In the marketing profession, we have depended on the Four Ps as foundational to business success. But is that still relevant today? Tune in and learn why Rick Spear says ignoring the Four Ps is like ignoring the alphabet. In this episode, we discuss how pricing, above other strategies, has become the secret weapon for marketers in managing through these uncertain waters of inflation, recession, and constant change. But to wing it or make guesses benefits no one. Pricing is the top strategy to gain—or regain—value. Find out why Rick says that the critical question we need to keep asking is: “What will it take to earn 1 point of market share?” HINT: A few key insights can trump terabytes of data.
Ruth Stevens: Looking at the Four Ps, where do you think pricing rests in terms of importance and impact?
Rick Spear: Pricing, independently of the other Ps, drives top line. It's where the rubber meets the road in terms of value proposition and go to market. The real question is not just what is your pricing level, but in fact, how are you capturing value? In the world of capital markets the question is, are you a price maker or are you a price taker? And the answer is, it really doesn't matter. Because if you're a price maker you still have to take the right prices. If you’re a price taker, you have to think if you’re taking the optimal amount of money off the table for the short term, the medium term or the long term. The idea is that value is constantly being redefined. Pricing represents the ultimate dynamics in terms of competitive positioning, in terms of the needs of the of the customers in terms of the value that the products that we're bringing to the table provide today, as well as the promised value of those products tomorrow.
Cyndi Greenglass: Are the Four Ps still valid? And, does marketing have control over pricing still or do customers?
Rick Spear: The Four Ps have stood the test of time because they are such a broadly defined set of principles. You could add another two or three Ps in there and feel perfectly comfortable. When we're trying to grow a business or we're trying to sustain a business we have to ask, what is the cost, value and drivers of winning a single point of market share? That's a very loaded question. Because the question is what's the market? How do you determine what the unit value is of that market?
When it comes to the four Ps, the argument that because we're now in a democratized world where information is abundant and available and everyone has omniscience, we eradicates the value of well-defined promotions, of well of well-derived pricing.
Ruth Stevens: Are there new tools and other techniques that are helping with pricing today?
Rick Spear: When we think about what's changing, we should also think about what doesn't change. The questions that we ask continue to be the same. What is the value, and what does it take to win one point to market share is fundamentally the underlying driver of any tools that we're going to use. In terms of articles to intelligence and machine learning –is that really new? The computational power that we have allows us to use statistics and combine statistics with programming. It's another set of tools that allow us to make informed decisions. In some cases, it actually drives pricing on a real-time basis. There are trading algorithms that are using machine learning to figure out what to buy and what to sell. In its most basic level, it’s how Netflix or Amazon decides what to recommend to you. Machine learning is playing an increasingly important role where you have vast amount of data at your disposal.
Key Takeaways/Three Little Piggies
- Pricing drives the top line and go to market strategies and value what pricing impacts and affects the most, how I gain or retain value.
- We should be asking ourselves as marketers and as business strategists what drives our ability to win one point of market share.
- A few key insights can triumph terabytes of data in some circumstances. AI and machine learning can be extremely helpful in real time pricing but cannot replace insights in the market.
Marketing Communications Today presents Horizons, it’s forward-thinking, looking ahead, through the front windshield and beyond, into the marketing future. Join Cyndi and Ruth bi-weekly for new ideas, technologies, tools and strategies that are emerging to help marketers navigate over the marketing horizon.
Meet our guest
Rick Spear is a senior executive in the capital markets industry who has spent 50% of his career helping to run firms and 50% as a strategic advisor/consultant to CEOs, boards and heads of businesses. As head of strategy, he has helped to architect and manages multi-year growth plans, targeting and growing revenue and profit by sizing markets and performing competitive analysis He has worked with every functional head across multiple companies, including the CEO, COO, CFO, Chief Product Officer, Chief Technology Officer, Head of Middle/Back Office, General Counsel and Chief Risk Officer. His education includes Stanford University and Harvard. He is currently, Senior Advisor at Simon-Kucher & Partners, a global strategy consulting firm focused on growth strategy, marketing, pricing, and sales.
Meet the hosts
Cyndi W. Greenglass is a founding partner and president at Livingston Strategies, a data-informed, strategic consulting firm that helps clients develop, execute, and measure their customer communications with a close focus on results. Cyndi has razor-sharp strategic skills matched by impeccable on-the-ground savvy and tactical abilities. She is an Adjunct Instructor in the Data Marketing Communications online master's degree program from West Virginia University.
Greenglass has twice been named into the Top 100 Influential BTB Marketers by Crain’s BtoB Magazine and was the 2012 CADM Chicago Direct Marketer of the Year. She is a member of the Board of Advisors for BRAND United and has taught, trained and presented at over 50 conferences throughout the world.
Ruth P. Stevens consults on customer acquisition and retention, for business-to-business clients. Ruth serves on the boards of directors of the HIMMS Media Group, and the Business Information Industry Association. She is a trustee of Princeton-In-Asia, past chair of the Business-to-Business Council of the DMA, and past president of the Direct Marketing Club of New York.
Ruth was named one of the 100 Most Influential People in Business Marketing by Crain’s BtoB magazine, and one of 20 Women to Watch by the Sales Lead Management Association. She serves as a mentor to fledgling companies at the ERA business accelerator in New York City.
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