One of the most enduring marketing concepts is the idea of the marketing mix that is also often associated with the 4P’s – Price, Product, Promotion, and Place. The marketing mix is a method used in marketing to determine a product’s strategy and its portfolio. Neil H. Borden first introduced the concept of the marketing mix that originally contained twelve different components – Product Planning, Pricing, Branding, Channels of Distribution, Personal Selling, Advertising, Promotions, Packaging, Display, Servicing, Physical Handling, Fact Finding and Analysis. In 1960, marketer E. Jerome McCarthy continued Borden’s thoughts and summarized these components into four main categories that are the 4P’s which we know today. Marketers all around the world have since used the 4P’s to plan and execute their strategies.
Over the past few decades, many things have changed drastically including the rise of the dot-com in the late 1990s to early 2000s, and now the growth of social media. The question comes if the traditional 4P’s of marketing, that have been the foundational pillars of fifty years of marketing planning, still holds the same key position in the marketing toolbox in today’s world.
The Fundamentals of 4P’s
Product – The term “Product” is a general term to describe an item that satisfies what a consumer wants and it encompasses both products (tangible) and services (intangible). Every product experiences a life-cycle that is unique to itself; this includes the different phases of growth, maturity and the eventual decline as sales fall. A marketer must understand how long the life-cycle of the product and plan strategies to overcome the different challenges that will arise as the product moves through its life-cycle. A marketer must also consider the product mix, by expanding the current product mix through increasing the depth of product features or simply by increasing the number of product lines.
Price – The term “Price” refers to the amount of money a customer pays for the product. The price component is critical as it determines the company’s profit and hence, survival. Adjusting the price of a product has a significant impact on the marketing strategy and, depends greatly on perceived value, competitive comparisons and price elasticity.
Promotion – Promotion is all of the methods of communication carried out to provide information to prospects about the product. It comprises of advertising, public relations, sales organisation and sales promotion.
Advertising consists of any communication that are paid, from television commercials, radio and Internet advertisements and even print media. Public relations is one whereby the communication is not paid in absolute terms and includes press releases, sponsorships, exhibitions, conferences, seminars or trade fairs and events.
Place – Place refers to the best location where consumers make contact and eventually purchase the product, such as direct from a sales representative, through a channel partner, in a store or online via an e-commerce platform.
Why 4P’s Alone is Not Enough
Times have changed so much that the initial concept of looking internally at the 4P’s is no longer valid; however the principal objectives of marketing and the elements of the marketing mix are pretty much the same today as they were fifty years ago. Marketers today must not only take the 4P’s at face value, but they must learn to appreciate the fundamentals of the model and adapt with time.
In today’s world, consumers are rarely looking for just a product alone, they are looking beyond the product itself, and they are looking for solutions. It is no longer about ‘if you build it, they will come’. Consumers now participate in creating the product as we move from the Experience Economy to the Era of Engagement. Solutions deliver, not products. Companies must focus on creating solutions or products that bring value to its consumers and not solely about the product’s features or functionalities. And this value is often known as the value proposition of the product. Companies have to move beyond these basics which also forces them to look at the sale through the consumer’s eyes.
Many things have changed, but price remains as the primary driver when making purchasing decisions. However, unlike the past, it is not the only factor that determines a successful sale. As information becomes increasingly accessible and transparent, there is an increased demand for value for money. Value is defined as the relationship between what you are charging (the price) and the expected benefit your customer will receive. Even with commodity items, consumers are willing to pay premiums for better service or faster delivery just because they see this as an “added value” that justify the higher cost. In other words, if the price you want to charge does not provide more significant benefits than a similar competitive offering, they are unlikely to choose your product.
Promoting a product is no longer about blasting potential customers with advertisements and bulletins, but about engaging and resonating with people. Without promotion, a product will be most probably unable to make it in the crowded marketplace. Moving into the digital age, promotion also expands well beyond the traditional marketing channels. Google introduced the term Zero Moment of Truth (ZMOT) that talks about how the consumers have evolved in the way they discover, research and buy products. Therefore, companies must be able to be there at the micromoments when the consumers need them the most. However, with tons and tons of advertisements flashed at the consumers’ face each day, paid promotion (or media) may become less effective in today’s world. This means that companies now must not only focus on the primary promotional methods but also digital marketing techniques as well as building relationships with customers and potential customers. Such relationships include creating engaging content or campaign on social media platforms to even building an online community through forums.
While “Place” traditionally looked at the locations and channels that were most appropriate for a potential customer to make a purchase, a product now must be made available in multiple places – in a brick and mortar store, online, or via a range of resellers. Every business competes in two worlds: a physical world (marketplace) and a digital world of information (e-commerce). With the rise of e-commerce platforms like Amazon, Taobao, Lazada and Zalora, customers are looking for the ease of purchasing a product regardless of whether they are in a physical store or shopping online. Also, the introduction of e-commerce opens up sales opportunities worldwide, providing companies with more places to sell their products.
The Way Ahead
The marketing landscape has changed dramatically over the past five decades with changing mindsets, evolving trends and emerging technologies. It is driven by changes in how customers choose to engage in the sales process. Following the traditional 4P’s by face value into this new world will mean that companies that fail to adapt, will in turn fail to prosper and eventually die off.
So, as long as the 4P’s are defined and used appropriately, they are still relevant and valuable for today’s marketers. Change is inevitable in all businesses, and marketing is no exception.