Marketing is an essential part of any business, whether it’s a small start-up or a well-established company.
In this article, Georgi Georgiev, the CEO of Releva with more than 20 years of experience in the industry, explores the 4 Ps of marketing and illustrates how they have been the cornerstone of many marketing strategies. He also discusses how Releva uses them to optimize the user experience and increases revenues while maintaining ethical data handling.
The following article contains expert advice from our CEO on effectively using the marketing mix to achieve steady growth, regardless of your level of experience in marketing.
When we talk about marketing we usually start from the 4Ps – product, price, placement, and promotion. The concept was introduced by E.J. McCarthy in 1960 in his famous book “Basic Marketing: a managerial approach”. This is what every MBA has studied as a foundation, including myself.
In addition to the original 4 Ps, there are now 3 additional elements: planning, process, and people. I believe that the performance of a company’s marketing efforts should also be considered another important factor. That makes the Ps 8.
It’s important to measure and consider all aspects, but in my opinion, there is a significant misinterpretation of McCarthy’s book and a misguided contemporary understanding that suggests that these Ps are:
- All at the same time optimizable
- Possessing equal weight in your company
- Highly interdependent from a marketing perspective
Let’s say that you can optimize all 8 Ps at the same time because they are equally important (statements 1 and 2). If we define just two KPIs per P this makes 16 KPIs to optimize at the same time. Some of these KPIs will be competing with each other, some will even cannibalize your business.
Let’s take just 2 Ps from the classical mix and 1 P from the modern approach – product, price, and people. If we want to differentiate our product via innovation and, at the same time, make it cheaper, what would be the message to our recruitment and engineering teams?
Let’s answer the question “How to make a product cheaper?” by taking, for example, a deep-tech company like Tesla. Their approach would be to automate whatever is possible (a significant investment), source materials at a lower cost (sometimes at the expense of quality), hire less expensive labor (which may involve relocating operations or hiring less qualified workers) and eliminate excess costs (which may impact brand image, recruitment, and even product quality and delivery). If you want to maintain the same level of quality, you can focus on automation and appropriate cost-cutting measures. But how does this relate to making the product more competitive through differentiation? This requires hiring top engineers, often highly involved in innovation, R&D, and even academic work.
Because everything is a result of people’s work, let’s say that you do both, hire different profiles for optimizing cost and innovation. And again you’ll bump at a trade off, how do you imagine these two different types of people to work together as a team with common objectives? I am quite certain that th
So, in my opinion, statements 1 and 2 are simply wrong. You can just optimize a few of these 8 aspects and still make a winning company.
Now the third statement is “All Ps are highly interdependent from marketing perspective.” Lets take, for example, two restaurants – La Piazzentza: known for its big pizzas and cheap prices – one of the most popular Italian restaurants in Barcelona (especially the one in front of Sagrada Familia); and the famous El Bulli: that was a restaurant near the town of Roses that was at a place no one knew before, but had three Michelin stars and was described as “the most imaginative generator of haute cuisine on the planet.” El Bulli has some truly impressive stats; they may have “accommodated only 8,000 diners a season, but got more than two million requests. Bookings for the next year were taken on a single day after the closing of the current season.”
If I would give 5 stars to each of the Ps, I would grade La Piazzentza like that:
- Product 2,
- Price 4,
- Placement 5,
- Promotion 1,
- Planning 1,
- Process 2,
- People 2,
- And Marketing Performance 1;
and El Bulli like that:
- Product 5,
- Price 2,
- Placement 1,
- Promotion 1,
- Planning 1,
- Process 5,
- People 5,
- And Marketing Performance 1;
Now, as scientists might do, we will look at some corner cases and make a non-math deduction.
First, what do you think will happen if La Pizzentza decides to bring to all their customers а semi-finished product they just put for a few minutes in the oven before serving? It will definitely drop their product rating from 2 to 0. But remember you can see Sagrada Familia through the window. I would guess they will be as full as they were before. Their Placement is what really drives this restaurant. They might also get some savings from pizza sourcing but will win a negative review for food and deteriorate the brand.
Second, what will happen if El Bulli decides to dramatically increase storytelling and spend millions in Promotion? They will get not 1 but 2 millions million calls for reservation. What will be the effect on the business – dramatically negative. They spend money for nothing. They can accommodate only 8000 dishes per year.
Third, what will happen if El Bulli and La Pizzentza change Places. I guess La Pizzentza will get bankrupt immediately, and El Bulli will have a negative impact on the business because they will pay higher rent. One thing is clear though no one will go to El Bulli to enjoy Sagrada Familia.
From these examples, I think it is clear that not only that businesses organize around a few of the original Ps, but that if you try to push harder on non-critical Ps it will result in a negative impact on the business. Finally, you may get non-critical Ps close to 0 without dramatically changing the performance of your business.
I want to conclude with a few words about eCommerce as we have created Releva. A company that innovated in the field of AI for marktech. Releva is a marketing automation platform that personalizes the multichannel to increase conversion rate, AOV and LTV. In our three years of existence, we have created a process that focuses on only five of the (8)Ps mentioned above that in our experience have additive value to the eCommerce, e.g., the more the better.
As you may know, everything in digital promotion these days is done by intelligent machines.
Releva’s contribution to the mix is another intelligent machine (an AI) that can predict:
- What products the user needs;
- When the user will have to buy the products of need;
- What is the price that this particular user will be willing to pay/payment method/buy now pay later, etc.;
- What is the channel – Facebook, Media, Email, Viber, WhatApp, etc.
- Where we can find these users to tell them that we know a product, on their price exists now but for a limited time.
Releva uses this knowledge throughout the whole user journey (Process) to promote and re-target relevant products (Promotion), at the optimal time for the user, at the right price (Price) in the right channel (Placement). Releva optimizes for both user experience and ethical revenue increase (Performance).