The 4 “P’s” of Marketing (And an extra P)
A critical component of Marketing is messaging. This entails creating messages that are memorable. This article is about the main P’s of marketing.
Alliterating P’s is a popular way to create a memorable acronym. There is a saying that comes from the British army about Planning surrounding 5P’s: Proper Preparation Prevents Poor Performance. This saying is a shortcut of the crude original phrase with 7Ps – Proper Planning and Preparation Prevent Piss Poor Performance. The 4P’s follow this approach.
When marketing, messages that are memorable should always be created. In the digital age, this framework forms part of the basics of Marketing 2.0. It helps organise and analyse the marketing efforts of any brand, product or service.
The four Ps are:
These help you think about and execute the marketing mix. This framework is great to use internally in any marketing relations as it helps you focus on the basic elements, leading to a clear and concise marketing campaign. It ensures coordination and alignment in planning and executing a successful offering.
The first P: Product, stands for the value proposition (offering); which is what a company is selling, either a product or service, or mix of both. This offering needs to make sense in relation to the customers’ wants and needs.
is made up of the feature set of our products/services, meeting the needs and desires of our targeted customers. A relationship needs to be built based on the Product/Market Fit, which needs to be assessed and optimised.
A concept called The Value Proposition Canvas (VPC) has been developed in order to help entrepreneurs assess and optimise the Product/Market fit. It helps us evaluate and rethink our product and how it aligns to our customers, aiming to optomise its perceived value (how customers perceive the value of your offering).
It is critical to note to what extent the problem being solved is and how much satisfaction it is generating, as this is the basis of a sustainable competitive advantage. This advantage will enable higher prices to be requested, thus higher price margins.
The ultimate goal is achieving the optimal fit between what you are offering, the value proposition, and what customers want and need.
However, there are multiple customers segments, therefore this fit will need to be evaluated and tweaked for each segments’ different needs and wants.
Product Life Cycle
Products flow through a life cycle, progressing from the growth stage, to the maturity stage, then to the decline stage. The markets and customer segments evolve over time. Each stage impacts the marketing mix and strategy. Through understanding these stages, challenges can be anticipated and addressed. This is done by the marketing management. The dynamics must be relative to each stage or a succession thereof.
Figure1: (Product Life Cycle)
Extending the Product Life Cycle
This can be achieved by:
- Recalibrating and Improving Advertising (to gain additional and potential reach).
- The Exploration and expansion of new markets to acquire more customers in different segments.
- Pricing alterations: reductions or discounts can motivate possible customers that indecisive about purchasing.
- Introducing new value adding features to capture new customers.
- Design and Packaging that is updated and attractive can catch new customers eyes.
Price is the amount your customers are expected to pay. However, deciding on what to set the price in order to maximise sales is more complicated as it directly affects how well the product/service sells. The Law of Demand depicts that the lower the price, the more sold, and vice versa.
Law of Demand
The law of demand is a concept based on Price and Quantity. The graph below makes it easier to visualise. It shows the demand curve in relation to a supply curve. Where the two meet determines the price and quantity sold.
The quantity that will sell is related to the price along the demand curve. The Elasticity of Demand depicts how changes in price affect the quantity sold.
You will need to create a perceived value through marketing and branding. Creating an aura of prestige and desire, based on educating the customer on the utility of the offering (functional value), will enhance the perceived value. This can be done through content marketing. It supports premium pricing, which results in superior profit margins and a sustainable business model.
Understanding the customer in relation to your product is important. Customer engagement and analysis will provide vital insight into how your product is being used and perceived.
Price may be affected by competitive comparisons therefore differentiation will help you sustain profit margins. Comparisons must serve a strategic role, not just compete on price alone. It can work as a short-term strategy when looking at gaining and capturing market share and dominance, and driving out competitors.
Pricing is one of the most critical decision in the marketing mix as it will influence customers image/perception of your brand and what you have to offer. Pricing strategies can be set to maximize profitability, draw in customers, defend an existing market from new entrants, increase market share, or rapidly enter a new market. The strategy must impact potential customer’s very selective decision to purchase.
It is important to keep an eye on your competitor’s actions and responses to price changes in order to maintain or gain a comparative advantage within the market. The ‘internet of things’ allows for instantaneous and effortless price comparisons.
Pricing Strategies and Models
Examples of Pricing Strategy and Pricing Models:
- Two fer
- Loss Leader
- Service Contract
Consumer Perceptions and Price Sensitivity
Recommended books on pricing and value are:
- Priceless by William Poundstone
- The Price of Everything by Eduardo Porter
- The Strategy and Tactics of Pricing
There are certain factors related to purchasing decisions based on comparing prices, availability of alternatives and the ability to compare.
- Reference Price Effect – sensitivity to how high the price is relative to substitutes.
- Difficult Comparison Effect – less sensitive to the price of a known brand when comparisons are sparse.
- Switching Costs Effect – buyers are sensitive to paying extra to switch and would rather remain committed.
- Price-Quality Effect – buyers are more willing to pay more for higher quality.
- Expenditure Effect – buyers purchase size in relation to their budget determines sensitivity.
- Shared-cost Effect – buyers are less sensitive when paying the smaller amount. E.g. health insurance and prescription price circumstances.
- Fairness Effect – buyers know the reasonable cost for an item; the farther the price is outside this range, the more price sensitive the buyer.
- The Framing Effect – Bundled packages reduce price sensitivity as it is difficult for buyers to separate individual costs. e.g. Cell phone contracts.
Promotion is based on the methods of communication and awareness creation that marketers use.
There are various audio, video, photographic and textual methods of delivery surrounding various media outlets such as:
- Podcasts (Castbox/Spotify/Soundcloud/Itunes/Google Play)
- Blogging platforms
- Social media platforms
- Text messages
- And many more
New media channels are constantly being launched and adopted by the masses.
- Sales promotions
- Special offers
- Public relations
There are three categories of Promotion channels:
- Owned – websites and email lists
- Earned – social media shares and likes
- Paid – advertising
Promotion revolves around communication. Communication channels have multiplied. This is relative to the mass adoption of the internet in coordination with smart devices. The specific channel you choose to use should suit your audience, product and pricing simultaneously.
A promotion plan should be set, allocating resources to each element in the promotional mix (personal selling, advertising, sales promotion, direct marketing, publicity, event marketing, exhibitions, trade shows and presentations).
Supply Chain Management and Distribution (how the product is delivered to customers) are key elements of Place or placement.
You will need to look at a mix of distribution channels and consider which ones will deliver your product/service best. Some concerns revolve around the end users purchasing, access and use patterns which need to align with the rest of your product strategy and compliment it.
Location is vital in converting potential clients into actual clients. Today, online would most likely be the best place to achieve this, beginning with permission and content marketing, to ensure engagement and customer journey creation. Using revolutionary placement strategies that reduce front end costs and commitments, such as SaaS Software (software accessed online and paid for with a monthly subscription with no initial software purchase) as a Service Model, minimises potential barriers to purchase in the customers mind.
The decisions surrounding place will depict how products are delivered to the market and how they are sold.
5. Positioning (the extra P)
This is the place that a brand occupies in the customers mind and how it is differentiated from competitor’s offerings and messaging.