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4Ps of marketing (Kotler)

The big picture

Philip Kotler introduced what is commonly known as the 4Ps of marketing: product, price, place and promotion. The ‘4Ps’, or the marketing mix, is a description of the strategic position of a product in the marketplace. The premise of the model is that marketing decisions generally fall into the following four controllable categories:

• Product (characteristics)
• Price
• Place (distribution)
• Promotion.

When grouped into these four categories, marketing decisions can be justified and chosen deliberately, taking into account the intended effects (Figure 35.1).

When to use it

Marketing (and sales) is the functional field in any organisation that bridges the customers’ perspective with the organisational perspective. An analysis of the elements that form the marketing mix of an organisation, the 4Ps introduced by Philip Kotler, gives insights into the company’s current and potential interactions with current and potential customers and the position the company has in the perception of its customers. The marketing mix is a tactical toolkit that an organisation can use as an integral part of its marketing strategy to realise its corporate strategy. As an organisation can adjust the 4Ps categories on a regular basis, it is able to keep pace with the changing needs of customers in a specific market segment.

Figure 35.1 The marketing mix: Kotler’s 4Ps
Source: after Kotler and Keller (2006)

How to use it

There are three basic steps:

1. Step 1: Research. In order to develop a marketing mix that precisely matches the needs of the customers in the target market, an organisation first has to gather information on each of the 4Ps.
2. Step 2: Analyse the variables and determine the optimum mix. Next an assessment is to be made as to whether the 4Ps are well enough aligned to each other. An optimal marketing mix has to be determined, which will allow the organisation to strike a balance between satisfying its customers and maximising the organisation’s profitability. This means making decisions regarding the issues in each of the categories illustrated in the following table.

• Product – Do you actually produce what your customers want? Possible decisions and activities regarding the product include: new product development; modification of existing products; and elimination of products that are no longer attractive, or that are unprofitable. There is also a variety of activities closely linked to the product that can be considered, such as branding, packaging, guarantees and the handling of complaints.
• Place (distribution) – Are your products available in the right quantities, in the right place, at the right time? Can you achieve this whilst keeping inventory, transport and storage costs as low as possible? Analyse and compare the various distribution possibilities, after which the most appropriate option can be selected. Again, there are a number of activities related to this category, such as selecting and motivating intermediaries; controlling inventory and managing transport; and storing as efficiently as possible.
• Promotion – How can you best inform/educate groups of customers about your organisation and its products? Different types of promotional activities may be necessary, depending on whether the organisation wishes to launch a new product, to increase awareness with regard to special features of an existing one, or to retain interest in a product that has been available in the same form for a long time. Therefore, decisions must be taken as to the most effective way of delivering the desired message to the target group.
• Price – How much are your customers willing to pay? The value obtained in an exchange is critical to consumers, in addition to which price is often used as a competitive tool, not only in price wars, but also for image enhancement. Pricing decisions are thus highly sensitive.

3 Step 3: Check. Monitoring and control on an ongoing basis are essential to ascertain the effectiveness of the chosen mix and how well it is being executed.

The final analysis

Over the years, the 4Ps have become an institution. But one of the main problems with the 4Ps is that they have a tendency to keep increasing in number, prompting the question ‘Where does marketing stop?’ Of all the candidates, the ‘people’ factor is undoubtedly the most widely accepted ‘fifth P’. After all, people manipulate the marketing mix as marketers; they make products/services available to marketplace as intermediaries; they create the need for marketing as consumers/buyers; they play an important role when it comes to service levels, recruitment, training, retention, and so on.

It is tempting to view the marketing mix variables as controllable, but remember that there are limits: price changes may be restricted by economic conditions or government regulations; changes in design and promotion are expensive and cannot be effected overnight; and people are expensive to hire and train. Do not forget to keep an eye on what is happening in the outside world, as some events may have a greater impact than you think.

Ultimately, successful marketing is a matter of gut feeling and acting on hunches. Whilst the marketing mix is a useful instrument when it comes to analysing and ordering, the multitude of marketing decisions has to be considered.

References

Kotler, P. and Armstrong, G. (2011) Marketing management, 14th edn. Upper Saddle River, NJ: Prentice-Hall.

Kotler, P. and Keller, K.L. (2000) A Framework for Marketing Management, 3rd edition. Upper Saddle River, NJ: Prentice-Hall.

Kotler, P. and Keller, K.L. (2006) Marketing Management: Analysis, Planning, Implementation and Control, 12th edn. Upper Saddle River, NJ: Pearson Education.