pro-marketing - to promote the marketing activities, moving forward. However for the low growth economic, it is replaced by Com-marketing - to communicate and cooperate with the consumers, sometimes stopping or even moving backward to listen to their voices.

1. (C1) Corporation and C-O-S

The core of 4Cs is corporation (company and non profit organization) while the core of 4Ps is customer - they are the targets for the actions of the attack or defense. 4Ps look like customer-oriented however in reality, the decisions are made by the companies or corporations. Therefore the marketing activities of a company should be encircled by the consumers or citizens as the demanders to make the requests.

To avoid the misunderstanding, it is necessary to clarify the relationship between the consumers and the company, Just looking at the 7Cs compass, it may be misunderstood that the customers become less important because the "Customer" of the 4Ps core is moved to the outer chord and replaced by the "Company". In fact, the meaning to do it is just opposite - the consumers or customers play more important role. To arrange them on the figure like this is due to three reasons: 1) the company is encircled by the customers; 2) the company is the center to execute the marketing activities; 3) the company is encircled by the consumers instead of just the customers.

C-O-S (Competitor, Organization, Stakeholder) within the corporation.

The company has to think of compliance and accoutability as important. In the market, there are the companies of the same business, the competitors. Their activities cannot be ignored and they are also functioning as the individual systems of 7Cs compass so that the core can be seen as multiple. Stakeholder (stockholder and loyal user)

Why "Company" is put in the scope of 7Cs? The reasons are: 1) It is necessary to place more emphases on the organization of the companies; 2) It is necessary to execute marketing plans in conjunction with the company's objectives; 3) It is necessary to tackle the internal communication related problems like corporate communication or corporate identity system(CIS), etc.

2. Four Cs

(C2) Commodity, (C3)Cost , (C4) Communication and (C5)Channel

3. (C6) Consumer

Consumers are those people encircling the companies. Instead of just the customers of 4P marketing model, they are the ordinary citizens nurtured by the motto of the consumerism. However of course they are also including the customers and the potential customers.

We can then divide the consumers into two categories. The first one is the perspective customers and the second one is the other citizens who have the social relationships with the companies. The people of first category were the target of the marketing activities in the era of the high-growth economics. It is out of questions that in the era of consumerism, they still need to be explored to increase the market share. One the other hand, the companies now can not omit the people of second category even there is not sell and buy relationship with them. For example, the companies produce noises and trashes in the process of the production, which lead to the social problem. Since the word "Consumerism" was introduced from 1960s, the companies so far still sometimes ignore their benefits.

The factors related to the customers can be explained by the first characters of four directions marked on the compass: N = Needs, W = Wants, S = Security and E = Education.
a. Needs - analyze what the consumer needs. Needs is the unsubstantiated opinion, some of which cannot be converted to the concrete commodities. Companies can offer more alternatives to meet the various needs of the consumers;
b. Wants - the substantiated needs to expect the accordingly commodities. The companies need to place more emphasis on the biggest needs and not to omit the noiseless needs;
c. Security - the safety of the commodities, the safety of the production process and the adequate after-sell warranty;
d. Education - consumers right to know the information of the commodities;

4. (C7) Circumstances

Besides the customers, there are also various uncontrollable external environmental factors encircling the companies. The same as the factors of the consumers, they can also be explained the first character of the four directions marked on the compass - N = National and International,W=Weather, S = Social and Cultural, E = Economic.

a. National and International Circumstances
The National Circumstances are related to politic and law. Once an election finished, the combination of the politicians in the parliament may be changed and they may implement different policies. The most influential to the marketing decisions is economic policies, which directly related to the economic growth. There are also a dozen of laws to protect the consumers namely Consumer Contract Act, Consumer Protection Fundamental Act and Product Liability Act. The companies have no other choices but to follow these laws or they will face the endless lawsuits.

International environment now also becomes important. In the very near future, no one single country can form an independent society. It is a must to establish the international cooperation mechanism for solving the problems like international law, energy, military and trade etc.

b. Weather
Despite the advance of the human technology, the weather and natural environment is still uncontrollable. For most of the natural disasters, the companies can do little but try to predict when they will happen and adjust the marketing plans. However more can be done to avoid the disasters caused by human like the environment pollution.

c. Social and Cultural Circumstances
Social Circumstance is related to the social system and problems of a nation. When exploring a new oversea market, it is essential to study the social circumstances of that nation. Moreover marketing analysis should include following human cultural factors:
1) basic values and attitudes
2) motivation
3) learning capacity and achievement orientation
4) technical know-how
5) social discipline
6) sense of responsibility for the common good and the community
7) capacity for flexible adaptation to a changing environment

d. Economic Circumstances
Economic Circumstances is closely related to National Circumstances we have discussed before however economics climate is changing due to many other uncontrollable factors like energy, resources, international income and expense, financial circumstances and economic growth etc. For example, the whole organization structure for marketing needs to be adjusted from 4Ps to 4Cs or 7Cs model when the economics is changed from high-growth to low-growth.

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Source:
McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
Kotler, P. and Keller, K. (2006), Marketing Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA.
Lauterborn, R. (1990). New Marketing Litany: Four Ps Passé: C-Words Take Over. Advertising Age, 61(41), 26.
Schultz, Don E; Tannenbaum, Stanley I; Lauterborn, Robert F (1993), Integrated marketing communications, NTC Business Books, ISBN 978-0-8442-3363-5
Shimizu, Koichi(1989) Advertising Theory and Strategies, (Japanese) first edition, Souseisha Book Company in Tokyo. pp.63-102.
Shimizu, Koichi (2014) Advertising Theory and Strategies,(Japanese) 18th edition, Souseisha Book Company (ISBN4-7944-2132-X C3034) pp.63-102.
Shimizu, Koichi (2016) Symbiotic Marketing Strategis, (Japanese) 5th edition, Souseisha Book Company (ISBN978-4-7944-2482-2 C3034) pp.25-62.
Solis, Brian (2011) Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web, John Wiley & Sons, Inc. pp. 201-202.Jump
McCarthy, Jerome E. (1975) Basic Marketing: A Managerial Approach, fifth edition, Richard D. Irwin, Inc., p. 37.

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Let's sing a song the 7Cs Compass Model

(7Cs Compass Model in Co-marketing)

Corporation C-O-S
Commodity, Cost, Communication, Channel

Consumer:
Needs, Wants, Security, Education

Circumstances:

National and International,   Weather

Social and Cultural,   Economic.

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Former Professor Koichi Shimizu: Former Professor of Advertising, Josai University Graduate School of Business Administration, Japan

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