Tag Archives: 4Ps

Are the 4Ps part of consumer behavior?

I never would have asked this question, had it not been one of the combinations of keywords that brought people to this blog within the past week. But once asked, the question is too unexpected not to receive an answer.

And that answer is NO.

The 4Ps are, depending on who you ask, a mnemonic device referring to 4 key concerns of marketing (product, price, place, promotion), a model for organizing marketing activity or a tool for influencing sales volume and frequency.

But they are not part of consumer behavior. That is “The process by which individuals, groups or organizations search for, select, purchase, use, and dispose of goods and services”, according to one definition.

Simply put, the 4Ps are stimuli (and they are by no means the only ones). Consumer behavior is the set of responses to these, and other stimuli.

I feel like I’ve done a bit of responding myself ūüôā Hopefully it’ll be of use to whoever wrote the original search string.

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Are the 4 Ps of marketing still relevant on the web? ‚Äď Part 2: Price

A few weeks back, I was arguing for the continued use of the 4P matrix as a valid tool for conceptualizing marketing, including in the online environment. My position was that as a system, they continue to be relevant, as long as we can understand how the definition of each component must be expanded to reflect the new realities.

In the case of products, I stated that the changed environment means a change in the process of facilitating the meeting between wants and needs and those who can service them.

Now comes PRICE. My thinking here is that price as a concept is just as relevant in the connected world as it was previously. As marketers, given the modern structures of communication, we just need to reassess our thinking of price on 3 scales.

1. The price versus purchasing power continuum

The question of whether customers will purchase a good or not is often decided by whether they can afford it or not. We are used to thinking of the ¬†available “out of pocket”, the impact of credit schemes, but the change brought about by the recession and economic crisis is in the time frame in which customers think about affordability. If consumer credit used to mean that something that we could not purchase now can become affordable by staggering payments (and paying a premium for that “affordability in installments”) customers now tend to think a lot more short-term about affordability. “Do I have the money now?” is increasingly used as a gauge of individual purchasing power.

When we think of purchasing power, we often refer to that of our niche target, which could be higher than the average. In the new, frugal, economy, I argue that the average purchasing power should become the reference, as our customers can very easily backslide or simply embrace the lifestyle of earning less as a precaution.

Finally, we need to think about the informational context that defines affordability. Customers can easily monitor the movement of prices across varied categories of goods and may time their purchase to take advantage of the fluctuations (see couponers and the evolution of Groupon and its clones). ¬†This is where our online world differs from the previous generation’s: in its ability to gauge better, quicker, easier when a product moves in or out of the range of our purchasing power.

2. The cost / value ratio

We all know this one, and we’re also told that it is a significant concern to generation Y, who expect more value for less cost. The shift here is, again, in the ability to assess that value. First and foremost is the increased communication, whereby more and more information about the value of a product to various people is available. Traditionally evaluated goods (such as movies, books or restaurants) are now just a few among millions of reviews of everything. More importantly, it’s not only the features and functionality, the usability and durability that are being assessed, but also the more intangible aspects of value such as the experience, or the status that possession provides (for example the “Likes” or other reflections of how others interact with your purchase). Therefore, your price must now be set by referencing a larger, wider concept and understanding of value.

3. Price comparison

We’ve always comparison-shopped, looking for the cheapest version of something we needed or desired. But today, that ability is infinitely scaled up. It is now inbuilt into many stores, especially online. It is now possible with the least amount of effort. If comparison shopping for DIY or furniture or groceries often entailed several trips is widely different directions, it does not anymore. Nor is the separation between our own prices (sale, outlet, etc., regional) possible, and even if trudging all the way to the other end of the country for a cheaper pair of shoes, or asking a friend to buy and ship them is not economically advantageous, the customer is still able to know and question your pricing decisions in regard to him.

This perhaps is the biggest change that the WWW has brought to price, but it does not eliminate the relevance of this second P among the 4. Sure, if you think of price only as your price point, that elusive combination of cost-covering, profit making, affordability, yet desirability at which customers and company are both satisfied, then yes, you are using the “matrix” wrong. But if you understand the new content behind the figure that you must advance, you will find that PRICE is still a whole lot of relevant.

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Are the 4 Ps of marketing still relevant on the web? – Part 1: Product

We’re in the Age of Questioning. We’ve become enamored of revolution. The web that changes how PR and marketing work. The web that changes how the previous web worked. The web that changes how we as people work. And so on…

Mind you, I don’t disbelieve those changes.

I see how Facebook is enlarging that Dunbar number of manageable acquaintances.
I witnessed the incredible surge in worth of mouth arising from the new, social media and its impact on sales.
I experienced personally how the online environment is changing our notions of awareness, notoriety, reputation, interaction and so many more.

But sometimes, I believe we’re being too radical in rejecting what is condescendingly referred to as conventional wisdom. I’ve been stirred into saying something about this by the following post by David Meerman Scott, whose “The New Rules of Marketing and PR: How to Use Social Media, Blogs, News Releases, Online Video, and Viral Marketing to Reach Buyers Directly” ¬†is¬†actually an interesting read filled with useful techniques and a deep understanding of how new media works.

He argues that

I think focusing on the traditional Ps lead directly to failure because the concepts force marketers into a marketing paradigm that just isn’t effective in a social world.

I agree that being hung up on certain ideas impedes our ability to make effective use of new, unusual opportunities, but I disagree with the lack of relevance of the 4Ps.

First, the 4Ps were always more of a mnemonic tool to understand how to structure  and approach marketing, than actual prescriptions for conduct, and as such, they serve the same function in the online environment as in the 1960s markets.

Second, the beauty of concepts is that their content or definition is very user and context specific. Right, justice, morality, love and many other concepts have given rise to sophisticated philosophical constructs that are widely different, although the concept debated is the same.

I propose that that the 4Ps are similar: useful concepts that structure our experience and direct our actions. The mistake is not in the idea of having a concept, or the concepts themselves, but in how they are defined.

So, yes, I agree that we must question our interpretation of the 4 Ps in light of the changes in the marketing environment, but we should not dismiss them out of hand.

Take “PRODUCT”, for example. Meerman Scott argues that “A focus on¬†Product¬†means you create web content about the wrong things.” In fact, in his book he goes on to explain:

Marketers don‚Äôt understand buyers, the problems buyers face, or how their product helps solve these problems. That‚Äôs where the gobbledygook happens. First the marketing person bugs the product managers and others in the organization to provide a set of the product‚Äôs features. Then the marketing person reverse-engineers the language that they think the buyer wants to hear based not on buyer input but on what the product does. A favorite trick these ineffective marketers use is to take the language that the product manager provides, go into Microsoft Word‚Äôs find-and-replace mode, substitute the word solution for product, and then slather the whole thing with superlative-laden, jargon-sprinkled hype. By just decreeing, through an electronic word substitution, that ‚Äė‚Äėour product‚Äô‚Äô is ‚Äė‚Äėyour solution,‚Äô‚Äô these companies effectively deprive themselves of the opportunity to convince people that this is the case.

He’s not wrong. Just incomplete.

In essence, marketing is there to facilitate a transaction. Both parties obtain something.

Party A exchanges a good or service of their making or to which they have somehow added something with party B, in return for something that’s of value to Party A (whether¬†that is¬†another¬†good or service, money, or intangibles such as goodwill or reputation). The condition for that exchange is for Party B to desire what Party A has to offer, to have access to the good or service and to be able to offer what party A desires in return. Admittedly, this is a product centric view, where marketing’s role to create that desire, ensure accessibility, and¬†intermediate¬†the equivalence between party A’s value and Party B’s.

Let’s take it from the point of view of party B. Party B needs, desires, or is lacking (without¬†realizing¬†it) something. In one scenario, ¬†Party A independently¬†offers that something, so marketing’s role is to make the two meet. ¬†In another scenario, Party A has¬†the¬†capacity to cater to party B’s needs, desires or subconscious, but does not now what these are. They desire some value from party B, but do not know what to offer in exchange, and that’s where marketing comes in, helping party B understand what they want or need, and guiding party A towards meeting that need.

Regardless of the scenario, the key , online or offline, is to find whatever X meets the parties’ mutual goal¬†(and make sure that they can exchange it or partake in it and¬†establish¬†a fair,¬†satisfactory¬†value for that exchange.) That X is the¬†“PRODUCT”¬†in marketing, and it does not go away on the online¬†environment¬†just because the paradigm has shifted from product-centric to¬†consumer¬†centric.

True, if you do not redefine the content of “PRODUCT” you end up concentrating on the make-up and features of the X rather than on the customer’s objectives and the benefits they seek, especially in writing or¬†describing¬†that¬†X. It does take away from understanding that there is no intrinsic value in what you produce, its only value comes from doing something or offering something somebody¬†wants¬†or needs. Perhaps it is easier for me because I’ve worked with intangibles, like movies. You can’t speak about the features of a movie, it has none, other than technical¬†prowess. Actors names, directors, technology, are code-words for the experience the user has,¬†which¬†is at¬†the¬†center of marketing. But ultimately, it is still a product and saying “PRODUCT”¬†is not relevant in the online environment is throwing the baby (the value for¬†the¬†customer) out with the bathwater¬†¬†(bad communication).

Similarly, the other 3 PS need redefining, which I will write about in the next few days.

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