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TITLE (supplied by the customer): "Why The Four P's Are Still Effective?"

DESCRIPTION (supplied by the customer): Four Ps identification paper. Reflect on your own organization and identify the product, place, pricing, and promotion, or service development strategies currently employed. Assess the effectiveness of each.

PROJECT DEVELOPED:

The marketing profession and science alike still find the conventional component of the marketing mix--the Four P's--a valuable set of elements underlying the preparation of any successful marketing analysis, research, or plan. These Four P's--product, price, promotion, and place--also capture the marketing environment or the key dimensions of the product or service relevant to its interaction with this environment, which ultimately clears its competitive advantage. The latter results from an informed choice on the part of the various consumer strata (or their representative agents) making their decision in every market segment that pertains to their needs or desires. 

It could, somewhat naively, be argued that, if the consumer can access complete (relevant) and correct information about the product's parameters, he or she will make an optimal choice reflecting on both their true preferences and the actual distribution of quality on the market. The structure of supply would thus supposedly predict the pattern of demand (or choice), and vice versa. In reality, of course, it's not all that simple. For one, search or information can be costly, let alone that the very effort of search and optimization can be attached psychologically with a cost in terms of negative emotions (aversion to problem solving). Brand loyalty, other things being equal, could in fact be explained by that aversion of problem-solving and for that matter to uncertainty pertaining to quality distribution (supply structure). We are not going to argue that consumers are irrational or emotion-driven; nor will we say that the rational consumer won't fail to pick better and better solutions, and in fact loves the very enterprise of problem solving and search. Neither extreme is completely true or relevant for that matter. In fact, both extremes might become more plausible and approach a common denominator if we relax some assumption regarding the consumer's choice. 

Indeed, the rational (utility-maximizing at all times) consumer will be interested in choosing the best solution addressing his or her needs. However, we should not assume as self-evident that (a) the consumer explicitly realizes all his needs (i.e. can choose from among just any combinations of features appealing to specific preferences, less so when the combination--the product--is completely new), and (b) that the consumer will love any additional information just because he wants a better solution. In fact, consumers might hate information--be it in terms of time committed to search or of advertising. He might also hate talking to and haggling with the salespeople. But in any event, he must assess the product's parameters.

That all probably being correct and necessary, such understanding might not be sufficient for the marketing professional to have. For one cannot possibly penetrate the consumer's system of motivation and incentives (driving his choice and relevant to the supplier's competitive edge) without understanding what core of parameters the majority of consumers will likely take into account when making their choice. Why is that? The consumer's preferences cannot be directly observed other than if revealed via his choice probably determined by the product's parameters. However, the product's intrinsic or fundamental characteristic is but one component of its perceived value for different consumers. Other aspects of value are determined by the rest of the Four P's, which all in fact can be viewed as complementary, inseparable, exhaustive constituents of the product's value.

These Big Four do not really describe the external environment, but rather capture the product's endogenous dimensions. We will now briefly outline these elements of the marketing mix:

Product: Captures parameters such as the quality, features, package, brand, and possibly such externalities as the company's overall reputation or "goodwill." Plus, post-sales warrantee and service are integral part: the customer wants his needs satisfied and not a mere set of distinct parameters none of which alone (outside the complementary synergy) represents much value. On second thought, for some customers some of these parameters are more desirable than others, while some of these should best be unbundled altogether.

Price: Involves base price, benchmark reference prices, trade-in operations, terms and conditions of financing, etc. Optimal pricing is an all-important standalone facet of marketing management, which affects the company's advantage subject to the gap between the intrinsic perceived value and the reference price (the maximum amount of wealth the customer stands ready to trade off for this particular product--of course, together with its complementary add-ons such as locus, distribution, etc.)

Place: Refers to optimal selection and management of distribution channels, possibly logistics and warehousing if applicable (less so to services). 
Promotion: Comprises an entire set of advertising, public relations, and otherwise education for customers aimed at shaping the maximum attainable perceived value (and lowest elasticity of demand). 

Analysis:

The organization we will analyze is the Economic Education and Research Consortium headquartered in Washington, D.C. It should be fairly self-explanatory that the company sells educational and research services pertaining to economics and business related disciplines. To fit the products into the Four P's framework, we first have to analyze their economic value. It commits itself to training professionals in the aforementioned disciplines to conduct theoretic and applied research, as well as to function in the academic instruction or corporate consultancy fields. In fact, the training it offers could for all practical purposes amount to PhD level preparation, its key competitive edge being the twice as short training period (two years). The organization tailors its specialists preparation to the specific needs as spelled by the buyers--corporations or research institutions that plan on hiring those experts upon graduation, or buys this expertise as ongoing training schemes for their current employees. The final product is therefore not mere expertise, but its complementary match with the demand on the part of the employing institutions. Therefore, in building and maintaining its edge, the organization must address these ultimate needs as well as the preferences of the individual trainees desiring to augment their education so as to make it more marketable for the position they seek to land.

Product: The product is therefore the human capital that the company supplies onto the corporate and academic market. The organization's past reputation is another important component of the product at large. Reputation, in turn, consists in part in the expected employment match whose probability the consortium optimizes. 

Price: The price is in terms of the training fees, as well as sponsoring and otherwise human capital augmenting donations and initiatives such as distinguished guest speakers. The latter can be viewed as a positive externality, with potential for free-riding on the part of those employers or trainees who deny their interest yet benefit in the end. 

Place: One other difficulty involved in the analysis has to do with the fact that the company's product is in fact a service, more pertaining to the category of intangibles. Conventional logistics, warehousing and shelf life issues do not directly apply to services which are mostly delivered on the spot and require little if any inventory equivalence. The distribution channels certainly are an issue. For NGO type organizations, public relations and networking are commonplace. 

Promotion: Advertising booklets, samples of projects done and invitations to workshops and conferences, as well as an official website are all heavily employed to shape the favorable and sustainable perception of value, and to communicate the pressing need for the edge-minded employers to manage their human resources proactively and more aggressively.

The elements of the marketing mix we have just discussed actually pertain to the traditional and, some would argue obsolete, taxonomy. An alternative framework has been suggested to adequately address the new challenges of the twenty-first century marketing, characterized by an environment where knowledge and information are the key underlying determinants of a sustainable edge. More so for the 'intangible' products like complex services, informational technologies, and the augmenting of the human capital which is increasingly becoming the company's most critical earning asset and source of its competitive advantage ...
  
  

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