Why the Four Ps of Marketing are Dead
Did you ever study the Four P’s of Marketing at College? Well, Out with the Four P’s and in with the ABCDE’s of marketing.
As The Digital Economy explained, the industrial age paradigm in marketing founded on traditional media. The old paradigm was one of control, simple and unidirectional: firms market to customers. We create products and define their features and benefits, set prices, select places to sell products and services, and promote aggressively through advertising, public relations, direct mail, and other in-your-face programs.
This was possible because print and broadcast technology were centralized, one way, one to many and controllable. Marketers extolled the need to focus on customers; be customer centric, create great experiences, promote and defend your brand. Public Relations was the business of communicating and controlling “messages.” Customer input was achieved through solicitation – as in surveys and focus groups. Customers were outside the boundaries of the firm and not really engaged in actual innovation, let alone in ongoing product and service co-creation.
The Brand was an image, badge, promise, trustmark or “word in the mind.” Industrial age marketing models emphasized pushing images, messages, and other marketing content. All this is best summed up in the famous “Four P’s” of marketing – having the right product, being in the right place with the optimal price and effective (one way) promotion.
Many forces are changing this situation. Most pundits emphasize how the technology paradigm is no longer broadcast but interactive. The new media are distributed, one-to-one, many-to-many, difficult to control and more neutral. Rather than a passive audience, the recipients are users, actors and collaborators. They provide a platform for new kinds of engagement, communities and customer co-creation.
However there are other forces. The impetus for a new marketing model is also stimulated by a new generation of consumers. These “digital natives” of the Net Generation have a different culture than their baby boomer parents. They behave differently as consumers and are more effective scrutinizers of product value.[i]These new consumers want to be engaged.
As a result, customer centricity is being turned upside down. Rather than simply listening to customers, companies must and can truly engage them. Customers become value creators themselves through new forms of collaboration. Companies can use the Web to build rich experiences that endure. The brand, rather than being just an image, promise, or “word in the mind,” can become, in part, an actual relationship between a company and its customers.
There has been some progress in using social media for effective customer interaction but the old paradigm in marketing remains intact. Today companies need to build wiki brands,[ii] and integrated customer experience platforms. There are important breakthroughs in mobile and geo-spatial technologies that change many aspects of the customer experience. Social analytics can pay off big time. Because of transparency companies are becoming naked. And if you’re going to get naked you better be buff – showing integrity and consider the interests of their customers to privacy.
I don’t think it’s an exaggeration to say that this combination of forces completely changes marketing.
- Rather than Product — think Experiences.. Today they are mass customized, service-intensive, and infused with the knowledge and the individual tastes of customers. Companies must constantly innovate, and product life cycles collapse. Customers now participate in creating products and services through business ecosystems. Increasingly young consumers don’t want products – they want experiences. The old industrial approaches to product definition and product marketing are toast.
- Rather than Place – think Anyplace. Every business competes in two worlds: a physical world (marketplace) and a digital world of information (marketspace). B-webs enable firms to focus on the marketspace by creating not a great Web site but a great B-web and relationship capital. Hearts, not eyeballs, count. Within a decade, the majority of products and services in many developed countries will be sold in the marketspace. Today geospaciality is delivering what we might call the marketface – the intersection between place and space. With tools like GPS, Google Glass or Layar, consumers can explore the physical world including the marketplace with their digital devices. Ask your device where to find a store that sells Prada shoes within half a mile of your location. Look down a street through the video camera on your device and ask it to point to the ATMs. View the hotel in front of you and ask for room rates and availability.
- Rather than Price, Think Price Discovery. Enabled by online marketplaces, dynamic markets and dynamic pricing are challenging vendor fixed pricing. In these early days of new price discovery mechanisms we question even the concept of a “price” as customers gain access to mechanisms that allow them to state what they’re willing to pay and for what. As John Svoikla pointed out inRed Herring years ago, price is a crude measure. It reflects in a single number all the attributes that customers may value in a product – time, effort, craftsmanship, innovation, fashion, status, rarity, long-term value, and so on. Customers will offer various prices for products depending on conditions specified. If you deliver this afternoon I’ll pay A. If I can buy this quantity I’ll payB. I’ll accept certain defects and pay C. If someone else will pay D, then I’ll payE. Buyers and sellers exchange more information and pricing becomes fluid. Markets, not firms, will “price” products and services. New companies like Exchange Solutions now create markets where price and money are only one of the variables in value.
- Rather than Promotion – Think Collaboration. Advertising, promotion, publicity, public relations, and most other aspects of corporate communications are archaic concepts. They exploited unidirectional, one-to-many and one-size-fits-all media to communicate “messages” to faceless, powerless customers. The Net Generation’s “N-Fluence” networks are powerful new forces that marketers must engage. Even traditional broadcast advertising can be transformed, as was the case of the Doritos Super Bowl ad contest – where Doritos engaged their customers in creating product ads (by my reckoning to great success).
The web upends control. Friction breaks down among customers and between you and your customers. They often have access to near perfect information about products, and power shifts towards them. Customers, no longer external entities, participate in your firm’s Business-web through multidirectional, one-to-one, and highly tailored communications media. They control the marketing mix, not you. They choose the medium and the message. Rather than receiving broadcast images, they do the casting. Rather than getting messages from earnest PR professionals, they create “public opinion” online with one another.
Rather than promotion, companies should collaborate with customers and seek to build relationship capital. For the first time, a company can forge two-way, interactive, personalized relationships with all its customers on a mass scale.