A modern approach to Marketing Mix - From 4 Ps to "Distribution" + "Product-Market Fit"

Connecting the dots and thru lines between traditional and modern marketing

Having come across many provocative posts that declared 4 Ps dead, I have been in a reflection mode. Extreme positions often crowd out the nuances and while it’s tempting to either staunchly defend the timeless relevance of the 4 Ps or declare them entirely obsolete, I offer a more balanced perspective revealing how their role has evolved/shifted rather than being dead. I also introduce 2 newcomers to the Marketing toolchest - Distribution and Product-Market fit. Let’s get right into it..

Distribution and Product-Market fit are the new 4Ps of Marketing

How the 4 Ps have shifted

Let’s discuss about the 4 Ps first

Product –  Diminished influence . Product doesn’t belong in marketing’s wheelhouse anymore.

• Product development has evolved into a separate, specialized function within organizations. Modern businesses have recognized the complexity and technicality involved in creating products, leading to the establishment of dedicated teams, such as engineering and product management, focused solely on product innovation and development. These teams leverage user research, market analysis, and technical expertise to build products.

• Now, don't get me wrong, the aesthetics of a product, like the packaging and overall feel, still dance in the marketing spotlight. I recall my time at Discover Card as part of go-to-market team, launching the Discover It card, where the welcome kit was nothing short of regal, signifying the card's no-annual-fee policy with a tangible touch of class. Similarly, at First Republic (etched in my memory as an exceptional employer), the marketing team’s flair was evident in the exquisite welcome kits, complete with gym bags and travel accessories, making a lasting impression. Little things matter and add up. Marketing has still a role to play but it’s peripheral with Product team taking the driver’s seat

Pricing – Little to no influence. Pricing has evolved beyond the traditional marketing domain into a separate strategic function

• Pricing now involves complex decision-making processes that require specialized knowledge of market dynamics, competitive analysis, and financial modeling. Companies often have dedicated pricing teams or financial analysts who assess cost structures, market demand, and competitive landscapes to set prices. This specialization ensures pricing strategies are not only aligned with market conditions but also with the company's overall financial goals, making it a distinct entity that intersects with, but is not solely managed by the marketing department.

Placement and Promotions – Highly relevant and expanded

Simple definitions  

• Placement: (WHERE) It’s in essence the channels where a company sells it’s offerings to reach customers.  Examples: Wholesale, retail, geos, direct to consumer etc.

•  Promotions (HOW) – It’s about the strategies and tactics used to communicate with target audiences to raise awareness, create interest, and drive demand for a product or service. Examples: Ads, sales, Direct marketing, content, phone calls

If you read the above again, it’s fascinating to observe how placement and promotion work in harmony on the continuum of marketing spectrum. It’s time to gather these threads into a more comprehensive tapestry termed “Distribution”

Distribution" encompasses the strategic process of delivering a product or service to the end consumer. Placement + Promotion = Distribution  

Distribution take into account the broader scope of reaching and satisfying customer needs, moving beyond the traditional confines of placement and promotion to encompass the entire journey of product or service delivery to the end consumer. It involves several key aspects that ensure products reach the right audience effectively. Here's are the different components that come to mind (and there can be others outside of the list as well):

-  Audience

 - Channels

-  Content  

-   Platforms

-  Partnerships

-  Customer/User  Experience

-   Analytics and Optimization

- Orchestration of Marketing operations/technology (or AI Ops in the new world)

Let’s introduce the newcomer

Newcomer: Product Market fit (PMF).

Let’s start simple with definitions and understand the concept

 Note: There are PMF nuances between B2B and B2C business, however, the concept and framework still stays consistent

Product-market fit describes a scenario in which a company’s target customers are “buying, using, and telling others” about the company’s product in “numbers large enough” to sustain that product’s growth and profitability

Myth – PMF is only applicable to early-growth companies

PMF is not just a startup's concern but a continuous gauge of market alignment for companies at all stages from small startups to large enterprises

(Which is why it's a part of modern Marketing mix right alongside distribution)

As markets evolve, customer needs can shift, necessitating continuous adjustments to the product, marketing strategies, and customer engagement approaches. Therefore, ongoing evaluation and adaptation are essential to ensure that the product remains aligned with market demands, and economically viable sustaining the company's growth and success over time

Example – The iconic, Google search, which is 57% of Google’s revenue finds itself working on PMF, given AI innovation and competition such as perplexity AI, fantastic AI chat platform that also functions as a search engine with almost 10 MM active users.

Let’s expound PMF further, There are 4 embedded dimensions in PMF

1. Sales: Revenues/Units

2. Customer satisfaction: Measured by referrals, WOM, NPS, CSAT etc.

3. Scale/large numbers: This is about CAC efficiency and ROI (LTV/CAC) thresholds to be able to sustainably grow the product

4. Market share: How big is the pie and the market share - Is the pie/share growing or shrinking.  

Balancing Act - PMF continuously involves balancing the dimensions that might be in conflict with each other: demand, satisfaction, and scalability.

• Take the example of being a loss leader in a price-sensitive market. By offering your product at a price well below its fully-loaded cost, including acquisition expenses, you can ignite immediate demand. Price-sensitive customers love a steal, leading to sky-high satisfaction rates. Yet, this approach is like a double-edged sword; The cash burn won’t be sustainable. The company risks draining its resources before establishing a sustainable revenue stream.

• On the flip side, consider efficiency-driven automation. Swapping personalized service calls with automated emails might cut costs and streamline operations, but it can backfire on customer satisfaction. People often value human interaction, especially when solving complex issues. A business with complex product leaning too heavily on automation might save money in the short term but risks alienating its customer base early on, leading to lower satisfaction and getting in the way of generating demand especially when a lot of early demand comes from happy customer / referrals

Order of Priority – This is where B2B and B2C might diverge,

B2B - Solve for Satisfaction first

Optimize satisfaction relentlessly until they love the product, find extensive usage and ideally, cannot do without it. Efficiencies can be achieved later once you have a dedicated customer base..

B2C -Solve for satisfaction, sale, and efficiency in equal parts.

When you are selling hundreds of widgets, solving for efficiencies from the get-go is paramount..

Finally – let’s get to Marketing’s role – 5 key aspects

1. Market research: Conducting surveys, focus groups, and market analysis to understand the size, needs, preferences, and pain points.. 

2. Customer: Breaking down the market into distinct segments to identify which group of customers the product will serve best. Try to get to Ideal Customer Profile (ICP). Start with 1-2 personas, but no more than 3..

3. Positioning (benefits ,not features):  Effective product positioning is art + science. Going beyond mere advertising to integrate the product’s identity into every aspect of customer experience. Communicating the unique value and differentiation of a product to its target market. It's about carving out a distinct place in the minds of consumers ….

4. Go-to-market (Combining Above 3) - Action plan that specifies how a company will reach customers and achieve competitive advantage ..Should ideally integrate marketing, sales, distribution, and customer service to deliver a cohesive and compelling value proposition.

And most important of all --Pivoting. Tweaking product, positioning or even the personas

5. Pivoting -    Identifying weaknesses and making necessary adjustments. There can be a range of things that don’t land well. It could be the product, positioning or even the personas…all of which is tweakable with the right approach..

How do I know my PMF strategy is working (or not)

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Some Real World examples

Growth (or leads in the world of product led growth) is the immediate telltale sign..

My team launched a consumer lending product in one of my prior jobs and got significantly higher than expected leads from paid media (mostly search, some social) efforts 3 weeks into campaign. The CAC was high but we knew we cracked the growth code. Subsequently we worked on getting the CAC to where we wanted it to be..

Positioning tweaks can solve PMF issues

On the flip side, we launched a business lending product and we were way short on leads and way high on costs. So that’s a double whammy, not sustainable, needing a pivot. In this case, our positioning wasn’t landing and tweaking the copy/creative fixed that issue

Target segment / Persona switching can fix PMF issues

• One of the pre-seed companies I am mentoring is marketing an enterprise AI integration product with high value and easy-to-deploy use cases, One of the target segment/personas had off-the-charts visits but poor pull-thru, leading to abysmally low lead volume.. Switching the personas solved the pull-thru issue making the business viable

Hope that the above framework helps provide a fair and balanced view while introducing a new way to think about the marketing mix. Let’s not bid farewell to our trusty 4 Ps just yet. Instead, let's welcome the evolution and expansion of marketing mix…

Thanks for taking the time, and I would love to hear your thoughts.