Today’s post is by Glenn Walker, a partner at Tiko Digital, an internet marketing firm situated among the oil derricks of Edmonton, Alberta, Canada. When not online Glenn enjoys playing hockey, like any good Canadian, and has a resulting collection of beauty scars he would gladly show you. You can follow him on Twitter at @walkergv.
“Marketing is still an art, and the marketing manager, as head chef, must creatively marshal all his marketing activities to advance the short and long term interests of his firm.” - Neil Borden, The Concept of the Marketing Mix (Science in Marketing, 1964)
More than an eloquent quote, the statement above introduces a foundational concept of marketing. Though the term is widely used and discussed, many marketers can’t articulate the concept of the marketing mix even though they think about its effect every day. Understanding classic concepts, like the marketing mix, are the foundations marketers can use to build effective, compelling, and sustainable marketing programs. So now, let’s dust off the cover and crack into the history books.
A Harvard professor and past president of the American Marketing Association, Neil H. Borden wrote and formalized the concept of the Marketing Mix in 1964 in a paper of the same name. The term appears in his teachings and writing for nearly 15 years previous, but he attributes the creation of the term to his colleague, James Culliton, who described a business executive as “a mixer of ingredients, who sometimes follows a recipe prepared by others and sometimes prepares his recipe as he goes along.”
The Concept of the Marketing Mix that concerns Borden is “how can advertising, personal selling, pricing, packaging, channels, warehousing, and the other elements of a marketing program be manipulated and fitted together in a way that will give profitable operation?”
The 4 Ps of the Marketing Mix
As it took hold, the concept of the marketing mix spawned another important marketing advancement.
The 4 Ps of marketing (Product, Place, Promote and Price) were proposed in 1960 by E. Jerome McCarthy, a Michigan State marketing professor. The goal of the 4 Ps is to further distill and formalize the key ingredients of Holden’s marketing mix concept. In many circles, the 4 Ps are described as “The 4 Ps of the Marketing Mix.”
The goal of marketing, according to common definition, is to create and capture value. So, a marketer’s goal should be to identify the marketing mix that creates and captures maximum value. The 4 Ps provide a rather timeless guide to finding the optimal marketing mix for your product, service, brand, or business.
Product, Place, Promote and Price
The concept of the 4 Ps is important for many reasons, one of the most important being: adherence to the 4 Ps can prevent marketers from building short-sighted campaigns based on the common fallacy that marketing is simply advertising. Let’s introduce each of the Ps and show how we can think of marketing as more than just advertising.
In terms of the marketing mix, a product is more than just the physical object for sale. Product is the perceived value the customer receives from the object. It is therefore important to think of the product from the customer’s point of view and understand the value they derive from interacting with it.
A book ordered on Amazon is not just a collection of paper pressed between two pieces of cardboard. The convenience of ordering a book online and having it delivered to your doorstep, versus driving to a local bookstore, is part of the perceived value created.
The enjoyment a person gets from reading a paper book versus using an eReader gives us another example of perceived value.
Also known as marketing channels, place describes how a company goes to market.
Place addresses how convenient it is for customers to access goods. Decisions like retail vs. online distribution can affect the customer’s access and therefore perceived value placed on the product. Easy access to products is not the only factor in choosing a marketing channel. Limiting access to goods can create scarcity and potentially add value.
If a book publisher chooses to print a limited edition of a book and only distribute 1,000 copies, the perceived value of the book could be inflated. Conversely, if the same publisher offers an unlimited number of copies at a discount on Amazon, the perceived value of that same book could be deflated in the eyes of those customers
Marketing and promotion, described as advertising above, are often seen as one and the same.
While it is wrong to think of them as the same, promotion is an important part of marketing’s value creation process. Promotion, in terms of the 4 Ps, is choosing the proper ways to communicate with customers. The goal of promotion is to ensure customers are aware of your product, what it can do for them, and how they can get it.
The advertising that we see every day is an example of promotion but by no means the only one. Promoting our book using paid advertising mediums like pay-per-click marketing or traditional media is one way to drive awareness for your product.
Additional options could include an author’s book tour with the author acting as salesperson or unpaid mediums like public relations count as forms of promotion.
Price has the unique position in the marketing mix of capturing rather than creating value. Setting a price for a product or service is a reflection of the maximum value a marketer believes he or she created by the choices made concerning the other 3Ps.
Back to our book example, book publishers commonly release a hardcover version early on, at a higher price, to capture customers who highly value the new release. Several months later, a paperback version of the same book is released at a lower price to capture customers who highly value a lower price point.
This is a simple example of how marketers can use price (pricing models and strategies) to maximize revenues and profit for essentially the same product.
Everything Old is New Again
Traditional marketing concepts and thought still apply; I would contend they matter even more in the present because of the overwhelming choice of ingredients available to marketers today.
The Concept of the Marketing Mix has been studied, analyzed, and debated for over 60 years and the original 4 Ps have been expanded, altered, and reclassified. This blog has just scratched the surface of these marketing concepts. If you have a thought, something to add, or a classic marketing concept you feel deserves mention, please feel free to comment or write.