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Sunday, 4 December 2011

The 4Ps in marketing - revisited

I've been hearing a lot about how the 4Ps are dead, and how the 4Ps are alive and well so I thought I'll blog my version of 4Ps and join the debate.

The 4Ps are alive and well. But perhaps not the way we think about it. In a sense, 4Ps have always been rather firm centric - its about the price the FIRM charges, the place the FIRM sells its offerings, the product that the FIRM offers, the promotion that the FIRM has to undertake. So I thought I'll have some fun and turn things on its head..... in a co-creation sense of course. (if you need to understand value co-creation, check here).

1. Price
Yes, there is still money to be charged, but increasingly, 'price' is no longer a consequence of a sequential activity. Its not what I get for what I pay for anymore. I mean, how do pay for google, or facebook? or how do I really 'pay' for getting the nutritional attributes of food in the supermarket when i scan the barcode and read it off an app? There is money floating around somewhere but increasingly, the revenue is being distributed, just as value creation is distributed within the system. Also, it's not what the 'price' we give firms now, it's what we get back, as SDLogic will always say, we are resource integrators, we integrate resources and money is just another resource. But I actually argue further - that we are getting multiple outcomes for one 'price' - e.g. paying for broadband and a computer and then getting so many different types of outcome from social networking, surfing the net etc. so I would argue that the monetary system is becoming less and less relevant in achieving outcomes through systemic collaboration and distributed intelligence and information. My favourite theory is that money, because it is so generic a resource, is increasingly 'devalued' - so an outcome for outcome exchange (I walk your dog, you cook me a meal) has greater 'goodness' or 'value' than if it went through a market which is why as technology increases efficiency matching needs from connectivity, money may be increasingly irrelevant for societal happiness. Very far fetched, I know, but as a business economist, its currently my pet theory. I'll model it if I just had some time :(

2. Promotion
oo.... let's get a little creative here. Companies still promote - a lot. The ads on google, proximity marketing through foursquare; groupons etc. they are all there - just using a lot of technology. But there is a subtlety that many have not noticed. Instead of taking their products as given and 'promoting' their offerings, companies are starting to change their offerings too.... drug companies realise they are not just about medicine, there is nutrition, well being etc. so they are co-creating value in constellations that are not just about the physical, but about their meanings. From music (bands), to perfumes, firms are dematerialising their 'products' (see blog post on dematerialisation), co-creating value through identity, culture and families. the new world of promotion is not just about firms influencing customers, but customers influencing firms' offerings' design, and customers influencing customers through social networks and creating systems of shared values.

3. Place
You know where I am going with this from the previous promotion bit. Place is not just physical space of course, but virtual space. and its not about channels of purchase, its about channels of influences, experiences, meanings, symbols, and again, the firm dematerialising the product so that it can be in multiple 'places' in different forms, creating new and interesting business models. this is beyond plurality in channels or buying channels. this is the firm being the true organiser of value co-creation, and understanding what resource or information is needed for different channels.

4. Product
I am starting to sound like a broken record. but to quote previous posts, technology liberates us world from the constraints of time (when things can be done), place (where things can be done), actor (who can do what) and constellation (with whom it can be done). The PRODUCT, in ALL of that, can be better designed to allow when it can be used, where it can be used, who uses it, and with whom it is shared with. Requirements of the future is looking at technologies from quantum information to artificial intelligence, composite materials that are light to nano technology that create multiple forms of use value, we will start making things that connect better, that can be mobilised differently, can be sent differently and can be used across time and space.

So that's my quick take on the Marketing 4Ps.

And I can't wait for the future. Oh wait. it's here. :D

7 comments:

  1. "Yes, there is still money to be charged, but increasingly, 'price' is no longer a consequence of a sequential activity. Its not what I get for what I pay for anymore."
    .
    Every single day I'm bombarded by economists, politicians and academics (I call them the triad)that don't believe or understand the meaning of your first phrase up there.
    .
    They only know one lever to sell: reduce cost to reduce price.
    .
    I don't know if in the UK is the same, in Portugal and Spain one can count by the fingers those that stand by that first phrase... the mainstream don't understand the power of "value"

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  2. While I agree with your observations, I am not sure it is helpful to pay homage to the "4 Ps" -- I think (Service Science aside) the real world has already changed quite beyond that framework and new frameworks should be asserted. This is already happening in Service Science, Platform Business Models, and Customer Experience Marketing.

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  3. i dont think I was paying homage at all! Rather I firmly believe that we don't build enough bridges between 'legacy' knowledge and new knowledge. It is easy to say something is 'new' by just using new words and putting it in a complicated way so that it sounds impressive but yet when interrogated on HOW the knowledge has changed and WHAT has changed about it, there isn't much substance. I love new frameworks but there are many frameworks that are brilliant and genuinely useful and just as many out there are rubbish in new clothes.

    There are millions out there who have studied the 4Ps and if we don't know how to tell them what has changed, they will be less convinced of the substance of the change. Any new framework or knowledge has to be secure and confident enough to engage with legacy knowledge and come out winning. Not acknowledging the 4Ps existence in marketing is just refusing to see the elephant in the room, IMHO.

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    Replies
    1. Indeed 4Ps can be explained by "new frameworks." Here I share insights from my recent research on legal approach to the 4P and 7P concepts. Unlike the economic and marketing views which focus on exchange of goods/services or economic value, the legal view focuses on exchange of legal rights and obligations. When legal view of exchanges is taken, all four Ps can be described by a single element of contract, Promise. (Incidentally Promise also happens to be a P). In the language of contract law, Product is bundle of promises of the seller, Price is the bundle of promises of the buyer, Place (or distribution) is agent (of the principal) through which the buyer and seller make promises, and promotion is invitation to make first promise (in the legal terminology promotion is called invitation to treat). The additional 3 Ps of the 7P concept (people, physical evidence and process) can also be described by Promise. People are agents of their principals, or firms. Hence, like place, people are agents through which the buyer and seller make promises. Contract law would describe the ingredient Process of the 7P concept as performance of the contract. Lastly, according to the contract law, a necessary condition for formation of a contract is "meeting of the minds" and not meeting of the eyes. In other words, Physical Evidence is not an element of a contract. The legal approach is parsimonious. Fewer elements of a contract can describe 4Ps and 7Ps. The 4Ps can be described by three legal elements (promise, invitation to treat, and agent) and the 7Ps can be described by just four elements (promise, invitation to treat, agent, and performance).

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  4. Yes, I see your point now and agree that it is important to address the legacy frameworks in order to move forward with new ones that hopefully for accurately can describe the world. Here;s an interesting related post: http://www.conversationagent.com/2011/12/building-a-platform-that-respects-brands-and-users-alike.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+ConversationAgent+%28Conversation+Agent%29

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  5. Great blog, indeed the marketing mix is a live and well. As an agency marketer I often find myself taking some of my clients right back to the basics, going through the marketing mix to get all their ducks in a row. I have created an infographic to explain the marketing mix to small and medium business owners and managers
    http://www.zeno-marketing.co.uk/marketing-clinic/2012/7/5/marketing-mix-made-easy.html

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