McCormic

1.  The marketing mix is made up of the 4Ps, product, place (distribution), promotion and price. For which

     of the 4Ps did McCormick not develop innovative tactics and practices?

McCormick developed innovative tactics and practices for all of the 4P’s. Cyrus McCormick was a risky and strategic business man. He would make sure the product meet high quality standards, was accessible in the most relevant markets and promoted it in the most competitive ways. Pretty much McCormick was very innovative in his tactics by using the 4Ps to his advantage.

Practices as the postponed assemble process and the winterization of their parts show how McCormick constantly improved the design of their products. They set one of the first plants in the world to mass produce standardized parts.

His plant was ideally positioned on the river and lake front with barges and sailboats able to load on one side of the plant and a railway line on the other giving him distribution advantage.

In 1842, McCormic launched a promotion never heard before and offered guaranty of satisfactory performance or the return of your money. His advertising “campaign” to build the reputation using testimonials of the McCormick Brand was the first of its kind in American economic history, he encouraged field demonstrations, developed his own magazine, participated at Agriculture Shows and took his machinery to international expositions in Europe, where he won important awards.

McCormick was also innovative in his pricing strategy in several ways. He used the penetration pricing strategy selling his early reapers at a price barely over cost to get his product out in use. McCormick created a competitive advantage for himself by creating a standardize pricing strategy and by introducing the concept of payments.

2.  Was it product innovation or innovation in the diffusion (the marketing) of product innovation that was

     at the root of McCormick’s success?

In McCormick’s case was a little bit of both but innovation in the diffusion of the product was what ultimately led to McCormick’s success. He was not the only producer in the market capable of creating these machines, decided not to fight for the patents and did not necessarily have the best product on the market at all times however he developed innovative tactics of diffusion that helped his product and business model stand out from the rest.  He understood that success would come from his mass marketing efforts, that would generate mass manufacturing, reduce costs, lead to lower prices and more profits to be invested back in product and market development, that would lead to even greater sales growth and so a virtuous cycle.