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Are the 4 Ps Still Relevant?
Recently, several speakers I’ve seen at various events have noted the impending demise of marketing’s 4 Ps -- product, price, place, and promotion. Curious to discover whether those were coincidence or a burgeoning point of view, I posed the question to several industry insiders.
Their full responses to the question – Are marketing’s 4 Ps still relevant? – are posted online in our current issue, but I wanted to share a sampling here to continue the conversation. What’s your opinion?
Lior Arussy
President, Strativity Group
In a world where customers face almost endless choice and an optimal comparison of products and prices, a new thinking is required. In a world where private labeling and Web technologies equalize almost every industry, we must shift our thinking. The new 4Ps are not company-centric, but are customer-centric. The new 4Ps are Preference, Premium Price, Portion of budget, and Permanence of relationship. It is these four customer actions that determine an organization’s success. Companies no longer control the relationships, customer do. Our guiding principles should reflect this fundamental shift. Welcome to the new era of customer action-based Ps.
Andy Lorin
1to1 Media Editorial Advisory Board member and
Marketing Analyst, Bonasource
In today highly commoditized environment with almost parallel prices, well-informed and savvy customers often [move] between multiple brands of the same product with virtually the same features. It jeopardizes the major buying influencers of the 4Ps, product and price, while leaving place and promotion as merely placeholders.
To live up to the new reality, the 4Ps should get a fair transformation into something like Customer, Product, and Information Sharing. The customer element reflects variables that companies must count when developing a sellable product offering. The product element contains a group of variables responding to customer calls, including acceptable features and prices, to give a product a chance to become a brand. Information sharing communicates the product features, including the whole set of promotional tools, and collects customer information to set up better customer relationships—with loyalty as the end product of marketing.
Peter Nyberg
President and Founder, ingage
I would not say that the 4Ps model has been debunked. However, the strategies for managing product, price, place, and promotion have changed considerably. There are two main reasons why. The first one has to do with consumer empowerment. The second was the advent of interactive technologies. To succeed in today’s customer-driven, globally connected economy, marketers must manage each of the 4Ps in a smarter, more efficient manner. One way to do this is to leverage next-generation technologies that enable organizations to target, experiment, measure, and adapt….
The bottom line is executives can’t afford to address each of the 4Ps separately anymore. Instead, they must take a holistic approach and constantly listen to their customers for clues on how to optimize their strategies.
Paul Greenberg
Author, CRM at the Speed of Light
The business ecosystem is now controlled by the customers and that means that the 5Cs are dominant. They are contextual, connected, collaborative, creative, and content-driven. That means that customers are looking for personalized experiences with a company that provides aggregate capabilities to enhance those experiences. In that world, marketers become the front-line employees in the conversation with the customer. Their job is to engage the customer and enhance that relationship.
James Vila
Senior Director, Carlson 1 to1, and Principal, Peppers & Rogers Group
Businesses still need to develop products, price them distribute them and sell/market them, so the idea that the 4Ps have somehow gone away is clearly nonsensical.
What is clear is that the ways in which the 4Ps get done have shifted. Two key factors behind the change are the Internet and the fragmentation of marketing disciplines and communication outlets…. Somehow we must find a way of reinventing the way in which the 4Ps are managed in the modern organization in a way that harnesses the power and dynamics of new tools and techniques but remains rooted in a clear understanding of the interconnectedness of all 4Ps.
Reader Jack Rawlins was kind enough to email me saying that he enjoyed the Taking Issue article I've written about here. In fact, he liked it well enough to blog on it himself. He's give me permission to capture this thoughts here:
"In the Jan/Feb issue of 1to 1 Magazine, author Paul Greenburg says the 4 P’s are no longer king. He says now the 5 C’s dominate. They are: contextual, connected, collaborative, creative and content driven. Say what?
How do you make any of those high C’s make music without the 4 P’s of product, price, place and promotion. Aren’t the 5 C’s all part of promotion? And don’t those neat sounding C’s contribute to, rather than replace what helps establish product, price and place?
In the same issue, Lior Arussy, President of Strativity Group, argues for a new gaggle of P’s: preference, premium price, portion of budget and permanence of relationship. He says the new 4 P’s are not company-centric, but customer-centric. Say what?
How do you build preference, establish a premium price, capture a portion of budget and build a permanent relationship without those good old-fashioned P’s?
Also, in the same issue, James Vila, Senior Director, Carlson 1 to 1, and Principal Peppers & Rogers, says the idea that the 4 P’s are history “is clearly nonsense.” He argues that the Internet and the fragmentation of marketing disciplines and communications tools have changed the way we use the 4 P’s. Right on!
Peter Nyberg, President and Founder of Ingage, agrees. He says we need a holistic approach to the 4 P’s based on listening to customers to guide our strategies. Now that’s customer-centric."
All insights are absolutely relevant. To paraphrase what I believe is being said is that that we need to revitalize the customer-centric model and understand the differences between the product-centric and service-centric paradigms. Extending the Ps is appropriate but I believe the real issue is developing a viable strategic intent; and an empowering strategy and organizational culture; a shared vision that is also a personal vision at all levels; empowerment and accountability; both reliable and flexible organizational styles, and conceptual models that allow the heretofore external customer environment into the internal organizational environment.
In addition, there is no best way. If there were we would not be having this conversation. Even some of the Great and Built books (without their halo effect) offer no silver-bullet. There is only a strategic intent that includes a generous portion of a co-development of value environment with the customer. This is where emergent strategies can be discovered and future shock opportunities revealed. Unfortunately, many of the measurement schemas for management bonuses are short-term, “show-me-the-money” focused. In my opinion, they will not be the companies left standing in a services economy. They simply do not understand the concepts of cultivating barnacles or chasing butterflies.
The four P’s of marketing may not still apply in the service-dominated, global environment of today. Booms and Bitner (1981) extended the four Ps marketing mix (product, place, price, and promotion) to include the services marketing mix, which included people, physical evidence, and process. People were defined as all human actors who play a part in the service delivery and affect customers’ perceptions. These included company personnel, the customer, and other customers in the service environment.
Many companies have failed to understand that services are much different from products. Search properties for pre-determining service quality (search properties) are not the same as products. One cannot test drive a dinner served at a new restaurant. This is where branding and word-of-mouth are important differentiators.
The work of Darby and Karni (1973) suggested another category to Nelson’s search and experience properties, which are credence properties. These are properties that a customer may not be able to evaluate even after purchase. To illustrate using an automobile example, a credence property may be the effectiveness of a transmission warranty repair. Upon completion of the repair, the customer may notice that fuel consumption had drastically fallen. Upon inspection at the dealer, it was determined that the wrong parts were used, which caused internal slippage and thus the reduced mileage. The importance of credence properties is that the customer is not an expert in the field and therefore possesses limited skills upon which to evaluate the quality of the repair. Had the transmission repair lasted past the 90-day dealer warranty period, would the problem be traced to faulty repair or customer misuse?
Services are intangible, inseparable, and heterogeneous (Parasuraman et al., 1985b). Services cannot be inventoried and unlike products, where the customer is not involved in the production process, customers are intimately intertwined in the service consumption process, even to the point of self-service. The most important difference is that service quality is determined solely by the customer at every moment-of-truth interaction point with the company’s delivery system, which makes services almost infinite in variability. The result is ubiquitous pressure to customize services at the customer level. This innate variability of services is diametrically opposed to the generations of teachings by the founding fathers of production efficiency, such as Fredrick Taylor’s “One-Best-Way” (Scott, 2003) or the newer models of production efficiency such as six-sigma (Lambert & Carnell, 2004), both of which are designed to reduce duplicity of effort and drive out variability. A process rated at six-sigma represents 3.4 defects per million. Blakeslee (1999) found that manufacturing firms usually performed at three to four-sigma, whereas service companies are often between one and two sigma.
Obviously, improving service quality is not as simple as arranging processes in nice little process mapping streams. Most process flows do not properly account for rework or service recovery processes which are the part of the hidden process plant within each organization that produces services for consumption. Much of this can be traced to the lack of any relationship whatsoever with the customer. A defining moment may be traced to the demise of the Fuller-Brush man and the advent of the television as the most cost-efficient (effective?) channel of communication. Many companies seem to be searching for ways to get rid of the customer interface: “If we could just get rid of those pesky customers.”
Looking for a model? Think Ritz Carlton or USAA, among some others who seem to GET IT.
References
Blakeslee, J. A. (1999). Implementing the six sigma solution. Quality Progress, 32(7), 77-85.
Booms, B. H., & Bitner, M. J. (1981). Marketing strategies and organizational structures for
service firms. In J. H. Donnelly (Ed.), Marketing of services (pp.47-51). Chicago:
American Marketing Association.
Darby, M. R., & Karni, E. (1973). Free competition and the optimal amount of fraud. Journal of Law and Economics, 16, 67-86.
Lambert, J., & Carnell, M. (2004). Organizational excellence through Six Sigma discipline.
Quality Focus, 4(2), 18-25.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985b, May-June). Quality counts in services too. Business Horizons, 44-52.
Scott, W. R. (2003). Organizations: Rational, natural, and open systems (5th ed.). Upper Saddle River, NJ: Prentice Hall.
The four Ps are still relevant as a framework. Do we no longer have Products, Prices, Places, Promotions?
I agree with Mr. Nyberg and Mr. Vila: our approach should differ based on how we want our customers to experience our brand's 4 Ps.
If you are still in a world where you compete on price (we're cheaper!), benchmark against your competition (hey, we're as good as the next guy!), using exclusviely above-the-line advertising (we have a Super Bowl commercial!), you're in the wrong market. Try some new direction, possibly similar to Blue Ocean Strategy (Google it!).