Rethink the Mix: From Four P’s to the Seven T’s
Marketing Mix Modeling (MMM) serves as a linchpin for aligning marketing strategies with business objectives. However, the efficacy of MMM is intrinsically linked to the frameworks that underpin it. As the business landscape evolves, so too must the models that inform MMM. This essay will examine the evolution of these frameworks, how they adapt to modern marketing challenges and, in turn, enhance the predictive and analytical capabilities of MMM.
1. The Traditional Four P’s of Marketing
The “Four P’s” framework for the Marketing Mix has endured as a practical and memorable concept that categorizes the four key elements that companies must consider when marketing a product or service.
Here’s a brief explanation of each element of the 4P’s framework:
Product
This refers to the physical product or service offered to the consumer. It involves understanding what the consumer wants from the product and how it meets their needs. This includes important aspects such as product features, quality, branding, and even the product life cycle.
Price
This involves determining the value of the product and setting a price point accordingly. The price should reflect the product’s perceived value to the consumer.
Factors like supply costs, seasonal discounts, and competitor pricing all play into price.
Place
This refers to the distribution channels where the product can be accessed by the consumer. It could be a physical store, an online platform, or a combination of the two. Implicitly, the goal is to make the offering easily accessible where and when the consumer wants to make a purchase.
Promotion
This involves all the methods used to promote the product. This includes advertising, sales promotions, public relations, and social media marketing. The aim is to create awareness and interest in the product and persuade consumers to make a purchase.
The Four P’s model — Developed in the 1960’s by E. Jerome McCarthy— is elegantly simple, and provides a straightforward template for conceptualizing the marketing mix.
2. Limitations and Extensions of the Four P’s
The Four P’s were conceived in a market environment that was largely product-centric. ‘Product’ was the focal point, and the other P’s were designed to support it. ‘Price’ was set based on cost-plus or competitive pricing models. ‘Place’ referred to physical locations, and ‘Promotion’ was often a one-way communication from the brand to the consumer. Over time, attempts to expand the 4P’s framework include three additional P’s: People, Processes, and Physical Evidence, known as the 7P’s and the new customer-centric 4 C’s framework.
The 7Ps framework:
People
This refers to both the people who work for a business and the target audience. Employees must be trained and motivated, while the target audience must be understood and catered to.
Processes
This involves the procedures, mechanisms, and flow of activities by which services are consumed. A streamlined process enhances customer experience and adds value to the offering.
Physical Evidence
In a service industry, physical evidence pertains to the environment in which the service is delivered. This can include the layout of a retail store, the design of a website, or even the appearance of service personnel.
The 4Cs Framework
The 4Cs framework — Customer Solution, Cost, Convenience, and Communication — shifts the focus from the business to the consumer. It aims to look at marketing elements from the customer’s perspective, emphasizing value delivery and customer experience.
The 4C’s is more customer-oriented:
Customer Solution
Instead of focusing solely on the product, this angle considers what solution the product provides to the consumer. Understanding the customer’s problem is crucial for product development and marketing. It allows businesses to tailor their offerings to meet specific needs, thereby increasing the product’s value proposition.
Cost
This takes into account the total cost of ownership, not just the price. It includes time, convenience, and other variables that might not be immediately obvious. By understanding the full spectrum of costs associated with a product or service, businesses can better align their pricing strategies with consumer perceptions of value.
Convenience
This replaces ‘Place,’ focusing on how easy it is for the customer to make a purchase, not just the distribution channels used to deliver a product or service. Convenience is a significant factor in consumer decision-making. Businesses need to ensure that their products are easily accessible, whether in-store or online.
Communication
This replaces ‘Promotion,’ emphasizing a two-way relationship between the business and the consumer, rather than just talking at potential customers. Effective communication builds trust and fosters customer loyalty. It allows businesses to receive feedback, make adjustments, and personalize their marketing efforts.
While both the 7P’s and the 4C’s frameworks can broaden and deepen our understanding of marketing, as we can see after a certain point the benefits of alliteration start to break down. Where these frameworks might seem to be memorable and cohesive at first, they suffer from oversimplification and ambiguity, limitations that can affect their descriptiveness and universality. For instance, ‘Service’ is not separately accounted for but is subsumed under ‘Product.’ Likewise, ‘Brand’ is implicitly included in ‘Product,’ which overlooks the standalone value that a brand can offer. The need to fit elements into the alliterative structure excludes other important factors that don’t align with the “P” potentially leading to gaps. Add to that the fact that alliteration is language-specific. The 7P’s or the 4C’s may not translate well into other languages.
3. The Seven T’s: A Modern Adaptation
Alexander Chernev developed the “Seven T’s” framework, which serves as an advanced adaptation of the traditional Four P’s model, designed to meet the intricate demands of today’s business landscape. The Seven T’s — Product, Service, Brand, Price, Distribution, Incentives, and Communication — provide a more comprehensive and nuanced set of tactics for businesses navigating markets increasingly influenced by digitalization, service orientation, and branding. The Seven T’s offer a more expansive toolkit that allows businesses to design, articulate, and deliver value with greater nuance.
The Seven T’s framework enhances the traditional Marketing Mix in several key ways. It separates ‘Service’ from ‘Product,’ acknowledging that modern offerings often blend the two. It elevates ‘Brand’ as a distinct category, recognizing that a brand’s value often transcends the physical product. ‘Distribution’ evolves from the more static concept of ‘Place,’ reflecting the dynamic, multi-channel strategies that are now the norm. Moreover, ‘Promotion’ is subdivided into ‘Incentives’ and ‘Communication,’ capturing the varied and complex engagement strategies employed by contemporary businesses.
For example, in industries like software, the ‘Service’ component can be as critical as the ‘Product’ itself, offering options like one-time licenses or ongoing subscription services. Similarly, ‘Brand’ is no longer just an extension of the product; it forms an emotional and psychological connection with the customer, an element not fully encapsulated by the ‘Product’ category in the Four P’s.
Here are the Seven T’s defined:
ProductThe ‘Product’ tactic refers to the tangible or intangible goods that a company offers to fulfill specific customer needs. Usually, when a consumer buys a product, they gain complete ownership and rights over that particular item. The Product encapsulates the features and advantages of the item or service that the organization offers to the market. A product must offer unique selling propositions (USPs) to differentiate itself. For instance, smartphones not only serve as communication devices but also offer functionalities like high-quality cameras, various apps, and other features that cater to different consumer needs.
Service
‘Service’ within the marketing mix signifies the advantages and experiences provided to consumers, without transferring permanent ownership of the goods. The ‘Service’ tactic has gained prominence with the rise of the service economy. While there’s often a fine line between product and service, certain offerings can be marketed as either. A key distinction lies in the permanence of ownership: products are owned, while services are accessed or rented. Interestingly, many modern offerings seamlessly blend both dimensions. For example, it can include not only customer service but also services like installation, warranty, and after-sales support. In industries like software and streaming, the subscription service model has even overtaken the product model.
Brand
A ‘Brand’ serves as more than just a name or a logo; it’s a powerful marketing asset that indicates the origin of a product or service and sets it apart from rivals. Through branding, companies offer something intangible yet immensely valuable that transcends the mere physical or functional attributes of their offerings. It crafts an emotional bond with consumers, with a self-expressive benefit that ties into their identity or lifestyle. The ‘Brand’ tactic is increasingly seen as a critical asset in creating long-term value. Strong brands can command higher prices and customer loyalty.
Price
Price literally refers to the financial cost assigned to the goods or services offered by a business. This is the amount of money that customers and partners are expected to pay in exchange for the advantages conferred by the product or service. As a tactic, ‘Price’ is not just the amount a consumer pays; it’s also a psychological element that can influence perceived value. Pricing strategies can vary widely, from premium pricing to penetration pricing, each with its own set of advantages and disadvantages. The right pricing strategy can be a significant differentiator.
Distribution
In the context of the 7Ts, ‘Distribution’ refers to the methods or avenues utilized for getting the product or service into the hands of the customer. It outlines the logistical journey of an offering from the producer to the consumer, encompassing channel partners such as wholesalers, retailers, and e-commerce platforms. THE rise of DTC models has changed the distribution landscape, allowing companies to bypass traditional retailers. Companies now manage a mix of traditional and digital distribution channels, each with its own set of logistics and costs.
Incentives
‘Incentives’ in the marketing mix incorporates various promotional tools like discounts, coupons, or loyalty programs to motivate purchases, referral bonuses, and even gamified experiences that encourage engagement and repeat purchases. Incentives can target various stakeholders in a business, from the end consumers to channel partners and even employees within the organization. The ‘Incentives’ tactic is increasingly sophisticated, with companies using analytics to tailor promotions to individual consumer behaviors.
Communication
Communication’ in the 7Ts framework is about informing and persuading your target audiences about the key attributes and benefits of a brand, product, or service. These audiences include potential consumers, business partners, and internal stakeholders. Communications encompasses advertising, public relations, social media, and other forms of outreach. With the proliferation of media channels companies must manage a consistent message across traditional advertising, social media, influencer partnerships, and even customer reviews. Increasingly, communication is not just about selling but also about providing value through information and engagement.
4. The Tactical Flexibility of the Seven T’s
The 7Ts allow for a more segmented approach to measuring ROI. For example, you can measure the ROI of ‘Incentives’ separately from ‘Communication,’ giving you a clearer picture of what tactics are most effective in achieving your business objectives.
By integrating the 7Ts into Marketing Mix Modeling, businesses can gain a more accurate, comprehensive, and nuanced understanding of how different marketing tactics contribute to their overall goals. This, in turn, enables more effective optimization of marketing strategies, leading to better performance and ROI.
It’s evident that the Seven T’s offer a more holistic and adaptable framework for businesses operating in today’s complex and rapidly evolving markets. While the Four P’s provide a foundational understanding of marketing, the Seven T’s equip businesses with the tactical flexibility required to succeed in the modern world.
