Way back in 1960, a marketing professor at Michigan State University named Edmund McCarthy, developed a set of basic ingredients required to successfully market goods and services. These variables are: Product, Price, Promotion and Place. Commonly known as the “The Four P’s”, Mr. McCarthy expanded on a “marketing mix” concept previously developed by Neil Borden, a professor of advertising at Harvard. Marketers around the world used the Four P’s to be sure they had the right stuff to succeed in their particular market. Today, even with our rapidly changing digitally connected world, this old-school concept is still a viable tool to shed light on deficiencies in a go-to-market strategy.
In very simple terms, The Four P’s can be defined as follows:
- Product – does the product or service satisfy a need in the market?
- Price – does the potential customer perceive substantial value from the cost of the product or service?
- Promotion – is the potential customer aware of the product and fully understand its value proposition?
- Place – can the potential customer conveniently obtain the product or service?
Here’s a couple of examples.
The electric car manufacturer run by Elon Musk, marketed the first fully electric sports car in 2008.
- Product - The car was to counteract the need for high priced fuel, reduce environmental emissions and perform like a sports car.
- Price - Since then, the company has developed other models in lower price categories to reach larger markets.
- Promotion - Combined with his 60-Minutes interview, Space-X projects and numerous stories about battery powered cars, Mr. Musk and Tesla have become very recognizable names.
- Place - Even more, Tesla is challenging the traditional automotive dealership distribution channel in a number of states with online and manufacturer direct sales.
It is a quintessential Four-P power play. On the flip side, some companies should have paid more attention to their Four P's.
In 1999, the company was at its peak. It seemed every strip mall in America had a Radio Shack store. They were everywhere. Yet in just 15 years the company would file for Chapter 11 and the NYSE would suspend trading of the company stock. Could the Four P’s have prevented this fall from grace? Maybe.
- Place – With more than 7400 stores nationwide, it was pretty easy to find a Radio Shack store.
- Promotion – If it's presence in so many locations wasn’t enough, Radio Shack had a reputation to be the innovative touchstone for electronic equipment. In the 1920’s, it supplied products, parts and service in the early days of amateur radio. In the 1940’s it opened audio showrooms to feature new stereophonic equipment. It sold its first electronic calculator in the early 70’s and began selling the first mass marketed fully assembled personal computer (the TRS-80) in 1977. As late as 2013, Interbrand ranked the Radio Shack brand as the 47th most valuable brand in the United States.
- Product & Price - Here's where it goes wrong! For the longest time, Radio Shack specialized in arcane electronic products and accessories with personalized and localized service. They charged prices with large profit margins. Customers were willing to pay those prices because this product/service combination was not available anywhere else. But then Radio Shack began to get into mass marketed products like electronic toys, personal computers and cell phones. Now, they were competing with the big-box retailers not only on price, but on product selection and service. Radio Shack recently emerged from bankruptcy with a fraction of the locations it once had and continues to search for the right product/price mix.
Are the Four P’s the crystal ball that predicts the future? No. Any marketer will tell you there are no “silver bullets” and we all know there are numerous factors contributing to the success or failure of a company. But, if you find yourself scratching your head over sales and performance reports, lay the Four P’s over your company’s marketing mix. Better yet, start your next presentation to the executive committee with this simple question: “Do we have all of our P’s?”
The answer may surprise you.