The 4P Framework is a powerful tool to set the right marketing mix within a case study
Use the 4Ps to align the products of a company with the right price, place, and promotion
The right product
The product must meet the needs of customers. This category also includes packaging, as well as services and guarantees, which could come with the purchase. The key area in this framework is to understand the distinctive characteristics of the product in comparison to the competitors' products (see benchmarking).
The right price
Generally, 3 different approaches are used to set the price of a product:
- Cost-Based Pricing
- Competitive Analysis
- Value-Based Pricing
The “right” price is the one, which maximizes the revenue. To sell the greatest amount at the best price possible, we need to know how people value the product; therefore value-based pricing is usually recommended.
The right place
Place refers to the PLACEment of a product in the market rather than just the point of sale. This dimension includes the whole distribution system: transportation, storage, and choice of a distribution channel to the point of sale among others. To choose the right place you need to focus on the customers’ needs, wants, and behavior.
The most effective promotion
Promotion bundles all communication activities with the customers. Ideally, the information of a product is presented in such a manner that it raises awareness of the target group and convinces them to purchase the product. Promotional costs often represent a sizable proportion of the overall costs.
Example: Starbucks
- Product: a variety of caffeinated drinks and a distinct ambiance unavailable before Starbucks in the US.
- Price: premium price because of the uniqueness in the American market and willingness of people to pay.
- Place: establishing themselves as a coffee-to-go place, therefore they set up coffee shops in places with a high frequency of walk-in customers.
- Promotion: Starbucks is one of the most recognized brands today. Starbucks addresses its modern clientele using various kinds of advertisements such as mobile apps, social networks, and other types of viral marketing.
Key takeaways of the 4P Framework
- Classical marketing tool
- Key elements: product, price, place, and promotion
- A helpful framework for the introduction of new products
