The Four P’s, Essay Example

In marketing, one of the first concepts learned is the four P’s. Product, price, place, and promotion are essentially the way one could describe the marketing mix in general. There are variations of how the four P’s can be used with marketing versus value approach. This includes creating, communication, and delivering value. Analyzing how different companies would use each approach shows the potential effectiveness of each. Marketing and value approach has their pros and cons, and which one is most successful is based on the target market.

In order to differentiate between marketing versus the value approach it is important to understand by definition what each of the four P’s consists of. According to an article published in Purdue Extension they stated:

1. Product. The right product to satisfy the needs of your target customer.
2. Price. The right product offered at the right price.
3. Place. The right product at the right price available in the right place to be bought by customers.
4. Promotion. Informing potential customers of the availability of the product, its price and its place. (Ehmke, Fulton, & Lusk 2012)

Price is one of the four factors that are directly correlated with the value approach. Focusing on this factor changes the marketing approach to a value or price methodology for marketing.

Many marketers are moving from the literal cost-based pricing to a different approach of what customer’s perceive as value. By shifting from marketing to value based, it addresses many different areas. For example, how is ones product different or better than its competition? This product is worth much more than the investment that is being made by the consumer. Determining how much of a price differential should be given to keep consumers buying ones product over the said competition. If value is desired, are improvements necessary to show the ultimate value of the product from the customers prospective? Also, a big value-based tool is positioning ones product to show the advantages over the competition. Getting more for their money is essential for marketing in a cost-based environment.

Value-based pricing and marketing is what companies use to show a comprehensive, consistent approach for utilizing their customer seen value over the rival product and implement value-based pricing. “Regardless of the product category, it is the customers’ perception of value that will determine which vendor gets their business. For this reason, it is important for companies who make and price products to understand how much their products are worth.” (Gale & Swire, 2006) This shows that pricing a product too low could also devalue it as well. Companies have to be comparable to market competitively. When companies decide to focus on value for their marketing plan, it does not simply consist of showing that their product is cheapest, there is far more too that.

Wal-Mart would be a perfect example of a company that utilized the value-based marketing plan. Showing their shelves are stocked with product at a fraction of the price of their competitors is key in their marketing. An example of marketing outside of the value-based avenue would be Ethan Allen. They market their holiday collection and other popular items that are in high demand to show the place to go. Never to utilize price as a tool for getting their product into consumers hand, they depend on the product to sell based on other factors. Both companies have had tremendous success based on their chosen direction for marketing versus value-based marketing. Their clientele is very different; however the success they had was based on the focus and direction they took. Marketing and value approach has their pros and cons, and which one is most successful is based on the target market.

References:

Ehmke, Cole; Joan Fulton; & Jayson Lusk. (2012) Marketing’s Four P’s: First Steps for New  Entrepreneurs. Purdue Extension.

Gale, Bradley T. & Donald J. Swire. (2006) Value-Based Marketing and Pricing. Retrieved   from http://www.cval.com/pdfs/VBMarketingAndPricing.pdf