Marketing is not just about creating a professional facade; it's about understanding the needs and wants of the consumers, and fulfilling them with creativity and innovation. In this ever-evolving landscape of digital channels and changing consumer behavior, the traditional 4Ps of marketing have transformed into 7Ps - People, Process, Physical Evidence, Product, Price, Place, and Promotion. Let's embrace these changes, and use them to create a better world for our customers.
Welcome to the new era where marketing is everything and everything is marketing
Because copyright matters. How to cite this article: American Institute of Business Experience Design (2023). Exploring the evolution of traditional marketing: From 4Ps to the extended 7Ps mix. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].
Marketing is an umbrella concept and a multifaceted field that includes a wide range of activities. It can be challenging to distinguish between genuine marketing strategy efforts and those that simply aim to create a professional façade. Oftentimes, it seems like everything can be marketed and nothing is off-limits. Moreover, research has revealed that even top-level executives such as CMOs and marketers hold a biased interpretation and execution of marketing, especially given the proliferation of digital channels and the evolving consumer behavior.
Consequently, the traditional marketing mix of 4Ps (Product, Price, Place, Promotion) has undergone a transformation to include three additional Ps - People, Process, and Physical Evidence, in order to keep pace with the changing times. In this article, we will explore the definition and evolution of traditional marketing and dive into the extended 7Ps mix, which has become essential for businesses to succeed in the modern era.
Before diving into the 4 or 7Ps of the marketing mix, it is important to first define marketing. Even for marketing experts, CMOs, marketing academics, or students, the definition of marketing may not be clear. This can make it challenging to implement marketing strategies within a company's overall strategy, especially since marketing is often confused with advertising or branding.
Therefore, it is important to start by getting back to marketing basics and understanding its evolution to better align with the needs of today's consumers and businesses. Besides, in today's competitive market with multiple physical and digital channels, businesses should not only focus on the traditional 4Ps or 7Ps of the marketing mix, but also embrace modern experiential marketing and its strategic 7Es tool to create effective business strategies that deliver the experiences that customers truly want. By doing so, businesses can establish a solid competitive advantage, drive growth, and increase revenue.
In this article, we will discuss some crucial aspects of modern marketing and its mix tool that every marketer and business owner should know. Topics to be covered:
An updated definition of marketing to unlock success
The American Marketing Association defines marketing as "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." (AMA, 2017).
The definition of marketing emphasizes the following core functions, which should be the focus of any marketing effort:
Creating, delivering, and exchanging offerings;
Providing value to customers, clients, partners, and society;
Approaching marketing as not just a single activity but a set of institutions and processes;
Enhancing communication as a key aspect of marketing;
Considering the use and impact of marketing to deliver value to different types of organizations, businesses, and society as a whole.
The definition of marketing by the American Marketing Association (AMA) has recently been updated by marketing scholars to offer a more comprehensive understanding of marketing. According to this definition, marketing is not just a set of tools, processes, sciences, and strategies focused on the market and the market actors, but it is also a state of mind, a way of thinking. Marketing helps companies, individuals, associations, institutions, governments, and more to define their uniqueness and share their values with customers by anticipating and capturing future trends, innovating, and disrupting the actual reality of their market.
After analyzing recent marketing research and evolving business practices, we propose an updated definition of marketing:
"Marketing is a multifaceted discipline that involves capturing, creating, and sharing value with target audiences. Its ultimate goal is to highlight the uniqueness of a product or service, creating a competitive edge that challenges established conventions in the industry and society. It is important to note that marketing is not just about advertising, as it encompasses a wide range of activities aimed at satisfying customers, market actors, and stakeholders, and building long-term relationships with them." – American Institute of Business Experience Design (AIBXD), Updated Definition of Marketing 2023
Marketing mix: back to origins
When it comes to the marketing mix and the 4 Ps, Philip Kotler, Northwestern University Marketing Professor, is often the first name that comes to mind for marketers and CMOs. While Kotler is certainly known for popularizing the definition of the marketing mix, it's important to note that he did not actually create the 4Ps marketing mix model. Rather, he played a key role in disseminating the idea beyond academia and into the business world, as well as among students in business schools. In fact, most business school students take a core marketing course that features Kotler's textbooks. To avoid making any incorrect statements, it's important to understand the origins of the marketing mix and why it's called that in the first place.
The marketing mix, consisting of four fundamental components known as the 4Ps - product, price, place, and promotion, was originally conceptualized by American Marketing Professor Edmund McCarthy in 1964. However, it was scholar Philip Kotler who popularized the approach from 1972 onwards through the publication of several successful books.
Although Kotler's work has contributed significantly to the field of marketing, the original expression "the marketing mix" was coined by James Culliton, another American Marketing Professor, in 1948. Culliton believed that to achieve a successful marketing strategy, it was necessary to combine and balance a range of different factors, including consumer behavior, industry, competition, planning, pricing, distribution, promotion, customer service, and market research. This concept was later supported by Neil Borden, a Harvard Business School Professor, who published his conclusions in a 1964 article titled "The Concept of the Marketing Mix".
The 4Ps marketing mix model has become a standard in the industry, helping companies optimize resources and maximize profits to achieve success beyond imagination.
In 1958, McCarthy presented his thesis at the University of Chicago, in which he suggested grouping marketing elements into four categories, all of which began with the letter P. This led to the creation of the 4Ps abbreviation, which helps companies optimize their resources while maximizing profits. This model, along with Kotler's works, has become a standard in the industry and is widely taught in universities and business schools. Its practicality has made it a go-to tool for companies across various sectors.
As you may have noticed, marketing has undergone significant changes since the 1950s, and the marketing mix has also evolved along with it. As early as the 1960s, the traditional four Ps of marketing (product, price, promotion, and place) were expanded to include people, process, and physical evidence. As marketing practices continue to develop, the concept of the marketing mix is being further refined and applied to modern marketing strategies.
From 4Ps to 7Ps: unlock your business's potential with the 7Ps Marketing Mix for maximum ROI
The marketing mix owes its success to its ease of implementation and its ability to analyze the market by considering a marketing strategy based on the 4Ps. However, the marketing mix had to evolve because the 4Ps initially proposed were only focused on physical goods intended for consumption. For instance, a cereal brand or a car.
But what happens when the product is a service? In the case of a restaurant, the package offer includes components beyond the physical product (food to be consumed), such as service providers, servers, and the environment where the food is consumed. Due to the service industry, three additional Ps have been added to the initial mix, creating a 7P mix marketing model that covers both products and services, including intellectual services like consulting or coaching services.
The 4P marketing mix model is a fundamental tool for companies to create an effective marketing plan that generates value for various audiences such as end consumers, B2B customers, institutions, etc. The four Ps that constitute the model are product, price, place, and promotion. To apply this model, it is important to follow these steps in the given order:
Product – How to create a winning product or service
Developing products that cater to the needs of the market is a crucial aspect for any company. They must take into consideration all the aspects of the product or service, such as its functionality, packaging, design, ergonomics, and more. The company must ask itself three crucial questions:
What is the product or service that is being offered?
What are the expected outcomes and benefits that it can offer?
How will the customer benefit from using the product?
To answer these questions, the company must focus on the aspects that differentiate its product from the existing ones. They can also provide additional services such as after-sales service or delivery to offer more value to the customer. Through the product policy, companies can define the quality of their offerings, and thereby establish themselves as a valuable player in the market.
A great example of a brand that created a unique product is Dyson. They revolutionized the vacuum industry with the introduction of their bagless vacuum cleaner, offering a completely new and unique user experience. Their innovative technology allowed their vacuum cleaners to have stronger suction power than traditional vacuums, and their design made them easy to use and maintain. This helped Dyson establish themselves as a leader in the vacuum industry and solidify their reputation as a brand that creates innovative and unique products.
Price – How to effectively determine the pricing for your product or service
When designing a product or service, it's crucial to determine a price that is appropriate for it. The pricing strategy depends on various factors such as the target market segmentation, the production volume, and the company's desired positioning of the product in the market - whether it is for luxury or mass-market consumers. In order to determine the final price of a product, the pricing policy should consider both internal and external factors that affect the offering.
Internal factors such as market position should be taken into account when deciding on the product's price.
External factors are equally important and can include factors such as the perceived value by the target consumers, competition analysis through studying and comparing living costs, price elasticity, which is the relationship between the cost of living and demand, and regulation where certain sectors are subject to regulation.
Different prices can be defined by companies, such as final customer price, distribution price, or psychological price. Additionally, pricing strategies can be implemented based on the positioning of their offering:
Penetration pricing strategy: In a highly competitive market, some companies set a low price when launching a new product to gain a market share and attract price-sensitive consumers.
Alignment pricing strategy: To avoid a price war, it is also possible to align with competitors’ prices.
Price-skimming strategy: To give their brands a high-end image and position, companies often set deliberately high prices to target high-income consumers. Later on, the price of a product can fall, especially if it is considered obsolete (as with old versions of smartphones or computers). Most companies in the technology sector use a price-skimming strategy.
Apart from these strategies, the main challenge for companies is to determine the right price for their products or services. This decision depends on three key elements:
Evaluating how much buyers are willing to pay for the products
Considering the profit margins and costs associated with production and marketing
Considering the prices charged by competitors to define their positioning
Here are some examples of pricing strategies used by various brands:
Rolex uses a "skimming pricing strategy," selling their watches at a higher price than their competitors. Their marketing approach positions their products as luxurious and high-end, which taps into the initial demand for their products. As the product becomes more mainstream, they gradually lower the prices.
Tesla, on the other hand, implements a "penetration pricing strategy." They introduced their electric vehicles at a lower price point than their competitors to increase their adoption and accessibility to a wider market. This pricing strategy allowed Tesla to become a leader in the electric vehicle market and increase their market share.
Toyota uses an "alignment pricing strategy," which aims to align the prices of their vehicles with their customers' perceived value of the product. Their approach is based on value-based pricing, setting prices according to the value that customers place on the product. This strategy allows Toyota to offer their customers a fair price that aligns with their expectations and needs. As a result, Toyota has established a loyal customer base and maintained a competitive edge in the automotive industry.
Place – How to improve the distribution of your product or service and keep it effective
When it comes to selling products, distribution policy plays a crucial role in determining the channels that are used. For companies that want to have multiple distribution points, the strategy of multi-channel distribution is important. This means that it is necessary to provide customers with various ways to access the company's offerings.
Decisions must be made about how customers can purchase the company's products and services. The options include a direct approach, where the company sets up an online store or website, or an indirect approach, which involves working with partners such as retail chains or individual retailers. In order to create a successful distribution strategy, companies should consider the following questions:
Where and how can potential customers find and purchase the products?
What is the most effective way to deliver the products?
It is crucial to make sure that a well-defined distribution strategy is in place to make products easily accessible to customers.
An example of a brand that only sells online is Amazon. Amazon is an e-commerce giant that sells a wide range of products online and has no physical retail stores. Customers can browse, select and purchase products from their website or mobile application, and the products are then delivered to their doorstep. In contrast, Apple sells both online and offline. Although Apple is known for its brick-and-mortar retail stores, it also has an online store where customers can purchase products. They offer customers the option to purchase products online and have them shipped to their homes or to visit their retail stores to purchase products in person.
Promotion – How to create a successful campaign to effectively communicate product or service value to your target audience?
Promoting a company's offer is a crucial aspect of marketing that involves highlighting it to the target audience via effective communication channels. To implement an effective communication policy, there are five main steps that companies should follow:
Defining the objectives and strategies to convey a strong message to the target audience
Identifying and selecting the target consumer profiles and the type of message to be communicated
Drafting the content and the key message to be conveyed to the chosen consumer
Choosing the right communication paths, media, and support to deliver the message
Managing the operational follow-up of the company's promotional actions and setting up dashboards with appropriate performance indicators
Promotion is an integral part of the marketing mix, consisting of several elements that help a company deliver its message to both prospective and existing customers
Similar to a marketing mix plan, there is a communication mix plan that is crucial for companies to effectively reach their audience and achieve their marketing goals.
Promotion includes a set of tools that companies can use to achieve their objectives, reach their target consumers, and highlight the features of their products or services. Similar to a marketing mix plan, there is a communication mix plan that companies should follow. It's important for companies to understand that promotion is not limited to advertising alone. They should implement an integrated communication promotion mix that includes the following key elements:
Advertising. Promote products through displays or social networks, more effective reach to targeted audience;
Sales promotion. Incentives to stimulate sales, drives traffic and increases revenue;
Sales force. A team of salespeople who sell products, expands market share and maximizes profits;
Direct marketing. Direct communication with potential customers, personalized approach and higher response rate;
Public relations (PR). Building positive relationships with the public, improves brand image and reputation.
Besides, promotional communication in the marketing mix also refers to everything that is associated with a brand's identity, including its packaging, colors, shape, and logos. Logos are particularly effective in delivering messages to customers as they help to define the company and create a distinct identity within a specific industry.
Marketers strive to position their brands clearly in the minds of their target customers as a way to gain a competitive edge. In order to achieve this, brand strategy decisions are made based on several factors. These factors include:
Product attributes: These refer to the physical and tangible properties of a product such as its size, shape, color, and design. Product attributes play a crucial role in shaping a customer's perception of the brand. For example, Apple's iPhone is known for its sleek design, high-quality camera, and user-friendly interface. These product attributes have helped Apple to establish a premium brand image in the minds of its customers.
Product benefits: These refer to the advantages or benefits that a customer derives from using a product. These benefits could be functional, emotional, or a combination of both. For example, Nike's athletic shoes are designed to provide comfort and support to athletes during physical activity. Additionally, Nike's brand is associated with the emotional benefit of being a part of a community of active and passionate individuals who strive to achieve their goals.
Product beliefs and values (emotions): These refer to the intangible aspects of a product that influence a customer's emotional connection with the brand. These beliefs and values are often communicated through advertising and other marketing efforts. For example, Coca-Cola's brand is built around the values of happiness, togetherness, and sharing. Coca-Cola's advertising campaigns often feature groups of people enjoying their product together, which reinforces these values in the minds of their customers.
By considering these factors, marketers can create a brand strategy that resonates with their target customers and helps to establish a unique brand identity.
The example of Pampers shows the importance of a comprehensive branding strategy. When Pampers shifted from simply promoting dryness to focusing on how it could help mothers with their baby's development, its growth skyrocketed. This demonstrates the power of branding in creating strong emotional connections with customers and addressing their needs.
Here's our advice: A comprehensive branding strategy can transform a company's image and create a competitive advantage in the market. By understanding the customers' pain points and providing them with a solution, companies can build a loyal customer base and drive long-term growth.
The marketing mix plays a crucial role in enabling companies to create, modify, and adjust their products by regulating the content of the 4Ps. This allows companies to focus their efforts on a single P or the 4Ps as per the stage of the product life cycle. While the 4Ps are widely used to operationalize strategic and creative thinking in marketing, there are other approaches that can incorporate additional elements, depending on the problem and the sector.
For instance, in tourism, hospitality, and services, it is necessary to consider elements that cover all dimensions, tangible and intangible, and that can be translated into an effective marketing strategy. In 2009, the Chartered Institute of Marketing approved an expanded definition of the marketing mix with three additional "P" variables, namely, people, process, and physical evidence, to create touristic offerings.
From then on, the 7Ps became popular and are now part of the new definition of the marketing mix that aims to meet the needs of the service sector and beyond. The previous version, the 4Ps, was considered too brief to be applied to selling services or online offers.
People – How can you effectively define a high-quality workforce to reflect the quality of the service and your brand's DNA?
The fifth element in the marketing mix is people policy, which is especially crucial in the service sector. Since services are intangible, consumers often have difficulty assessing their value. As a result, they look for key indicators that can help them determine the quality of the service. A high-quality workforce is one such indicator, making it imperative for companies to employ excellent staff and deploy them effectively. Human resources (HR) policy is an important marketing tool because people (or staff) often provide services, and customer satisfaction depends largely on them.
For example, in the luxury gastronomy industry, the background and training of people (or staff) serving customers are unique to each restaurant and reflect the standards of high-end dining that distinguish them from mainstream restaurants. Thus, the profile of waiters hired and their training may vary depending on the sector, brand positioning, and how service providers can showcase this to customers or guests. A great example is The French Laundry in Napa Valley, California. The restaurant is renowned for its inventive tasting menu, impeccable service, and luxurious dining experience. The background and training of the staff here are unique and tailored to the restaurant's standards of high-end dining, which distinguishes it from mainstream restaurants. For instance, the waitstaff undergo rigorous training in wine pairing, menu descriptions, and customer service, which reflects the restaurant's brand positioning as a luxury dining destination.
Process – How to define a delivery process effectively and avoid failure
Effective process management goes beyond technical procedures, like manufacturing a product. It also involves ensuring that customers have a positive experience. To achieve this, businesses should develop customer-oriented processes that prioritize customer comfort. This includes the entire sales journey, from the first interaction with the product to the final purchase. To enhance customer retention and promote sales, businesses should reflect on the customer's journey on their website or in-store, for example, by setting up pleasant queuing systems or using sensory marketing to create a unique brand universe.
An excellent example of how businesses can improve their delivery process and customer satisfaction is Nespresso, which uses sensory marketing through visual merchandising – the practice of creating visually appealing displays – to create an enjoyable service delivery process for their customers. Nespresso provides customers with easy-to-use self-service kiosks and qualified sellers to deliver the service, making the process not only convenient but also enchanting for their customers. Additionally, they always offer clients the opportunity to test their latest flavors and coffee creations, which further enhances the overall customer experience. By focusing on both the purchase process and the customers' enjoyment, businesses can improve their delivery process and maintain customer satisfaction and loyalty.
Physical evidence – How to improve the visual setting where your product or service is purchased?
The seventh element in the new marketing mix is all about optimizing the physical environment of a product or service. Physical evidence plays an important role, particularly in the service sector, where it's not easy to influence customer perception as with a high-quality product design or material. Therefore, the aim is to positively impact the customer's subjective perception by improving the visible environment of the service, aligned with the company's objectives. Design, architecture, appearance, and materials are the primary tools to achieve this.
Physical evidence also offers the opportunity to stand out from the competition: many providers offer similar services, but differ significantly in the atmosphere created by their physical evidence strategy. One of the primary challenges in selling services is that they are intangible, unlike products. However, if you are selling online, the physical evidence can be achieved through a well-defined and thought-out user experience, especially on the company website. Fluid navigation, a clear and easy-to-use interface, and personalization all contribute to creating a positive image of the company and the service provided.
Apple is a great example of a company that has successfully used physical evidence to establish itself as a high-end brand in the tech industry. Apple's use of minimalistic and neat decor, sophisticated colors, and sleek store designs have become a hallmark of the brand. These elements are present in all aspects of the purchase process, from the design of their products to the layout of their stores. Apple's physical evidence is so strong that it has become an integral part of the brand's DNA.
Another great example of a company that has effectively used physical evidence is Starbucks. The company's use of warm and inviting store designs, comfortable seating, and the aroma of freshly brewed coffee is designed to create a cozy and welcoming atmosphere. This physical evidence has helped to establish Starbucks as a go-to destination for people looking for a relaxing and comfortable environment to enjoy their coffee.
Overall, the effective use of physical evidence can help businesses to establish themselves as unique in their industry and create a strong connection with their customers.
In summary, the 4Ps and 7Ps are the traditional components of the marketing mix. However, marketing scholars have proposed new definitions that include more than 7Ps when implementing product and service strategies. For example, the 10Ps mix includes three additional Ps to the 7Ps mentioned earlier, which are partnership, permission, and persuasion. Nevertheless, this latest definition of the marketing mix is still not widely used and is somewhat disputed. Some argue that the 10Ps are unnecessary as the 4Ps or even the 7Ps already cover these aspects.
Get ready for the next revolution in the marketing mix: say goodby to 4/7Ps and hello to 7Es experiential marketing mix strategic model
Although the marketing mix 4/7Ps has been a useful tool, it has been criticized by top marketing academics for being too product-focused. As the marketing landscape continues to evolve, there has been a growing emphasis on prioritizing customer experience and shifting from the traditional marketing mix to the experiential marketing mix (7Es). This strategic business model is becoming increasingly important in the digital era where customers expect a more personalized and engaging experience.
Many marketers and CMOs still rely on the traditional marketing mix (4/7Ps) when designing marketing strategies, despite the fact that these techniques may no longer be effective in today's phygital world. With the rise of digital technology, consumers now expect a more engaging and personalized experience across both physical and digital channels.
Unfortunately, many marketers lack the adequate knowledge and training needed to successfully implement the experiential marketing mix (7Es) and create truly immersive experiences for their customers. To stay ahead of the curve, marketers must seek out new knowledge and skills in this field to develop more effective strategies for growth.
It is crucial for marketers, CMOs, CXOs, and businesses across all industries to gain the necessary knowledge on implementing the experiential marketing mix (7Es) to ensure the success of their upcoming marketing strategies. By doing so, they will be able to define their offers, brands, digital services, platforms, or products from every perspective and level, resulting in unique and profitable brand experiences.
If you are looking for valuable insights into experiential marketing strategy, design, and management, then sign up for AIBXD Strawberry Experience Blog, a free resource that offers daily updates, providing you with all the information you need to succeed. Additionally, the American Institute of Business Experience Design offers a comprehensive program to help marketers elevate their skills in experiential marketing and stay up-to-date with the latest industry trends.
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Cite this article as: American Institute of Business Experience Design (2023). Exploring the evolution of traditional marketing: From 4Ps to the extended 7Ps mix. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].