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The 4Ps 02
How to design your marketing mix

What the model looks like and how it works

There is an old saying that marketing is about getting the right product at the
right price in the right place with the right promotion. The 4Ps (Figure 2.1)
is an extension of this simplistic view. It describes the four essential compo-
nents of the marketing mix:

Figure 2.1 The 4Ps

Product Place
(Everything about your (The channel by which
offer – all features and your product gets to
benefits) the market)

Target
market

Price Promotion
(The price of your (The promotional mix
product at every level you use to market
in the value chain) your product)

SOURCE Adapted from McCarthy (1960)

Product
This is what a company has to sell. It may not be a physical product; it
could just as easily be a service or a product accompanied by a service. It
is nevertheless what the company offers. Arguably, the product is the most
important part of the marketing mix. It defines who will buy it, how much
they will pay, what features they will find appealing and where it could
be sold.
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Questions that need to be answered to determine that the product is right

for its market are:

●● What benefits does the product provide to the customer? How do these
benefits solve the customer’s problem?
●● What type of customers are the most likely targets for the product?
What are their demographics, their behaviours, their attitudes and their
­psychographic profiles? How would they be described as a segment?
●● How will the customer use the product? How frequently will they use it?
When will they replace it?
●● What would the customer do if the product was not available?

Price
Price is the component of the 4Ps that collects revenue. The other 3Ps
incur costs. The price that someone is prepared to pay for a product is the
‘bargain’. From the customer’s point of view it is a figure that is worth
paying to obtain the product and, from the supplier’s point of view, it is a
figure that covers the costs of production and collects (hopefully) sufficient
revenue to make a profit.
Questions that need to be answered to determine that the price is right
for its market are:

●● How do customers perceive value in the product? What are the key bene-
fits that they value? What monetary value is put on each of these benefits?
●● To what extent do customers perceive the lifetime value of the product
(how long it lasts, the degree of maintenance that is required, any resale
value, etc)?
●● What are competitors’ prices for a similar product? To what extent is the
product perceived to be better or worse than competitors’ products?

Promotion
People need to be aware of the availability of products and they need to be
convinced of their value. Promotion is the means by which this communica-
tion takes place. The promotion could be any part of a mix that includes
adverts in newspapers, magazines, journals, the TV and radio. It could also
include direct marketing such as flyers or e-mails. Exhibitions, public rela-
tions and point-of-sale material are part of the promotional mix.
 The 4Ps 11

Questions that need to be answered to determine that the promotion is

right for its market are:

●● What is the reach of the promotion? How many customers/potential

customers will see it?
●● What is the impact of the promotion? To what extent will it stop people
in their tracks and capture their interest?
●● What is the relevance of the promotion? Is it something that the customer
is interested in? Do the messages resonate?
●● What is the call to action? What will potential customers do next?

Place
The product (or service) is made available somewhere for the customer. This
could be in a shop, online or direct from the manufacturer. It is the channel
(or channels) by which the product is distributed.
Questions that need to be answered to determine that the place is right
for its market are:

●● What are the channels that are most used by the customer for this type
of product?
●● What penetration of the channels can be achieved?
●● What are the opportunities for finding new routes to market – ie alterna-
tive channels?
●● What does each of the organizations in the channel require in terms of
margin and service support?
●● How will the product stand out from competitive products in the channel?

It should be clear from the above that the 4Ps are not aimed at just anyone;
they are aimed specifically at a target audience. The four essential ingre-
dients of the marketing mix are often referred to as hygiene factors. If the
company fails on any one of them, the marketing strategy will fail.

The origins of the model

The 4Ps were coined by Edmund Jerome McCarthy, an American marketing
professor. McCarthy’s aim was to bring science and structure to marketing
as befitted his training as a statistician and mathematician. He launched
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the framework in 1960 in a book entitled Basic Marketing: A managerial

approach.1 The book became a bestseller on the subject of marketing and
the simple mnemonic of the 4Ps was quickly accepted.

Developments of the model

Still holding with the mnemonic of the 4Ps, other authors have added three
more elements to the mix:

●● People: it is argued that, in many businesses, people are a critical part of the
offer. They make the product. They sell the product and create relationships
with customers. They service the product and they deliver it. They deal with
enquiries and problems. People are an essential component in any offer.
●● Process: the process by which the product is made is part of the offer.
Companies have other processes that are relevant to customers such as the
way it deals with enquiries, carries out credit checks, handles complaints,
etc. These are all part of the offer.
●● Physical evidence: in some situations the physical environment is an
important part of the offer. This would especially be the case for a super-
market where the width of the aisles, the layout of the store, the colours,
the smells and the ambience of the place can all have a big influence on
the marketing.

In 2013, Richard Ettenson, Eduardo Conrado and Jonathan Knowles wrote

an article in Harvard Business Review entitled ‘Rethinking the 4Ps’.2 They
argued that the original 4P model is not suited to the business to business
(B2B) world. They claimed that the old 4P framework stresses product
technology and quality, and these they said are hygiene factors and do not
differentiate. In an attempt to shift the focus from products to solutions,
they suggested the SAVE framework. SAVE is an acronym for solution,
access, value and education:

●● Solution (rather than product). This places the emphasis on solving the
problem rather than selling the product.
●● Access (rather than place). It is important to have access to customers
wherever they are and whatever they are doing. This means that bricks-
and-mortar distribution outlets are far less relevant today than, for
example, the internet.
●● Value (rather than price). People care far less about the price than what
they get for their money – it is value that matters.
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●● Education (rather than promotion). Promotion can be seen as manipula-

tive and, in many B2B markets, trust and reputation are more important.
Trust is built up over time in an educative way.

The model in action

The 4P model (or one of its derivatives) can be used whenever a marketing
plan or business case is being considered. It is particularly useful in two
business scenarios: launching a new product and entering a new market.

Launching a new product

New products are the lifeblood of all companies. Successful companies continu­
ously modify or introduce new products to meet the changing needs of their
customers, and it is said that a successful company has over one-third of its
products that are less than three years old. This proportion could vary consid-
erably, and companies that make confectionery – for ­example – are more likely
to have a greater proportion of new products in their portfolio than those that
make steel components. Whether the product in question is a new doughnut or
a new alloy, the discipline of checking out the 4Ps is still worthwhile:

●● Does the new product better meet the needs of customers than existing
products?
●● How much are the features and benefits of the new product valued over
and above those of existing products?
●● Will the new product fit into the distribution chain alongside existing
products?
●● What promotion will be required to launch the new product?

Entering a new market

Growth can often be achieved by taking a product into a new geography
or launching it to a new group of customers. The questions to be answered
must be:

●● Where does the product sit against competing products that are already
available?
●● In the new geography or the new segment, what will people pay for the
product?
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●● What channel to market will be successful within the new geography?

●● What are the messages that will work in the new geography?

Western companies selling into China have had to modify their product
portfolios. KFC offers Peking duck, Starbucks has added green and aromatic
teas and Coca-Cola sells carbonated fruit drinks (as well as Coke) to the
Chinese. Manufacturers of workplace gloves sell smaller sizes to fit the
smaller hands of the Chinese workforce.
The price that is charged in a country has to be appropriate for the income
in that country. This is often referred to as purchasing power parity. It is why
a Big Mac may cost three or four times as much in Norway or Switzerland
than it does in India.
The channel to market varies enormously across different countries. In
China and in many Asian countries the open market is still a major outlet
for all types of products – both consumer and industrial. Small and special-
ist shops abound in the East while megastores are dominant in the West.
The promotion of products differs considerably across the world. In the
East, great significance is placed on the name of the product, the design of
the logo and possibly the colour of the pack.
When IKEA opened stores in China, it could not afford to support them
with the big catalogues that were a standard promotion in the West. They
used smaller brochures that could be sent out several times during the year.
They also communicated with a softer message. Instead of positioning the
company as a proud rebellious brand – as it does in the West – they commu-
nicated how small changes would make life better, a more humble approach
aimed at young Chinese women of 25–35 years of age.

Some things to think about

●● Consider using a 4P structure when developing a marketing plan. It is
particularly useful when entering a new market, launching a new product
or developing a new customer segment.
●● When analysing your 4Ps, keep in mind the target customers. Build perso-
nas for the customers (see Chapter 32) and build the 4Ps around them.