4 P’s of Marketing

The 4 P’s of marketing are a core lesson in any business education. They define the marketing mix strategy.

The 4P’s of Marketing are:

• Product
• Price
• Promotion
• Place

4 P’s of Marketing

The origin of the 4 P’s is credited to E. Jerome McCarthy in 1960, so the concept has had some staying power. That should give an indication of how important it is.

In a nutshell, the 4P’s of marketing define what you are going to sell, how much you will sell it for, how you will get the word out, and where you will sell it.

The 4 P’s are a way to make sure you have your bases covered when deciding how to serve your customers. In general, they are most applicable to the marketing team, but there is overlap with most groups within the company.

Let’s look at the 4 P’s of marketing in more detail.

Product

Your product must meet your customers’ needs, and they must see value in it. Needs vary, though. Some people want to get a lot for their money. Others value quality. Some want a long-lasting product. Others know they will be regularly upgrading, so don’t care much about extended product life. The key is to match the product to the customers you want to serve.

Be careful about making assumptions here. Listen to the voice of the customer and be sure that you are certain that what you offer is what your customers want.

Continuous improvement helps a great deal here, specifically in quality.

A large part of planning a product includes thinking ahead about the product life cycle. Consider how the product will get rolled out. Think about how to maintain production at its peak and ramp up if necessary. And think about how to retire the product with as little cost as possible. Lean helps a lot in the last aspect, as it promotes keeping very little inventory on hand. If demand suddenly drops off, you won’t be stuck with a lot of unsellable items.

 Price

Price is more complicated than it seems. The way you want your product to be perceived is closely tied to its price. If you want to be seen as a value brand, the price has to be low. If you are a high-end brand, you can charge more, as long as the perception of quality remains intact.

In both cases, though, cost must be kept as low as possible. With a value brand, you make a little with each sale, but sell a lot. The reverse is true with top-end brands. You sell fewer items but need to make more per sale. So even with an expensive product, cost matters a great deal. And while continuous improvement helps in a lot of areas, cost is where it really shines.

Price sensitivity (also known as price elasticity of demand) can be very high for some products, meaning that a small change in price can have a huge impact in sales. There may be a very small window of successful pricing between the points where you sell a lot of items but barely cover your variable costs on each sale (and lose money overall), and where you make a lot on each sale, but don’t sell enough items to cover your fixed costs.

 Place

“Place” is where you choose to sell your product. It can be based on location, meaning specific regions of the country or if you want to sell globally. It can also be the type of store you want to sell in.

In addition, you have to decide if you want to sell directly to customers, or only sell through distributors. You might even come up with other unique places to sell your products.

Regardless of where you end up selling, each decision creates several areas where you need to apply continuous improvement. Every sales channel will require a unique set of processes to be effective in satisfying your customers.

Promotion

Promotion is how you get the word out about your product. The marketing team will have a strategy and may choose from many different mediums. They may use traditional advertising in TV, radio, and print. They may take on a social media strategy, a viral “word of mouth” strategy, or rely heavily on YouTube and video marketing. Your company may also be event focused or do a lot of partnerships where it piggy backs off of the partner’s marketing effort (i.e. sponsorships for sports teams or branding on in-flight snacks).

Some products sell differently at different times of the year, or even at different times of the day. Happy hours are commonly used to get more sales in the late afternoon. To compensate for this variation in demand, special offers are used to increase sales.

If you are on the marketing team, you will benefit from using continuous improvement tools to streamline the tools you use to create and administer promotions.

For the rest of the company, you will need to use your CI mettle to become flexible if you are a promotion driven company. Promotions can result in spikes in sales. Your manufacturing team needs to be able to handle those spikes.

Marketing and Continuous Improvement

There are two main ways your continuous improvement efforts relate to this term, and to marketing in general.

The first is that any team that does marketing will need to be well versed in office Lean. That means knowing a lot of problem-solving tools, having a good ability to stabilize and streamline processes, and being able to tie your efforts into policy deployment so you are aligned with the company’s plan.

The other way CI affects marketing is in being able to deliver on promises made in a profitable way. Engineering has to be quick and efficient and effective in releasing new products. Manufacturing has to build to specification, without waste, and on time to meet customer needs. The materials team needs to make sure that the supply chain can handle whatever demand your company sees without breaking the bank.

In short, marketing is only effective if the company can back up what it is promising customers.