The 4 E's: Adding Fuel to the Marketing Mix

The 4 P’s of marketing was the brain child of Edmund McCarthy, a Notre Dame marketing professor and author. He came out with the marketing mix framework in 1960 with the publication of his book Basic Marketing: A Managerial Approach. The systematic method to to managing price, product, promotion and place (distribution) has been the bedrock for product and marketing managers alike for decades. It has served many industries well but has had it limitations as markets, economies and select industries have matured. More specifically I witnessed first hand a number of cycles within the payments and credit card industries which resulted in the demise of former competitors. They had built card empires by turning the crank and were doomed by the same success that got them to the top in the first place. Markets moved on but they were basing all of their modelling exclusively on prior behavior as influenced by very narrow marketing stimulus resulting in adverse selection. As a result I was looking to add a supplement or boost to the tried and true marketing mix.

Upon reflection in the late 90’s I came up with a 4 E’s framework which I wrote about in an insurance industry trade publication. This was the result of validating the construct with a direct insurance client. They not only created a new product but a new industry a decade earlier. They had successfully gone to market with affordable life insurance cover with premium rebates subject  to sustaining tenure requirements. Over time they attracted substantial competition resulting in market share erosion. This was largely the result of an inability to adapt to change and understating consumer response to having more choices. As someone once said, ” its like walking up the down escalator, if you stand still you are going to go backwards“.  Challenging conventions was at the heart of the matter. The marketing mix was up for a complete refresh. Price elasticity  product ladder management, promotional and distribution champion and challenger testing were in order. However, the decline was slow and not readily observable. Many were blinded by the success that got them there and were committed to staying with what they knew and understood. What we believed was needed were gear shifts. Something that was embedded in their business model that encouraged them to compete with themselves in advance of the competition.

This case study led to the development of our 4 E’s model. The aim was to create something that was a bit more dynamic and responsive to facilitating change rather than waiting for it. The elements include Earn, Engage, Evolve and Energize. Earning driven marketing establishes offer development and delivery at a profit the consumer is willing to pay for. Customer Engagement is critical to customer satisfaction thus repurchase, up-sell, cross -sell and retention rates. I remember reading JD Power research some years ago which showed very high customer satisfaction rates for a specific car brand. However, repurchase rates were very low. The reason had a lot to do with life stage events. Some people like a specific product and have no complaints but buy other brands as their needs change . This brings me to Evolve and the interdependence of the 4 E’s model. Evolve is about responding to ongoing supply and demand considerations by challenging static product and feature attributes and recognizing rivalry impacts. Lastly, you need to Energize your proposition. In financial services, the category is never top of mind and when it is, it often draws on negative associations. Breaking through mind clutter with relevant messaging that creates desired associations and calls to action are critical success factors. Keep the 4 E’s model in mind when managing your own business.

 

 

 

 

 

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