The Big Picture…
Enterprises use the Marketing Mix – a set of activities/tools – to get you to buy their product. McCarthy introduced it in the 1960s. And it has become a marketing classic.
We commonly refer to it as the 4 Ps: Product, Price, Place and Promotion.
Where Product is the tangible/intangible/mix that you are selling. Price signals to the customer the value, and there are various strategies you can apply here. Promotion covers the activities used to communicate with the customer. And Place is where your product is bought and how – is it direct to customer, through middlemen; what does the servicescape (or even eServicescape) look like?
There are, though, criticisms of this 4P mix. And these criticisms are often less well known/overlooked. For example, it doesn’t take account of strategy or external factors; is too internally focused. Or more common like it doesn’t work well for service.
And subsequent extensions/alternatives have been offered. Such as Lautner’s 4Cs, or Boom & Bitner’s 7Ps, or Kotler’s 8Ps, for a service marketing mix. Constantinides’s paper has a good summary of these criticisms and extensions/alternatives.
The 4P marketing mix is well established and taught on every marketing, business and MBA course. There is a danger we take it as gospel and blinker our views to the criticisms. Although most courses will cover the service marketing mix (though often as an aside and as part of a goods vs service thinking, i.e. goods are good, service causes a problem where goods and service are seen as fundamentally different).
I look at the service marketing mix here. And more interestingly identify the Synthesis Marketing Mix in this article – which takes a look at the marketing mix through our service-dominant logic lens and that service and goods are not fundamentally different.
The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.. The aim of marketing is to make sell superfluous.Peter Drucker
In the 1960s McCarthy’s wrote Basic Marketing: A Managerial Approach introducing us to the product marketing mix. This mix is the set of activities and tools that a marketer uses in order to sell you a product. And it is a classic of Marketing.
Here in Figure 1 you can find a schematic of the marketing mix – the 4 Ps: Product, Price, Place and Promotion. Each of the Ps guides us in various decisions to make to get the customer to buy the product.
Let’s take a look at each of these Ps in turn. And then we can peek at the criticisms of this 4P mix before looking, in separate articles, at the Service Marketing Mix and my Synthesis Marketing Mix. And we’ll start with looking at Product.
First, in the mix, we have what we are selling, i.e. the product. And in a marketers world, this means both tangible and intangible things. Tangible items are physical objects, such as books, cars etc (often called goods). And, intangible things are services. We find that products often sit somewhere on a continuum between goods and services.
Products sit on the good-service continuum
Here in Figure 2, you can find the classic goods-service continuum. Over on the far left, we have entirely tangible goods, a house, for example. Whereas on the far right we have pure services, such as financial advice. In between these extremes, we find blended goods/services.
Let’s take eBooks as an example. Whilst you cannot physically hold an eBook, we still call it a goods. You are able to own and store them. In this case, it is a particular type of goods: digital goods. Of course, you probably downloaded these digital goods through a service. That service is not a pure service. Instead, it is service dealing with products. Quite where it sits on the continuum is going to depend on how prominent the service part is. If the service just sells eBooks, then it is likely to be towards the “tangible products with supporting services”. However, if it is a subscription service allowing you to rent eBooks, then it is more to the “major service with supporting products” position.
As an aside, under a service-dominate logic lens, we really observe there is a service-service continuum. Where we can interpret the left side as self-service (often carried out through using goods).
Just as important is the fact that products must meet a user’s need.
Products must meet a user’s need
It’s not uncommon for us to think of user’s needs as three types of need: existing, latent or incipent.
- Existing – if we know the need and there is an existing solution.
- However, if we know the need but there is no existing solution, then we call it a latent need.
- Our final category of needs is the incipent needs. These are those the customer doesn’t know they have (yet).
Incipent needs are dangerous needs. Since we can convince ourselves, an incipient need exists when, in reality, the customer has no need. Or the value achieved meeting the incipient need is negligible. On the other hand, history is full of heroes who created industries by fulfilling incipient needs – Henry Ford, Steve Jobs etc.
We meet these user needs though features of the product.
Products are a set of features
Often we break a product down into a set of features. And those features come in the five categories you can see in Figure 3. The concept is from Kotler’s Principles of Marketing.
Kotler’s five categories of features are core, generic, expected, augmented and potential. But you may have seen only three categories before. Don’t worry. Kotler also created a simplified 3 level model – core, expected and augmented – by merging some of the five categories together. Let’s take a quick look at each of these original five categories.
Firstly there are the core features. These features define the basics of the product. For example, we say a core feature of a car is that it gets us from A to B.
Secondly, there are the minimum set of features you would find in the product, across all providers. Continuing with our car example, we would have features such as an engine, wheels, seats, steering wheel, etc. These are the generic features.
Next, we come to the expected features. Features we would expect the car to have but are not generic across all products. Let’s take air conditioning in our car as an example. It doesn’t come with every vehicle (yet), so it is not generic. But for certain models, or in specific markets you would expect it. You are unlikely to find a car without air conditioning in the US (it is nearly generic); compared to Europe (expected).
And time plays a part too. We find features move across categories as time goes by. Nowadays, air conditioning is expected, almost becoming a generic feature. Yet years ago, it was a unique selling point. Which leads us to our next category.
Augmented and Potential Features
Augmented features bring out the Unique Selling Points (USPs) for this particular product, the differentiators from our competitors. It also covers the extras, such as subscription-based servicing/repairs.
Finally, potential features are those that we use to continually enrich the customer going forward. As an example, it is not uncommon for Coca-Cola to have competitions for its consumers to excite them. These are potential features.
We might be better off thinking differently about value, i.e. instead of features, think about what progress – functional and non-functional – you are trying to help a beneficiary make. But as we’re looking now at the 4P model, then value is wrapped up as a provider attribute…and comes into the realm of price.
Let’s now look at the second element of the marketing mix: price. It is this element of the mix that signals to the customer the value of the product. But, if we set the price too high we likely lose sales. Or if we set too low, we don’t maximise revenue.
When we look, we can find many different pricing strategies. And we also see many different ways of categorising them. I want to highlight one categorisation approach that I have found useful in the past. Here it is in Figure 4.
I don’t intend to go into Figure 4 in any more detail. Instead I will point you to the paper it came from if you wish to read more. The article is Noble and Gruca’s “An Empirically-Validated Framework for Industrial Pricing“.
Now let’s look at the third element of the mix: place.
I am the world’s worst salesman, therefore I must make it easy for people to buyFrank Winfield Woolworth
We refer to place as where your product is bought, and, how it gets to where it is purchased.
How the product gets distributed to the consumer affects the control you have over the presentation. You get the most control when you sell directly to the consumer. However, as you can see in Figure 5, there are various other distribution models. Some arise just because that is how it is done in your chosen market.
The easiest to control approach is direct to consumer selling (of either product or service). After that, we can sell to a retailer, or to a wholesaler or to an agent. As we go lower, the control over the end experience we have gets less.
It is a similar case for services. Quite often we think these will be provided directly to the consumer. And that is the case for a large number of services. However, there are sometimes agents involved, for example, ticket agents for concerts.
And increasingly there are platforms – such as Amazon, Pinterest, Etsy, Fivvr etc – through which services can be sold. I distinguish platforms from agents.
You may have noticed the last row under products in Figure 5 is strange. The flow is reversed and consumers are sending things to the producer/provider.
As we seek to save the world’s limited resources there is an increase in the circular economy. The World Economic Forum report “Towards the Circular Economy – accelerating the scale-up across global supply chains” is a fascinating read on this topic. And Figure 6 comes from there. Additionally, the WEF report gives examples of Ricoh, Philips, Vodafone, H&M, and Trina Solar user of the circular economy.
At the very basic instance, we can think of recycling plastic bottles. Here in Sweden, consumers do this all the time. They are comfortable returning plastic bottles and aluminium cans to get deposits returned.The marketing mix still applies for the circular economy. We must make the "place" of return for the consumer to producer flow easy to use. Otherwise the circle will not compete. Click To Tweet
For this to be successful we have to apply the same principles of place to the return experience. We need to turn Woolworth’s quote from the start of this section around. We “must make it easy for people to return”. And the place part of the marketing mix is vital in achieving that. This is precisely what the Swedish Pantamera organisation does by organising collection points at various locations and in various other organisations.
Bitner worked further on this and identified what she called servicescapes.
I could write a lot about servicescapes, but this article is already getting long! In short, a servicescape covers the aspects involved in physical evidence of the 7 Ps, when relating to customer interaction.
Here, in Figure 11, is the main diagram from her paper “Servicescapes: the impact of physical surroundings on customers and employees“. On the left are 3 dimensions: ambient conditions, space / functions, and signs, symbols & artefacts. These make up the perceived servicescape. Which through response moderators lead to the employee and consumer responses. Those responded are broken down as cognitive, emotional and physiological. On the right, we can see the behaviour resulting from everything to the left and the interactions between the employees and the consumers. Either the behaviour is to approach or avoid the service.
It’s a very interesting paper to read through. Though, it is, by nature of when it was written, missing the modern computer revolution.
The physical evidence aspect of the services marketing mix needs to be addressed for the e-services world. Harris & Goode looked at this in their paper “Online servicescapes, trust and purchase intentions“.
They found three dimensions are important: aesthetic appeal, layout & functionality as well as financial security. And that aesthetic appeal and layout and functionality of their e-servicescape mapped closely to ambient conditions and layout and functionality in Bitner’s original off-line servicescape.
We should note their study was focussed on e-commerce. But I believe most aspects are equally relevant for other services. Say you are a service dealing in knowledge – lawyers, management consultancies etc – then those first two dimensions are still valid as part of your web presence. And that presence you use to showcase your knowledge and experience. Additionally, you probably give away digital goods – in the form of brochures and case studies – or run a blog. Those are all activities in the promotion/communication part of the mix. But they also form part of this physical evidence attribute. You’d be wise to ensure they have aesthetic appeal and layout/functionality.
Lastly, we come to the promotion aspect of the marketing mix.
With promotion we are talking about all the activities that are involved in communicating with customers. We need to raise awareness, generate excitement, and differentiate our product. All in order to make a sale.Promotion in the marketing mix can learn a lot from innovation diffusion. The promotion that works for one adopter group does not work for the one to the right. And, we need to change message and channels from exclusivity to social proof to get… Click To Tweet
Relevance to innovation
Adding new, or improving existing, features is an obvious place where we can apply innovation. But so is the place. Both in terms of who and how we are selling – direct to the customer, through middlemen, and the reverse as part of circular economy. And with innovations in the service-scape.
Similarly, we can look at the price in terms of business model. And whether subscription, fee-mum etc are the way forwards.
I like to think of promotion as a similar challenge as innovation diffusion. There we segment the market into Rogers’ 5 adopter types. That is to say, innovators, early adopters, early and late majority, and laggards. And there we find two key insights.
Firstly, we know that promotion activities used for one adopter type do not work for the adopter type to the right. Our promotion has to change.
Secondly, Maloney’s 16% rule tells us that the message and channels used need to change after 16% adoption is reached. Innovator and early adopters types need to see scarcity and are reached through exclusive PR. After that, we need to change to a message of social proof (look, everyone else is using it) and the use of mass media.
Criticisms of the 4P Marketing Mix
In “The Marketing Mix Revisited: Towards the 21st Century Marketing” Constantinides collects criticisms (and the proposed extensions) of the 4 Ps from a variety of perspectives.
He highlights, from a consumer marketing perspective, that the modern-day consumer is different than back in the 1960s. They are more powerful and aware. He references several studies that show the 4P mix has a lack of customer orientation, has no customer activity or strategic elements. Various authors suggest adding more Ps, or several Cs (including customer). One critique suggests 5 Vs instead.
Constantinides goes on to give similar reviews from the perspectives of Relationship-, Services-, Retail-, and Industrial-Marketing perspectives.
And let’s not forget, the 4Ps is limited to one view of the world:
the four P’s represent the sellers’ view of the marketing tools available for influencing buyersKotler, “Marketing Management, 11th Edition” (2013)
Despite these criticisms, we find the 4 Ps remains a cornerstone of marketing and business school teaching. Constantinides covers why this may be so in the introduction of his paper.
So, the 4Ps is a marketing classic and deserves our attention. But let’s not gloss over the criticisms it has received. Not least those related to service. You can read my article on the service marketing mix where I dig deeper into how the mix is traditionally enhanced to 7 or 8 Ps.
And after that, I take a look at what a marketing mix might mean if we look at it through a service-dominant logic lens. Arriving at what I am calling the Synthesis Marketing Mix.