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In a Digital World Are the 4 P's of Marketing Still Relevant?

10/04/2014 13:55 BST | Updated 08/06/2014 10:59 BST

When we were chatting about a collaborative digital business model, my nephew Chris challenged me with this statement "I can't understand what the consumer gets for helping others though!" I had just shared with him a business that raised $10m which allows people to help people for free. I was rather hoping that his digital youthfulness was about to surprise me and provide me with a deep native understanding of being-digital and offer me some insights to the future; but his mind has already been corrupted by out of date, but classical business/ marketing, education. As we continued to debate digital first as I structured out an update to classical marketing, as is set out below.

There is an awful lot written and taught about the traditional 1960's marketing mix tool which is commonly known as the 4, 5, 6, 7 and even 8 P's of marketing. A quick read of Wikipedia gives all the basics. A re-write that never really caught on in the 1990s was to change to 4 C's of marketing and focus on the consumer and in 2012 the daddy of western marketing Kotler presented "people, processes, programs, and performance." Even with the endorsement of Gartner this methodology has never really caught on.

I am neither brave nor stupid enough to suggest that this replace the traditional and time tested marketing mix thinking, but the old framework doesn't embrace for digital as the fundamental and does not allow in its teaching digital first. Both I argue have to have consistency as a bedrock. To get straight to the point, below is a mapping the traditional marketing mix words and how I see them translated into digital first, each one is addressed in turn. However, the shift is not about the word set which describes each term but about the moral principal behind it. This is the radical shift from profit motivated greed to purpose driven awareness as the key driver, which I first saw outlined by Michael Porter in 2011.

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The Purpose Price shift.

Traditional economic theory which drove marketing thinking was dominated by a PROFIT first mantra; pricing was a function of what the market will bare, what you can get away with, competition and positioning. The driver being to maximise returns for the shareholders/ stakeholder and earn personal rewards through delivery. Any real environmental or sustainable cost was never factored in. In a digital-first the driver is migrating towards PURPOSE first. Whilst the fact is that the marginal cost of the next bit (aka product) is zero which introduces FREE as a price, there increasingly has to be an alignment between the end users intention and personal motivations and what they perceive are the motivations of the company delivering the service [I am using end-user rather than customer as the end user is unlikely to be paying in any formal currency for digital services] If the company is not clear about their own brand values and motivations the Purpose Price shift introduces a new hurdle to success.

The Product paradox

You, your data and your digital footprint [what you say about yourself and what others say about you and all metadata] becoming the product in a digital world is widely written about. The product was once a physical thing, something you held, we added services and now you are the product. You are the product as others are willing to pay for your data to enable them to reach you. In a digital world you are tracked, and unlike the NSA most times you understand this and give your permission.... This tracking allows the trackers to know what you like, your preferences. In turn the trackers take your preferences and sell the ability to reach you and enable other to sell to you. We, you, me, digital citizen as the product, benefit as we get advertised (traditional) products that we want (if it works well). The paradox is that the product is you and you are not needed.

Perks win over Promotion

Promotion is the advertising, selling messages and communications, when boiled down it is telling the target market that the right Product is available in the right Place at the right Price, whatever right is! It was the instruction telling you to buy but could not be measured. In the digital world promotion becomes flat and the game is to take your data from a dark data warehouse server drive (a dark screen) and display it on a brightly lit screen in front of an end user, so they can interact. Winning the game (lighting the screen with your data) allows you to gain more data about the product (you) or sell the end-user something (traditional). In this digital world you can measure exactly the effectiveness of every Perk, every message, every word, every channel ... everything. What is evident in the digital world is that promotion could not offer you engagement before, during and after purchase (even if free). Perks such as your own mayor badge (foursquare), new free credits to play the game more (bingo), extra content (MOOC), recommendation (others buy this), buy these together, group buying and an very long list which means that Digital Perks are more effective than traditional promotion and can be measured.

Participation is better than Place

Place, as presented in the traditional marketing mix defined the channel, delivery, the actual physical place and experience a customer had. It aligned to the brand and was the expression of the experience that would enable customers to become loyal (assuming the product and price worked for the customer.) Place for a digital service is anywhere at anytime and has no marginal cost - it is a different platform to compete from. The device is provided by the end user, access and software are the main determinates of the experience (outside of your control) with a company's own UI/ UX (user interface/ user experience) added on top. However in this digital world it is impossible to differentiate and nothing is unique. So what you can do in a digital world is get the user to collaborate, join in, design and participate. The user takes ownership and this is why a company's Purpose is so important. If the user is now going to give you time, energy and ideas they want to make sure that we all do this together for the greater good. Unlike traditional loyalty which is effectively an economic manipulation of the customer, Participation breads loyalty

The Pride Packaging debate

Packaging is what you see on the self and when you touch the product and for a service it is the wrap that makes you return to that average restaurant where you feel a million dollars. Packaging reflects the brand, image, values and presents the product in a way that makes you desire it. Great packaging for toys makes a simple plastic objective desirable. Packaging is an essential part of the whole customer experience. In the digital world PACKAGING does not exist to the same extent but PRIDE does. Pride represents that part of the decision making process but is orientated towards your desire to create the least impact on the environment for example, pride to share and show off, pride you have made a good choice. Pride is about sharing in a digital world - you are happy to add your endorsement to the product, rather than the celebrity. You are happy to recommend to your friends. You are the packaging. Therefore, like product where your data is the product, in packaging your image and identity are the wrapper.

Privacy is the new People

In the traditional marketing mix PEOPLE represents the customer, the market segment defined by some form of demographics. Your strategy aligns your product, your price, your ability to reach that defined customer and win them over to buy from you. Marketing is about how you use every tool possible to enable PEOPLE to buy your product and not the competition. In the digital domain where you are the product, your image is the wrapper and your data has value, the companies attitude towards PRIVACY becomes the new demographic segmentation tool. Your market is now defined not by demographics but by TRUST. As your product do I trust you with my data, my preferences and my behaviours? Segmentation of the end-user is now based on: will you protect me, will you defend me, will you harm me, will you exploit me or will you bring me value. Like the shift from Price to Purpose and getting the purpose wrong introduces a new hurdle to market take up, so will getting PRIVACY wrong. If you targeted the wrong customer in the old PEOPLE approach you failed, get privacy and trust wrong in digital = #fail

Passion has more value than Positioning

Positioning is the consumers' understanding of the product and its specific benefits. Consumers typically form their understanding of the product over a period of time using information from a variety of sources including claims, word of mouth, reviews and competitors. Your position whilst positioned by you using all the tools available is actually how the end user and competition perceive you. In a digital world customers are very good at telling you what they think and it is not always as expected. Positioning was about you provided to the customer a sense of what you wanted. In the digital domain the customer now informs you of where they see you. Yes there is a barter. However the end user is now able to express their passion, feeling, desires and compelling reasons for using your product and service. The essence of a great marketing mix was alignment. The right product, to the right people, at the right price, correctly positioned etc - it was all consistent. The same applies in a digital world - the new has to have an aligned strategy, well thought through and be completely consistent. The one difference here is that once you told the customer, now that end-user can be deeply involved in making you widely successful or a living nightmare - their passion for or against you.

As a final point, whilst digital first is important let's not forget that Apple has $160Bn of cash from traditional marketing on real products and Google has a modest $70Bn .... so we should conclude that traditional works and the new has proven itself as a worthy co-existor!