Photo: RetailWire
Are the four Ps of marketing irrelevant for retailers?
Through a special arrangement, presented here for discussion is a summary of a current article from the IMS Results Count blog.
For centuries, retailing has been based upon the four Ps — product, price, promotion and place. Retailers still “sell” products at a price both online and in-store. So why are the four Ps now being assailed as both inadequate and ineffective?
In the age before Amazon, retail was all about location. Customers had to come to stores to purchase. Retailers could differentiate by carrying different selections of products. And before online, pricing and promotion were instrumental in attracting customers and driving store traffic. Today, it is virtually impossible for an individual retailer to differentiate solely on product or price.
But the real reason that the four Ps are dead is the change in customer behavior and their expectations. Today’s omnichannel consumers shop anytime and everywhere. They expect “unlimited” product selection, with the ability to price compare, all from the convenience of the new “place” of retail — their smartphone.
In a column on Forbes.com, Pam Danziger, president and founder of Unity Marketing, maintains that, while many still cling to the four Ps because they can control them, retailers must align with today’s experience-driven customers by focusing on the four Es:
- Experience – The sum of the customer’s experience is the new “product.”
- Exchange – The customer doesn’t just want a catalog of products at a price; they want an exchange of ideas, information and value beyond price.
- Evangelism – Promotion is not enough, and customers are tired of being bombarded with deals. Evangelism really translates to “engagement” that is personalized on the customer’s terms, lifestyle and values.
- Everyplace – Stores have been replaced by “everywhere,” and communication must now be everywhere as well.
Others have argued for even more Es: Emotions, Execution and Engagement. Whatever Es you choose, the emerging picture of retail success requires transformation to a very customer-centric, experiential business.
Discussion Questions
DISCUSSION QUESTIONS: In what ways may the four Ps of marketing be falling short for retailers in the age of omnichannel? Which themes should replace them?
Poll
BrainTrust
Phil Masiello
Founder and CEO, CrunchGrowth Revenue Acceleration Agency
Ron Margulis
Managing Director, RAM Communications
I wouldn’t say that the four Ps are dead. “Place” of course becomes less relevant when shopping online, however I will even say that “place” is critical when it comes to website design. If a shopper doesn’t easily find the product they are searching for, then “place” on the website is most critical. This can be enhanced with technologies like intelligent sequencing, for instance.
“Product” is key because if there isn’t a compelling product in the mix, then no further shopping journey will happen. Next “promotion” is all about creating awareness for the product and/or service. If the shopper doesn’t see any interesting campaigns either online or in-store, then the advocacy for the brand wanes quickly. Finally, how has “price” become irrelevant?!
I hear the message in the article, however I don’t think we should abandon the four Ps quite yet.
I like these new 4Es of experience, exchange, evangelism and everyplace proposed in the article, which collectively reflect experience. This is a consumer necessity while the productivity of places, processes and people are essential to the retailer.
What has been intelligent behavior by marketers in the paid-owned-earned media model is now challenged as the importance of the store visit experience increases. Quality of experience equals quality of commerce when benefits including discovery, product assessment and immediate fulfillment are considered against price. In-store digital experience contributes to brand and location appeal.
The Four Ps of marketing have always been irrelevant because they leave out the customer. The problem that brick-and-mortar retailers are facing is simple. Retail is retailer-centric and e-commerce is consumer-centric.
Amazon wins because Amazon puts the customer first.
A simple method for marketing is to think about your customers and determine who they are. Think about them in a way that allows you to build a buyer persona and give that persona a name, like Mary. Now you are no longer marketing to an abstract, you are marketing to Mary. Engage with Mary where ever she is and that will allow your business to thrive.
Understanding your customer thoroughly is the most effective marketing tool in existence.
I don’t care if you have the greatest and most engaged staff, offer the best experiences and interact with the shopper everywhere, price will always be a key factor in retail marketing. Even in times of relative prosperity and especially during economic downturns, price is critical. You think Amazon is stealing market share solely with customer experience, product assortment and convenience?
I think that in many ways the marketers are not in touch with reality at the store level and neither are the retailers. We hear the word “experience” constantly and yet how many retail stores provide one? I am amazed at how often a company spends millions of dollars on an ad campaign to get customers in their stores and when the customer goes into the store there is no representation of the campaign anywhere. Currently, I would site Office Depot’s great TV ad campaign, “Taking Care of Business.” Go into any of their stores and there’s not even a sign saying “taking care of business,” let alone any connection to the TV promotion. So we can say omnichannel, we can say “experience” and retailers can still think about the four Ps or the four Es. But until marketers get together with operations, merchandising and training and all collaborate to deliver the best customer experience with everyone on the same page, nothing much is going to change.
Like most declarations of fundamentals being “dead,” this one is overwrought. I get Chris’s points and agree with them — no issue there. But it is more instructive to think of the Four Ps as living principles that must adapt in execution to new circumstances and tools. “Product” is now “whatever I want.” “Place” is “wherever I am and can get it when I want it,” etc. Adapting to change is mandatory — but abandoning the core guarantees will mean that the new direction and initiatives will implode into an ill-maintained foundation.
The four Ps are far from dead. They may be more relevant today than ever.
Start with place — instead of the store its my laptop and instead of going to the store to buy, the product is delivered to my home.
Product is about delivering the unique selling features that a certain customer wants. How can that ever go away?
Price is the dollars and cents of an item, it is the value of the item to the buyer.
Promotion isn’t just cents off, it is communication.
To me it is impossible to operate in any selling world without dealing with the four Ps.
The day internet shopping became a thing, the four Ps were dead — for retailers. For manufacturers there is still a lot of value in that theme — you’re not going to go wrong if you done a good job on all four. The Es, on the other hand, may not make sense. Yes some people may want an experience with the product — most just want the product. There’s a small need for an exchange of ideas and engagement — but again, most just want the product at a good price when they want it.
I don’t think the four Ps are dead, but retailers’ ability to control the transaction using these tools has diminished in our age of consumer empowerment. Pam Danziger offers an alternative view, but it’s really a way to supplement marketers’ conventional wisdom with a more holistic view.
Of the four P’s, I continue to feel that “product” is the most important. Whether the consumer is buying online or in-store, and whether he/she is looking for a transaction or an “experience,” there is no substitute for well-conceived and well-edited content.
We witness too many flops that focused more on the four Es instead of the four Ps.
Amazon competes on the four Ps — product, price, promotion and place and everything they do centers around the four Ps.
Good article and great discussion. No one is wrong with their comments and it reflects the disruption that is happening in retail. My 2 cents is that what was always missing from the four P’s was the fifth (and most important) P — people. Customers and staff are the most important focal point. Setting customers aside for a moment, consider how much more staff now mean in the retail equation. They are fundamental to providing the in-store experience and need to be treated and invested in accordingly.
Great point Kevin, I definitely notice a correlation between the happier store associates in certain brands and the experience and the not so happy associates in other brands. I often wonder is this just down to wages or perhaps a combination of influences such as training, corporate culture etc. I think the experience is driven by the people agenda as much as any other factor, at least in the physical realms of shopping. Of course the price and or good value is also important given the US consumption and wages history over the last several years.
The four Ps have been outdated and irrelevant for at least a decade because they are company-centric and the marketplace is now consumer-centric. If companies continue to organize their companies around their own needs then they are not going to succeed. Consumers control what information they want to see, when they want to see it and what products they want (they can design new products with 3-D printers for themselves). They search for the price they want to pay, want delivery where and when it is convenient for them and want access to delivery information. In addition, consumers want to talk with companies, help design products, give feedback and have attention paid to that feedback. Designing products, place, promotion and price from inside the company will not satisfy these consumers.
There have been a number of proposed alternatives. While the letters and numbers differ, the one thing that remains consistent is that the concepts have to be consumer related. For example, the following Cs:
All of the Cs present the consumer perspective rather than the company perspective which is reflective of today’s marketplace.
It is tiring to face newly-coined marketing theories like the “four Es” day after day (look up the great Mark Ritson video “7 Ways to Make Marketing Great Again” for a superb, common sense take-down of the marketing industry’s desperate need to claim the old is dying).
The four Ps remain the core of marketing for a retailer. And there is real truth that Es are important. But they are merely part of the four Ps. Place? Um. The internet is a place. And a retailer needs a strategy for leveraging their places as a unified force to drive sales. That seems pretty simple and obvious.
The point of the four Ps is that each marketer/retailer needs to develop their own strategy for succeeding within the Ps and for the Ps combined.
What concerns me most for retail is that it’s far more exciting (and possibly easier to win with internal politics) to spend time with these big theories than to do the truly hard work needed for success: Sorting out how to succeed by creating a strategy that uniquely leverages products, places, prices and communication then implementing that strategy.
To begin with, I find that the notion of “the age of omnichannel” falls short and is therefore irrelevant. And … that’s the point.
Omnichannel thinking may have made limited sense, emphasis on maybe, in a world where shopping options were going to be eternally confined to physical, websites and mobile. But our shopping options are way past that now — Amazon’s Echo and Dash button and the IoT being the obvious, but hardly the only, examples.
The point is it is too easy to get caught in the narrow parameters of definitions. The four Es aren’t any more or less instructive than the four Ps. The key is to understand how the foundational constructs of retailing are modified over time and on the consumers’ terms.
Sixteen years ago Fred Crawford and I extensively researched this question for The Myth of Excellence. What we found was not that elements like price were no longer important, but that consumers defined price much differently than retailers did. Ditto with access, experience, product and service.
So rather than invent cute new buzzwords or more marketing rhetoric, it’s past time we started looking at how ideas like “price” evolve over time. There’s nothing wrong — in and of themselves — with the four Ps, but there is something terribly wrong with us trying to force a 1977 view of the world onto 2017.
The four Ps fall short when marketers think about them in their terms rather than in terms of the shopper. It’s really a question of perspective and getting out of your own way to understand what people want. Instead of dismissing e-commerce as a threat to their businesses, companies should ask “why do people want this?” and then, “how can we satisfy those needs?” Businesses are only as successful as their customers allow. Focusing on the four Ps or four Es from the wrong perspective will get you in trouble every time.
Location, location, location no longer appears to have the power it once had in comparison to online, and that was extremely important to the success of any brick-and-mortar store. Online matches product, promotion and price, so it would appear the brick-and-mortar mass retailing store is going to have to morph into something completely different than what it is right now. It’s hard to say what technologies will alter how brick-and-mortar engages shoppers, or how much of a hybrid of online and physical store retail outlets will have to become. But the three Ps are no longer going to be the guideposts. Let’s see what happens with Whole Foods.
I don’t think you can call the four Ps dead, but I see a lot of value in the four Es as well. I think the reality is that retail is becoming increasingly a combination of the two. Really though, marketing needs to be rooted in the customer. If you know who they are and what they want then you can serve them better. For example, I think location or place is actually still very important, but it’s shifting towards using the smartphone and the customer location to recommend products and stores and spaces that are near where they are at any given time. That offers a great opportunity for a nearby store to engage with a customer and draw them in.
I don’t think any of the 4 P’s is going away (except, I guess, place). The current problem is that we have e-tailers in many cases essentially giving away merchandise, so price has become all-important. But I don’t think that can go on forever (he types, with crossed fingers).
And even today, product and promotion — i.e. service, availability — are important: sure the I-don’t-know-what-I-want-or-where-to-look customer logs onto Amazon, but thoughtful people already know that’s probably not the best site for them … and I think that number can only grow as e-commerce grows.
CPGs 4 Ps are not complete for retail. There is a fifth P, that is People and it drives meaningful differentiation. Some call it the experience. But in reality all five Ps are the shopping experience.
The five Ps aka Selling Model: Product, Price (merchants); Place, People (operators) and Promo (marketing) all need to be in balance and are defined in terms of the target audience. This requires the 3 key shareholders to be in alignment. It also requires the enablers (IT, finance, HR, legal, strategy) to also be in alignment. All of that aligning is the CEO’s job.
Dysfunctional retail brands are the result of a distorted Selling Model. Distorted selling models fail first.
This model works for all channels: bricks, clicks, and calls.
The problem with the 4 P’s lies in retailers’ execution, not the principle of the P’s themselves. The execution has traditionally focused on what is best for the retailer and not the customer.
In today’s world, the customer is king and applying any thought process that diverges from that is flawed. Why indeed has Amazon succeeded? It’s their attention to the customer first.
Regarding the four E’s — Experience is too often used as a catch-all for addressing (or covering up) too many problems. Yes, experience matters, but again, it’s all in the execution. I’ve spoken with quite a few retailers who admit they don’t lack for ideas and concepts about how to build a great experience but ultimately fail in the execution. How many retailer in the last few years announced they would spend $10’s or $100’s of millions in “omnichannel” only now to be counted among the list of flailing brands losing sales each quarter.
Perhaps the first ‘E’ needs to be Execution after all!
Well for me the 4 Ps are what has got me to this point, and for those who believe they are no longer relevant, I’d like to give you some examples of how it still is, though changing your minds isn’t likely to happen.
Every day, we as store owners are challenged to push hard for finding great values for our customer base, no matter what type of retail you are in. A very strong, focused social media advertising campaign can and will bring customers into your store if you have the right product at an amazing price, and have plenty of it to offer
Yes, I am quite old fashioned, but have learned to use technology to bring customers into my store weekly, and I appreciate everyone’s thoughts. But incorporating the above mentioned 4 Es has been going on for years, with the exception of everywhere, as I do not sell online. I would replace the final E with Exceptional, as that for me is how I win the customer over in how they are treated, and in the great values we provide. It’s just past 5 pm, but I thought I’d add my thoughts on this. Don’t count us out in the Retail game just yet, as there is a lot of fight left in us, and I’ll be around making more comments for years to come.
Product, price, promotions, and place are still crucial. Although the marketplace is changing and there’s a need to create omnichannel experiences to meet the consumers’ changing expectations and behavior, the four P’s shouldn’t be abandoned, they should be adapted and change much like the marketplace itself. Product and price are still very relevant in any channel. Without a good product, there is no purchase. If price doesn’t meet the value or expectation, there is no purchase. Promotions need to align in-store and online to communicate with consumers effectively and drive purchases.
While place changes for the online channel, it doesn’t stop there. It’s important to decide where the product is located on the site, under what category, and if it pops up when people search for it. It’s also important to take marketplaces like Amazon or eBay into consideration. While the experience and engagement are important, the four P’s shouldn’t be forgotten just yet.