Tuesday, February 10, 2015

Are the 4 Ps Still Relevant or In Need of a Major Reset?

If you’ve taken a marketing course over the past few decades you were likely schooled on the 4-Ps: Product, Place, Promotion and Price.

Developed in the early 60s by the marketer E. Jerome McCarthy and popularized by Philip Kotler, the four Ps have maintained a prominent role in how marketers develop go-to-market strategies and set the “marketing mix” – a recipe for balancing the ingredients of revenue success.

For B2B solution providers, the 4-Ps include:
  • Product – a marketer must understand how their product/ service fits into the adoption life-cycle (innovation, early adopter, early / late majority and laggards), as well as product mix - increasing the depth of the product/service features and potentially the number of product/service lines.
  • Place – Where you can purchase the product / service, such as direct from a sales rep, through a channel partner, in a store or on-line via e-commerce.
  • Promotion - Communication to provide information to prospects about the products / services including advertising, public relations, content marketing, and sales presentations, collateral and tools.
  • Price - The amount a customer pays for the product/ service with pricing set based on the perceived value, competitive comparisons and price elasticity.

The big question nowadays, are these 4-Ps still relevant?  In a world that has changed so much over the past 55 years, likely not. Today buyer is more empowered with:
  • Information, leveraging the Internet and social media / peer recommendations to make more informed purchase decisions
  • More ways to buy
  • Products that are more personalized / customized for the individual.

As well, B2B buyers are more challenging, with:
  • Shorter attention spans, now only 8 seconds, less than that of a Goldfish
  • Buying by committee, more risk adverse and involving more diligence in every decision to avoid making a mistake
  • Intense economic focus – caring about the bottom line impact, return on investment and fast payback.
Today, buyers want B2B solution providers to focus more on the derived business outcomes and value-add versus price and push promotions.

As a result, according to research a few years back from Forrester, the 4-Ps of marketing are outdated and in need of a major rethink.

There is clearly a shift away from a traditional product / service / price focus, with buyer’s wanting to emphasize value outcomes. As a result, they suggest a new mantra for B2B, focused on solving customer challenges and delivering value - a move to the new 4-Ps:  Problem, Pattern, Path and Proof.

The 4-Ps of Outcome / Value Marketing / Selling proposed by Forrester include:
  • Problem - What are the customer’s business objectives and challenges –you are helping them to solve. Are they fully aware of these issues, and how will you help them uncover / diagnose new challenges, and prioritize those of which they are already aware. What is the cost of sticking with business as usual / the status quo?
  • Pattern – Once the customer is aware that the problem exists and it is a priority, how will your solution help them solve their problem? How will they use your product / service to overcome the challenges and derive value?
  • Path - How will the solution / service be purchased and how can you help facilitate the ever more complex decision cycle and gain consensus amongst the multiple stakeholders? What does the customer need to be successful?
  • Proof - What is the quantified value the solution will deliver with regards to reducing costs, driving incremental revenue / margin or other tangible business benefit, and what additional business benefits will the solution deliver such as reducing risks, or driving agility? How have others obtained similar value at low risk?

The Bottom-Line

Clearly economic conditions are different, technology has advanced, and buyers have evolved from 50 years ago. Although we shouldn’t totally abandon such time honored approaches, using the same marketing / selling practices of 50 years ago may not be the best approach.

It may be time as well to rethink and evolve / shape the traditional 4-Ps to one focused more on the buyer, more outward in, and less on the product and service, inside out.  Working on Problem, Pattern, Path and Proof just may be what we need to make the shift from product / service centric to value / outcome focused.

Sources:
Wikipedia: Marketing Mix - http://en.wikipedia.org/wiki/Marketing_mix

Forrester Sales Enablement Conference 2010 Presentation

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