Note: Robbie Fitzwater was my guest on the new edition of the Marketing Companion podcast, where we explored the new relevance of the classic Four Ps of marketing. His notes in preparing for the show were so extensive that I invited him to write it up as a blog post. Great bonus content!
You can hear the show here:
Click here to listen to Episode 252
By Robbie Fitzwater, {grow} Community Member
Until last year, I was convinced that the Four Ps of marketing (product, price, promotion, and place) were dated and no longer applicable to the modern marketing universe.
The technological and cultural change that has taken place since E. Jerome McCarthy introduced this famous idea in 1960 has been profound. I can’t name many business philosophies that have remained relevant for 60 years.
So last year, when I was asked to teach a class on Marketing Foundations in the Clemson MBA program, I was ready to poke some holes.
But as I prepared for this class, I found that I could not avoid the 4 Ps. In fact, I will humbly admit they are more relevant than ever!
Given my revelations, I wanted to unpack them here (in public) so you could be the ones to poke some holes and decide for yourselves whether the Four Ps are still applicable to the modern marketer.
Why are the Four Ps of Marketing still a big idea in the digital world?
The First P of Marketing: Product
In the early days of marketing, your product used to be the goods or services your business offered. The concern was to meet the customer’s needs. Nowadays, it’s so much more — perhaps because present-day consumers want much more.
Your product is a meaning system conglomerated around its image, the story around it, and the social proof built around both the product and your brand.
Niche local brands now have access to global audiences. Brands that would have seen modest success 20 years ago are now thriving by connecting with a much larger tribe.
Your product is also a matter of transparency. There are no more secrets. Your product is how you interact with your community, the environment, and in some cases, the news cycle.
Benefits & Challenges for Marketers
Transparency is a given these days. There are no more secrets. Simply satisfying a need or expectation is a given. The products that thrive are the ones that can build a differentiated position in the hearts and minds of the consumer.
Digital channels opened the door for groups to build an audience first, then monetize that audience by selling them products that fit in line with what they need. Take a look at content creator Jimmy Donaldson, better known as Mr. Beast. He created a YouTube channel in 2012 and finally saw a rise to fame (going viral as it’s called on the Internet) in 2017. Since then, he has amassed over 100 million subscribers. Donaldson earned his reputation as the “biggest philanthropist on YouTube” by giving away $1 million to followers by 2018. He has since founded multiple charities and continues to hold giveaways and competitions, thus creating a large, loyal fanbase.
Donaldson launched Mr. Beast Burger in 2020, a sandwich shop using ghost kitchens around the country. The endeavor has already generated $100 million in revenue with no signs of slowing, success which can be attributed to the already owned and loyal audience Donaldson generated through his YouTube channel.
Marketers are seeing challenges with the evolution of “product” as well. Marketers typically have less and less control over the product development process. Companies are creating new products in silos, with product development teams and marketing teams working entirely independently of each other.
In many ways, customer service has played a larger role, often doing “damage control.” The performance of the product dictates how the product will be viewed after, which leads to the social proof that can build around the product. If marketers are involved with this upstream process from the start, they could more easily connect and meet the need of the end user without the clunky growing pains in between.
Effects of the Pandemic
While online shopping becoming much more common since the pandemic, the use of social proof (reviews) in making decisions has gone way up. We lean on this strategy more and more in making buying decisions, and it is bleeding into our physical world decisions. Shoppers are now checking product reviews while in store, and those reviews are making or breaking the purchase decision.
The Second P of Marketing: Price
Price used to be how much you charged for your product relative to the competition. But things have changed.
Price has become a much more fluid and complicated topic. Prices can change much more dynamically relative to market conditions, and pricing is also open to a global market. Take car prices, for example. When we purchase a car, we know relative prices in our area and know our alternatives. We also have access to information that lets us know that later in the month, there may be more flexibility in pricing for dealers because their urgency is higher.
Your price is also a story about your brand. In the luxury market, we see brands burning excess products rather than selling them at a discount and diminishing the brand. Consumers have more transparency around pricing and how they shop. If they know the product they want and trust the brand, customers may not care how much it costs.
Alternatively, if something is a little more expensive on Amazon, consumers may be willing to pay more for the convenience of adding it to the order they are already getting that week and the safety of the 30-day return window. Consumers would rather pay more for a product with “free shipping” than pay for the product and shipping costs.
Benefits & Challenges for Marketers
Companies like Amazon and other marketplaces force prices for sellers of commodity products lower and lower, further commoditizing their products. The race to the bottom mentality damages the long-term positioning of a brand and trains customers to expect the lowest possible price for your product at all times.
Discounting plays a large role here also. When prices are marked down too consistently, it creates a situation where when there is always a sale, then nothing is a sale. For brands to get out of this trap, they have to retrain their customers to stop constantly expecting a discount.
Like the product, this is an area that may no longer sit under the marketing team. Ownership of pricing may be distributed between sales, product development, and other stakeholders within the company. No longer being able to set pricing presents a challenge for marketers. If pricing is not in alignment with the marketing strategy, then it can have large, unintended consequences.
Effects of the Pandemic
With shopping behaviors moving more online, shopping based on price has become easier and easier. Consumers can now find cheaper alternatives to your product with a quick Google search, and most of the time, alternatives are presented to them whether looked for or not.
The Third P of Marketing: Place
Place used to be where you sold your products and services. This included trade shows, marketplaces, or brick-and-mortar stores.
Now, omnichannel is king. Place has shifted from where you sell your products to how and where you sell your products. Distribution has become much more consolidated, with models shrinking all the time. Products used to flow from producer to wholesaler, then to the retailer, and finally to the end user. Now, more and more products are going directly from the producer to the end user. This evolution opens the door for new opportunities at every level.
Omnichannel distribution has become a large component of place in terms of the marketing mix. For example, Target has physical Target stores as well as an online site where customers can have products shipped directly to their homes or held for pickup in-store. Another company, Nespresso, has products available for purchase on Amazon, in the grocery store, on their website, and brick and mortar locations. Some channels may be more profitable than others and lend themselves to different business models – suddenly place has a lot more consideration and math behind it.
Benefits & Challenges for Marketers
The tools needed to offer products through different channels have never been easier. For example, Kraft Heinz created a Shopify store at the beginning of the 2020 pandemic so consumers could purchase products without the risk of going in-store. In the past, that would be an undertaking of millions of dollars and years of work to develop the infrastructure for an online store. Now, site builders like Shopify and others make building online stores a simple task.
Direct-to-consumer models may drive more profit, but those businesses may need to find a way to generate traffic and demand on their owned channels. Retail partners may cut into a large portion of your margins, but you do not need to acquire the traffic. Many groups like Nike (2017 Consumer Direct Offense) decided to pull their product from up to 50% of their retail channel partner’s stores to focus more on their owned channel and retailers with more profitable customer segments.
Managing the customer journey across these channels is a challenge. Omnichannel customers tend to be the most profitable. Still, getting all of this data to play nice is relatively challenging across so many verticals.
With so many options for place, it is challenging to decide where to place your bets as a marketer. Businesses are forced to understand unit economics for each channel. For example, many restaurants partner with delivery services like GrubHub and Uber Eats. These companies provide a more broad reach but cut into or even kill restaurant margins.
Effects of the Pandemic
The pandemic increased friction for in-person buying and a decrease in friction for online shopping. Still, there is a non-obvious gap here, because the psychology of online shopping is different than that of in-person. Online shopping is more like spearfishing than casting a line, while in-person shopping feels more spontaneous as sometimes you discover new things.
We’ve seen the rise of click-and-collect and other shopping channels expand much more than they have in the past. Many categories that have not seen major disruptions have also seen this. Online grocery ordering is suddenly a common practice, and once those behaviors are adopted, it is hard to go back. I do the grocery shopping for our family. After using the apps to order what we need, I think we likely save two to three hours a week. I don’t know if I will ever go back in the store and shop the same way I did before.
The Fourth P of Marketing: Promotion
Promotion used to be how you communicated your product or service to the world. Promotion was done through traditional ad channels, billboards, sponsorships, trials, and giveaways.
Promotion looks more like how businesses create demand for products and how they engage consumers at each stage of their customer journey. This is a process where everything is measured and managed in as much precise detail as possible. In today’s world, the brand is no longer the one in charge of the message, giving way to consumers making the major decisions.
In a business-to-business context, this is the top-of-the-funnel engagement to the customer journey. Marketers can not rely on just ads, because research behavior around purchasing has increased. Now marketers need to ask how much content will aid and supplement a buying decision.
Benefits & Challenges for Marketers
There are more ways to reach consumers: social and display ads, email, SEO, over-the-top TV ads, content, influencers, and organic social to name a few. But most consumers are becoming increasingly skeptical of ads as they’re becoming more aware of manipulation tactics and hollow messaging.
There have never been fewer barriers to entry to reach your audience. But while people are more accessible, actually getting their attention has never been more challenging. Suddenly this conversation has account for the nuance of being relevant and valuable enough to break through the thousands of inbound messages a person gets on a given day.
Effects of the Pandemic
Since early in the pandemic, people are spending much more time on their devices. The level of sophistication needed to break through has obviously increased. However, a standard “in-store” promotion may not carry the same weight that it did in the past because fewer consumers will see it. Taking the Pepsi Challenge, for example, would not have worked with fewer people in stores.
With so many products and services being so accessible via Amazon and other online outlets, separating yourself from commodities in your space is extremely important to rise above the noise of crowded markets.
The Fifth P of Marketing?
When I proposed this examination of the Four Ps of marketing to Mark Schaefer, he was so enthusiastic about it (he is an obvious advocate of the idea!) that he thought we should break it down as a podcast episode. So, we did.
This is my first time on the show and I think it went really well. One of the big debates we had at the end was nominating a fifth P. We both agreed an additional P was worthy and required, but we disagreed on what it should be.
You won’t want to miss this show. I think we both pushed out thinking in new ways as we talked about why the Four Ps of Marketing are more relevant than ever. Just click here to listen!
Click here to listen to Episode 252!
