A fifth P in the marketing mix?
8 October 2015
Updated: 7 November 2017
Any marketer worth their salt knows the famous 4 P marketing mix: price, product, point of sale and promotion. However, it is clear that the advent of e-commerce has revolutionised the world of marketing and consequently added a potential fifth P into the equation: payment. This latest possible addition now plays a major role in developing marketing strategies for brands. Creating and promoting a product/service is not enough, it has to be sold and bought online, which opens up an array of new challenges for companies.
The advent of e- commerce and subscription
E-commerce has changed consumer habits. Buying a refrigerator, sofa or any other everyday item can now be done from behind the comfort of a screen in a couple of clicks. E-commerce is the swiftest growing retail market in Europe. SALES IN THE UK, FRANCE, GERMANY, SWEDEN, THE NETHERLANDS, POLAND, ITALY AND SPAIN are anticipated to grow from £132.05 bn (€156.28 bn) in 2014 to £156.67 bn (€185.39 bn) in 2015 (+18.4%), achieving £185.44 bn (€219.44 bn) in 2016. A significant financial windfall…
We should also take into account a basic trend that has even further revolutionised the way we consume: subscription. For several years now, this trend has completely transformed the way we shop. For goods used both episodically (cars, skiing equipment, etc.) and daily (tablets, computers, software, etc.), we now prefer to rent rather than buy. These products, which we still bought a few years ago, are now rented, as consumers prefer to pay for the use, as opposed to the ownership, of the product. For example, rather than buying a smartphone every six months, consumers prefer to rent it in order to change it according to their wishes and trends.
This new approach has led companies to re-think their payment procedures and propose new payment means adapted to recurring purchases and the rental of products/ services. How to collect regular and frequent payments from a user without depending on credit card validity dates, payment limits and problems caused by theft or loss of a bank card? Despite the progress made regarding cyber security, consumers are still reluctant to enter their bankcard details online. Fortunately, thanks to new technology, e-merchants have new tools to overcome this challenge.
Payment is a vital step of the customer journey and online conversion
The payment stage finalises the purchase or lease of a product/ service, and is an essential step of the customer journey, even more so in the digital age. Due to sharing economy, the challenge for brands is no longer only in achieving a purchase, but obtaining a payment for a product/service in recurring payment software in order to ensure a regular income without errors.
Payment methods must appropriately adapt to different payment situations. For example, whether the consumer buys the product/service once, recurrently or completes the purchase on their mobile or other device. For each purchase type, e- merchants now have tools to propose the appropriate payment procedure to their customers.
For example, for a consumer who buys a magazine or clothing from time to time, paying by bankcard is the most effective solution. However, when paying his/her electricity bill, rent or even phone plan, SEPA Direct Debit is the most suitable option. Recurring payments are not interrupted In the case of theft or loss of a bankcard. E –tailers should consider online payment as a tool to increase loyalty and enhance customer experience (payment history, shopping habits, etc.). SEPA Direct Debit can benefit a variety of recurring services such as crèches, libraries or sports activities.
Given the impact of payment on conversion rate, it should be carefully considered as part of the marketing mix
How to improve the conversion rate and average basket of an e-commerce site? Which means of payment to choose? It is important to think about a simple payment solution and an easy to complete payment form, which requires only essential information (customer name, bank account or IBAN number, expiration date and security code). There is no need to ask potential customers for information they have already provided, as this could create a negative customer experience. There are so many questions an e-retailer should consider in order to improve the customer experience and conversion. Do the 4 Ps alone still seem sufficient to you?