According to an old saying, marketing is all about getting the ideal goods at the ideal price, in the ideal
location, with the ideal promotion. this 4P’s business model will help you learn to build a successful business. The 4Ps are an expansion of this condescending viewpoint. It lists the following four crucial elements of the marketing mix.
Product
This is what a business must sell. It might not be a physical asset; it might instead be a service or a product that includes a service. Nevertheless, that is what the business provides. The product might be said to be the key component of the marketing mix. It establishes who will purchase it, how much they will pay, what features they will find desirable, and potential sales locations.
The following questions must be answered in order to determine whether the product is appropriate for its market:
- What advantages does the product offer the customer? How do these advantages help the customer?
- What types of customers are the product’s most likely targets? What are their populations, behaviours, attitudes, and psychographic profiles? How would you categorise them as a segment?
- How will the product be used by the customer? How often will they use it? When will it be replaced?
- What would the customer do if the item was no longer available?
Price
Price is the revenue-generating component of the 4Ps. The other three Ps Costs will be incurred. The price that someone is willing to pay for a product is known as the ‘bargain’. It is a valuable figure in the eyes of the customer. Paying for the product and, from the supplier’s perspective, it is a figure that covers production costs and collects (hopefully) enough to make a profit, you must generate revenue.
The following questions must be answered in order to determine whether the price is appropriate for its market:
- How do customers perceive the product’s value? What are the most important advantages that they value? What monetary value is assigned to each of these advantages?
- What is the value of the product perceived by customers? What are the most important benefits they value? What is the monetary value assigned to each of these benefits?
- What are your competitors’ prices for a comparable product? To what extent is the product perceived to be better or worse than the products of competitors?
Promotion
People need to be aware of the availability of products and they need to be convinced of their value. Promotion is the means by which this communication takes place. The promotion could be any part of a mix that includes adverts in newspapers, magazines, journals, the TV and radio. It could also include direct marketing such as flyers or e-mails. Exhibitions, public relations and point-of-sale material are part of the promotional mix
The
following are the questions that must be answered in order to determine whether
the promotion is appropriate for its target market.
- What is the promotion’s reach? How many customers/potential customers are expected to see it?
- What is the promotion’s impact? How far will it stop people in their tracks and satisfy their interest?
- What is the promotion’s importance? Is it something the customer would be interested in? Do the messages ring true?
- What is the call to action? What will prospective clients do next?
Place
The product or service is made available to the customer in some way. This could be in a store, on the internet, or directly from the manufacturer. It is the product’s distribution channel (or networks).
The following questions must be answered in order to determine whether the location is appropriate for its market:
- What is the most popular platform for this type of product among customers?
- What level of channel penetration is possible?
- What are the possibilities for discovering new routes to market, i.e. alternative platform?
- What does each channel organisation needs in terms of margin and service support?
- How will the product differentiate itself from competitors in the market?
The preceding should make it clear that the 4Ps are not aimed at just anyone; they are specifically aimed at a target audience. The four essential marketing mix components are frequently referred to as hygiene factors. The marketing strategy will fail if the company fails on any of them.
Where did the 4Ps model come from?
Edmund Jerome McCarthy, an American marketing professor, coined the 4Ps. McCarthy’s goal was to bring science and structure to marketing, in keeping with his background as a statistician and mathematician. In 1960, he published Basic Marketing: A Managerial Approach, which introduced the framework. The book became a marketing best-seller, and the simple mnemonic of the 4Ps was quickly adopted
The Model's Evolution
Continuing with the 4Ps mnemonic, other authors have added three more elements to the mix:
People
It is argued that people are a critical component of many businesses’ offerings. They manufacture the product. They sell the product and build customer relationships. They service and deliver the product. They handle inquiries and problems. People are an important component of any offer.
Process
The process by which the product is made is included in the offer. Other processes that are relevant to customers include how a company handles inquiries, credit checks, and complaints, among other things. All of this is included in the offer.
Physical evidence
In some cases, the physical environment is a critical component of the offer. This is especially true in the case of a supermarket, where the width of the aisles, store layout, colours, smells, and atmosphere can all have a significant impact on marketing.
Richard Ettenson, Eduardo Conrado, and Jonathan Knowles published a Harvard Business Review article titled ‘Rethinking the 4Ps.’2 They claimed that the original 4P model is unsuitable for business-to-business (B2B) operations. They claimed that the old 4P framework places an emphasis on product technology and quality, which they claimed are hygiene factors that do not differentiate. They proposed the SAVE framework in an attempt to shift the focus from products to solutions. The acronym SAVE stands for solution, access, value, and education.
The solution (rather than product). The emphasis is now on solving the problem rather than selling the product.
Gaining access (rather than place). It is critical to have access to customers no matter where they are or what they are doing. This means that physical distribution outlets are far less important today than, say, the internet.
Value (rather than price). People care far less about the price than they do about what they get for their money – value is what matters.
Education (rather than promotion). Promotion can be perceived as manipulative, and trust and reputation are more important in many B2B markets. Trust is earned through education over time.
The Model at Work
When considering a marketing plan or business case, the 4P model (or one of its derivatives) can be used. It is especially useful in two business scenarios: the launch of a new product and the entry into a new market.
Introducing a New Product in the Market
All businesses rely on new products to survive. Successful businesses constantly modify or introduce new products to meet their customers’ changing needs, and it is said that a successful company has more than one-third of its products that are less than three years old. This proportion can vary greatly, and companies that manufacture confectionery, for example, are more likely to have a higher proportion of new products in their portfolio than companies that manufacture steel components. Whether the product is a new doughnut or an alloy, the discipline of checking the 4Ps is still worthwhile:
- Is the new product better suited to customer needs than existing products?
- How much are the new product’s features and benefits worth in comparison to those of existing products?
- Will the new product coexist with existing products in the distribution chain?
- What kind of promotion will be needed to launch the new product?
Getting Into a New Market
Taking a product into a new geography or launching it to a new group of customers can often result in growth. The following questions must be answered:
- Where does the product stand in comparison to existing competitors?
- What will people pay for the product in the new geography or segment?
- What marketing channel will be successful in the new geography?
- What are the messages that will be effective in the new geography?
Western companies that sell into China have had to change their product portfolios. KFC now sells Peking duck, Starbucks has added green and aromatic teas, and Coca-Cola sells carbonated fruit drinks (in addition to Coke) to Chinese customers. Workplace glove manufacturers sell smaller sizes to accommodate the smaller hands of the Chinese workforce.
The price charged in a country must be appropriate for the country’s income. This is commonly known as purchasing power parity. It is for this reason that a Big Mac can cost three or four times as much in Norway or Switzerland as it does in India.
The route to market varies greatly between countries. The open market remains a major outlet for all types of products – both consumer and industrial – in China and many other Asian countries. Small and specialty stores abound in the East, while megastores rule in the West.
The promotion of products varies greatly around the world. The name of the product, the design of the logo, and possibly the colour of the pack are all very important in the East.
When IKEA first opened stores in China, it couldn’t afford to support them with the large catalogues that were commonplace in the West. They used smaller brochures that could be distributed multiple times throughout the year.
They also communicated in a more gentle manner. Instead of positioning the company as a proud rebellious brand, as it does in the West, they communicated how small changes would improve life, a more humble approach aimed at young Chinese women aged 25 to 35.
Key Notes:
- When creating a marketing strategy, consider using a 4P structure. It is especially useful when entering a new market, introducing a new product, or creating a new customer segment.
- When analysing your 4Ps, keep your target customers in mind. Create customer personas and build the 4Ps around them.