The 4 ‘P’s

Jon Weaver, Marketing Manager, Bournemouth Borough Council

Spencer Brace, Sales & Marketing Manager, Bournemouth International Airport.

Heather Moore, Marketing and Promotions Officer Marwell Zoo, Hampshire

For convenience, and to aid thinking, the activities that need to be considered within the marketing mix can be put under four headings, often referred to as the 4 'P's: Products; Promotions; Price; Place. This framework is often attributed to McCarthey, (1975). 'Mix' is an important term because each element of a plan cannot be considered in isolation. There is limited time and resources and decisions in one area will likely have an impact elsewhere.

Figure 5.1 The 4’P’s of the marketing mix

You might think about the process of packing your suitcases ready for a holiday. What you pack depends on where you are going and what you hope to do there (your objectives). You suitcase is only so big, so packing some things means that others must be left behind. A decision to include one thing (a swimsuit) may make another thing more desirable (sun-cream). You can try this Midwest Living magazine interactive packing guide to get the idea.

The same is true for marketing managers. If prices are cut, there may be less money for advertising, or if new versions of a product are introduced, there may be the need to communicate these new features with advertising. A marketing manager will aim for synergy from different activities. This means that they compliment each other to create an affect greater that the sum of individual activities. Overall the aim is to produce a mix which differentiates (makes different) the organisation's offerings from competitors in a way that is meaningful and adds value to consumers.

Products
Under this heading a marketer needs to consider the thing that is being sold. This is not just the physical product itself, but also anything related to how it is made, packaged and named. Under this heading the marketer also needs to consider product/service options, the after-sales service, warranties, and servicing. For example, look at all the options available on a major car manufacturer's website (eg, BMW). You might also consider all the choices you might have to make for a simple flight:

• Departure and arrival airports;
• Type of ticket -timed return, open return, one way, standby;
• Type of seat -first class, business class, economy;
• Food -vegetarian, fish, meat;
• Entertainment -film, radio, video games, phones, magazines.

The marketing of services is becoming more important in advanced western economies and they therefore need special consideration. Most services will still have some physical aspects (airline tickets, holiday booking confirmation forms, credit cards, insurance polices), but in more and more cases service transactions are entirely electronic. Marketers therefore also need to consider the website and telephone booking system as part of the product (service) aspect of the marketing mix.

Promotions

Heather Moore, Marketing and Promotions Officer Marwell Zoo, Hampshire

This heading refers to all types of communication that relate to a specific marketing campaign. This includes communication with retailers and distributors, communication with purchasers and end users and also internal communication with the sales force and other employees. Promotion is an area with considerable innovation. Marketers put great efforts into finding new ways to communicate with consumers.

When people think, or talk about marketing they are often only considering promotions. This is because it is the most visible part of the marketing process after the product itself. But it would be a mistake to focus only on promotions. Promotions work best when they are considered along side decisions about products, pricing and place.

Promotion is a very complex area of marketing. There are also an increasing number of options available to organisations when it comes to communication. You might consider your own media options. Each day you can choose from several hundred TV channels, 20 or more radio stations, 3000+ newspapers and magazines, many millions of websites, and books, cinema and video games. You will also be exposed to dozens of posters, and see hundreds of brands in shops and being used by other people. The media is therefore very fragmented and the chance of one piece of marketing communication reaching you and being remembered seems slim.

For these reasons it is common practice to employ external agencies to develop and plan much of the work. A marketing manager therefore needs to co-ordinate the activities of the external experts and to evaluate their performance. This in itself can be a complex and difficult task.

There are a number of ways of classifying the different types of communications, but you will often here marketers talk about 'above-the-line' and 'below-the-line'. These terms are a bit confusing and originate from the way that advertising agencies invoice their clients. You don't really need to worry about this, but you might consider the various tools and their main uses. Above-the-line refers to media advertising, below-the-line refers to public relations, direct marketing, sales promotion and sponsorship. In addition, personal selling is considered under the promotion 'P'.

Note that most consumers will mix these terms - often referring to everything as 'advertising' or 'marketing'. Marketers only need to make clearer distinctions because of the need to employ and co-ordinate staff and outside agencies with the relevant skill and experience. However you should note that there is some obvious overlap and ambiguity between techniques and that the various activities need to be carefully coordinated. New techniques such as brand placement (the placement of a brand in a TV show, a film or even video games) in particular blur the different disciplinary boundaries.

Advertising
Advertising refers to all paid-for placement of marketing messages in the media

Advertising is probably the highest profile communication tool available to marketers, but there is some debate about the decline in the value of traditional advertising techniques. With more media available to consumers it is becoming more difficult to reach the right people at the right price with advertising.

The main media choices available are: TV, press (newspapers and magazines), radio, outdoor (posters of various size), and Internet.

Advertising is often used to generate awareness (especially posters) and to build brand image. TV advertising is especially good for building the emotional aspects of a brand (what people think about them, for example that they are luxurious, exclusive, family orientated). You might consider the example of the Special Olympics on the website of the advertising agency JWT. Press advertising can be useful for providing consumers with more detailed information about goods and services, although magazine advertising may also make use of high-quality photography to stir the emotions.

A major advertising campaign across TV, press, posters and radio is incredibly expensive and it would not be unusual to spend several £ million on a national campaign. To help advertisers make the most of this technique there are several organisations and in particular the Incorporated Society British Advertiser's (ISBA) who provide guidance to advertisers.

Public Relations (PR)
Public Relations refers to all activities related to creating mutual understanding between an organisation and its stakeholders (they include customers, the media, employees, investors, the government, the local community and pressure groups). Public relations commonly involves the use of press releases (formal notices issues by the organisation) that are picked up by the media and used in editorial. Media relations therefore involves placement of marketing messages in the media without paying an advertising rate. Many organisation now have online 'press offices' where you can download press release information. For example, look at the Thomas Cook online press office. The Institute of Public Relations is the trade body that supports the use of PR techniques.

Other PR activities may include internal newsletters, an intranet, community relations, and political lobbying (attempts to persuade politicians to vote/develop policy favourable to the interests of the organisation). For example, The Whitehouse Consultancy are a company that spaecialise in helping organisations influence politicians.

Sponsorship

Heather Moore, Marketing and Promotions Officer Marwell Zoo, Hampshire

Rather than pay for advertising space, companies can choice to give money to another organisation in return for recognition of this donation. PR is often also used in conjunction with sponsorship. Money is given to another organisation - often a sports club, a charity, or the arts in return for positive PR opportunities. Sponsorship of sporting events and of TV programmes is now also popular.

Sponsorship can be affective at raising awareness and also at positioning an organisation. For example, by sponsoring football (the national game in the UK), the Nationwide Building Society position themselves as big, national, popular, traditional.

You can get news of he latest sponsorship deals from Sponsorship.com.

Sales promotion
Sales promotions usually refer to short-term incentives to encourage purchase, but schemes like Air Miles - often referred to as loyalty schemes - might be thought of as long-term sales promotions.

Sales promotions can be useful for generating short-term increases in sales. They can also be affective at undermining competitors marketing campaigns. For example, when a new car is launched by a competitor, an established brand may offer a cash back scheme or low-rate finance. But care must be taken with the nature of the promotion. Excessive use of sale promotion can undermine the brand by giving the perception that the company is struggling to find customers, or by confusing customers about the real value of the goods or services, for example some furniture retailers seem to have perpetual sales with large discounts.

Other popular sales promotions include: providing extra free (e.g., three nights accommodation for the price of two); competitions (e.g., win a holiday); free gift (e.g., free travel insurance when you book a holiday). The Institute of Sales Promotions (ISP) is a trade body that promotes the use of sales promotion techniques.

Direct marketing

Spencer Brace, Sales & Marketing Manager, Bournemouth International Airport.

Direct marketing relates to techniques where an organisation communicates directly with individuals. The most obvious example is direct mail, but increasingly popular is the use of telephone, email and sms messaging. Direct marketing is popular because the response to communication can be directly monitored and because information can be personalised to each recipient. More information about a product of service can be sent directly than could normally be included in a TV or even press advertisement.

Direct marketing has become more popular recently because improvements in technology have made databases less expensive (direct marketing requires a database of individuals to send personalised messages to). The low cost of electronic communication means more direct marketing activity now takes place via the internet. The Institute of Direct Marketing is a trade body that exists to support and promote the use of direct marketing techniques.

But direct marketing has also become rather controversial and the ethical issues related to its use need to be considered by managers. There are increasing concerns about the use of personal data and invasions of privacy and individuals can now register with one central service to avoid direct marketing, for example telephone-based direct marketing can be avoided by registering with the TPS.

There are also concerns about the excessive use of email for direct marketing. You may come across the term 'Spam' to describe the large quantities of unwanted emails that people received from organisations.

Personal selling
Before the complex and sophisticated process of marketing that we now have, there was still personal selling. Personal selling refers to direct contact between a representative of the organisation and potential customers. This contact is usually face to face (either in a shop or showroom, or in the customer's home), but it may also be over the telephone. Person selling allows for the presentation of goods or service in detail. It also allows for detailed negotiation over option and price.

For many goods and services there is very little personal selling and the increased use of the Internet for purchases is reducing this further. However for high-involvement purchases (such as cars, financial products, electrical goods and some packaged holidays), the salesperson still has a vital role. The Institute of Sales and Marketing Management (ISMM) promotes the use of personal selling and sales management.

Organisations often want to reduce the sales force if possible because wage costs can be considerable, but there is at least some evidence that consumers often wish to talk to a knowledgeable individual salesperson when making complex decisions over products and services.

Price
This heading refers to decisions about how much to charge for goods and services. It may be easy for you as a manager to neglect this aspect of the mix in favour of the more 'glamorous' promotion and product areas, but ultimately decisions over price affect the viability of a brand and the profitability of an organisation. Pricing is also much more complex than you might think.

Firstly price needs to take into account consumer psychology. Although some consumers purchase solely on price, most use price as a way to judge quality. The more expensive something is (within reason) the better the quality is likely to be. Price can therefore be used as a form of communication - to communicate exclusivity for example.

Economists also know that price affects demand, but this relationship can vary. This is called price elasticity.

Figure 5.3 Typical graph showing price elasticity

Reducing price usually increases demand and vice versa. So a manager can use price to 'manage' overall demand for a product or service. Many hotels, airlines and other leisure-related service vary price considerably according to demand, especially seasonal demand.

Finally, where goods and service are marketed through intermediaries, marketers need to consider the trade and retail prices.

Place
This heading refers to distribution. This means all aspects related to how goods and services are 'moved' from the producers to the end user. This means the coordination of retailers and/or wholesales and in the case of products the logistics involved in moving from factory/warehouse/head office, to the end user.

Most goods are sold through intermediaries, (for example, retailers). Marketers must therefore consider the type, size and location of retailers and possibly also the training of retail staff.

But increasingly organisations - especially service organisations - are selling direct to the consumer via the telephone and the Internet. This has the potential to reduce costs (no retailer margin) and bring organisations closer to their customers. However, it also adds considerable burden to organisations to introduce payment and service systems that would previously have been dealt with by retailers. The introduction of a system of direct sales might also bring an organisation into conflict with existing retailers who they now compete with. For example, British Airways used to sell through travel agents, now they also sell directly via their website.

Some additional service 'P's - People, Processes and Physical evidence
As marketing has become more complex, with more options for place, product, promotion and price, the 4'P's have arguably struggled to fully explain the full range of activities than marketing managers need to coordinate. Marketing managers in the service sector in particular might be critical of a framework which was developed primarily for products. Services differ from products in some important ways:

• They are intangible: you cannot hold a train journey in your hand (only the ticket)
• The are consumed at the same time as they are produced: you cannot make a flight in advance, the consumer experiences it at the same time as the company produces it.
• They are transient: after a ferry trip nothing is left of the journey. This also means that once the boat has left harbor, spare cabins are worthless.
• They vary from one use to the next. Although one Nokia phone may be indistinguishable from another of the similar model, no two visits to the same hotel will be exactly the same.

Booms and Bitner (1981) therefore suggested the introduction to 3 more 'P's: People, Processes and Physical evidence.

Services are particularly dependent on people - not just the sales force - but all the contact staff. For example a hotel has receptionists, maids, cooks, and bar staff. All these people have a direct influence on the experience of guests. It is the role of marketing to ensure that all these staff are working towards the marketing promise that has been presented in brochures, in advertising and on the internet. A good relationship with hotel staff is more likely to result in repeat visits and recommendations to friends than any amount of sales promotion or advertising.

Services also differed from goods in that they are produced and consumed at the same time. A guest's experience of a restaurant is determined by the quality of the table booking, the waiter's efficiency and the skill of the staff in the kitchen. These things cannot be produced in advance. Marketers therefore need to ensure that there are processes in place that can try create a consistent quality of experience. This includes booking and payment mechanisms, complain procedures, and quality checks and controls.

Physical evidence is a way of formalising aspects of place and product that are particular to service purchases. It refers to all the physical things that a purchaser of a service might encounter. This would include the ambience and design of the surroundings in which the service is encountered, tickets and information leaflets.

The marketing mix: a critique
There are a number of problems with the process of coordinating the marketing mix. Firstly, there are some concerns over the terms used. Given that marketing is supposed to be consumer focussed, it could be argued that the 4'P's are rather inward looking - encouraging marketers to focus on internal processes and activities. You might therefore want to modify the framework to make it more focussed on the consumer. One example of this is the 4'C's (Lauterborn, 1990). This replaces the 4'P's as follows:

• Product becomes Customer solutions - the way that a product meets consumer needs.
• Promotion becomes Communication - reflecting the potential for two-way interactions between an organisation and its customers.
• Price becomes Cost - what is the overall balance of costs and benefits to the consumer?
• Place becomes Convenience - a focus on how and where the consumer would like to buy.

Even if you get the terminology right, there are still problems in creating an appropriate mix. You will have seen that there are a considerable number of activities to coordinate. This in itself makes it hard to always produce complimentary strategies - especially where outside agents are used. In addition, given the intensity of competition in most markets producing a unique and meaningful mix is easier said that done. It is therefore possible that much marketing activity ends up focusing on minor points of differentiation of little significance to consumers. For example, although all the major airlines will claim to be different in their advertising, the experience of an economy-class transatlantic flight with any of them is little different.

Many marketing campaigns are remarkably similar and conservative marketers may be more likely to stick with historic strategies or to copy other, leading firms' strategies than to take the risk of experimenting with new ideas. This means that what should be a huge creative task can easily be reduced to a bureaucratic one. Just check the websites for Virgin Atlantic, United Air and British Airways to see how similar they all are.

A further issue that is worth considering is that although this framework highlights the scope of marketing, the structure of many organisations -especially smaller organisations -does not place all these activities under the control of the marketing department. For some organisations, for example marketing is seen as a part of the sales department. The variety of structures within organisations -often historic -adds further complication to the development of effective marketing strategies