In 1960, Jerome McCarthy got a bright and amazingly resilient idea. All the components of a marketing strategy could be reduced to just Four P’s (Product, Price, Place, and Promotion), the 32-year-old marketing professor claimed.
And he was right, at least at the time. Those Four P’s have since become a tremendously influential guide in marketing programs. Although the world of marketing has changed significantly since the ’60s, all MBA students, marketers, and strategy consultants are still expected to know and apply the Four P’s as if they were laws of nature. Some would argue that the digital revolution has yet to radically change the teachings of the Four P’s.
But a closer look at some of today’s fastest-growing brands shows that time has buried the Four P’s. Companies can no longer use them to gain a competitive advantage and meaningful differentiation. In fact, they more and more look like the roadmap to failure.
Let’s look at promotion. In recent years, we have seen the explosive growth of companies that don’t do any advertising at all. Zara, one of the largest and fastest-growing fashion brands, never advertises. Facebook didn’t grow to 800 million users through any type of promotion. And although the company thrives off advertising, Google only recently started to advertise.
In the Plex, a new book about the rise of Google, Steven Levy tells the story of how Google’s first VP of marketing Scott Epstein suggested an elaborate marketing plan based on the Four P’s. Google founders Sergey Brin and Larry Page rejected his plan outright, and Epstein left the company shortly thereafter. “It really came down to this,” a Google employee told Levy, “do we want to put money into the technology, into the infrastructure, into hiring really great people? Or do we want to blow it on a marketing campaign we can’t measure?”
Google didn’t need marketing; the search engine was so good that it spoke for itself. Few companies are lucky to have such a powerful product, but the essential rationale is the same for everyone: A penny spent on campaigns is a penny less spent on creating user value. In a transparent, digitally empowered world, only the best offerings survive, so companies that spend on promotions have a cost disadvantage.
Importantly, the decline of promotion does not mean that brands don’t matter; it just means that their value hinges less on costly marketing campaigns.
The other P’s are just as dispensable. Place is obviously becoming less and less important as more commerce moves online. And price is also less of a potential strategic marketing advantage. With price, comparison sites like Tripadvisor.com, Pricegrabber.com, and Bizrate.com, many companies are forced to let raw market forces determine the price of their products.
So what is today’s marketer left with as a way to build a strategic advantage? The product. The only real way for a company to build a growing brand is to design products and services that are so good that they become marketing vehicles in and of themselves. Or put in broader economic terms: The golden rule for today’s hyper competitive and information-rich markets is this:
The only way you can increase the value of your brand is by increasing the value of your offering.
That value isn’t defined solely by greater usability, though that’s a part of it; value is to a greater and greater degree determined by the emotional connection a user has to a product. Great design creates emotional value. Bold social actions by a company and great, or even free, services do the same. But in the post-advertising world, there is no simple formula for creating emotional value–apart from producing an outstanding product.
This One-P marketing rule will have profound ramifications for how companies organize their marketing, split their marketing budget, and integrate product development, design, and brand building–not to mention for the $450-billion-plus/year marketing industry. But at least one “P” will be easier to learn than four.
Written by Jens Martin Skibsted and Rasmus Bech Hansen.