7 marketing models
The following marketing models are intended to help marketers elaborate their marketing plans. They are usually taught in any serious marketing curriculum and can be found in classic academic books. I listed 7 of them by chronological order. See them as good food for thought, but be aware that they are not really useful for small and medium businesses.
Summary of this article
- Edmund Jerome McCarthy's 4 P's of marketing (The original marketing mix) (1960)
- Koichi Shimizu's 4 C's (1973)
- The 7 C's Compass model (1979)
- Bernard Booms and Mary Bitner's 7 P's of marketing (The expanded marketing mix) (1981)
- Robert Lauterborn's 4 C's (1990)
- Jagdish Sheth and Rajendra Sisodia's 4 A's model (2012)
- Motorola's SAVE model (2013)
Edmund Jerome McCarthy's 4 P's of marketing (The original marketing mix) (1960)
Created by Jerome McCarthy in 1960, the marketing mix is a classic tool to help plan what to offer and how to offer it to the customers. It is considered as a foundation model in marketing. Essentially, there are four P's: product, price, place and promotion. Product is often developed based on customers' needs and wants, captured through market research. Companies control the majority of product decisions from conception to production. To establish a selling price for the product, companies use a combination of cost-based, competition-based, and customer-value–based pricing methods. Customers' willingness to pay, estimated in consumer value-based pricing, is the most important input that customers have in connection with pricing.
Once companies decide what to offer (product and price), they need to decide how to offer it (place and promotion). Companies need to determine where to distribute the product with the objective of making it conveniently available and accessible to customers. Companies also need to communicate the information about the product to the target audience through various methods such as advertising, public relations, and sales promotions. When the four P's of the marketing mix are optimally designed and aligned, selling becomes less challenging as customers are attracted to the value propositions.
Here are a few sub-concepts related to each P:
- Product variety
- Brand name
- List price
- Payment period
- Credit terms
- Sales promotion
- Sales force
- Public relations
- Direct marketing
- Marketing 4.0, by Philip Kotler, Hermawan Kartajay and Iwan Setiawan, Wiley, pages 45 and 46.
- Marketing Management, by Philip Kotler and Kevin Lane Keller, 15th Edition (Global Edition), Pearson, page 47.
Koichi Shimizu's 4 C's (1973)
Koichi Shimizu's 4 C's is an update of the orignal 4 P's model, where each P is replaced by a C:
- Product -> Commodity
- Price -> Cost
- Promotion -> Communication
- Place -> Channel
Comment: I haven't found much explanation about Koichi Shimizu's original model, but you can have some more information with the following model.
The 7 C's Compass model (1979)
Koichi Shimizu's 4 C's classification was expanded to the 7 C's Compass Model to provide a more complete picture of the nature of marketing in 1979. The 7C's Compass Model is a model of co-marketing.
The company has to think about competitors, organization and stakeholders. Compliance and accountability are also important.
Co-creation. The goods and services for consumers or citizens.
There is not only producing cost and selling cost but purchasing cost and social cost.
Not only promotion but communication is important. Communications can include advertising, sales promotion, public relations, publicity, personal selling, corporate identity, internal communication.
C6: Consumer (Needle of compass to consumer)
The factors related to consumers can be explained by the first character of four directions marked on the compass model. These can be remembered by the cardinal directions, hence the name compass model:
- N = Needs
- S = Security
- E = Education
- W = Wants
C7: Circumstances (Needle of compass to circumstances)
In addition to the consumer, there are various uncontrollable external environmental factors encircling the companies. Here it can also be explained by the first character of the four directions marked on the compass model:
- N = National and International (Political, legal and ethical) environment
- S = Social and cultural
- E = Economic
- W = Weather
Bernard Booms and Mary Bitner's 7 P's of marketing (The expanded marketing mix) (1981)
By the 1980s, a number of theorists were calling for an expanded and modified model that would be more useful to service marketers. The prospect of expanding or modifying the marketing mix for services was a core discussion topic at the inaugural AMA Conference dedicated to Services Marketing in the early 1980s, and built on earlier theoretical works pointing to many important problems and limitations of the 4 Ps model. Taken collectively, the papers presented at that conference indicate that service marketers were thinking about a revision to the general marketing mix based on an understanding that services were fundamentally different to products, and therefore required different tools and strategies. In 1981, Booms and Bitner proposed a model of 7 P's, comprising the original 4 P's plus Process, People and Physical evidence, as being more applicable for services marketing.
People are essential in the marketing of any product or service. Personnel stand for the service. In the professional, financial or hospitality service industry, people are not producers, but rather the products themselves. When people are the product, they impact public perception of an organization as much as any tangible consumer goods. From a marketing management perspective, it is important to ensure that employees represent the company in alignment with broader messaging strategies. This is easier to ensure when people feel as though they have been treated fairly and earn wages sufficient to support their daily lives.
Process refers a "the set of activities that results in delivery of the product benefits". A process could be a sequential order of tasks that an employee undertakes as a part of their job. It can represent sequential steps taken by a number of various employees while attempting to complete a task. Some people are responsible for managing multiple processes at once. For example, a restaurant manager should monitor the performance of employees, ensuring that processes are followed. They are also expected to supervise while customers are promptly greeted, seated, fed, and led out so that the next customer can begin this process.
Physical evidence refers to the non-human elements of the service encounter, including equipment, furniture and facilities. It may also refer to the more abstract components of the environment in which the service encounter occurs including interior design, colour schemes and layout. Some aspects of physical evidence provide lasting proof that the service has occurred, such as souvenirs, mementos, invoices and other livery of artifacts. According to Booms and Bitner's model, the physical evidence is "the service delivered and any tangible goods that facilitate the performance and communication of the service". Physical evidence is important to customers because the tangible goods are evidence that the seller has (or has not) provided what the customer was expecting.
Robert Lauterborn's 4 C's (1990)
Robert F. Lauterborn proposed a 4 C's classification in 1990. His classification is a more consumer-orientated version of the 4 P's that attempts to better fit the movement from mass marketing to niche marketing.
Consumer wants and needs
A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.
Price is only a part of the total cost to satisfy a want or a need. The total cost will consider for example the cost of time in acquiring a good or a service, a cost of conscience by consuming that or even a cost of guilt "for not treating the kids". It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.
While promotion is "manipulative" and from the seller, communication is "cooperative" and from the buyer with the aim to create a dialogue with the potential customers based on their needs and lifestyles. It represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.
Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to guarantee convenience to buy. With the hybrid models of purchasing, Place is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.
Jagdish Sheth and Rajendra Sisodia's 4 A's model (2012)
According to Jagdish Sheth and Rajendra Sisodia, poor management as a consequence of not knowing what drives consumers is behind the majority of marketing failures. The authors make the case that consumer knowledge is a much more reliable route to success. Their customer-centric marketing management framework emphasizes what they believe are the most important consumer values — acceptability, affordability, accessibility, and awareness — which they dub the four As.
Acceptability is the extent to which a firm’s total product offering exceeds customer expectations. The authors assert that Acceptability is the dominant component in the framework and that design, in turn, is at the root of acceptability. Functional aspects of design can be boosted by, for instance, enhancing the core benefit or increasing reliability of the product; psychological acceptability can be improved with changes to brand image, packing and design, and positioning.
Affordability is the extent to which customers in the target market are able and willing to pay the product’s price. It has two dimensions: economic (ability to pay) and psychological (willingness to pay). Acceptability combined with affordability determines the product’s value proposition. When Peachtree Software lowered the price of its accounting software from $5000 to $199 and started charging for customer support, sales demand increased enormously.
Accessibility, the extent to which customers are able to readily acquire the product, has two dimensions: availability and convenience. Successful companies develop innovative ways to deliver both, as online shoe retailer Zappos does with excellent customer service and return policies and its tracking of up-to-the-minute information about warehouse stock, brands, and styles.
Awareness is the extent to which customers are informed regarding the product’s characteristics, persuaded to try it, and reminded to repurchase. It has two dimensions: brand awareness and product knowledge. Sheth and Sisodia say awareness is ripest for improvement because most companies are either ineffectual or inefficient at developing it. For instance, properly done advertising can be incredibly powerful, but word-of-mouth marketing and co-marketing can more effectively reach potential customers.
Sheth and Sisodia base the 4 As framework on the four distinctive roles a consumer plays in the marketplace — seeker, buyer, payer, and user. A fifth consumer role — evangelizer — captures the fact that consumers often recommend products to others and are increasingly critical with the advent of the Internet and social media platforms.
Note that we can easily relate the 4 As to the traditional 4 Ps. Marketers set the product (which mainly influences acceptability), the price (which mainly influences affordability), the place (which mainly influences accessibility), and promotion (which mainly influences awareness).
Source: Marketing Management, by Philip Kotler and Kevin Lane Keller, 15th Edition (Global Edition), Pearson, page 48.
Motorola's SAVE model (2013)
The SAVE model was presented in 2013 as an update of the 4 P's model for B2B companies.
Define offerings by the needs they meet, not by their features, functions, or technological superiority.
Develop an integrated cross-channel presence that considers customers’ entire purchase journey instead of emphasizing individual purchase locations and channels.
Articulate the benefits relative to price, rather than stressing how price relates to production costs, profit margins, or competitors' prices.
Provide information relevant to customers' specific needs at each point in the purchase cycle, rather than relying on advertising, PR, and personal selling that covers the waterfront.
Source: Rethinking the 4 P's, by Richard Ettenson, Eduardo Conrado and Jonathan Knowles, Harvard Business Review.
Author: Dimitri Alamkan
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