Are the 4P's Still Relevant for Today's Marketers

One of the most enduring concepts in marketing is the idea of the marketing mix. The concept became popular in the 1960's after Neil H. Borden published an article in the Journal of Advertising Research. Borden's original marketing mix model contained twelve components. E. Jerome McCarthy later grouped these ingredients into four categories that became universally known as the 4P's of marketing - Product, Price, Place, and Promotion.

In their seminal textbook, Principles of Marketing, Philip Kotler and Gary Armstrong define marketing mix as "the set of tactical marketing tools - Product, Price, Promotion, and Place - that the firm blends to produce the response it wants in the target market."

Given the profound changes in marketing over the past few decades, it's legitimate to ask whether a fifty-year-old model of marketing is still relevant and valuable for marketers today. My answer to that question is emphatically yes, provided that marketers keep two important things in mind.

The 4P's Include More Than the Terms Normally Suggest

The terms used in the 4P model are category labels that encompass more than the literal or common meaning of the terms. For example:

• Product - The Product component encompasses both products and services, as well as complex "solutions" that consist of both products and services. The term Product really refers to whatever a company offers to the market, and several marketing thought leaders and practitioners have suggested that "offering" or "solution" would be a more accurate term for this component of the marketing mix.
• Promotion - In the 4P model, Promotion has always encompassed all of the ways that a company communicates with potential buyers. Therefore, Promotion has always included advertising, direct response marketing, personal selling, and public relations. Today, Promotion would also encompass content marketing, inbound marketing, and social media marketing even though these tactics emphasize the use of "non-promotional" content.

The 4P's Describe What Marketers Can Control, Not What They Must Achieve

The 4P model speaks from the perspective of the selling company. It has always been designed to describe factors or conditions that the selling company controls. The 4P model has never attempted to describe what is required to be successful from the customer's perspective. To use a food example, the 4P's are like a list of available ingredients that chefs can use to create a variety of dishes in a variety of ways, but the 4P's do not provide the specific recipes for dishes that diners will like.

To understand what is required to achieve success with customers, you need another model or tool. One that I've found to be useful for this purpose is the "4A" model of marketing developed by Jagdish N. Sheth and Rajendra S. Sisodia. The major components of the 4A model are Acceptability, Affordability, Accessibility, and Awareness. Each of these major components has two dimensions. I'll be discussing the 4A model in greater detail in a future post. For now, the diagram below shows the four major components and the two dimensions of each component.

The marketing landscape has changed in dramatic and fundamental ways over the past five decades. However, the core objectives of marketing and the elements of the marketing mix are much the same today as they were fifty years ago. So, as long as the 4P's are defined and used appropriately, they're still relevant and valuable for today's marketers.

A Cornucopia of B2B Marketing Predictions for 2015

So far this month, my posts have focused on what will happen in B2B marketing during 2015. In my first January post, I discussed a recent webinar by the Aberdeen Group regarding what best-in-class marketers are planning for this year. In my last post, I described some of the findings of a recent survey by StrongView Systems that asked business leaders about their marketing budget and spending plans for 2015.

While performing research for these posts, I discovered an excellent website developed by Backbone Media. Backbone has collected predictions from nearly two dozen B2B marketing thought leaders, and the website presents these predictions in a very accessible format.

The predictions at the Backbone website cover a wide range of topics. I'll focus on three topics that earned comments from multiple marketing thought leaders.

The Roles of Marketing and Sales

I've written before about the need to forge a tighter integration between marketing and sales, so this is a topic that interests me greatly. Here's a sample of the comments and predictions from the thought leaders.

• David Meerman Scott predicts that there will be a convergence of marketing and sales driven by changes in the way people buy. He argues that most people now begin their buying process by performing research using search engines and social networks. Then he says:  "And that means that it's not about marketing doing one thing and sales doing another because from the buyer's perspective it's all the same."
• Matt Heinz predicts that the sales enable function will become more formalized and robust in 2015, and that it will be managed by the marketing department.
• Perhaps the most provocative prediction comes from Marcus Sheridan, who argues that B2B sales reps will largely become extinct and will be replaced by online content.

Video Marketing/Visual Storytelling

Over the past couple of years, several research studies have documented the power of video content to create engagement with potential buyers. Several thought leaders believe that companies will greatly expand their use of video content in 2015. For example:

• Heidi Cohen  believes that 2015 will be the year of video for two reasons. First, she notes that YouTube is now the second largest search engine and that you need content there if you want to be found by your prospects. And second, she argues that video content is an easy and fairly painless way for companies to get input from their employees and customers.
• Michael Brenner argues that visual storytelling will be critical in 2015 and that leading brands will start to create in-house production studios to develop video content.

Predictive Analytics

Predictive analytics was a hot topic in marketing circles in 2014, and several thought leaders believe it will play a more significant role in B2B marketing in 2015 and beyond. Some examples:

• Craig Rosenberg argues that companies will add predictive analytics in order to gain insights that will make their sales efforts more efficient.
• Matt Heinz contends that companies will begin to leverage predictive analytics to help them put the right marketing content in front of the right prospects at the right time.

Whatever actually happens in 2015, it will be an exciting year in B2B marketing.

2015 Marketing Budget Trends by Channel

This month, I'm featuring posts that describe a few of the many published predictions about what will happen in marketing during the coming year. In my last post, I discussed a recent webinar by the Aberdeen Group regarding what best-in-class B2B marketers are planning to focus on in 2015.

This post deals with marketing budget and spending trends in 2015. In late November and early December of last year, StrongView Systems surveyed business leaders from a wide range of industries regarding marketing spending plans for 2015. The StrongView survey generated 377 responses, mostly from business leaders affiliated with North American companies. About 34% of the respondents were from companies with 1-50 employees, while 28% were from companies with more than 1,000 employees. The survey did not provide a breakdown of B2B vs. B2C respondents, but it appears that both were represented.

The survey respondents were generally optimistic about their marketing budgets for 2015. Fifty-four percent expect their budgets to increase in 2015, and 40% expect their budgets to remain at 2014 levels. Of those respondents who believe their 2015 marketing budgets will grow, 47% expect the increase to be between 5% and 10%, while about a third of the respondents expect budget increases of more than 10%.

The StrongView survey also asked participants about their spending plans for ten specific marketing channels or techniques. The table below shows the percentages of respondents who plan to increase and decrease spending on each channel or tactic.

These survey results reflect the continuing divide between digital and traditional marketing channels and tactics. As the above table shows, most of the planned increases in spending are directed to digital marketing techniques (e-mail marketing, social media, mobile marketing, etc.), while most of the planned budget decreases will target non-digital marketing channels and tactics, such as print advertising and radio/television advertising.

While the shift to digital is undeniable, a closer look at the StrongView survey results reveals that some non-digital marketing channels and tactics are holding their own. For example, the percentages of respondents who plan to increase and decrease spending on trade shows and events are almost equal. And while 22% of respondents plan to decrease spending on direct mail, 17% of respondents said they will increase direct mail spending in 2015.

The StrongView survey didn't specifically address spending on content marketing, but several other recent research studies have indicated that many companies will significantly increase their investments in content marketing in 2015.

What High-Performing Marketers are Planning for 2015

We're now well into the prediction season, and it's easy to find articles, blog posts, and webinars that focus on what will happen in marketing in the coming year. The prognostications range from timid to bold, and while I wouldn't bet my retirement savings on most of them, some of the predictions are realistic and insightful.

Recently, I attended a webinar that featured some useful (if not completely surprising) predictions derived from solid research. The webinar was presented by Maribeth Ross, the Chief Content Officer and a Managing Director with the Aberdeen Group. The topic of the webinar was "What Best-in-Class Marketers are Planning for 2015," and the content of the webinar was based on research conducted during 2014 in Aberdeen's customer-facing practice areas.

In this webinar, Ms. Ross focused on two major issues:

• What were the top challenges facing marketers in 2014?
• What are best-in-class marketers planning to do in 2015 to address these challenges?

According to Aberdeen's research, the top four pressures facing marketers in 2014 were:

• "We're not getting the most out of our marketing automation investment."
• "We know lead management is important, but we're not doing it very well."
• "Our buyers are doing more research on more channels before ever talking to sales."
• My sales team needs different resources due to this new buyer."

To address these pressures, Ms. Ross says that in 2015, best-in-class marketers plan to:

• Improve their use of marketing automation technologies by implementing progressive profiling, testing and optimizing landing pages, aggregating data to create account-level views, and implementing lead routing and lead scoring
• Develop clearly defined lead management processes and improve their ability to track and measure the performance of their lead-to-revenue funnel
• Double down on investing in content so that they can effectively engage potential buyers who are performing research and educating themselves
• Enhance their sales enablement capabilities by improving lead qualification processes (including, specifically, the ability to identify "hot" leads that should be sent immediately to sales), by analyzing the effectiveness of their content resources, and by leveraging technology to make it easier for sales reps to find and access content resources

As noted earlier, these predictions are not particularly surprising. The pressures that Ms. Ross identified have been building for the past few years at least, and leading B2B marketers have been focused on marketing automation, content marketing, and sales enablement for quite some time. It's likely that these issues will remain important for next several years.

Our Most Popular Posts - 2014 Edition

This will be my last post of 2014, and I want to thank everyone who has spent some of his or her valuable time reading this blog. I hope that you have found the content here to be both thought-provoking and useful.

Thanks to analytics, I can see how many times each blog post has been viewed, and I thought this would be an appropriate time to share which posts have been most widely read. This ranking is based on cumulative total reads, and therefore older posts obviously have a built-in advantage.

So, in case you missed any of them, here are our five most popular posts.

An Inconvenient Truth About B2B Demand Generation - If you're a B2B marketer, measuring the dynamics of your lead-to-revenue funnel is critical to understanding how well your demand generation system is performing. This post shows that the demand generation system in many B2B companies is horribly inefficient and illustrates how much improvement is possible through the implementation of best practices.

Why Content Marketing is the Best Way to Build the Brand - Some respected marketing industry experts have argued that content marketing has made brand marketing or "building the brand" obsolete. This post argues that building the brand is still an essential marketing objective for B2B companies and that content marketing is now the best marketing tactic to use for branding. For another perspective on the importance of brand building, see Why B2B Branding Still Matters.

Use an Importance-Performance Matrix to Get Marketing and Sales Talking - A perennial favorite. This post explains how to use an importance-performance matrix to capture the degree of agreement or disagreement between marketing and sales regarding key demand generation activities. An importance-performance matrix won't tell you how to resolve conflicts between marketing and sales, but it will identify the issues you need to address.

It's Time to Integrate Marketing and Sales - Marketing and sales "alignment" has been a hot topic among B2B marketing and sales professionals for some time. This post argues that it may be time to move beyond mere "alignment" and actually integrate the marketing and sales functions. In a later post - Four Key Ingredients in the Marketing/Sales Integration Recipe - I discussed four critical requirements for integrating marketing and sales.

Why BANT No Longer Works for Qualifying Leads - One of the most widely-used methods for qualifying B2B sales leads is known by the acronym BANT, which stands for Budget-Authority-Need-Timeline. This post argues that BANT is no longer an effective way to qualify sales leads. In a later post - Rethinking the Value of of BANT (It's Not as Outdated as Some Suggest) - I revisited this topic and argued that the BANT criteria can still be useful for qualifying leads if they are used at the right times to answer the right questions.

Happy New Year, everyone!

Why Print Marketing is Still Vital for Some Companies

The growth of digital marketing over the past few years has been nothing short of spectacular. According to Forrester's latest digital marketing forecast, digital marketing spend in the US will exceed $100 billion in five years, it will be about $13 billion more than television advertising, and it will represent 35% of all US advertising spend.

There's no longer any doubt that digital technologies are playing an increasingly important role in the path to purchase of both consumers and business buyers. This doesn't mean, however, that all non-digital forms of marketing have lost their effectiveness. In fact, recent research indicates that traditional print-based marketing channels and tactics are still a vital part of the marketing communications mix for some kinds of companies.

The Nielsen Research

In September of this year, The Nielsen Company published a report that focused on what sources of information consumers use to make buying decisions. The Nielsen report acknowledged the growing importance of digital technologies in consumers' path to purchase. For example, Nielsen expects that online sales of consumer product goods in the US will be 2.5 times higher in 2015 than they were in 2010.

What some people will find surprising is that Nielsen's research also reveals that print marketing is still an effective component of the marketing mix for retailers. Nielsen found that today, more than half of all US shoppers use printed circulars to obtain product and sales information, and the use of printed circulars is nearly 20 percentage points higher than the closest digital marketing touch point - email. Based on its research, Nielsen concludes that print is not dead for retailers and that digital won't be replacing print anytime soon.

The ABM Research

Research also shows that print marketing is still effective in the B2B space. Last year, The Association of Business Information & Media Companies (ABM) conducted an in-depth survey of almost 6,700 media end-users (readers, event attendees, etc.) to gain insights about how they are obtaining information to support business-related purchases. The survey focused on several kinds of digital and print media, and also included events such as conferences and trade shows.

The ABM survey found that 96% of end-users use both websites and print magazines to obtain business information. When asked what sources of information they use on a weekly basis, 73% of respondents said websites, 67% said e-newsletters, and 45% said print magazines.

ABM also asked survey participants to rate the importance of various sources of information in buying decisions. When asked about researching work-related purchases, the top three sources identified by respondents were:

• Websites - 65% of respondents
• Product information from manufacturers - 62%
• Print magazines - 48%

When asked specifically what sources of information were important for learning about new products, services, or suppliers, the top three information sources identified by respondents were:

• Websites - 80% of respondents
• Product information from manufacturers - 73%
• Print magazines - 69%

Key Takeaway

The growing importance of digital marketing channels and techniques is undeniable, but these research findings indicate that both consumers and business buyers are still using printed marketing materials to inform buying decisions. The evidence shows that potential buyers are increasing the number of information sources they use during their path to purchase. So, they are embracing the newer digital communication channels, but they are also continuing to rely on traditional, non-digital sources of information.

It's also clear from these studies and other research that younger buyers are more likely to use and rely on digital communication channels. Therefore, it's likely that, over time, non-digital marketing channels and tactics (including print-centric marketing) will become less important than they are today. For the intermediate future, however, print marketing will remain a useful and effective component of the marketing mix for many kinds of companies.

Do Inbound Leads Cost Less? Maybe.

Advocates of inbound marketing frequently assert that leads acquired through inbound tactics cost less than leads obtained through outbound marketing techniques. The research usually cited to support this claim is the annual inbound marketing survey conducted by Hubspot. In the State of Inbound 2014 study, Hubspot found that in B2B companies having 51 to 200 employees, the average cost of an inbound lead was $70, while the average cost of an outbound lead was $220. Hubspot went on to say, "We did find that leads sourced through inbound practices are consistently less expensive than outbound leads, regardless of company size."

Hubspot has been conducting annual surveys for five years, and all have consistently shown that inbound leads are less expensive (on a cost-per-lead basis) than outbound leads.

Measuring the relative costs of acquiring leads through inbound and outbound marketing techniques can be useful and valuable, but marketers must keep two important points in mind. First, it's obviously critical to have an accurate picture of the costs. In many companies, inbound marketing work is done by internal employees, many of whom have other job responsibilities. Therefore, unless a company tracks labor costs on a activity basis, the costs associated with inbound marketing will often be understated.

It's also critical to remember that understanding the relative costs of acquiring leads through inbound and outbound marketing programs will not, in itself, tell you whether inbound marketing or outbound marketing is more valuable for your business.

To accurately measure the value of any lead generation tactic, you also need to know what quality of leads the tactic is producing. In this context, lead quality refers to the likelihood that a lead will actually make a purchase and become a customer. To incorporate lead quality into your evaluation, you need to use lead conversion rates to "translate" lead acquisition costs to the customer level.

I can illustrate how lead conversion rates impact lead costs with a simple example. The table below compares the costs of inbound vs. outbound leads at various stages of the lead-to-revenue cycle.

In this example, I'm using the following lead stages:

• Inquiries
• Marketing qualified leads (MQLs)
• Sales accepted leads (SALs)
• Sales qualified leads (SQLs)
• New customers

The cost-per-inquiry values used in the above table are based on research by SiriusDecisions, and the conversion rates in the table for inbound leads are the conversion rates that SiriusDecisions says are achieved by the average B2B company. For illustration purposes in this example, I'm assuming that outbound leads convert at slightly higher rates than inbound leads - 2 percentage points at each lead stage.

As the table shows, the cost-per-inquiry for inbound leads is significantly lower than for outbound leads. At $25.00 per inquiry vs. $41.50 per inquiry, inbound leads are about 40% cheaper than outbound leads. However, when measured on a "per new customer" basis (which is the most important number), outbound leads in this example actually cost about 3% less than inbound leads.

Please understand, I'm not arguing that outbound marketing is "better" than inbound marketing. The conversion rates for outbound leads used in my example are for illustration purposes only. Your conversion rates for both inbound and outbound leads will almost certainly differ from those used in my table. In addition, research by SiriusDecisions has indicated that inbound leads cost less and have higher conversion rates, on average, than outbound leads.

The important point here is that you can't evaluate the value of inbound vs. outbound marketing for your business until you measure your lead acquisition costs at the customer level.