What are the 4Ps of the Marketing Mix

The 4Ps are one of the key concepts that underpin marketing strategy and tactics. The Ps stand for Product, Price, Place and Promotion. They were conceptualised by the distinguished US marketing and research academic, E Jerome McCarthy.

Before we look at the 4Ps in detail let’s summarise the difference between strategy and tactics:

Strategy: Sets out which direction you have selected to achieve the macro marketing objectives your organisation has set. In marketing terms this might be to increase share by depositioning weaker competitors or to increase sales by increasing market penetration into new audiences. Think of strategy as the journey you need to make to get to your destination relative to everything else that is going on in the economy and in your category. Strategy is about the management of your resources in your business environment. Strategy is delivered over the medium to long term – it usually takes time to deliver, months and sometimes years. Strategy is what you’re going to do to achieve your objectives.

Tactics: Sets out the individual actions you will undertake in order to deliver the strategy. In marketing this might mean increasing revenue by increasing prices and using advertising to drive preference and reduce sensitivity to price.  Think of tactics as the individual decisions you have to take to complete your journey. Tactics can happen quickly – days, hours or even minutes.

Against this background the 4Ps are not exclusive to strategy or tactics, they can contribute to both. Let’s examine how each of the 4Ps works in a bit more detail.

P1 – Product

• What do we mean? Products have attributes which can confer advantage, or mean that the product lags behind market trends. If the product is ahead of demand trends, it should perform well in market. If it’s behind, it will do less well. The development of attributes is referred to as NPD – New Product Development – the more NPD generally means better, more competitive product and vice versa.
• Examples –
  • Apple used product technology to revolutionise the mobile phone market. Apple’s iPhone set totally new standards in mobile technology by combining a phone, a music player and a web browser, not to mention developing its associated app marketplace. Today Apple still retains around 24% of the mobile market.
  • Toyota led the way in hybrid auto technology development and retains the dominant share in this category.
• Timescale – All products (and most services) have to be researched, designed and tested before they can be launched. Product development generally takes time, it can be months and, in some cases, it can be years.
• Strategic or tactical? Such are the costs, resources and timescales required product development it has to be regarded as a strategic issue.

P2 – Price

• What do we mean? Price is what we pay for goods and services. There is no question that price can change consumer behaviour. As a general rule the lower the price of a good, the more units it will sell and vice versa. However, a high price can also be used to assert and reinforce superiority in a category. Discounts and sales promotions fall under the Price element of the 4 Ps.  These can be used tactically to change price for short time periods and increase sales for price sensitive goods and services.
• Examples –
  • Aldi commits to no frills value and prices itself as being seen as the lowest price supermarket.
  • John Lewis used to guarantee that they were “Never knowingly undersold”. Recently, this mantra was dropped. Since then, the company’s fortunes have changed suggesting this price promise had a positive impact on consumer behaviour.
  • Stella Artois is positioned as reassuringly expensive.
• Timescale – Price changes and promotions can be activated quickly, by day in retail and in real time in online / e-commerce environments. however, there can be longer term commitments to price vs category average. The Stella example shows a long-term commitment to upholding a price premium to position a brand. We could say that supporting a premium price is a longer-term initiative, reducing price is a short-term initiative.
• Strategic or tactical? Price reduction and discounting can be tactical in the short -erm but maintaining a long-term low or premium price relative to a category average usually requires a longer-term strategic commitment. In the case of Aldi, the whole business – from supply chain to checkout is structured around delivering a low-price, this is a long-term strategic initiative to secure a market specific position.

P3 – Place

• What does this mean? Place means Distribution. It’s where and how consumers are able to buy your product. For many years, distribution was simply about retail, but since commerce has migrated to online, distribution has now had an online manifestation. This could be the more generic impact of e-commerce such as wider access to product through much reduced impact of distance, but it’s also about how consumers assess distribution quality. Quality can be measured through speed of delivery, ability to try and buy and the returns policy.
• Examples –
  • Traditionally, retailers would sell more products if they increase their number of stores and vice versa.
  • Banks continued to close branches as more and more of their customers transition their banking activities from the counter to online.
  • Amazon revolutionised distribution by creating a massive and accessible e-commerce platform.
  • Apple revolutionised how music is distributed and bought.
  • ASOS revolutionised the distribution of multi brand clothing and fashion items.
  • Netflix has revolutionised how we consume movies – and had effectively killed off other physical formats such as DVD.
  • In the e-commerce world, delivery times, costs and returns policy all form part of the distribution characteristics of a company or brand.
• Strategic or Tactical? Traditional retail distribution networks are a strategic asset but they can be leveraged in a tactical way. They are strategic because they involve the use of a lot of capital and are slow moving. They can be leveraged tactically through localised incentives. Digital channels e.g. ecommerce are distribution channels but they are much more flexible and can therefore be used both strategically and tactically.
• Timescale – changes in traditional retail distribution are generally slow moving although the opening and closing of retail stores can have a significant impact on short term revenue. Changes in e-commerce distribution policy can have a quick effect. Increasing delivery costs or free delivery thresholds can have an immediate effect on consumer behaviour.

P4 – Promotion

• What do we mean? Promotion means marketing and advertising communications. In the marketing mix, promotion does not mean price promotion. Price promotion sits under the price element of the marketing mix. Long term commitment to advertising spend can confer competitive advantage and a long-term commitment to investing on a share of category spend (Share of Voice or SOV) that is greater than your market share (Share of Market or SOM) has been shown to drive growth.  This is called excess share of voice or eSOV. See a post on this topic here. Commitment to advertising consistently and at scale is a core component of consumer goods marketing where prices are generally low, decision making is as much emotional as it is rational and consumer purchase decisions are made quickly on System 1 ‘autopilot’ decision making. To enable this high mental availability is required, and that in turn requires always on advertising which is efficient at reaching mass or large segment markets.
• Examples –
  • Examples of large scale “always on” advertisers include Unilever, P&G, Sky, McDonalds and Tesco – these brands represent over £500m in adspend – seems a lot, but for these mass market brands, they are investing less than £10 per person per year to maintain high mental availability and high brand preference.
  • Of course, these brands are not representative and there is a long tail of advertisers who use much lower spends to deliver targeted communications to build online traffic, clicks, leads and sales.
• Strategic or Tactical? Clearly promotional communication activity can be both strategic and tactical. We talk about ‘brand building’ and we talk about ‘performance’ media. There is little doubt that strategic activity is about