In 1960 E Jerome McCarthy published Basic Marketing. In it, he suggested that a company or product’s strategic position in the market could be described by four P’s: Product, Price, Place and Promotion.
According to McCarthy, the 4 P’s are the tactical tools at companies’ disposal to streamline their marketing, and they collectively became known as the marketing mix.
A few years later, Philip Kotler built further on McCarthy’s P’s. Kotler’s books were much more popular than McCarthy’s, which probably explains why most marketers now give Kotler credit for the 4 P’s.
Kotler, however, soon realized that the four P’ s were insufficient, and tried in the 1980s to introduce two more: Public opinion and Political Power. Other marketing thinkers have come up with more suggestions that further complement – including Packaging, People, Process and Physical Evidence.
Despite their obvious shortcomings, McCarthy’s soon-to-be 50 year-old 4 P’s remain one of the elemental laws of nature in the marketing universe.
But the world in which the four Ps first prevailed held completely different marketing conditions than today’s.
In the 1950s and 1960s, the Western world was in the midst of unprecedented social change and growth. After World War II, there was a strong need for practically everything, and the rapidly growing consumer machine had to be fed with more and more products. If anything, in any way, benefited the standard of living, it essentially sold itself.
The media world also looked different. The consumer obediently adapted him or herself to the relatively few media channels through which news, information and advertising were trumpeted out – with neither opportunity nor expectation of being able to influence when, where or how he or she would consume the messages, or contribute to public thinking or opinion on the subject.
Those who made and sold products quite simply held both the baton and the megaphone.
And it was thus, in this from-the-inside-out world, that the four P’s were born – as well as a number of other fundamental marketing theories.
Common to these post-war theories is that they assume that the seller has the power to define how the buyer should interpret the offer – and thus the value, usefulness or experience of the product, service or idea.
That power no longer exists.
Firstly, globalization and ever increasing competition have marginalized the importance of product features and functionality, as competing products in almost all categories now offer essentially the same basic functionality. In addition, prices have become almost completely transparent, and geographical distance now very rarely has any real significance. Last but not least: customers no longer want to listen.
The typical ‘stupid’ consumer, who previously had neither voice nor influence, has now – thanks to the Internet and social media – been replaced by ever more knowledgeable and critical participants – each with a growing influence on how brands are perceived and experienced.
In short: the buyer has grabbed the baton and seldom even hears the megaphone.
Yet many marketers continue desperately to try to make the 4 P’s work. Maybe the P’s time has passed. Maybe it’s time to bury them once and for all.
That’s the opinion of marketing professor Robert Lauterborn, author of books like The New Marketing Paradigm: Integrated Marketing Communications. He proposes an alternative approach based on the customer rather than product, which helps us see the business from the buyer’s point of view, not the seller’s. Lauterborn’s 4 C’s are Consumer, Cost, Convenience, Communication.
The starting point is a Consumer (or customer, if you wish). Forget about the product. There is simply no longer any reason to develop something just because it is possible to do so, and expect that it will automatically sell. Focus instead on really understanding the customer’s needs and wishes. People, after all, no longer buy products. We want what the product results in: a value, a utility or an experience. What do customers expect of your business or product?
As a strategic positioning and tactical variable, the product’s actual price is also irrelevant. Price is just one part of the buyer’s total cost to experience the usefulness or value of the product. Think instead in terms of Cost to Satisfy. Most companies do not compete, after all, with a few percent price difference here or there, but with the sum of the customer’s perceived costs – both monetary and emotional. In addition to the price tag, for example, a tin of snuff costs the time it takes to go to the kiosk, the guilt of being nicotine-dependent and even the remorse that the money is not being used for something more valuable – maybe a summer vacation with the family. ”The most snuff for the money” is not the main value measure – not even ”the best nicotine kick for the least money”. The value, benefits and experience are determined instead in a multitude of complex relationships, each of which differs slightly from customer to customer.
‘Place’ is, if possible, even more irrelevant. People no longer need to go anywhere to buy just about anything they want – unless they want to. Everything is available on a computer screen or in a catalog right in front of them – around the clock. Think, then, in terms of ‘Convenience to buy’. That does not mean that the distribution channels are unimportant – only that their role has changed. Think about how your customers would like to buy, and how the buying process itself can make your customers’ lives easier and less time consuming. Think about whether there is anything related to your product that the customer wants to experience, something that will give you her undivided attention. If you can manage that, you can actually get customers to travel great distances and still experience it as an easy, convenient, timesaving way to buy.
And, lest we forget, promotion is an obsolete way to look at the role of marketing communications. Mass marketing is history. Customers expect, rightly, a two-way communication with the brand. Think Communication (or conversation, if you wish). To communicate is to exchange thoughts, knowledge, feelings and ideas – to both listen and speak. In brief, it’s collaboration between buyer and seller in order to create a desired value and a desired benefit or experience on both sides.
Lauterborn’s four C’s reflect a thoroughly customer-oriented marketing philosophy. One which, in my opinion, much more accurately describes a brand’s strategic positioning and tactical opportunities than McCarthy’s four P’s.
Whether it is wise to limit ourselves to the number 4 and the letter C, is open to discussion.
So let’s do it. Discuss, that is.
Originally posted in Swedish on The Brand-Man, here.