Marketing and its four P’s in the digital world

4 P's in the digital era

Consider how easy it was to decide what you want to buy in the 60s. There were exactly 5 sorts of media marketers could use to reach potential customers: radio, direct, mail, billboard and television. Now consider how complex is the decision path of a customer today. Customers make a journey across multiple devices and through time. Online channels and research have a huge impact. More and more customers use the internet through mobile devices such as smartphones, hence they need to be reached through mobile search and display; new mobile ad formats need to be reviewed etc.

Marketing is rapidly becoming one of the most technology-dependent functions in business, which has led to the shift in control of marketing technology from IT and Sales to Marketing in most companies. This is why it is said that the Chief Marketing Officer has become the Chief Marketing Technologist.

Marketing 4.0

Let’s apply this wisdom to one of the widely known marketing fundaments, i.e. the 4P model of marketing. In the earlier version –the marketing 1.0 model – the marketer is considered the value creator, who uses 4 P’s (product, place, price and promotion) to transfer or communicate his message to the value beneficiary, aka the customer. This is the end recipient, who is expected to share the marketing message through word of mouth. Word of mouth has been around forever and contains a very strong marketing power. It is identified as the most valuable form of marketing, since consumers have more trust in recommendations from friends and family than in advertising. Today it received new proportions because of the use of social media, which increased the reach of word-of-mouth marketing.

Over time the 1.0 model has evolved to a 2.0 and a 3.0 version. Each time additions and adaptations are made to accommodate the model by adding new P’s such as participation and principles.

The most recent version is the marketing 4.0 model (see picture below), which has included the context into the model. In the connected world that we live in, the marketing mix has evolved to accommodate more customer participation. Due to the internet and social media our society has become much more participative. In marketing this has led to more interaction between value generators and value users, both also among value users. This means that importance of transparency has increased gigantically, an evolution marketers cannot neglect. Last but not least, because of the amount of choice they are offered today, consumers attach more value to principles. Brands are judged on their core values, the why of the brand. In most cases this has become the only differentiator between brands.

All these elements have led to the redefining of the 4 P’s in the marketing 4.0 model as the 4 C’s.

In the digital economy, co-creation is the new product development strategy. Through co-creation, companies can improve the success rate of new product development. Co-creation allows customers to customize and the personalize products and services that they want, thereby creating superior value propositions.

In the digital economy, price is similar to currency which fluctuates depending on the market demand. Online retailers for example collect a massive amount of data which allows them to perform big-data analytics and in turn to offer a unique pricing for each customer. With dynamic pricing, companies can optimize profitability by charging different customers differently based on several customer profile aspects.

In the sharing economy the most potent distribution concept is peer-to-peer distribution. Think of players like Airbnb or Blablacar. In a connected world, customers demand access to products and services almost instantly, which can only be served with their peers in close proximity. This is the essence of communal activation.

The last C stands for conversation. Traditionally, promotion has always been a one-sided affair, where customers acting as an audience passively receiving the message. Today, social media enable customers to respond to these messages and discuss about them with other customers. The rise of rating systems such as Tripadvisor provide a platform for customers to have conversations about and offer evaluations of brands they have interacted with.

It’s the people, stupid

The marketing model has evolved and gotten more complicated over time but despite all the technological evolution the essential, the four P’s have stayed intact. The existing model still works but got updated with the new context.

If we could make one important addition to it, we would like to add a fifth P for people. Marketers are heavily impacted by the digital age and constantly need to learn new and other skills. This requires a lot from them.

In this digital world the marketer cannot lose touch with real human relationships. Digital technology should be used as an enabler to understand and serve your customers better. Alongside automation and technology, it’s critical to keep the human element of marketing at the forefront of everything. To do this requires listening to your audience and customer base.

Sources