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

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(The concept of the "marketing mix" has been a staple of marketing for over 70 years. It's discussed in virtually all marketing textbooks and taught in virtually all introductory marketing courses. But does the marketing mix idea still have a place in 21st-century marketing? The answer is "yes," and here's why.)

The marketing mix construct has been part of the marketing landscape for more than seven decades. The origin of the concept can be traced to 1948 when James Culliton, a marketing professor at Harvard, wrote an article in which he described the marketing executive as a "mixer of ingredients."

Culliton's article inspired Neil H. Borden, another Harvard marketing professor, who began using the phrase "marketing mix" in his teaching and writing in 1949.

Borden developed a model of the marketing mix that included 12 elements - product planning, pricing, branding, channels of distribution, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact-finding and analysis.

In his 1960 marketing textbook, Basic Marketing:  A Managerial Approach, E. Jerome McCarthy introduced a simpler model of the marketing mix that contained only four elements - product, price, place, and promotion. McCarthy's model quickly became popular and has been so widely adopted by academics and practitioners that the "4P's of marketing" have become synonymous with the concept of the marketing mix.

Despite its popularity and longevity, the 4P's model has been criticized for several reasons. Given how much marketing has changed over the past several decades, it's legitimate to ask whether a sixty-year-old marketing mix model is still relevant. My answer to this question is an emphatic "yes," provided you keep a few things in mind. 

The 4P's Include More Than the Terms Suggest

One criticism of the 4P's is that the ingredients used in the model don't adequately capture the complexity of today's marketing environment.

The response to this criticism is that the terms used in the model should be viewed as flexible category labels that can encompass more than the literal or common meanings of the words would suggest. For example:

• Product - The "product" element can be used for both products and services, and for complex "solutions" that consist of multiple products and services. In essence, this element can refer to whatever a company sells.

• Price - This element can encompass any type of price and virtually every aspect of pricing strategy - for example, cost-plus vs. market-based vs. value-based pricing, premium vs. discount pricing, unit pricing, subscription-based pricing, and pay-for-performance pricing.

• Place - "Place" can encompass any method or channel of distribution a company is (or could be) using. Importantly, place can also encompass distribution via the cloud.

• Promotion - This element is intended to encompass all of the ways a company can communicate with its customers and potential buyers. This would include all online and offline "marketing" communication channels and tactics, and personal selling, but it would also encompass communications that are "non-promotional," such as customer service and customer success communications.

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

Another criticism of the 4P's model is that it focuses on the decisions and actions of the selling company, but doesn't address what is required to be successful with customers. This criticism is factually accurate, but that doesn't mean the model is flawed. It simply means the model was never designed to prescribe what will be effective with customers.

The 4P's model is like a list of available ingredients a chef can use to prepare a variety of dishes in a variety of ways, but it doesn't provide recipes for specific dishes that diners are guaranteed to like. It's up to marketers to decide what specific ingredients will produce a "meal" that will appeal to their target buyers.

To make these decisions wisely, marketers will need to use other methods and tools to identify the needs and preferences of their potential buyers. It's noteworthy that, in his marketing textbook, E. Jerome McCarthy did not discuss the 4P's model until after he had explained the importance of understanding the needs and attributes of the potential customers in the selling company's target market.

The Marketing Mix Concept Is Still Relevant

Even if you think the 4P's model is outdated, it's important to recognize that the basic idea of marketing leaders as "mixers of ingredients" is even more valid today than it was when it was introduced more than 70 years ago.

Regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Deciding how and where to invest finite marketing resources has never been easy, but these decisions have become more complex because today's marketing leaders have more options than ever.

The challenge facing marketing leaders is to use their finite resources to implement the combination of marketing activities and programs that will produce maximum results. Therefore, the task of a marketing leader is similar to that of a professional money manager.

The job of an investment manager is to construct a portfolio of investments that will produce the highest risk-adjusted rate of return. In today's environment, as in the past, a primary job of a marketing leader is to construct a portfolio of marketing activities and programs that will maximize the return on marketing resources.

So, James Culliton's 76-year-old description of marketing executives as "mixers of ingredients" is still accurate.

[Research Round-Up] AI vs. Humans - Round 1

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(This year, I plan to devote some of my Research Round-Up posts to a discussion of academic research papers about artificial intelligence. Some of these scientific papers will likely focus on comparing the capabilities of AI to those of humans at performing tasks related to marketing. This month's Research Round-Up features an unpublished paper that compares the performance of AI vs. humans at generating ideas for new products.)

"Ideas are Dimes a Dozen:  Large Language Models for Idea Generation in Innovation"

• Authors - Karan Girotra, Cornell Tech and Johnson College of Business, Cornell University; Lennart Meincke, Christian Terwiesch, and Karl T. Ulrich, The Wharton School, University of Pennsylvania

• Date Written - July 10, 2023

This paper describes the results of an experiment designed to compare the performance of generative AI and humans at producing ideas for new consumer products.

The task used in the experiment was to generate ideas for a new product for the college student market that would sell at retail for less than $50. The AI application used in the experiment was OpenAI's ChatGPT-4.

The experiment used three "pools" of new product ideas.

• First pool (200 ideas) - Ideas created without AI assistance by students enrolled in a product design course at an elite university.

• Second pool (100 ideas) - Ideas generated by ChatGPT based on the same "prompt" as that given to the students.

• Third pool (100 ideas) - Ideas generated by ChatGPT based on the same prompt and a sample of highly-rated product ideas. 

All 400 product ideas were evaluated by a panel of college-age individuals in the United States. The quality of the product ideas was based on purchase intent. Panel members expressed their purchase intent by selecting one of five options - definitely would not purchase, probably would not purchase, might or might not purchase, probably would purchase, or definitely would purchase.

The Results

The average quality of the product ideas produced by ChatGPT was higher than the average quality of the human-generated ideas. The average purchase probability of a human-produced idea was 40.4%, while the average for a ChatGPT idea (without examples) was 46.8%, and the average with examples was 49.3%.

Of the 40 highest-rated ideas in the experiment, 35 (87.5%) were ideas produced by ChatGPT.

The researchers also asked members of the evaluating panel to rate the novelty of the new product ideas. In this experiment, the mean novelty value of the human-generated ideas was higher than that of the ideas generated by ChatGPT. However, the researchers noted that novelty did not appear to be significantly correlated with purchase intent.

Implications for Marketers

The Girotra et al. paper has important implications for marketers because it adds to our understanding of the capabilities of AI applications like ChatGPT.

The results of the experiment described in the paper are similar to the findings of other recent research, including an experiment conducted by Boston Consulting Group (GCG) and scholars from four elite universities. I described this study in a post I wrote last fall.

In the BCG study, participants were tasked to generate ideas for a new shoe for an underserved market. They were also required to develop a list of the steps needed to launch the product, create marketing slogans, and write a press release for the product. The researchers found that participants who used an AI tool to complete the tasks outperformed those who didn't by 40%.

The results of these studies suggest that AI tools based on large language models may be better than humans at performing "brainstorming-like" tasks where the objective is to generate a large number of diverse ideas relating to a topic.

This result should not be that surprising. Large language models are trained on a voluminous amount of data from incredibly diverse sources. The ability to generate responses based on such a vast repository of training data enables an AI tool like ChatGPT to excel at brainstorming-like tasks.

For marketers, the findings described in the Girotra et al. paper and similar findings in other studies suggest that AI tools powered by large language models can be particularly well suited to perform content ideation tasks such as generating potential topics for blog posts or producing potential social media posts.

[Book Review] An Authoritative Road Map To High-Impact Content Marketing

Source:  Kogan Page

Last November, I published a review of Robert Rose's new book, Content Marketing Strategy. Rose's book is one of the best I've recently read, and it's an important addition to our library of content marketing literature. If you haven't read Content Marketing Strategy, I recommend that you add it to your reading list for 2024.

Shortly after I finished Rose's book, I discovered and read Purna Virji's new book, High-Impact Content Marketing:  Strategies to Make Your Content Intentional, Engaging and Effective (Kogan Page, 2023). This is also an excellent book, and I enthusiastically recommend it.

Purna Virji is a globally recognized content strategist and marketer whose work has been featured in The Drum, Marketing Land, Adweek, and other publications. She is currently Principal Consultant, Content Solutions at LinkedIn, and before joining LinkedIn, she was Senior Manager of Global Engagement at Microsoft.

What's In the Book

High-Impact Content Marketing contains 12 chapters that are packed with strategies, insights, and frameworks designed to enable marketers to conceive and produce intentional, engaging, and effective content.

Purna Virji uses the first two chapters of the book to explain why many content marketing efforts produce underwhelming results and to describe the essential building blocks of long-term content marketing success. These two chapters are particularly important because they reveal the perspective that Virji brings to the material in the balance of the book.

In Chapter 01, she argues that marketers struggle to achieve success with content marketing because they often get five basic choices wrong.

1. Focusing on outputs vs. outcomes (a/k/a content quantity vs. business results)
2. Chasing trends vs. being grounded in strategy
3. Prioritizing short-term vs. longer-term
4. Creating for machines vs. humans
5. Not balancing creation vs. distribution

Virji uses Chapter 02 to discuss what she calls the "four essential element pairs" of long-term content marketing success.

1. Behavioral science and learning design
2. Empathy and inclusion
3. Copywriting and selling skills
4. Strategy and measurement

The balance of High-Impact Content Marketing covers several topics that Virji argues are critical for the development of a high-impact content marketing program. These include:

• Needs analysis (internal and customer) - Chapters 03-05
• Competitor content audit - Chapter 06
• Content marketing strategy and measurement - Chapter 07
• Copywriting strategy - Chapter 11
• Content distribution techniques - Chapter 12

Virji also includes two chapters that explain how to use brainstorming to come up with high-impact content ideas.

My Take

High-Impact Content Marketing is an excellent book that should be considered required reading for anyone involved in content marketing. The book is well organized and well written, and Virji includes numerous real-world examples, which make the book more engaging and relatable.

She also provides several practical tips and frameworks in the book, which will enable readers to more easily apply the principles and techniques she discusses.

One particularly valuable aspect of the book is that Virji includes a discussion of "instructional design" principles and explains how content marketers can leverage those principles to create more effective content.

At the beginning of this review, I mentioned Robert Rose's new book, Content Marketing Strategy, and I noted that it is one of the best content marketing books that I've recently read. Rose's book and High-Impact Content Marketing address different aspects of content marketing, but these books are highly complementary.

Purna Virji's book provides a road map for creating effective content, while the primary focus of Rose's book is the organizational structures and processes that are needed to effectively manage a content marketing function. By applying the principles described in both books, marketers will greatly increase their odds of achieving content marketing success.

So, the bottom line is:  If you're involved in content marketing - and especially if you're responsible for leading your company's content marketing efforts - you need to read both of these valuable books.

Looking Back, Looking Forward - 2024 Edition

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The beginning of a new year is what behavioral scientists call a temporal landmark, a date that stands out as more meaningful than others. Temporal landmarks often prompt us to make significant changes in our lives or commit to pursuing new goals.

If you doubt the power of temporal landmarks, just consider how often we make "New Year's resolutions" to lose weight, or begin a regular exercise program, or learn a new skill.

Like many marketers, I used the final few weeks of 2023 to reflect on what happened during the year and plan for 2024. Because of the disruptive events of the past few years, I spent a good bit of time thinking about how this blog needs to change and what the focus of my content here should be in 2024.

What Won't Change In 2024

Last year, I began publishing two new types of posts each month - book reviews and "research round-ups." In 2023, I published eleven book review posts.

Today, marketers have easy access to a huge variety of content resources. They can read blogs, white papers, and ebooks, watch videos, listen to podcasts, and attend webinars.

All of these content formats can be useful and valuable, but some topics can't be adequately addressed by anything other than a full-length book. Therefore, books will always be an important knowledge resource for marketers.

My book review posts were very popular in 2023. In fact, three of my ten most popular posts last year were book reviews. So, book reviews will continue to be a regular monthly feature in 2024.

Last year, I published eleven monthly research round-up posts, and they were also popular with readers. Two of my ten most popular posts in 2023 were research round-up posts.

Most research round-up posts include brief descriptions of two to four recent research studies, although I have occasionally used a post to discuss one particularly important study in more detail. Given their popularity, research round-up posts will also continue to be a regular monthly feature this year.

What Will Change in 2024

My primary objective for this blog has always been to provide information and viewpoints that are timely, thought-provoking, and useful. To accomplish this goal, the content of this blog needs to evolve to reflect the ever-changing landscape of B2B marketing.

Without question, 2023 was the year of generative artificial intelligence in business and marketing. OpenAI's release of ChatGPT on November 30, 2022 ignited an arm's race among technology companies to develop and roll out new or enhanced applications featuring generative AI capabilities. Product announcements from both tech industry heavyweights and start-ups came at a rapid pace throughout 2023. 

The capabilities of generative AI language models also evolved at a breakneck pace last year, and it's now clear that generative AI will have a profound impact on all aspects of business, including marketing. I suspect that the pace of AI development will continue in 2024 and that generative AI will again be one of the hottest topics in marketing.

So, I'll be writing about generative AI this year, but my approach will be a little different than most. I've always believed that it's important to use this blog to make readers aware of concepts and research that they may not encounter in the popular B2B marketing literature.

Last year, generative AI became an important topic of scholarly research, and that will likely continue this year. Academic research papers can be an authoritative source of information about generative AI, but they can also be more challenging for marketers to access. Therefore, I'll be focused on finding and discussing these kinds of materials in 2024.

I'll also be actively looking for academic research papers on other topics that are relevant to B2B marketing, and I'll write about those when I find them.

2024 is poised to be another exciting year in B2B marketing. I look forward to expanding my knowledge and sharing what I learn with you.

Three Posts From 2023 That Are Worth Reading in 2024

A few days ago, I published a list of my ten most frequently read posts of 2023. I ranked posts based on cumulative total reads, which means that posts published later in the year were at a major disadvantage compared to those published earlier in the year. In the 2023 list, only one of my top ten posts was published after April 1st.

Several posts that I published later in the year have attracted a significant number of readers, but not enough to crack the top ten list. In a way, these posts are like the ugly duckling in the much-loved fairy tale by Hans Christian Andersen. They just need more time for their popularity to become evident.

Before we close the books on 2023, I wanted to highlight a few of these ugly duckling posts that, with time, may become beautiful swans.

The list I'm providing here is very subjective. I've selected posts that I believe will have continuing relevance for marketers in 2024. So, in case you missed any of them, here are three posts from this year that are worth reading as you start the new year.

"What B2B Marketers Can Learn From Missing Bullet Holes"

Source:  Wikipedia

This post focuses on the importance of avoiding selection bias when making decisions based on data. Selection bias can occur when the data used in an analysis (the "sample") is not representative of the relevant "population" in some important respect.

It's easy for marketers to fall prey to selection bias. As I wrote in the post:

"Selection bias is a troublesome issue because, like all humans, we marketers tend to base our decisions on the evidence that's readily available or easily obtainable, and we tend to ignore the issue of what evidence may be missing. In many cases, unfortunately, the evidence we can easily access isn't broad enough to give us valid answers to the issues we are seeking to address."

"How to Judge the Strength of Your Value Propositions"

By now, many of you will have completed most or all of your strategic planning for 2024. As part of that planning, you've probably identified the value propositions you will use with your customers and prospects.

Compelling value propositions are obviously essential for successful marketing, and it's important to periodically monitor the effectiveness of your value propositions. The best way to determine the strength of your value propositions is to test them with real customers and/or prospects, but that approach isn't always practical for some B2B companies. This post describes a framework that you can use internally to judge the effectiveness of your value propositions.

"How to Take the "Vanity" Out of Marketing Metrics"

Source:  ESO via Flickr (CC)

Marketers are usually advised to avoid using "vanity metrics" to measure marketing performance. The primary criticism of vanity metrics is that they don't have a measurable relationship with strategic business outcomes.

The real problem with vanity metrics is not with the metrics themselves, but rather with the failure of marketers to place those metrics in the appropriate context.

This post provides a detailed explanation of how to link marketing activities to specific marketing objectives and how to link those objectives to strategic business outcomes. Making those linkages visible is what converts vanity metrics into meaningful marketing performance measures.

Top image courtesy of Carol VanHook via Flickr (CC).

Our Most Popular Posts of 2023

This will be my last post of 2023, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal here has always been to provide content that readers will find informative, thought-provoking, and useful, and I've been immensely gratified by the attention and engagement this blog has received.

For several years, I've used my last post of the year to share which posts have been most widely read. For this list, I'm only considering posts that were published in 2023. I've ranked the posts based on cumulative total reads. Therefore, those published early in the year have an advantage.

So, in case you missed any of them, here are our ten most popular posts of 2023. 

1. How Marketers Should Navigate Economic Uncertainty in 2023
2. [Research Round-Up] The Continuing Importance of B2B Thought Leadership
3. The Yin and Yang of High-Performance Marketing
4. [Book Review] A Must-Read Guide To Igniting Account-Based Growth
5. [Research Round-Up] The State of Artificial Intelligence in Marketing
6. What Is the 95:5 Rule? Does It Apply To Your Company?
7. The Essential Behavioral Science Reading List for Marketers
8. [Book Review] A Valuable Introduction To the Complex World of Marketing Technology
9. [Book Review] An Insightful (and Timely) Guide To Marketing Metrics
10. What the 95:5 Rule Means for B2B Marketing

Happy holidays to everyone, and best wishes for a great 2024!

Image courtesy of Republic of Korea via Flickr (CC).

How to Set Realistic Revenue Growth Goals for 2024

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Establishing objectives is an integral part of any business planning process, and some of those goals inevitably relate to revenue growth. Revenue growth objectives must be realistic for company leaders to formulate sound business and marketing strategies. The first step in setting realistic revenue growth goals is to identify where your current revenue is coming from.

As the fourth quarter of 2023 draws to a close, many business and marketing leaders will be finalizing their revenue growth objectives for 2024. Growth is the prime directive for many companies, and revenue growth is often the primary measure of business success. Therefore, business and marketing leaders need to set realistic revenue growth goals as part of their strategic planning process.

Having realistic revenue growth objectives is particularly important for marketing leaders since they are usually tasked to develop and implement the programs that will enable their company to achieve those objectives.

To set realistic revenue growth objectives for 2024, business and marketing leaders must have a clearly articulated, evidenced-based revenue growth strategy. One important - but often overlooked - step in developing a sound revenue growth strategy is identifying where growth will come from.

Specifically, business leaders need to answer three basic questions during their planning process.

1. What are the structural sources of revenue growth in our business?
2. How much revenue growth is each of these sources currently producing?
3. How much revenue growth can we realistically expect to generate from each of these sources in 2024?

I discussed the structural sources of revenue growth in a post published a few weeks ago, so I won't repeat that discussion here. The following diagram shows the major structural sources of revenue growth that exist in all companies:

In this post, I'll discuss the process I use when working with clients to determine how much of their current growth each source is providing and to analyze how much growth each source can potentially provide in the next year.

How Much Growth Is Each Source Currently Producing?

Suppose your company had total sales of $110 million for the 12 months ending November 30, 2023. I'll call these 12 months "2023." You had total sales of $100 million for the 12 months ending November 30, 2022. I'll refer to this period as "2022." So, your company grew sales by $10 million during 2023.

For this example, let's suppose your company did not acquire another business or introduce any new types of products in 2023, but you did begin selling in a new geographic market during the year. Under these circumstances, your primary potential sources of revenue growth in 2023 were base retention, sales to existing customers, sales to new customers in existing markets, and sales to new customers in new markets.

To quantify how much revenue growth each of these sources produced in 2023, you would use sales by customer data from your ERP/accounting system.

Base retention (revenue churn) - To measure the impact of base retention (a/k/a revenue churn), identify the customers who bought from you in 2022. but did not buy from you in 2023. The total sales made to those customers in 2022 is the amount of revenue that was "lost" in 2023 due to revenue churn. For this example, let's say the amount of lost revenue was $1 million.

Sales to existing customers - Identify the customers who bought from you in both 2022 and 2023, and compare the 2023 total to the 2022 total. For this example, let's say that sales to existing customers increased $3 million in 2023.

Sales to new customers in existing markets - Identify the customers who bought from you in 2023, but did not buy from you in 2022. Then, eliminate those customers located in the geographic market you first entered in 2023. The sales made to the remaining customers are sales to new customers in existing markets. Let's say this source accounted for $5 million of the 2023 revenue growth.

Sales to new customers in new markets - This is the total sales made to customers in the geographic market that you first entered in 2023. Let's say this amount was $3 million.

The table below summarizes the results of this analysis and shows where your 2023 revenue growth came from.

How Much Growth Can We Generate from Each Source in 2024?

Once you know where your current growth came from, you can use these insights to set more realistic and achievable growth objectives for the coming year. The critical step is to analyze why the current growth happened.

In our example, sales to new customers in existing markets produced $5 million, or 50% of the total growth in 2023. One possible explanation for this growth is simply that demand for the types of products or services offered by your company expanded in 2023. In other words, the growth may have resulted from "being in the right market at the right time." It's also possible that this growth occurred because your company took customers away from competitors and increased its market share.

Whatever the specific reason, the important question is:  How much future growth can the existing markets provide? If they still have substantial growth potential, you may want to focus a substantial portion of your marketing efforts on acquiring more new customers in these existing markets.

On the other hand, if your existing markets do not have significant future growth potential, you'll need a different strategy to drive growth. You may, for example, want to focus more of your marketing efforts on acquiring new customers in the geographic market you first entered in 2023, or you may need to consider expanding into additional new market areas.

This type of analysis should be done for each structural source of revenue that contributed to your current growth and for any new sources that are expected to contribute to growth next year. Once this analysis is completed, you should set 2024 revenue targets for each source of revenue that is relevant to your company. And, once these revenue targets have been established, you can design marketing programs to achieve those objectives.