The “4 P’s of Marketing”: The Professors Missed 2 Critical P’s

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They missed some critical elements in your B-school education.  The “4 P’s” of Marketing, also known as the Marketing Mix:  Product,  Price,  Promotion, &  Place (Distribution)  serve as the back-bone for any business.

4 p's of marketing, the marketing mix

image credit: 4marketingps.blogspot.com

While the teaching’s are timeless, they are not complete.   With that said, I propose  the “2 missing P’s” in Marketing…..

POWER – The strength of your competitive position

The Golden Rule:  He who has the gold makes the rules.  Simply put, the more power one has in their niche, the better.  There are many reasons why strong market positions matters, pricing power at the top of the list.  Perhaps the most important of all?  The CUSTOMER votes everyday with their purchase.  The largest share player in a category is usually (not always) the player that is winning the vote from the customer, and that matters most.

Power is measured by the all mighty market share.  Your $ revenue as a % of industry revenue.  If you are selling $100mm in a $1bb category, you have a 10% market share.  Whether that means you are in a #1 or #10 share position is dependent on many factors.  In general, the more competitors fighting over points of market share, the more “fragmented” the competitive space is.

Why else is market share important?  Simply put, if your growth is not keeping pace with the category, you will be loose market share.  In the above example, if the category is growing at 10%, the future sales will be $1.1bb.  If you grew at 2%, your sales would be $102mm, and your share would fall to 9.3%.  While that does not sound like much, that is an erosion of your competitive strength of -7%

10% -9.3%= .7% share point decline.  .7% decline over your base 10% (-.7%/10%) = -7% decline.

So $ growth of +2% translates into a -7% loss in competitive position.  Growth needs to be viewed in the context of your competitive space.

Market Share Power

PEOPLEThe secret sauce of every business…..

  • Have you ever worked on a killer new product that never got off the ground?
  • Have you struggled to protect margins as customers (and your sales teams) demand lower pricing?
  • Have you seen competitors with fewer resources grab market share in light speed?
  • Has growth stagnated with no solution in the pipeline?

All of these challenges have a people component at the very core of the issue.  There are countless books written on leadership, customer service, social media, strategy, execution and countless other topics.  What underlies all aspects of business are the people in it, their focus & commitment to the greater good of the organization.  The people create the products, sell them to the customer bases, everything that exists from an “order to the cash.”  There’s a favorite saying I have:  “People make things happen…..or NOT happen.”  It sums it up nicely.

 

Get the 4 P’s right and your on your way a solid business.  But if you get the 6th P wrong (People), its only temporary.

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Comments

  1. Your style is very unique compared to other people I have read stuff from. Thanks for posting when you’ve got the opportunity, Guess I will just bookmark this blog.|

  2. Thank You! Look forward to reviewing yours as well. Happy and prosperous 2013!

  3. Bobby Bloom says:

    I enjoyed your insight on this topic. When I received my grad degree one of the Marketing Profs. taught the “12 P’s” and people was one of them but I’ll be damned if I can recall the other 7 that she added. I have always thought that although the “4 P’s” is a good model it needs to be built on the foundation of the “5 Forces” precisely to determine the position of your company and/ or product in the market.
    I enjoyed your site and wish you the best of luck!

    • Great insights Bobby, thanks for your thoughts. Your Prof was certainly ambitious if they expected great retention of “12 P’s “! Best of luck in 2013 and look forward to hearing from you!

  4. I searched and found it. Thanks for the post. Martin McLen

  5. Great insight- Companies who get the “People” wrong, often promoting talented marketers into positions of leadership who have limited or poor managerial skills and/or unable to get their marketing staff behind them. General Robert E. Lee was successful for much of the Civil War in fighting successful campaigns where he was outmanned and out-resourced because of his ability to articulate a vision, marshal resources and gain the undying support of those working for him.

    • Could not agree more Jeff. So much focus in a business education is on the “information accumulation” vs the real soft skills that are the true difference makers. General Lee is a great case study!

  6. Hello I do not agree with you. Why? T_T bye

  7. Good post! I add this blog to rss feed. tkanks

  8. I agree with power and people Mark. Positioning could also be considered another P that is worthy of mentioning and listed as one of the 7 or 12 P’s that many seem to recited.

  9. Enjoyable post.

Trackbacks

  1. […] Innovation is the life blood of a CPG company.  It gives the salesforce a reason to see their buyers and generates consumer interest at the point of purchase.  Ultimately, smart innovation drives profitable incremental $ sales.  It “margins up” a brand for the manufacturer and the retailer.  Innovation is also critical to driving market share gains, one of the critical “missing” P’s of marketing.” […]

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