3/5/13 1:02 PM The Demise of the 4 Ps Has Been Greatly Exaggerated

Page 1 of 4 http://www.marketingprofs.com/articles/print/2005/1517/the-demise-of-the-4-ps-has-been-greatly-exaggerated
The Demise of the 4 Ps Has Been Greatly Exaggerated
by Paul Barsch
Published on June 7, 2005
A recent book by a popular CRM expert declared the era of the 4 Ps effectively over. The author argues that product, promotion,
price and place are no longer key to providing sustainable differentiation.
In addition, he says, the use of this marketing mix merely keeps the enterprise at par with the competition.
And while the author makes many compelling points, the key question remains: has the oligarchy been dethroned and is the reign
of the 4 Ps over?
Simply stated, No; or, to paraphrase Mark Twain, rumors of their demise have been greatly exaggerated!
The global economy has changed the game for all players. Competition has emerged from low-cost-labor Asia/Pacific countries and
contract manufacturers. Outsourcing has spanned the globefrom Ireland to Russia to India. Powerful global brands like Samsung,
Nokia and Lenovo are emerging and taking dominant form.
Consumers, once satisfied to take whatever products and services the market produced, are now more savvy, information-driven
and have more choices than ever. Many companies and industries under threat from these forces yearn for simpler times.
Yet some companies are not only surviving in global economy, they're thriving. Some are regional players and others span
worldwide empires.
A common denominator for these companies is that they leverage the power of the marketing mix (4 Ps) to achieve new heights,
capture new markets and grow revenues at astronomical rates.
Some are mastering one aspect of the marketing mix, some are attempting to be dominant in all of them. But one thing is certain
differentiation can still be squeezed from the 4 Ps.
Product
While the global economy has made rapid time-to-market an imperative, especially since low-cost producers are quick to copy good
ideas, there's still competitive advantages to be found in innovative products. The consumer is looking for products that capture the
imagination, or sometimes just plain work better than alternatives. One of the last bastions of differentiation might be product
design.
Todd Moses, founder of the Paper Pro stapler, would probably agree.
In a recent Business 2.0 story, Moses was looking for a better staplerone that could staple through 19 pages without jamming.
Seeing nothing on the market that could fit his needs, Moses designed a stapler with a compact recoil spring that could staple 20
pages with seven pounds of force. (Typical staplers took 30 pounds.)
Now that over one million Paper Pro staplers have been sold, it's clear that the innovative product wins in the marketplace.
In another example, Apple computer has emerged from a has-been to one of the hottest product companies in the past 10 years.
One need look no further than the iPod for a dominant product.
According to NPD Group, the iPod has 92.7% market share in the MP3 player market. Incredibly, the closest competitor struggles
with a mere 3% of the market.
3/5/13 1:02 PM The Demise of the 4 Ps Has Been Greatly Exaggerated
Page 2 of 4 http://www.marketingprofs.com/articles/print/2005/1517/the-demise-of-the-4-ps-has-been-greatly-exaggerated
With a simple-to-use operating system that is truly intuitive, and small ear-bud headphones that could be considered the best on the
market, the iPod is far and away not only the market leader but also the market favorite.
Apple doesn't win because it has a product that no one can copy. Indeed, Dell's DJ, Creative's RIO and other MP3 players are
arguably very similar in features. Industry watchers also see a challenge to the iPod's dominance with cellular phones that play MP3
files.
While competitive devices swarm into the marketplace, Apple will keep winning in the marketplace because the iPod captures our
imagination. It brings the universality of music into a compact device that's so easy to usethe owner's manual can be thrown in
the trash. This year alone, according to the Apple Insider, Apple is challenging its retailers to move over 100,000 iPods a week!
Two simple examples, the Paper Pro Stapler and the red-hot iPod, prove that Product can still win in the marketplace.
Promotion
Love him or hate him, there's probably no one on the planet better at promotion than Donald Trump. Whether it's blatant and
shameless self-promotion, or promotion for his hotels, casinos or golf courses, Trump has mastered the art of public relations,
branding and personal selling.
If you ever visit New York City, you can't get away from Trump. As you tour the city you'll run into Trump Tower, Trump Park
Avenue and Trump World Tower, just to name a few.
Every Trump property has his name prominently displayedbranded, if you willon the front of every building. Taxi cabs across
NYC show the face of Trump and his NBC television show, "The Apprentice."
Even if you don't tour NYC, Trump's empire is ubiquitous. There's now Trump Ice bottled water, Trump tailored suits and five books
on how to think like Trump and become a billionaire. And it's impossible to forget: two words that have been etched into our
collective psyche from "The Apprentice""You're fired."
Trump critics keep wondering when the populace will tire of his endless self-promotion. Perhaps in the near future the Trump brand
will reach the point of saturation, but it's not there yet. Anything with the Trump name sells. In Florida, the Trump Tower Tampa
condominium highrise had 70% of its units sold a month before the sales office even opened. And Trump golf courses on the East
Coast still command $300,000 membership fees and annual dues of $15,000.
Trump succeeds in the art of promotion for a few reasons. The first reason is the sheer force and personality of Donald Trump. He
is absolutely shameless in his self-promotion. Everything is "the biggest", or "(h)uge"with a New York emphasis on the "u."
Is every Trump property the biggest or the best? Certainly notlook no further than his struggling three casinos.
Yet Trump, during every press conference, every interview and every taping of "The Apprentice" keeps reminding us that he works
with "only the best" and that "quality" and the name "Trump" are synonymous. Reminded enough times, pretty soon we begin to
believe it.
The second reason that Trump is a master of promotion is that he realizes every moment and every interaction is an opportunity for
promotion. During job interviews, Trump reminds candidates that they would be working for the best company in the world. During
meetings with vendors he reminds them that to work with Donald Trump means instant cachet. Customers pay a premium to
acquire a Trump condominium or golf membership. Employees, vendors and customers all want to work with Trump.
Even if it's widely held that Trump is a little bit over the top with his promotional abilities, it doesn't matter. He's a billionaire.
Businesses small and large can learn from him.
Price
Pricing decisions are rarely easy, and in fact are most often complex. In the airline industry, for example, dynamic pricing software
changes prices based on seat availability and flight demand. Hotel chains often adjust their pricing in real time based on levels of
occupancy. And in consumer industries, retailers often hope for an across-the-board margin, say 20% across the storebut
competitive forces often adjust pricing by the aisle and item.
One company, Planalytics, even helps retailers like The Home Depot and J.C. Penney manage risk and forecast demand for their
3/5/13 1:02 PM The Demise of the 4 Ps Has Been Greatly Exaggerated
Page 3 of 4 http://www.marketingprofs.com/articles/print/2005/1517/the-demise-of-the-4-ps-has-been-greatly-exaggerated
products based on weather patterns. The more data (past sales, seasonality, weather patterns, etc.) made available to pricing
decision makers, the more pricing can be adjusted in near real time to maximize revenues.
Pricing can take on a new dimension when seeking new market opportunities. Let's turn again to Apple Computer: Marketing
professionals at Apple saw that the price point of $299 for an iPod, or $249 for the iPod mini, was reasonable for most consumers.
Market research, however, showed that a whole new segment of buyers would jump on board at $99 for an Apple MP3 player.
Hence, the Apple iPod Shuffle was born.
Small, sleek and hip, the Shuffle is a flash player that gives users the ability to hear music files in order of download or in a random
format. Walt Mossberg of the Wall Street Journal notesthat the Shuffle is "a good product that will enlarge the iPod's appeal,
especially with kids, people on low budgets, or people who work out. I imagine some existing iPod owners will also buy Shuffles as
sort of add-on players. And the iPod juggernaut will roll on."
In the marketing mix, "price" does not necessarily mean "cheapest." There are plenty of enterprises across the globe selling
products and services at premium prices. One of the most outrageous examples is Juicy Couture jeans. A recent BusinessWeek
article titled "To Live and Thrive in LA" pointed out that the founders of Juicy Couture are getting $178 for a ripped pair of jeans and
$395 for a hooded sweatshirt lined with rabbit fur.
In this age of commoditization and cost reduction, companies are feverishly trying to figure out how to lower their costs and in many
instances are turning to the outsourcing of labor, production and even design. And while those might be good strategies to stay
competitive on cost, pricing strategies should not be overlooked.
Companies should be asking their customers more than just "at what price will you buy my product/service?" Instead, the better
question is "what product/service would you want to buy from meand at what price?"
Place
While many enterprises have long looked at product, pricing and promotion as ways to expand revenues, one of the strongest
strategies in the marketing mix is place. There are many companies that have mastered the art of distribution, although few of them
have achieved competitive advantage.
Dell Computer, with its direct to consumer model and high-powered Internet sales strategy, is commonly cited as one of the best
examples of dominating a channel. Another company bent on expanding its brand, ubiquity and availability is Starbucks.
A recent Wall Street Journal article titled "Cautiously, Starbucks Puts Lobbying on Corporate Menu" says that Starbucks "boasts
9,100 stores, up from 676 a decade ago! and opens an average of four stores and hires 200 employees each day."
There's a Starbucks in just about every city, often two or three. And many grocery stores are either selling Starbucks coffee by the
bag or have a coffee kiosk at the front entrance.
Not stopping at coffee, Starbucks has entered the music business, offering private-label CDs in its stores. And aiming to get its
product in the hands of as many consumers as possible, Starbucks also recently struck a deal with Jim Beam to market coffee
liqueur. Starbucks is after nothing short of market and channel dominance. All told, according the article, Starbucks plans to open a
total of 30,000 coffee houses, from the 6,500 today.
Smaller companies are also learning how to squeeze competitive advantage out of "place." A Business 2.0 article estimates that
Curves, a gym for women only, has surpassed 8,000 locations through the power of franchising. McDonald's took nearly 25 years to
open 6,000 outlets, so 8,000 Curves properties in 10 years is phenomenal. Curves, like Starbucks, has found that market
dominance can be found through expanding (profitably) faster than the competition.
In the marketing mix, "place" is much broader than simply mastering channel sales. It's also optimizing the supply chain. An
effective supply chain can be the difference between a barely profitable company and one that dominates. Getting the right product
to the right place at the right time (and at the right price) ultimately increases customer satisfaction and prevents money from being
left on the table.
Placement is still a winning strategy. Going forward, those companies who have mastered distribution channels and can supply
those channels with a high performance supply chain will enjoy the upper hand in the battle with competitors.
Mastery of the 4 Ps
3/5/13 1:02 PM The Demise of the 4 Ps Has Been Greatly Exaggerated
Page 4 of 4 http://www.marketingprofs.com/articles/print/2005/1517/the-demise-of-the-4-ps-has-been-greatly-exaggerated
Some of the enterprises profiled in this article have mastered one of the 4 Ps; others, such as Apple, are enjoying advantage in two
or more aspects of the marketing mix.
Success does not come easily, however. The strategy, while plain and simple, is difficult to execute. The winning strategy, and
mastery of the 4 Ps, requires for an enterprise to know the customer.
Curves, Starbucks, Apple and even Donald Trump know their customer. Customers need and want the self-esteem that Curves
gives them, the exclusivity of the Trump brand, the quality of a cup of Starbucks and the innovation that Apple delivers. Products
and services must tug on our heartstrings, cater to our emotions, fulfill our desires.
Connecting to customers needs to be more than lip service. It needs to be more than an investment in CRM software. Customer
connectedness is a pervasive attitude across the enterprise that is genuine, real and consistent.
It's not enough to have the lowest price, the most outlets, the fanciest product or the best promotional strategies. Mastery of the 4
Ps requires deep customer intimacy.
Mastery involves asking which of the 4 Ps is most important to the customer and then assessing what can be deliveredprofitably.
For Starbucks customers, low prices are not the issue. After all, a latte can cost $3 or more.
Customers care about quick service, convenient locations and a quality product. Recently, when Starbucks raised prices 10 cents
across the board, coffee drinkers didn't blink and sales are stronger than ever.
The 4 Ps aren't deadnot even close. Differentiation can still be squeezed from the marketing mix. To win in the marketplace, an
intense and intimate knowledge of the customer is required in a way that no competitor can match. That understanding must then
be applied in a relentless focus on the elements identified by the customer as most important.
Talk to customers, engage customers, live and breathe them. Then use the marketing mix to satisfy them. The seldom-used path of
competitive advantage beckons. Walk it.
Close this window Copyright notice
Copyright 2000-2013 MarketingProfs.com
All Rights Reserved.