The Four PS: Product, price, place and promotion

The application of the marketing mix known as the four Ps – product, price, place and promotion has been introduced over the past decades and has become widely recognized in the concept of marketing course today (McCarthy, 1971). These marketing mix elements are the key decisions areas that marketers must manage in order to aid the exchange or transfer goods, services to satisfy customer needs better than competition. A well defined definition by the American Marketing Association states that:

“Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange that satisfy individual and organizational objectives” (Bennett,1995).

Conversely, certain academics have argued that this view of marketing have become outdated for use in the 21st century today and is only relevant to certain organizations (Hakansson et al, 1982). Success cannot arise exclusively from the elements of marketing mix but indeed by building long term relationship between the buyer and seller (Ford et al, 1986). As reported by Gronroos (1990), marketing mix approach is considered to be too limited. Hence, this has a led a discussions towards a paradigm shift where new approaches have been emerging in the marketing research focusing on the importance of customer retention, market economies and customer relationship economies.

The aim of this essay is to critically assess whether the application of marketing mix is still relevant for contemporary approach to marketing today. To do this, new approaches towards the paradigm shift will be critically evaluated with support to reference of the literature and personal views on the understanding of the content. Lastly, a conclusion will be given on the summary of the essay.

Towards a Paradigm Shift in Marketing:

Although marketing mix is the foundation of most introductory textbooks, it is an incomplete framework for marketing today. As reported by Nichols and Woods (1997), 4 P’s misleads the theory of marketing that they are all that marketing requires. The main problem for this approach is the lack of coordination and cooperation across departments and functions. This result in low levels of business performance and low levels of customer satisfaction. As reported by Popovic (2006), the concept of 4 P’s is criticized as being a production-oriented definition of marketing and not customer-orientated. Moller (2006) have supported Popovic view and criticized that marketing mix does not consider on consumer behavior, does not allow interaction and capture relationships, works primarily as a simplistic device focusing the attention of management and it does not offer help for personification of marketing activities. This has led to a new paradigm shift on the focus of services and relationship marketing.

Certain academics have suggested that the 4 Ps of marketing mix should be expanded depending on the context in which they are being used (e.g., Kotler and Bloom 1984; Shapiro 1985; Booms and Bitner 1981: Renaghan 1981). According to Booms and Bitner (1981), he proposed an idea of an expanded marketing mix for general use by service organizations. The expanded mix includes the new ones like physical evidence where the environment in which the service is assembled and where the firm and customer interact, people where all human actors play a part in the service delivery and thus influence the buyers perceptions and process where the actual procedures and flow of activities by which the service is delivered. The new mix variables will influence customer whether or not their marketing impact is appreciated and managed. Thus, in order to draw attention to them as variables of equal importance than traditional mix elements, the services marketing mix gave each of the new variables its own place. This was not meant to imply that the new variables are independent of the traditional mix elements, but rather that they are of expressed importance to service firm managers and therefore deserving focused attention in services marketing planning.

However, in addition to the general criticism of the marketing mix, the specific concept of an expanded mix for services has also been criticized.

Over the years, a number of writers have sought to enhance the four P’s by adding other items that they believed were critical to marketing management. Several writers have included research as an essential marketing management activity and even assigned it the alliterative nomenclature of “Probing” (Borden and Marshall 1959; Traynor 1985). Other elements suggested for inclusion into the marketing mix are Packaging (Patty 1997) and People (Baker 1997). It has also been suggested that the list be expanded to include “personnel, physical facilities, and process management” (Magrath 1986). One writer went so far as to suggest that as many as 12 “P’s” be included in the array of marketing variables (Johnson 1986).

While each advocate for adding to the four P’s has championed that particular addition, none has made a persuasive case that the addition is essential to the exchange process or the creation of long-term elationships. Although none of the additions to the four P’s has had widespread acceptance, they do present a confused recipe to the student in some introductory

Relationship marketing attempts to establish, develop, enhance and maintain relationships and involve people over the long term so that they are loyal and supportive of the organization. This results in a stronger link between the internal processes and the needs of customers, resulting in higher levels of customer satisfaction. It is one of the most leading new approaches to marketing which has entered the marketing literature (Gronroos, C., 1992). Today, most firms are moving towards this approach in order to be more creative, innovative, and cost-effective for retaining and building loyalty with their customers. This approach is to be known as the biggest shift in the development of marketing.

One element of relationship marketing is the “promise” concept (Calonius., H, 1988). Organizations that fulfill promises will generally attract new customers. If promises are not fulfilled, the evolving relationships between the buyer and seller cannot be enhanced and maintained. It is a means of achieving customer satisfaction, retention of the customer base, and long term profitability (Reichheld, F.E., 1990). Another key element is trust where there has to be belief in the other partner trustworthiness that results from the expertise and reliability of that partner. Both these factors are vital in a form of relationship marketing as it strengthens the bond and helps avoid dissatisfaction.

Relationship marketing is still seen in its infancy as a mainstream marketing concept, although it has established itself as a primary paradigm in industrial and services marketing. Kotler (1992) is of the view that “what we are witnessing today is a movement away from a focus on exchange in the narrow sense of transaction toward a focus building value laden relationship and marketing networks. It is all about how to hold our existing customers.” This is probably due to the global economic meltdown as firms are fighting for survival. Our thinking is therefore moving from a marketing mix focus to a relationship focus (Webster, Jr, F.E., 1992).

As according to CRM today site, relationship marketing fails to captures the true change in the nature of network-enabled marketing exchanges. Relationship marketing makes the implicit assumption that firms creates and manage relationships, while customers play a passive role in the relationships. This assumption is no longer valid in the networked world of business. Customers are beginning to play anactive role in managing relationships. Value in marketing exchanges is no longer created by firms and delivered to customers. Rather, customers are becoming co-creators of value by participating directly in the marketing process. As customers contribute their expertise, time, and resources in marketing exchanges, we are witnessing the emergence of collaborative marketing. Collaborative marketing as the process of working together with customers to create value in marketing exchanges. Relationship marketing requires firms to think about relating to customers. In contrast, collaborative marketing requires firms to think about collaborating with customers and making customers an integral part of the firm’s marketing activities. In collaborative marketing, the network becomes the enabler of collaborative exchanges, which go beyond relational exchanges because they involve reciprocal dependence and maximization of mutual benefits.

For instance, Procter & Gamble has created the “P&G Advisors” program to collaborate with customers in developing new products. Customers try new products and provide feedback, allowing P&G to refine products and marketing plans. Before using the Internet, P&G would spend $25,000 to test a new product concept, and it would take two months to complete the test. Now, P&G can do the same test at a cost of $2,500 and get results in two weeks. P&G is also using the Internet to take these new products to market. For example, in launching its Physique hair care products, P&G invited consumers to register on its Physique.com Web site to sample the new products. Within 12 weeks, more than 5 million consumers visited the site, giving a strong start to the product launch. Similarly, the pharmaceutical giant Eli Lilly has created a Web-based community called Innocentive, which has attracted 7,000 research scientists to work with the company to solve chemistry problems in return for cash bounties. This is an astounding number, considering that Lilly has only 300 such scientists on its payroll. Lilly plans to create communities of researchers who can collaborate with each other and with the company to solve difficult research problems.

Firms that harness the power of collaborative marketing will be able to extend their enterprise downstream all the way to their end-customers and take their customer relationships to a higher level.

This shows that organizations today are already moving towards this new approach and not just focusing on the product/services they offer, but providing a long term relationship with customers focusing on value. My considered opinion is that in today’s troubled economic scenario this is perhaps the best resource for firms who have an existing customer loyalty base and therefore the need of retention is of primary concern.

In contrast, some academics disagree on these researchers who attack on the meaning, philosophy and importance of the marketing mix approach. They feel that marketing mix is still valid and helpful in all industries such as service and manufacturing. If a company does not have the right price, product/service quality, promotion and place or any other right marketing mix elements, it cannot create or achieve the right relationship with a customer. The right marketing and relationship mix offers a company a good opportunity to create a good total relationship with existing and potential customers (Zineldin, 2000). Practionners of management and marketing still believe in the validity of 4P’s. Give them the freedom to believe and improve, reconsider and renew the temple instead of destroying it. Indeed, companies have to use the 4ps to create customer relationships. Relationship marketing combines elements of general advertising, sales, promotions, public relations and direct marketing to create more effective and more efficient ways of reaching customers. It centers on developing a continuous relationship with customers across a family of related products (Copulsky and Wolf, 1990). The modern relationship movement leads organizations back to the pre-twentieth century with the global scale of the twenty first century through the 1960s (Borden 12 P’s and Kotler 4 Ps). Relationship marketing is not a new discovery but a re-discovery. The conclusion we draw that the paradigm shift is far from being dominant since ‘Kotlersims’ concept of the 4ps is still dominating. There is no evidence that relationship marketing is to recognize the subtle changes in the business environment and to adapt to them.

In the near future, the relationship marketing paradigm certainly will be a focal point of marketing research, thus positioning itself as a leading marketing focus not only in services marketing and industrial marketing but in most or all marketing situations.