What is the marketing mix in 2018?

Introduction

This article outlines the case for considering Permission as the 8th P in the marketing mix. It is slightly lighthearted as I wouldn’t presume myself worthy of adding the 8th P, but the recent rise in big data analytics and the resulting changes in data regulation (GDPR) mean that there may be a case for finding a place for Permission in the marketing mix.

Let’s start with the 4Ps of the original marketing mix

Everyone, or at least most people reading this article will be familiar with Jerome McCarthy’s 4 Ps of marketing. McCarthy, a US academic, proposed the concept of the 4 Ps marketing mix in his 1960 book Basic Marketing: A Managerial Approach  [1] – the foundation text of modern marketing. This work helped to give a managerial definition to marketing by outlining its scope of reference and providing a framework for marketing planning. For many years McCarthy’s four Ps helped to define what marketing is:

1. Product – developing the right type of product to meet the needs of the market
2. Place – distributing the product where the market will want it and be able to buy it
3. Price – pitching it at a price that will be suitable to the market and the firm
4. Promotion – communicating the product and its benefits to the market

The growth of services and the move to 7Ps

In 1981, in response to the growing service economy, Booms and Bitner [2] proposed a model of 7 Ps, comprising the original 4 Ps plus three more – people, process and physical evidence.

These are the three new Ps that Booms and Bitner added to the original four:

5. People – most services cannot be delivered without people. How well those people perform can define the quality of the service provided
6. Process – process is what delivers the service think carrying you from home to destination by public transport or going to the dentist, hospital or even the hairdressers
7. Physical evidence – makes the intangible service process more tangible and can confer quality – think pilot’s uniform or public services, fire, police and ambulance.

How has data and tracking changed marketing activities?

Over the last fifteen years marketing promotion and distribution (place) have been revolutionised by technology and eCommerce.

• Promotion – online advertising and email use personal data to drive promotional activity. Ad technology uses tracking data to identify prospects for products and services and predict when current customers might purchase again. This technology has become mainstream and many businesses now depend upon it.
• Distribution has been revolutionised by ecommerce which allows consumers to shop from home or work without entering a physical store location. Purchases are delivered to the door, again without having to leave work or home.

These developments have been underpinned by digital user tracking, both on site and within ad networks. Data from tracking cookies is used to build target audiences, target individual advertising messages, predict purchase behaviours and geo-locate prospects and customers.

Consumer tracking data is used by a number of large online advertising networks – these include well-known brands such as Facebook and Google and less well-known data brands such as Appnexus, Liveramp, OpenX, Rubicon and Pubmatic.  This tracking data, and in particular personal level tracking, has caught the eye of EU regulators and as of May 2018, a new stringent data regulation framework, the EU General Data Protection Regulation, comes into force.

GDPR puts the brakes on ad tracking and programmatic digital advertising

GDPR puts far more onus on those collecting individual level data than ever before. It practically demands that all data use is expressly consented or permissioned by the data subject (the consumer) and that responsibilities for what happens to that data extend along the chain of organisations using that data. To cut a very long story short, where a company is using a piece of data that can be used to locate or identify an individual person, it could be breaking the law if permission to do so has not been freely given.

This changes a lot in digital user tracking. The use of non-permissioned third party data which is used to expand the target audience of many brands using programmatic trading, effectively becomes a likely breach of the GDPR regulations.

So now in June 2018, having permission to talk to a consumer in digital space impacts three areas.

1. Acquisition –It will be harder to use PII to predict future behaviour and it will be harder to construct data pools of consumes who are demonstrating pre-purchase behaviour. It will also be harder to build cookie-based target audience pools.
2. Retention – the data of sending our blanket emails to non-consenting recipients are at an end. Over the last few months you will have received a request for consent email, or even a piece of direct mail, from most organisations that have been regularly visiting your inbox.
3. eCommerce – tracking is used both onsite and in ad networks for eCommerce. Whilst onsite tracking is less of an issue, tracking across third party ad networks is. eCommerce sites use ad networks to run re-messaging campaigns – trying to persuade consumers who have to abandoned a purchase to return and complete the transaction

In marketing mix terms – the GDPR regulation is having a direct impact on place (distribution) and promotion (advertising).

So, is Permission now the 8^th P in the marketing mix?

In my view it is.  We’ve had a revolution in digital marketing that’s been driven by data, We now have a regulatory environment that changes everything for marketers using individual level communications.

Moving forward, there can’t be a marketing meeting or action that doesn’t talk about permission – whether it’s about product or service usage, personal level communication, distribution targeting or even pricing if that pricing is based on individual level behaviours and data.

How can Permission not be the 8^th P in the marketing mix?

References

1. Jerome McCarthy Basic Marketing – A Managerial Approach Hardcover – 1960 (Irwin – original publisher)
2. Booms, B. H. and Bitner, M. J. Marketing Strategies and Organizational Structures for Service Firms Marketing of Services 1981 – American Marketing Association – Chicago