The 4Ps are Dead…and what we should do about it.

I had a dream last night.  The 4Ps were all alive and well, and dancing around on my black and white television set with Bing Crosby singing “It’s a Good Day” in the background.  Hey, can’t you see them too?  There goes Product and Price, followed quickly by Place and Promotion.  And then they break apart, and form a different pattern, Promotion and Product are now weaving in and out of the scene with Price and Place zipping around in the center.  And as my view pans out so that I can see the bigger picture, my eyes fall upon this big, elevated director’s chair, where up on top, impeccably dressed, sits the Marketing Executive.  He’s humming along while sitting back and directing all of the action (remember that back then, most all marketing executives were men…).  And to my surprise even Bing Crosby carefully watches the mighty Marketing Executive and alters his singing style and tempo based on his will.

And then I wake up.

And today, in April 2015, the cold reality is that the 4Ps, although we have all been taught about them in our high school, college or MBA marketing courses (most anywhere around the world) have died.  And if you’re like most every other marketing executive around the world, you’ve also been experiencing this harsh reality in your own company’s marketing efforts. You’ve surely tried your very best to create marketing strategies based upon this old-style era concept of the Marketing Mix, but unfortunately, very unfortunately, I am here to tell you that they have died, and there is no way to bring them back to life. And because of this, our jobs as Marketers have evolved far beyond where the 4Ps could ever have taken us.

As a Professor of Marketing, I wish that I could give you an exact date of their death.  My first inkling that something was amuck in the happy world of the 4Ps was when I read the articles that Christopher Locke and his colleagues penned in the now famous lines of The Cluetrain Manifesto at the turn of the millennium:  “We are not seats or eyeballs or end users or consumers.  We are human beings and our reach exceeds your grasp. Deal with it.”

And another strong dose of wake-up medicine came to me a few short years later with the 2004 publication of Vargo and Lusch’s Service Dominant Logic in the world renowned Journal of Marketing.  In their first 2004 article, and the many that they have published since then, they called out our over-reliance on “Goods-dominant logic”, or the “box-moving” mentality that Marketing inherited from neoclassical economics as too limiting for the realities of modern marketing.  And instead, Vargo and Lusch urged us to embrace a new mindset (or “logic” as they call it) built around the concept of service, ushering in a a new era of value-driven marketing that they have called “service-dominant logic”.  As I had transitioned from being a Marketing Executive to Marketing Professor right around that time, this challenge to my previous way of thinking was also a serious wake-up call.

But the event that finally convinced me that I had admit to the death of the 4Ps was the day my 3D Makerbot Printer arrived, and the stream of students and staff members here at Doshisha Business School who came to my office simply to watch it print.  It seemed that they also felt that something earth shattering had just happened.  While they and I both agreed that we were experiencing the birth of an entirely new era of business, I didn’t want to spoil their excitement with the fact that I had now become completely convinced that the 4Ps had silently passed away without many executives around the world knowing it had happened.

In beginning to speak about this new reality, I’ve found that the love affair that most Marketers globally are involved in with the 4Ps is painfully difficult to break up.  Because dealing with it leaves the Marketing Executive with the heart-wrenching challenge of finding an equally simple model to replace it.  As I give my lecture on this topic, I can see the wheels whirring silently in the background as thoughts like “Maybe the 4Cs are still valid, or maybe I need just a few more Ps… Maybe 7 or 9 will do the trick?” come to their minds.

Maybe you’re asking yourself similar questions right now.

While the 4Ps were easy to learn, and easy to teach, I think it’s important to go back in time to understand the era within which they were built and what they were created to help marketers at the time accomplish.

As Robert Lusch and Stephen Vargo eloquently explain in their recent (2014) book, Service Dominant Logic, the 4Ps grew from a neoclassical economic model of thinking, in which the marketing manager was in charge of their products, and with enough thought and attention, could come up with the proper “mix” of Ps that would ensure their rapid and far-reaching success.  If we go back 55 years to 1960, we actually find that the idea of the 4Ps originally came from marketing professor E. Jerome McCarthy, and were presented in his Marketing Textbook, Basic Marketing; A Managerial Approach. To get the gist for the type of Marketer that the 4Ps were built, we need to first understand Dr. McCarthy’s perspective of what marketing actually was at that time in history:

“Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user in order to satisfy customer and accomplish the firm’s objectives” — E. Jerome McCarthy, pp. 16

But in 2015, the world no longer fits neatly into such neoclassical economic models, and marketers no longer simply manage the products or services that they offer into the market.  And as Vargo and Lusch argue, Marketing has moved from this type of “box-moving” mentality, to a way of thinking dominated by the concept of service, within which the concept of “value” is king.

And while McCarthy’s 4Ps offered us an easy model that were appropriate for their time, they are no longer viable to the Marketing Executive who needs to excel today.

For proof of this, let’s look at the modern (2013) definition of what Marketing is today, from the American Marketing Association:

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”  American Marketing Association, Approved July 2013

Hmmm.  Not a “P” in sight.  Let’s go through each of McCarthy’s 4Ps in detail to understand why:

P#1:  Product
In the neoclassical way of thinking about economic exchange, the maker of a product or service “produces” and the purchaser “consumes”.  End of story.  What does the maker create?  A Product (that is our first P), and who consumes this product?  The customer.  Again, nothing interesting here, right?

But wait.  Let’s look at a modern pop music icon, Hatsune Miku to see if this is that easy to nail down today.  For those who haven’t heard of her, she is a co-created vocaloid diva, who sings more than 200,000 songs that have been created by fans from around the world.  “She” is responsible for a significant level of revenues from the Products (P#1) that bear her likeness, voice, or musical genius.  Here  is a link to one of her live, sold-out performances, and to our case study on “her”.

Whether or not you like the music or her performance, do you know who actually created that song, the lyrics, music and her rendition of it?  There are in fact millions of fans who have collaborated collectively to make not only that song but the thousands of others that are constantly under development rather than a central “maker” as was considered normal during McCarthy’s 1960’s-era marketing practices.

Was there a grand plan or master scheme behind the development of Hatsune Miku’s songs, lyrics or performances?  No.

Could we call her or her songs a “Product” in the traditional neoclassical sense or product development?  No, in fact we cannot.

Or how about in the world of 3D printing?  Just yesterday I downloaded a file for a card case, remodelled it on my own computer to fit my personal requirements, and printed it in my own office.

In this case again, what is the product?  Who is the manufacturer?  And who is the Customer?

Yes, I do have a Doctorate degree, but I think it would take more than a completely new dissertation to identify all of the possible models for what is actually happening in this case.

But no matter where we end up in conducting such an analysis, it most definitely will not be able to be boiled down to one simple P.

So, although I hate to break this news to you, we’re now down to 3 remaining Ps.

Next up, Price.

And we all know that the company sets the price and the customer must pay this price if they want to own the luxury of using that product.

I make a bar of soap. I price the bar of soap.  If you don’t pay that price, you’re not going to be able to wash with my soap today.

Case closed.  Or is it?

Let’s say I’m looking for a ride to the airport, and I fire up my Uber app.  Who set the price of the ride?  Uber?  No.  The market did.

Or a hotel room in Tokyo?  Fire up Priceline, and name your own price.

And back to my 3D Printer… How much did I pay for my new Smartphone stand?  Um…. nothing…. well, nothing beyond the price of the printer and the PLA materials I use to make my prints…but in essence…really, it’s nothing…

That leads me back to the recurring theme of this article, but before I even say it, I’m sure you already guessed my conclusion here… only 2Ps are left standing, because more and more Price is not only under the direct control of a 1960s-era marketing executive.

So now we come to Place.

The mighty marketer or years gone by would determine who bought his products through what specific channels.  Place mattered, and was manageable.

Think of one of Coca Cola’s early slogans, “Around the corner from Everywhere”.

But “Place” has become more than a physical location.  Mary Jo Bittner introduced us to the idea of Servicescapes, and how the environment mattered in our distribution of products.  And what was truly groundbreaking about her research was her finding that just like a physical space, the mental or psychological place that our customers are in when they purchase and use our products matters.

My research from many years ago on people’s uses of mobile phones proved that even within the same place, let’s say riding on a bus together, and sitting next to each other, two different people could actually be in two completely different places.  One wanting to embrace their location, learning more about the surroundings and the surrounding environment.  While their neighbor was not interested in any of that, and was simply looking for a way to escape.

In virtually-mediated environments, “where” you physically are matters much less than “where” you emotionally are.  And where I am emotionally at any given instant is thankfully not under the direct management control of any marketer.

And again, back to my 3D Printer.  I can print products not only on mine, but on the University printer across the street, or my friend’s printer down the block.  And I can download the files anywhere in the world where there is a reasonable internet connection.

Yes, queue the music.  Another P bites the dust.

That leaves only one P standing.  The mighty Promotion.

Mighty, for no other reason that many journalists around the world have convinced themselves that Advertising (or our last remaining P, Promotion) is marketing.  To prove this for yourself, please set up a Google News alert for the term “marketing” and see what types of articles arrive in your inbox each morning.  I’ve done this for many years now, and more than any other topic covered, these articles typically focus on the advertising campaigns of specific companies for their products or services.

“New Beer marketed to the elderly” proclaims one article, followed by “6 Marketing tactics essential to your product launch” in another.  Because of this mixing of the word “marketing” with one of its 4P components, Promotion, most people today (maybe just most journalists today?) think that marketing is simply Advertising.  And if this were the 1960s, maybe that’s not such a big mistake.  But in 2015, Marketing is not simply Promotion.

For example, just last week, I walked into one of the most famous tea shops in Kyoto.  It’s actually been around for more than 500 years, 17 generations and still going strong.  Their advertising budget?  Um… zero.  Zara has grabbed headlines globally with its “no advertising” innovations.  And before being purchased by L’Oreal, Kiehls thrived on Word of Mouth more than advertising.

And then there’s Amazon reviews, Yelp, Trip Advisor, and the legions of other sites built on ordinary people giving other ordinary people excellent advice and feedback on every type of product or service that you can buy or imagine.

I know that you can hear the music playing before I even start to mention my 3D printer again.

So there you have it.  The 4Ps are dead.

But after teaching at the MBA level for nearly 15 years now, I am sure that you can come up with counter examples that show that each of the Ps I’ve marked as dead is actually still alive and well… but before you do this, let me ask you this simple question:

If a “P” is relevant in some instances, and not relevant in others…is it really a P?  I mean, a LAW of a P, as each of these was originally intended to be?  Because Laws are supposed to apply to all instances of a thing, right?  The law of gravity doesn’t apply to some of us on some days of the week, and then apply to us on the others.  It applies to all of us all of the time.

So the 4Ps, as THE 4PS (the law), is no longer something with which you should build your marketing strategies any more.

But if the 4Ps are dead, what then should arise in their place?

And my answer, is very simple, and comes down to five letters.

VALUE

Value has become the new currency of Marketing.  And Value is not CREATED by a PRODUCER and sold to a CONSUMER who then uses it up and throws away whatever remains.

But value, as we know now, is co-created.

And marketers, create and manage value not only for their companies and their customers, but also for their partners, communities and our planet as a whole.

What does Hatsune Miku generate for all of the actors within her ecosystem?  Value!

How about my 3D printer?  Value!

Am I a producer of value?  Yes!  Do I also experience value?  Yes!

And that has become the beauty and excitement of Marketing today.

We live in a world where the opportunities to identify and create new value are staggering.  And the need for all of us to shift our focus away from the producer/consumer, “Goods-Dominant” mindset, and towards one of “Service-Dominant” value-driven approaches to solving the problems that are surrounding us has never been greater.

So as uncomfortable or challenging as it may be for you to lay flowers on the grave of the 4Ps, paying respects to Prof. McCarthy for his huge and powerful contribution to marketing thought in the 1960s through until a few short years ago, it is time to move on.  And begin to focus your marketing efforts on identifying, creating and cultivating value across your entire ecosystem.

For more insights into a step-by-step process for creating exceptional value in partnership with your customers, employees, partners, community and our planet, please see my newest book, The Value Plan.

About The Author

Philip Sugai

Dr. Sugai joined Doshisha Graduate School of Business in 2013 where he teaches Marketing, eMarketing, Marketing Research, and Sustainable and Responsible Marketing to Global MBA program students. Prior to joining the Doshisha University faculty, Dr. Sugai taught at the International University of Japan in Niigata since 2002, where he taught similar courses and served both as Dean and Associate Dean for more than 6 years. He received his Doctoral degree from Waseda University’s Graduate School of Global Information and Telecommunications Studies and his M.B.A. in Marketing and Operations Management from New York University’s Stern School of Business. He has worked as a marketing executive at American Express, Muze, Inc., and Lightningcast, Inc., and as a marketing consultant for Advantage Marketing Information.

2 Comments

Leave A Response