A modified form of "Marketing 7Ps": Digital Transformation (disruption) in Marketing Mix

This article is based on an academic research project completed in 2021 by Puru Timsina.

The 7Ps in marketing are proven marketing components and the impact on these components may disrupt the marketing process. In the journey of adopting new technologies marketing itself has changed its form and a new definition in the marketing mix has been created. The term ‘Digital marketing’ is often used these days shifting the traditional marketing approach promptly towards digitalization. Some researchers pointed out that an assessment is necessary on whether all the basic principles of marketing activities still exist in today’s marketing practices which raises an important question: Has the meaning of marketing mix changed because of digital marketing? In this article, I will discuss the principles of the marketing mix and how they have been modified because of digital transformation.

Digital transformation can be understood as a strategic and planned organizational change in its products, customers, or services throughout the process of adopting new technology. Businesses are now adopting the latest technology and simultaneously rapid innovation is happening around. The fourth industrial revolution referred to as “Industry 4.0” is adopting digitized and automated technology in production and management which is also impacting marketing principles. With the emergence of new ideas and practices because of Industry 4.0, undoubtedly digital disruption occurs from time to time and is a continuous process. This article examines each component of the traditional and modified marketing mix (the 7Ps of Marketing) to understand the disruption caused by Industry 4.0 and digital marketing.

The Marketing Principles we already know

The marketing mix is a fundamental component of marketing. Price, product, promotion, and place were the four components of the marketing mix proposed by McCarthy in 1960. Realizing the fact that marketing not only covers the product aspect but also plays a part in service, Booms & Bitner claimed that 4ps of marketing were not enough to define a marketing mix and hence added three other components on the list to make ‘7Ps’ of marketing’ in 1982.

Marketing Mix- 7Ps in principle

Product: In the marketing mix, a product (also refers to as a service) is what a company offers. The main reason for placing the product on marketing 7ps’ is to ensure the company is delivering the right product to meet the customer’s needs.

Price: Price in the marketing mix is not just a cost to buy the product but also a measurement of what group or which population group is prepared to pay the cost for what value they gain after paying.

Promotion: Promotion mix plays an important scope in marketing as this is concerned with delivering the message to the public which encourages buying. It is a holistic approach including the activities like advertising, push and pull promotional strategies, personal selling and other areas in sales development.

Place in the marketing mix can be understood as the market where the product is to be delivered. The place also refers to the target market segment in the service-oriented company. Target market segment; service and product delivery; distribution channel; and modes of transference; are the key falls under place mix.

People or participants are all those individuals who are involved in the process on both ends. Not only the consumers but all the employees and management, who have participated during the whole process cover under people mix.

Physical Environment: This marketing mix requires a concrete component to fulfil the criteria of the physical environment. Service experience and the physical participation that a consumer perceives about the business is the physical environment.

Process: Establishing the right practice and process to deliver products and services; receiving feedback and creating a favourable business environment are the aspects of the process mix of marketing.

What does digital transformation in marketing mean?

Digital Marketing

Achieving organizational marketing objectives by using digital mediums and technologies is a standard definition of digital marketing. Digital marketing matches the customer’s needs by improving their knowledge which ultimately helps in marketing activities. Social media marketing, Search engine marketing, email marketing, digital advertising and content marketing are few examples of digital marketing.

Concept of Industry 4.0

The concept of Industry 4.0 was pioneered in Germany in 2011 and adopted by the USA and Western European countries. Unlike other industrial revolutions, Industry 4.0 is a concept where consumers relate to the production process with the help of information technology and smart machines. Researchers claim Industry 4.0 is a new approach to sales management and change the communication pattern between businesses and consumers.

“Modified 7Ps of Marketing” in Context of Digital Marketing and Industry 4.0

Digital transformation in the context of marketing refers to exploring an organization’s marketing process by adopting technological changes and modify according to market requirements to sustain value creation. Digital transformation is not only concerned with making processes easier but positioning customers to the fundamental point of business and addressing market relationships. The 7Ps of marketing principles in the context of Industry 4.0 and digital marketing are discussed below.

Product: Open innovation model allows the participation of various stakeholders in product design and innovation. From the beginning stage of product design, customers are involved because of artificial and augmented reality. Industry 4.0 has simplified product design by involving smart machines resulting in less human error.

Price: The pricing policy of business has now changed because of digitalization. Businesses are using data analysis software to understand customers’ behaviour and offer the price in real-time making price policy dynamic. Price is one major factor on which customers change their minds during buying process so dynamic price based on customer behaviour is a modern and relevant approach.

Promotion: Promotion in digital media has become interactive because of the use of technology which not only displays the one-way message but analyses the customer’s data and guides through promotion accordingly. Companies use Social media optimization to understand customers’ opinions and recover from negative experiences. Traditional promotion tools such as personal sales and direct advertising seem to be changed because of some functions of Industry 4.0 like visualization and search engine optimization (SEO).

Place: In the traditional approach, organizations were focused on delivering the products at the right time and place. With digitalization, organizations focus on providing a platform to customers from where they can access products and services at any time. Click and collect service and Omnichannel are examples.

People: In large warehouses, people are replaced with robots that are more capable of accuracy in collecting orders, locating products, and offering different language options to customers via video interference. The concept of Virtual assistance is another replacement for people in the marketing mix. A personal virtual assistant in a travel company offers flight tickets and offers options to choose from them.

Physical evidence: Audi City is a digital showroom which provides the physical experience to the people in the store without the involvement of the actual product. Multi-touch tablets and wall-displaying videos can provide all the necessary information regarding the products, allowing the experience of assembling things, testing the range, and many more. Another example of smart retail service can be taken from Hointer in the USA. Customers can order the right size in the fitting room just by ordering from a mobile application and automated micro-warehouses delivers within less than a minute.

Process: Augmented reality (AR) is one of the important discoveries in Industry 4.0 and that has enhanced customer experience in many ways. One example is L’Oreal, which is using AR apps by allowing customers to test the product through a mobile app without wearing them physically.

Most impacted marketing components

In the above section, I examined the 7Ps of marketing presenting in both traditional and transformed versions. Although digitalization has affected each component it hasn’t yet changed core principles. The presented diagram supports the claim made by some researchers that the product, process and physical environment mix of marketing has been the most impacted components. Digital marketing has been more relevant in the present world with the redefined application of each marketing mix component.

Product mix was the ideal company’s job but has been modified to customer involvement these days. Price has changed its shape to a dynamic data-driven approach in some cases with the involvement of artificial intelligence. Promotion mix also uses instant data to analyze consumer behaviour and instant offerings are made accordingly. Place mix used a single distribution channel in the past but digital transformation has introduced a flexible distribution channel. The traditional definition of people mix has been improvised with the involvement of automated robots and information technology along with humans. The traditional approach relied marketing process on human action and operation whereas digital transformation has innovated the process using augmented reality and automation. Physical environment mix has revised definition in digital transformation because of the introduction of virtual reality whereas we all were sticking to the concrete physical environment.

Conclusion

Comparing all the 7 Ps of marketing, it is evident that there is a disruption in all seven components marketing mix. Three components: product, process and physical environment are the most hit in the marketing mix because of digital transformation. Industry 4.0 has impacted these components because of the rapid use of technology in production and sales management.

In the modern marketing approach, the product mix itself should carry a value to address the consumer’s technology adaptive behaviour. Data-driven customized marketing practices have replaced human involvement in process mix in many areas. Physical evidence took an unrealistic form in the marketing mix as it more focuses on the virtual reality experience instead of providing a real physical environment.

I noticed the future possibility of disruption in price mix heavily because of new practices in Industry 4.0 of behavioural data analysis and offering an instant dynamic price to the consumer.

Note: References used in this article can be provided on request.