Are the 4 Ps of Marketing Dead?

Do the 4 Ps of Marketing ask the right Qs? Here's why it may be time for financial marketers toss this model aside as obsolete.

Coined by Philip Kotler in 1967, the “Four Ps” breaks marketing down by Product, Price, Promotion and Place. Banks have based their approach to marketing on this model for decades.

It takes the form of a straightforward ‘product push’ marketing process:

• Produce the Product
• Decide on the Price
• Determine your target market and create the Promotional campaign
• Deploy it through the chosen channels (the right Place).


Although this approach is a tried and tested, it typically only yields a sales conversion rate of one- to three percent. Why? There are two main problems with the 4 Ps:

1.) The fundamental model. The 4 Ps were set up with product companies in mind, but financial institutions are service organizations. Each “product” a bank sells will be used many times over (for example, a credit card can be used hundreds of times every year). Every time a customer uses an institution’s “product,” it gives the bank yet another opportunity to distinguish itself with its service — that’s hundreds of opportunities stemming from a single “sale.”

2.) The timing. The methods used to determine a target market are typically statistical analysis tools (e.g., SAS) which might tell you that 87.2% of the target group will buy a new car in the next three years. This data can be amazingly accurate… and at the same time absolutely useless. Financial institutions need to know who wants to buy a car today! The essence of marketing is timing. The traditional 4 Ps approach is a bit like stabbing in the dark and hoping to hit your target.

Financial institutions differ from most other retail-based organizations. The more that they focus their marketing effort on trying to sell products, the more they miss the mark — while also handing a big opportunity to their competitors. Financial institutions need to change their marketing strategy away from the 4 Ps product-based approach and move to a strategy that is more in line with the marketing realities and priorities of a service-based company.

This has been underscored by research suggesting that of all of the customers that leave a bank, over 80% switch because they are dissatisfied with the service, compared with less than 10% who are dissatisfied with one or more of the bank’s products.

Service-based marketing is about determining the customer’s needs and addressing them. Unfortunately, financial institutions have always tended to develop their marketing strategy around simply selling products.

Sense and Respond Marketing

There’s another marketing model called “Sense and Respond.” The “Sense” element requires the answers to several questions before a reasonable “Response” can be formulated. These questions are: Who, What, Where, When and Why.


In sales situations, the Who, Where and When can usually be determined in the course of the interaction itself — e.g., a customer who is in the branch… now. At most financial institutions, this is as sophisticated as it gets. The sales and service protocol is simple and straightforward: “If Customer X is in Channel Y right now, what should we offer her?”

This system presents offers to consumers using either:

  • a previously stored customer information to suggest the pre-calculated next best offer
  • a crude rule, based on what the customer is doing (e.g. if they are looking for a mortgage, offer a mortgage!)

This is wrong!

If financial institutions don’t also correctly answer the questions ‘Why is the customer doing this?’ and ‘What is the need?’, they are simply swapping outbound product-push marketing for inbound product-push marketing. The difference is that with an outbound approach, consumers can set up filters or opt out of it. But with the more common inbound approach, consumers feel that they are being targeted whenever they contact the bank or credit union. That could even lead to them switching institutions.

Answering the Why and the What are the keys to highly effective marketing. If you know What a person wants and Why, the chance of being able to meet their need is immensely greater than playing the guessing game. Standard product-push, statistically-targeted marketing will generate average sales of 1% to 3%. Marketing when consumers’ needs are understood results in sales of 18% to 54%.

So why isn’t everyone doing it? The excuses include:

“My bank’s marketing is product-focused.”
“My bonus is based on product sales.”
“It’s what my supplier told me.”
“Isn’t this what everyone does?”

The Solution: Event-Driven Marketing

Financial institutions know the Who, What, Where and the Why but don’t really understand the When, which has resulted in consistently low response rates. However, with the advent of internet-based technologies and channels, it has become possible to identify the Who, When and Where in real time. You can now buy “real-time advisors” from most major CRM players. The problem is that none of them really get the “Sense and Respond” model, which means they can’t provide a proper analysis of the Why and What.

Depending upon which approach a financial institution has taken, they can either:

  • know What to sell and Why, but not When
  • or When to sell, but not What and Why

Financial institutions shouldn’t be forced to make a choice between these two unpalatable options. The complete customer-focused marketing approach is one that answers all five “Sense and Respond” questions: Who, What, When, Where and Why. These questions are all by Event-Driven Marketing (EDM). This involves determining the correct time to contact a person based on a significant change in their behavior (a ‘customer pull’ approach) instead of the typical direct marketing (product push) approach.

With EDM, commercial and communication activities are based upon relevant and identifiable changes in a customer’s individual needs. Events determine when a customer needs something — NOT when the financial institution wants to sell them something!

This clearly makes sense. If you want to sell a car to someone, you’re much more likely to have success if it’s at a time when they are actually looking for a car! With EDM, customers receive communications and service messages that are of interest to them at the right moment – and marketers avoid the ‘shotgun’ approach and cost that is typical of most targeted campaigns.

Financial institutions that have successfully deployed Event-Driven Marketing are reporting average sales of 12% to 54%, a churn reduction of 50%, and customer satisfaction scores that are 10-15% higher than competitors. That has also translated to conversion rates are roughly ten times higher than those achieved by antiquated marketing models like the 4 Ps.

Event-Driven Marketing addresses the limitations of Kotler’s 4 Ps, and determines the correct timing of any marketing activity — i.e., it identifies the Who, When and Where, but also focuses on answering the What and Why. It tells a bank or credit union who it should contact on any given day, and provides perfect opportunities for customer service.

Mark Holtom is the Managing Director of eventricity Ltd, a small UK based software house specialising in implementing Event Driven Marketing in financial institutions. Mark is also a guest lecturer on CRM at Oxford University.

This article was originally published on July 30, 2014. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Dear Mark,
    Thanks for your Post and Yes, the 4 Ps are dead.
    We may argue about the author. Whether it is MaCarthy or Kotler, but the 60ies is alright.
    The 60ies of the last century!
    So a wee bit of decades has passed since then, hasn’t it?
    And a wee bit hat happened since then, hasn’t it? Such a globalization with added to the marketing the product-, production- or merely sales-focused approaches to the markets.
    For consumer products this theory was substituted in Kotler’s “Marketing about the 21. Century” Not read? It is about the shift from 4 Ps to 4 Cs (Customer Solution, Cost, Convenience Communication).
    But stop. There is another small point. It is about marketing for consumer products. Not about service marketing.
    For service marketing there was another 3 Ps added. Not read? The reason why is simple. The task to market services is based on a different mindset, because of its consistence, better the lack of it.
    So your point that the 4 Ps are dead are news- better postworthy why?
    Björn Gemmecke

  2. Dear Björn,

    You are exactly right, in that the 4Ps has been superceded by things like the 4Cs, etc.

    My point is that, in Banking, 4P product marketing is still the basis for their efforts.
    – if you look at a bank’s marketing department, you will see that they are structured exactly for this approach.
    – You will also see that their KPIs are still geared for this (# products sold, etc.).
    – finally, the software and approach that they use is purely product push campaigns.

    Banks have paid lip-service to things like customer-centricity for a few years now, and you can find a customer experience officer or use of NPS, but scratch the surface and you will see this is a veneer on top of the same stuff they have been doing for years.

    More than this, the software being offered by Vendors is designed specifically to make product offers, real-time or not.

    So it may not be news to you but it is to most Banks.



  3. Philip Kotler says:


    Your letter is interesting. But you are confusing marketing with selling. Everything you are saying applies to good selling. Whereas marketing’s task is to design an optimal marketing plan for a target market chosen by doing market segmentation, targeting and positioning. This will determine the most effective value proposition that summarizes the 4Ps for that target market. When it comes to reaching and selling to specific customers, you message is useful.

    Philip Kotler

  4. Of course, “good” brands/companies (increasing in number) are following the most important 3Ps: People, Planet, Profits. While this might not focus directly on marketing/selling, as a guiding principle it provides a framework for both. I work in both the US (mostly) and Canada where two of the banking brands – “Tangerine” (was ING Canada) and, particularly, TD are trying to do things differently. TD seems to be trying to think out of the box on “People” at any rate. Last week, for example, to celebrate a new automatic teller system, they surprised some customers with a gift tailored precisely to them (e.g., tickets to Jamaica to see an ill parent, donation to an education fund…) and this won them a great deal of heart-warming publicity on the Old Promotion P front, Ellen Karp Anerca International

  5. Dear Mr Kotler,

    First of all, thank you for commenting upon my article. I respect your opinion, and whilst my view may differ, your input and feedback is very much appreciated.

    Like you, I also believe that marketing’s task in a product company is to design an optimal marketing plan for a target market chosen by doing market segmentation, targeting and positioning. However, I would suggest that Marketing’s task in a service company is to recognise customer needs in a timely manner and then to address these. In either case marketing’s job is to recognise and find these leads and for the channels/sales to act upon them.

    I have no problem with the 4Ps, and think they still hold good for product based companies, but that service based companies need another approach.

    My contention is that, based on what they do, Banks are not product based companies but rather service based companies. And thus the 4Ps are not an appropriate methodology. Despite this, the majority of Banks are structured and focussed on a 4P approach. Further, the vast majority of software they buy for marketing is designed around this same methodology.

    In my experience banks that use a 4P style of approach generate sales of about 1%-3% for their campaigns (this is the norm in Europe), whereas those who take a sense and response or EDM style of approach generate sales of between 18%-34% along with commensurate increases in customer satisfaction, loyalty, etc.

    Best regards,

    Mark Holtom

  6. Tim Vogel says:

    Interesting article!

    I think it’s always been accepted that the 4P’s are a basic piece of the pie and must be supplemented by additional consumer behaviors analysis in order to be successful. When one takes an EDM approach as you’ve described, their Placing the appropriate Product (set at an appropriate Price) with the appropriate type of Promotion (phone, email, direct mail, video, etc.) for the appropriate Person at the appropriate Time. So really, your approach is “5P’s and a T.” Nice ring to it, but EDM is better 🙂

    Those that focus on the 4P’s alone are simply grasping at straws… there’s always more!

    Lastly, what are some tangible ways successful institutions are tracking these “events?”

  7. Managing the marketing process includes my own little take on the 4 P’s – now affectionately refered to as the 13 P’s
    1) Planning — got to know where you’re going!
    2) Product — make sure you are delivering on a product and/or service that’s meaningful to the marketplace
    3) Positioning — find your unique selling proposition
    4) Price — what is the economics of the sale
    5) Process – Make sure everything works the way it should. And don’t be afraid to tear it apart to build it back up.
    6) Presentation/Packaging — everybody wants to see things attractively packaged — even if that’s your retail location
    7) Place – make sure your distribution channels are effective from the customer point of view
    8) Promotion – all the marketing communication pieces, including direct sales, need to work together in harmony to be particularly effective.
    9) People — this is where it all starts. Your corporate culture, the buy in of your employees…if you don’t have this, you don’t have it!
    10) Promise — Make sure you deliver on your brand promise. All touchponts including sales need to be delivered on.
    11) Perception – Perception is your customer’s reality. Make sure you know what they are talking about and make sure you are talking in the same forums they are.
    12) Prove – Measure, measure, measure your impact
    13) Payday! — doing all of the above turns into payday, not only for you and your employees, but your organization and its shareholders.

    We must manage the whole cycle.

  8. Joann,

    One could argue that #9 on your list — people — should actually be #1. The entire process of marketing is essentially a conversation — one “person” talking to another. You need to fundamentally understand who you are, and understand who you are talking to. Absent this, any attempt at marketing will fail.

  9. Dear Tim,

    EDM is simply monitoring the ‘pulse’ of your Customer to determine if and when there is a significant change in this pulse which requires communication.

    For a Retailer this is what you buy, for a Telco this is who you call and for a Bank this is how you transact. So EDM in Banking is monitoring Customer transactions. Of course there is more to it than that, but this is the essence.

    There are precious few actual sources of information with any real detail. You should Google this, but at the risk of being self-promoting, you might look at the following.

    Research on EDM from 60+ banks in 29 countries) here:

    As for what people have done, several banks have shared their results at conferences, etc. A synopsis of these can be found here:

    You can also find a information and resources on Event Driven Marketing on our blog.



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