What are the 4ps of marketing and how can we use them in modeling?
If you’ve been researching marketing mix modeling solutions, you’ve probably seen a lot of references to the 4ps of marketing. But why are they so important to marketing mix modeling and what do they tell us about our marketing strategy?
So, what are the four Ps of marketing? There’s product, price, place, and promotion. Each element can provide a framework for businesses to create and execute a successful marketing strategy for our brand. Here we will explain each of the four key elements (the four Ps) of marketing in depth and look into how they can be measured.
The first P is Product. This P refers to the tangible items or services that a business can offer to its customers or target audience. This might include product design, features, quality, packaging, branding, or customer support. In order to measure the product would involve analyzing product quality, customer satisfaction (reviews), and profitability.
Here’s an example: A smartphone manufacturer can measure the quality of its product by testing its durability, performance, and user interface. Satisfaction can be measured by surveys or reviews and profitability can be tested by measuring revenue, production costs, and profit margin on each individual item.
The second P is Price. Price is how much money a customer pays for a product or service. Measuring price involves analyzing the pricing strategy, and price elasticity, and whether this price is improving sales and revenue.
A clothing brand can measure the effectiveness of its pricing strategy by figuring out how its price will compare with competitors and testing whether the price is driving more (or less) sales and/or revenue. Price elasticity can be analyzed by how changes in price might affect the demand for their products.
The third P is Place. Place represents the distribution channels and methods that are used to deliver products to consumers. This might include physical stores, online shopping platforms, among other distribution channels. Measuring place is testing how accessible, convenient, and effective each distribution channel is.
Here’s an example from a food delivery company. They can measure the effectiveness of its placement strategy by analyzing customer feedback on the convenience and accessibility of its online platform. They can also measure the effectiveness of their distribution channels by testing the delivery time and the cost of their services.
Last but not least, our fourth P is Promotion. Promotion refers to the marketing activities that businesses use to expose their products or services to their target market and the rest of the world. Advertising, public relations, sales, email marketing, and personal selling are all methods of promotion. Measuring promotion would involve analyzing the effectiveness of marketing campaigns, the reach and engagement of promotional activities, and whether they have driven more sales and revenue.
For example, a drinks company can measure the effectiveness of its promotional strategy by testing whether there is a lift in customer engagement following a social media campaign, the reach of its advertising campaigns, and the impact of promotions on sales and revenue.
In summary, the 4ps of marketing build out the framework for businesses to create and execute effective marketing strategies. Measuring the four Ps involves analyzing various aspects of a business’s products, pricing, distribution channels, and promotional activities. By doing so, businesses can identify areas for improvement, and optimize their marketing strategies, in order to increase their revenue and profitability. This is also known as Marketing Mix Modeling and is at the core of how GrowthOS helps our customers to grow their businesses.