Pricing and the Other 6 Ps of Marketing
Image Credit: Scottsdale Quarter 28/12/2023; https://www.flickr.com/photos/alanenglish/53425868758
We marketers love our frameworks, and few are as enduring as the 7 Ps of marketing: Price, Place, Product, Promotion, People, Physical Evidence, and Processes.
Many of you will have heard of ‘the 4 Ps of marketing’, which were Product, Price, Place and Promotion, and which were introduced in 1960 by E. Jerome McCarthy. In the early 1980s the extra 3 Ps were added on by Bernard H. Booms and Mary J. Bitner (these marketing gurus all like an initial in their names, don’t they!) to reflect the needs of selling a service rather than just a physical product, but these days we marketers recognise the importance of service even for actual products so we always use all 7 Ps.
The model is taught on marketing courses around the world, often with equal weight given to each P. Yet in practice, one is too often neglected: Pricing.
Bookshelves are filled with advice on how to create the right product, build a strong brand, or run effective promotions. You’ll find shelves groaning under the weight of titles about digital marketing, customer journeys, or retail strategy. But pricing? There are far fewer guides, despite the fact that it is the only P that directly generates revenue. Adjusting price is the easiest way for a company to control profit. Every other P represents a cost.
Even more importantly, the Ps are not independent silos. They are interconnected levers that shape how a brand is perceived. A change to one inevitably affects the others. And nowhere is this truer than with price.
The Interplay of the Ps
Think about Apple.
The Product is sleek, elegant, and technologically advanced - it is a joy to hold in your hand. The Place is carefully controlled - Apple’s own premium stores, a tightly managed online presence (where the web experience is also a joy), and selected resellers. The Promotion avoids discounts, instead focusing on creativity, lifestyle, and the aspirational “Think Different” ethos. The People - both Apple Store staff and customer service teams - are trained to deliver consistent, polished experiences. The Physical Evidence includes minimalist packaging, pristine retail environments, and the distinctive Apple logo. The Processes are designed for seamless integration, whether that’s unboxing an iPhone or synchronising across devices.
I remember the first Apple phone I bought, and the shiver as I lifted the box lid to take it off – and the inner box slowly lowered itself into my hand. Even the box it arrived in had a massive attention to detail. When running marketing courses I have often asked the question “who still has the box their phone came in?”, and it’s not unusual to find most have more boxes than phones!
Now imagine if the Price were budget-level, like a mass-market Android device. The entire brand story would collapse. Apple’s high prices are not just a financial choice - they are an integral part of the brand, reinforcing the perception of exclusivity, design, and innovation.
Contrast that with Aldi. Its Product is good quality but functional food and other items. The Place is a no-frills store, with narrow aisles and limited stock. Promotion focuses relentlessly on savings, with many special buys. The People are efficient, moving quickly at tills to keep costs down. The Physical Evidence is basic packaging and straightforward store layouts. The Processes are streamlined: limited product ranges, fast checkouts, and efficient logistics. In Aldi’s case, low prices are not just consistent with the brand - they are the brand.
The same principle holds in other sectors. British Airways has historically built its positioning on service, safety, and global connectivity. Its Club World and First fares are priced high to signal status and comfort. At the other end, Ryanair has stripped out frills in every other P - minimal service, quick turnaround, secondary airports - so that its low pricing makes sense. Neither could succeed if they swapped their approaches.
Understanding Your Brand Position
Before you can decide on a pricing strategy, you must first be clear on what your brand stands for. This is not a purely financial decision - it’s about identity.
Ask yourself:
Who is my target customer? What do they value most - prestige, convenience, low price, reliability, or innovation?
How do I want my brand to be perceived? Am I aiming for exclusivity, affordability, accessibility, or mass-market appeal?
What role does my product or service play in customers’ lives? Is it essential, a luxury, an occasional indulgence, or a practical enabler?
Your answers shape every P in the marketing mix.
Take Waitrose. It isn’t just a supermarket - it’s positioned as a destination for quality ingredients, provenance, and a higher level of service. Customers expect to pay more, because the product range, store environment, and service levels all reinforce that perception. By contrast, Lidl appeals to shoppers who value efficiency and affordability above ambience or extended ranges. Each succeeds because their pricing aligns with their brand proposition.
Inconsistency is dangerous. A high-end restaurant that serves exquisite food but charges bargain-basement prices may unintentionally signal low quality, and will almost certainly go bust quickly because their higher cost-to-serve will not be supported by an appropriate price. A discount furniture retailer that suddenly launches a luxury-priced line without changing its product, place, or promotion will confuse customers.
There is a reason you will never see luxury perfume brands sold in bargain shops!
Brand clarity is essential.
What That Means in Terms of Price
Once you know your brand position, your pricing choices become far clearer. Here’s how different positions play out:
Premium brands - must set prices high enough to signal exclusivity. If Rolex watches were sold at £200 each, the brand would lose credibility overnight. Customers pay not only for the product but also for the status it confers.
Budget brands - must remain obsessively competitive. Ryanair exists to be the lowest-cost option; if fares drift upwards too much, customers defect. Every part of its business is designed to strip out costs so that low pricing is sustainable.
Mid-market brands - often get squeezed from both sides. To succeed, they must clearly articulate a blend of quality and affordability. Marks & Spencer has struggled at times because its pricing hasn’t always aligned with its positioning.
Innovators - can charge premium prices early on, but must expect to adapt as competitors emerge. When flat-screen TVs first appeared, they commanded thousands of pounds; today, the same technology is widely accessible at budget prices.
The lesson is simple: price is not just a number. It is a signal, and customers interpret it instantly. A price that feels too low may suggest poor quality; a price that feels too high will only work if the brand has earned the right to charge it.
Pricing Strategies to Match Brand Position
With clarity on your brand, you can then adopt a pricing strategy that reinforces it. Here are some common approaches, with examples:
Prestige pricing - Set high prices to reinforce exclusivity. Never discount, as it undermines the brand. Example: Rolex, Louis Vuitton, or high-end hotels such as The Ritz.
Everyday low pricing - Keep prices consistently low, supported by efficient operations. Avoid gimmicks. Example: Aldi and Ryanair.
Penetration pricing - Launch at a low price to rapidly build market share, then increase over time. Example: Netflix initially undercut traditional TV and DVD rentals before gradually raising prices.
Price skimming - Launch at a high price to capture early adopters, then reduce prices as the market broadens. Example: Xbox and Playstation.
Bundle pricing - Combine products or services to increase perceived value. Example: Sky bundling TV, broadband, and phone services.
Dynamic pricing - Adjust prices in real time based on demand. Example: Airlines and taxi platforms like Uber.
The key is consistency. A luxury brand cannot rely on penetration pricing without diluting its position. A value brand cannot credibly use prestige pricing. The chosen strategy must reinforce, not contradict, the other Ps.
The Central Role of Brand
Ultimately, pricing is not a spreadsheet exercise. It is a brand statement. The interplay of the 7 Ps is about coherence: every decision should reinforce the brand promise.
Think of it as a jigsaw puzzle. Each P is a piece, and the picture only makes sense when all the pieces fit together. Misalignment creates confusion, which erodes trust. Alignment builds credibility, loyalty, and profitability.
So the next time you review your price, start by thinking about your brand position and proposition, and the decisions already made regarding the other 6 Ps, before you decide on your price. And once you have settled on a price you then reverse the thinking: given the price you are about to charge, think about each and every P, and whether it needs to change to support that price.
Pricing is not just about covering costs or undercutting competitors. It is about telling customers who you are, what you stand for, and why they should choose you. And if the other Ps are doing their job properly, the price will not just make sense - it will feel inevitable.