Journal of Business & Industrial Marketing

Developing a new understanding of markets: reinterpreting the 4Ps

Håkan Håkansson Alexandra Waluszewski
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Håkan Håkansson Alexandra Waluszewski, (2005),"Developing a new understanding of markets: reinterpreting the 4Ps",
Journal of Business & Industrial Marketing, Vol. 20 Iss 3 pp. 110 - 117
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 Developing a new understanding of markets:
reinterpreting the 4Ps
Håkan Håkansson
Norwegian School of Management, Sandvika, Norway, and
Alexandra Waluszewski
Uppsala University, Uppsala, Sweden

Abstract
Purpose – Arising from systematic empirical observations’ aims to fulfil the need to review and refine existing market models and tools.
Design/methodology/approach – The article includes a critical analysis of existing marketing models, which mainly originate from the marketing mix
(the 4Ps) model, which in turn has a clear micro economic “allocation of resources” background. Today, it is argued there are important changes in how
markets work and what kind of marketing problems companies meet. Marketing is much more about dealing with dynamic issues where interaction is a
key mechanism and where the value of resources are not given but can be developed. The basic marketing problem in many situations is consequently
more about the development of resources than the allocation of them.
Findings – The 4Ps can still be a useful starting-point in many analyses but then the model has to be reframed including how the 4Ps are
conceptualized. In a first reinterpretation attempt, promotion (in terms of interaction) and place appear to be more essential for the creation of value,
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and product and price more an outcome of the same process.

Originality/value – The paper is a strong argument for an increased interest in developing new and alternative approaches to marketing where
dynamic processes, including creation of resources and value, are focused.

Keywords Marketing models, Economic processes, Market system, Resource management

Paper type Conceptual paper

An executive summary for managers can be found at
the end of this article.
Introduction
In 1967, when Philip Kotler presented his now widely-famous
book Marketing Management, neither academic nor business
audiences were spoiled with approaches offering serious
analyses of the concept of marketing. Since then we have
witnessed a dramatic increase in academic involvement in this
field. When, in the mid-1960s, the American Marketing
Association (AMA) launched the Journal of Marketing
Research, devoted specifically to marketing issues, the
association’s membership numbered about 3,000. By the
end of the century this figure had increased tenfold.
Meanwhile the successive ten editions of Philip Kotler’s
work were developed and adapted to more current trends in
marketing, and they were accompanied by an extensive supply
of marketing literature. Today marketing is represented in
everything from textbooks to a wide variety of research
journals, covering issues from how marketers can handle the
The Emerald Research Register for this journal is available at
www.emeraldinsight.com/researchregister
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www.emeraldinsight.com/0885-8624.htm
“knowledge-driven society” (Drucker, 1993) to “cause-
related marketing”.
When we compare the number of themes penetrated by the
current state-of-the-art in marketing with those in the mid-
twentieth century, the development must be considered as
overwhelming. Since the “4Ps” was launched in the 1960s,
marketing has been transformed from a rather restricted and
practical oriented set of models, to an established research field
resting on solid theoretical ground. Or, as Achrol and Kotler
(1999, p. 146) conclude: “In the relatively short period of a half
century, marketing has made several transitions, from seller of a
firm’s output to key player in shaping a firm’s products,
technologies, marketing policies, and strategic direction.”
Despite a generous borrowing from cognitive psychology
and sociology (Lehman, 1999), the development of marketing
analytical tools shows a high fidelity to its theoretical spring.
Starting out from the elegant, strict and simple traditional
economic assumptions, the continuous development has
closely adhered to the general path of economic theory, and
especially the development of the transaction cost school.
Though the supply of a well-filled assortment of analytical
tools for marketing issues has been applauded, displeased
voices are increasingly heard. The main source of this
distrustfulness is the misfit between the elaborate research
tool and the empirical area where it is supposed to be used. It
is, says Graham (1993, p. 10) with an “almost embarrassing
haste” that marketing has been applied in new empirical areas

This article is a summary of the introduction and concluding section of

Journal of Business & Industrial Marketing
20/3 (2005) 110– 117
q Emerald Group Publishing Limited [ISSN 0885-8624]
[DOI 10.1108/08858620510592722]
Rethinking Marketing: Developing a New Understanding of Markets,
Hakansson, H., Harrison, D. and Waluszewski, A. (Eds), Wiley,
Chichester, 2004.

110
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
without considering its underlying assumptions. Although
marketing in general can be characterised by a conscious work
aiming at postulation, testing and refinement of market-
behaviour theories, this was achieved, as Day and Montgomery
(1999, p. 12) underline, at the price of “narrow bodies of
empirical generalizations”: “Some narrowing of the scope is
inevitable if the inquiry is to be tractable within the budget and
data that are available. There is less excuse for the propensity
to rely on a single method to test complex, wide-ranging
theories with many interdependencies.” The long tradition of
reducing the empirical body has created a misfit that is
embedded into the key assumptions of the marketing concept:
the central but passive role of the customer and the one-way
directed nature of the exchange process. Or, as Day and
Montgomery (1999, p. 3) phrase it, the marketing paradigm
that emerged became coloured by “a loose consensus that
consumer choice, exchange and, especially the four Ps
(product, price, place and promotion), dictated important
questions for the field”.
Scholars engaged in empirical studies of exchange seem to
agree. Deep interactions between active sellers and buyers
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seems to be a phenomenon as old as economic activities
themselves as illustrated by economic anthropologists like
Sahlins (1974; 2004), Gudeman (2001) and Wilks (1996).
From scholars in economic history we know that exchange
has always been an issue of more or less deep interaction,
whether it concerns the supply of steam engines in the
eighteenth century (Lindqvist, 1984) or electricity
construction in the nineteenth and twentieth centuries
(Hughes, 1983). However, since the last decades of the
twentieth century the handling of these interfaces has changed
shape and interaction has become even more complicated. If
marketing has always been an issue of exchange, as Bagozzi
(1974) argues, these processes have emerged into much more
intricate patterns involving groups of companies and
organisations on both the supply and user sides. As Piore
and Sable (1984), among others, have made us aware, the
buying-selling interaction has transformed from being able to
be handled within a few interfaces by highly integrated
companies, to include direct and indirect interaction between
several related and specialised units. According to Achrol and
Kotler (1999, p. 146): “Business networks are not entirely
new, but there has been a rapid evolution in their number,
form and complexity”
Thus, while the academic world engaged in expanding the
theoretical toolbox of economic theory and, “made progress
on theory testing” (Day and Montgomery, 1999, p. 12), the
marketing organisations themselves were struggling with
fundamental changes in the exchange process. However,
instead of opening the door for an empirical world
characterised by increased interdependencies, the answer
from the theoretical marketing world was to continue to “limit
the nature of exchanges” in order to make it “properly within
the domain of marketing”. (Graham 1993, p. 2). By this
action, marketing might have fallen into the trap that can be
described by one of the most well-known aphorisms credited
to Mark Twain: “If the only tool you have is a hammer, you
tend to approach every problem as if it were a nail”.
The aim of this article is not to clear out all peculiarities of
how marketing issues presents itself in the contemporary
empirical world. Neither is it to deliver a finished tool-kit for
handling marketing issues in a business world characterised
by active buyers and sellers engaged in handling direct and
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Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
indirect interdependencies. The attempt is more modest: to
take some first steps on a journey towards a new
understanding of marketing by identifying some important
characteristics of contemporary exchange that need to be
captured and investigated. The inevitable starting point for
such endeavours is the marketing mix model. Whether or not
it fits with the empirical world, it is obvious that the “4Ps” in
Kotler’s versions – a work once named “one of the 50 top
business books all time” by Financial Times – has influenced
our thinking about marketing in a very distinct way. By
starting out from the marketing mix model and its underlying
assumptions and comparing it with some basic trends in the
market of today, it is possible to identify some aspects that
deserve a deeper consideration.
What’s missing in the “4Ps”?
The elegant “4Ps” or marketing mix model, first presented as
the theory of parameters by Rasmussen (1955), and then
developed by McCarthy (1960) and finalised by Kotler
(1967), grew out of economic theory and also embedded
some of its key assumptions into the marketing analysis tool.
From its origin, the marketing mix was a resource allocation
model, resting on the assumption that the relevant resources
involved in the exchange process, including the products, are
homogeneous, i.e. the economic value is independent of how
they are combined. With this underlying assumption, the
allocation problem first shows up as an issue of how much to
allocate to marketing in total. The next issue is to decide how
much to allocate to each of the different means – which in the
marketing mix model are the “4Ps”; product, price, place and
promotion. In order to work, the model has to add another
important assumption: that there is a linear dependency[1]
between the resources put into a mean and the outcome. In
other words, each mean must be assumed to have a specific
influence on the outcome.
Without the assumptions of homogeneity and specific one-
directed dependency the model could not provide the
marketing actor with the possibility of finding an optimal
solution between means and outcome; how to find an optimal
amount of resources to spend on marketing, or an optimal
division of these resources between the means (or customer
segments, products or geographical markets). The homogeneity
and one-directed dependency are also a prerequisite in order to
estimate the trade-off in terms of curves. Since these
assumptions are shared with traditional economic theory,
these analytical tools fit nicely with each other.
However, there is the problem of the fit between the model
and the basic characteristics of the empirical world. As was
argued above, there is a lot of evidence that the empirical
issues of marketing are far from being so simple and
straightforward as assumed in the model world. Instead
these observations suggest that marketing includes much
more of active counterparties, of creation of exchange of
resources, with features that are never fully known. It is
marketing issues that, per definition, are characterised by the
presence of dynamics, uncertainties and interdependencies.
The most radical implication for marketing in such a context
is, says Achrol and Kotler (1999, p. 146), “the shift from
being an agent of the seller to being an agent of the buyer,
from being a marketer of goods and services to being a
customer consultant and a manager of his or her saleable
consumption assets.”
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
If a basic characteristic of business life is interaction
concerning how to create supply and use of heterogeneous
resources (Penrose, 1959), and if these processes create
sediments in terms of development of relationships and
embedding of resource features beyond the borders of
companies, there is a severe need for a theoretical point of
reference reflecting these characteristics (Håkansson and
Waluszewski, 2002). Since the early 1970s, IMP
researchers[2] and relationship marketing researchers have
argued that such characteristics are not exceptions but typical
features of business life. What these three decades of deep
empirical studies of business exchange, carried out in several
different political, geographical and economical contexts,
have drawn attention to is that interaction affects both human
beings and the resources involved in these processes as well as
the economic outcome. These interaction processes concern
how to create a supply and use of resources that are not given,
and hence their value is therefore dependent on how they can
be combined with other resources. This means that market
exchange presents itself as a process where the economic
actors consider each other both as subjects and objects.
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None of these observations is trivial from a theoretical point
of view, since they challenge the basic assumptions of
traditional economic theory, and the two important
cornerstones in the marketing mix model identified above,
the resource homogeneity and one-directed dependency
assumptions. Thus, if we agree with the empirical
observations of interaction and how it appears in business
life, then we also have to abandon the idea that marketing is
an affair between autonomous units exchanging
homogeneous resources. In other words, we have to change
the view of what companies can do in a dramatic way; we can
no longer assume that companies are mainly searching for
optimal allocations of given resources. With interaction
between subjects concerning heterogeneous resources as a
basic point of reference, we have to regard company life as
opportunity driven: companies will try to develop non-given
resources through interaction with active counterparts in
order to create economic values.
Furthermore, with this basic point of reference the
understanding of how business activities can be captured is
also dramatically changed. If we assume that interaction
between conscious and active subjects concerning
heterogeneous resources occurs in, and presumably also
characterises, business life, then we have to develop research
tools capable of addressing the fact that companies are living
in a world of movement and change. Or, as Scott (2003, p. 23)
puts it: “If structures exist it is because they are continually
being created and recreated, and if the world has a meaning, it
is because actors are constructing and reconstructing
intentions and accounts, and thereby their own and the
others’ identities.” Thus, investigating marketing is trying to
capture an empirical world that is not at all given but
constructed by the involved companies who are constantly
wrestling with the issue of how to combine and activate
resources beyond company and organisational borders. It is
trying to capture a world in motion.
If marketing is dealing with dynamics
To point out that a resource homogeneity assumption needs
to be replaced with a resource heterogeneity assumption can
at a first glance appear as rather trivial. But, while the first
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Volume 20 · Number 3 · 2005 · 110 –117
assumption is based on a static economic world where
allocation is the key issue (as in the marketing mix model), the
alternative produces the opposite view – exchange deals with
the dynamic creation of new solutions. Furthermore these
alteration forces tend to express themselves in many
dimensions, something that certainly makes great demands
on both the construction and the use of analytical tools.
Dynamics is a compulsory feature of exchange; the question is
how it will appear, and if we are able to grasp this appearance.
Or, as Van de Ven et al. (1999, p. 4) underlines, if dynamics is
dealing with “living systems”, then we cannot investigate
these issues with theories resting on assumptions that “stages
of equilibrium” or “quasi-stable stages of equilibrium” are
ever possible to occur.
A dynamic approach raises several issues. One is how the
view of marketing activities interacts with both what
researchers are able to see and what marketing actors are
able to perform. If marketing actors apply an interactive
perspective to exchange, both the possibility of creating
change and directing it in a certain way increase. It also draws
attention to the deep interaction between actors on both the
supply and user sides of an exchange interface, including the
essential role of this process in product development. In other
words, how the dynamic features of exchange can be utilised
in the creation of customer value and how the purchasing side
contributes to the value creating process.
In sum, if we suspect that the resources exchanged in
marketing processes are heterogeneous, i.e. their values are
dependent on how active counterparts can create combinations
that can be embedded into their different business activities,
there is an urgent need to incorporate dynamics into marketing
theory. This need is not due to any indication that the general
level of change should be higher today than fifty or one
hundred years ago, or that resource heterogeneity should be a
new or increasing phenomenon. However, what obviously has
changed is the patterns of resources, which have been
combined and embedded into highly integrated structures
that stretch beyond the borders of companies and organisations
(Piore and Sable, 1984). Due to actors’ conscious endeavours
to develop new technological solutions and efficient production
structures, increasingly intricate patterns of related resource
interfaces are created. These are the result of interaction
processes that often stretch over numbers of company and
organisational borders, where predecessors of related resources
systematically try to influence each other. Such interaction
processes have both short and long term effects. They are
creating specific new solutions that can be embedded into the
existing structure, but are also preparing the ground for larger
investments and structural changes.
But, if empirical observations of marketing call forth a world
of interdependent actors systematically interacting about the
ways partially unknown resources can be combined to create
value, why then has the static “4Ps” model proved such a
fantastic vitality? There must be something more in this
vigorous model than its ability to supply the market analysts
with simple guidelines of how to cope with allocation issues.
One explanation behind the vital force of the “4Ps” model is
that it clearly identifies four important issues from an empirical
perspective. The model draws rings around the exchanged
product and three related aspects; its price, the place where it is
available and the promotion with which it is brought forward.
Any interpreter of marketing would most likely agree that these
four features are important ingredients in the exchange
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
process, whether viewed from an academic or business
perspective. What is more interesting, however, is that the
“4Ps” appear quite differently, when considering them from an
assumption of resource heterogeneity versus homogeneity.
Products – given solutions or open
opportunities?
When making empirical observations of exchange, the
product must be regarded as one of the most visible
indications of what is going on. In the marketing mix
model, the product is also credited with the role of being the
basic resource involved in the exchange process. Assuming
resource homogeneity, the product is treated as given but also
as being generic in nature. Consequently, the product is seen
as the result of a production system from which its features
and value are independent, and it is regarded as an input in a
user system that affects neither its features nor its value. In
other words, there is no need to pay attention to the system
that handles the product’s supply and use. Instead the focus
can be concentrated on how the product is composed and
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presented by the producing company. In comparison to the
marketing mix model’s other Ps, however, this first one is
supposed to have a distinguished position in the exchange
process. The homogeneous and solitary product is given the
double role of being a basic parameter determining the
borders of the market and a means that, in combination with
the other three Ps, has a direct influence on the outcome.
An interactive perspective grounded in assumptions of
resource heterogeneity does not deny that a product can be an
important parameter of the market conditions and a means in
the exchange process. However, what is problematic is to
reduce the complexity of the product to being no more than
this; something like cutting out a small, static slice of
something much bigger, which includes a wide variety of
dynamic aspects. When the features of a resource such as a
product are not regarded as given, but created in interaction,
neither its features nor its value in the exchange process can be
determined from the product itself, nor from the producing
companies’ perspective. If, as Penrose (1959) puts it, the value
of a resource is determined by “the services it yields”, both the
features and the value of a product are issues of how it is
combined with other resources and of how the results of these
combinations are actively embedded into the structures related
to the supply and user sides, respectively.
Thus, in this perspective the product is much more than a
given unit, which the supply and user structures automatically
are adapting to free of cost. Instead, the product appears as a
carrier of both opportunities and restrictions, and therefore
also tensions. Its features and value are created in interaction
processes that can involve technical resources, such as the use
of internal and external distribution and production facilities,
as well as internal and external social resources such as skills
of human beings embedded into business units and business
relationships. It is impossible to find an optimal solution to
how to combine a product and other related resources when
they are characterised by heterogeneity. However, by actively
relating resource combinations on the supply and user side to
the product, several of these resources, including the product,
can be developed. This process is far from automatic or cost
free, but can lead to a conscious, directed development of
related resources. This increases their value in certain
combinations, and decreases the likelihood of value creation
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Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
in other combinations. This implies that a product will always
be exposed to suggestions of change from actors engaged in
handling interfaces where it is combined with other resources
on both its supply and user side. And, whenever changed or
just activated in another way, the product will create tension
in both directly and indirectly related interfaces. In other
words, embedding a product into supply and user interfaces
means embedding a source of dynamics into them.
The empirical pictures produced with an investigation tool
resting on a resource heterogeneity assumption also
emphasise that the exchange of a product is nothing that
takes place in isolation, but in a context full of restrictions and
possibilities. The features and the value of a product can be
developed with the engagement of the producing company,
due to interaction with purchasing functions of the using side,
the technological development functions of several directly or
indirectly related companies, and different functions of
independent intermediaries, such as distributors. Since the
product has to fit into all these structures, it is exposed to a
wide variety of complementary or contradictory demands.
This means that a product never has the same role in the
different structures it is related to due to its supply and use.
Consequently, a product’s features and value are always a
result of compromises between different requests.
In this perspective, the marketing mix model’s reduction of
the product to a given, basic parameter of the boundaries of
the market, appears as rather unfair. Although it is possible,
and also probable, that some actors choose to see the product
as a given, it can simultaneously be treated as a variable by
other actors, with the possibility of being developed due to
how it is combined with other resources.
When searching for new tools for marketing analysis, a key
aspect seems to be the need to grasp the dynamic features of a
product, i.e. the opportunities, restrictions and tension it
carries with it or is exposed to. It must be possible to identify
the interfaces between a focal product and other resources
related to its supply and use and what is happening in them.
This means that the research tool has to allow the investigation
of the role of the product both as an individual resource and as
part of larger systems. This is similar to what was articulated in
the innovation literature (e.g. von Hippel (1998)), in studies of
technological development (e.g. Rosenberg (1994); Hughes
(1998); van de Ven et al. (1999)) and by scholars dealing with
technological interdependencies (e.g. Stabell and Fjeldstad
(1998)). Such models would allow the study of both how the
product is viewed and the effect of this view: if the product is
treated as a given, subordinate to other technical or social
resources, and thus handled as an outcome of and compromise
between other interaction processes. Alternatively, if the
product is given a more dynamic role in the exchange
process, forcing the development of both itself and other
technical and social resources directly and indirectly related to
its supply and use. In other words, we need a marketing
analysis tool that allows for the investigation of both restrictions
and opportunities when heterogeneous resources, and the
business actors’ conscious work with them, are included in the
product exchange process.
Price – the only element that does not produce
costs?
When considering how pricing is approached in the marketing
mix model, once again the heritage from economic theory
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
becomes clear. Due to the resource homogeneity assumption,
it is solely through its price that a product can contribute to
creating revenue. Kotler (2003, p. 470) comments: “Price is
the only element in the marketing mix that produces revenue;
the other elements produce costs.” According to traditional
economic theory, however, a company does not have to worry
about price. The price of a product is independent of any
individual user’s preferences, and by how the product is
combined with other resources. The price is given by the
interplay between supply and demand. Whenever there is a
pure market situation, the company cannot affect the price,
but has to be a price taker. In the marketing mix model,
however, companies are supposed to be able to modify the
price in order to create an optimal mix between market share,
revenue and profit. It is generally assumed that the business
actors are working in a market characterised by monopolistic
competition.
When applying an interactive resource heterogeneity
perspective, however, the price appears no longer as the
only element that produces revenue. Any resource, be it a
product, a production facility, a business unit or a business
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relationship, can be used to both reduce costs and create
benefits. Furthermore, the possibility of increasing the value
of a product by changing the way it is combined with other
resources on both its supply and user sides implies that the
price is not necessarily driven by the market, but can be one of
several dimensions affected by resource interaction. This
means that the price can always be influenced by directly or
indirectly related business actors. Thus the price can be
affected by active counterparts’ engagement in resource
interaction. This is a phenomenon that is also familiar to
accounting theory scholars; how companies actively build
physical and social resource combinations with the aim of
influencing not only costs, but also the value of these
resources, and thereby the price.
A second key aspect when searching for new tools for
marketing analysis seems to be the need to grasp the dynamic
features of price, i.e. how an active confronting of resources
can affect it. Instead of being driven just by the intersection of
the demand and supply curves, the price of a product or any
other resource appears also as a function of how it is
embedded into the structure of its producer and user sides.
This implies, for example, that a structure where the business
actors consciously are directing and combining resources in
relation to each other, i.e. a network-like structure, can create
a lower price for a certain product compared to a structure
behaving in accordance with the traditional market exchange.
Thus, a marketing analysis tool has to allow for the
investigation of how the price is created by the business
actors engaged in developing resource combinations. For
example, how price is an integral part of how physical
resources (products and production facilities) and social
resources (business units and business relationships) are
combined within and beyond company and organisational
borders.
Place – a cost for connecting supply with demand
or a source for value creation?
In the marketing mix model the place issue is equal with
handling a distribution channel that brings the given product
to its potential users, and the main task is to link an existing
supply with an existing demand. Or, to use the wording of
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Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
Kotler (2003, p. 505), it is the “Marketing channels are sets of
interdependent organizations involved in the process of
making a product or service available for use or
consumption.” Since the distribution channel is a cost and a
means that can create a certain outcome, attention is directed
to how to balance it by choosing between different kinds of
internal or external channel solutions and creating a suitable
mix between it, the price, and the promotion of the product.
In accordance with its heritage from traditional economic
theory, in the marketing mix model’s interpretation the
chosen channel is regarded as having no influence on the
resources distributed through it. Although distribution
scholars have opened up the perspective to include
questions like how to reduce uncertainty and handling
power-dependency, the place issue is still dealt with as a
“how-to-handle-distance” problem as a creator of costs and
not of benefits.
The place issue includes more than the question of how to
connect a given supply with a given demand, as has been
articulated by scholars engaged in cluster and industrial
district research. Although these research traditions represent
a rather wide variety of approaches, emphasizing the role of
competition as well as co-operation, they share the common
understanding that place is not only a cost driver, but includes
features that can create benefits. These benefits are mainly
seen in the learning processes that can occur within special
places, within districts or clusters where the traditional,
anonymous market exchange due to proximity has been
replaced by interaction and relationships. The localisation of
related industries within clusters facilitates knowledge
spillover. Thus, according to industrial district and cluster
scholars, these islands of dense relationships in an otherwise
traditional market appear as important sources of knowledge
useful in product development and value creation.
An interactive perspective, resting on a resource
heterogeneity assumption, agrees with the understanding
that the place issue is much richer than simply being a cost for
bringing the product from the producer to the user. However,
place-related qualities are nothing that grows out of special
geographical areas where the traditional market exchange is
played out in favour of relationships. Whether or not there is
any geographical proximity between the parties engaged in the
exchange process, the activated resources are characterised by
place related features. Any resource, a product, a production
facility, a business unit or business relationship, can include
place related features. These can be both costs and benefits,
depending on how resources are combined. This
understanding has important consequences for how to view
functions that in a traditional perspective are treated as being
solely a cost and a means, such as the distribution channel.
Like any resource involved in the exchange process, these
resource combinations appear as important sources for the
development of new features of resources and thus for the
creation of economic benefits.
Consequently, since the resources involved in the market
exchange process involves different functions of different
companies and organisations in different locations, creating
an economic value of place can be regarded as an issue of
identifying and developing new combinations. How can
features of a product, some production facilities including a
distribution channel, some business units and business
relationships be combined in new ways to create economic
benefits? In this perspective a company’s or a group of
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
companies’ creation of economic benefits can also be a result
of their skill to transfer and transform physical and social
resources, available elsewhere, as their ability to take
advantage of locally available resources. Place appears as a
heterogeneous phenomenon, created by each company at
each place, through its way of combining local and distant
resources. Thus, place must be approached as a dependent
variable – something a company can reduce to a cost issue –
or actively try to utilise in the exchange process.4A third key
aspect when searching for new marketing analysis tools seems
to be the need to understand the dynamic features of a place,
i.e. how place related features interact with the resources that
are activated in the exchange process. Such a research tool has
to allow for the investigation of place as an object of analysis
in itself. In other words, how can it be used consciously by
business actors in order to reduce costs and create benefits.
Promotion – a cost for one-way communication
or a double-sided value creation process?
The promotion issue is, in the marketing model’s
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interpretation, a question of how to send a message about a
given product to potential users. Promotion or
communication, according to Kotler (2003, p. 563) is a
must “companies must also communicate with present and
potential stakeholders, and the general public, Every company
is inevitably cast into the role of communicator and
promoter”. Like the price and place elements, promotion is
not supposed to have any effect on the features of the
products involved. Nor is the promotion endeavour
considered to have any influence on the structure that is
related to the production and use of the promoted products.
Assuming resource homogeneity, promotion appears as an
issue of how to create an optimal mix of communication tools
in order to get a product’s message from the producer to the
user. Although feed-back is ascribed an important role in this
process, its content is mainly considered as evidence of how
well the company has succeeded in communicating a certain
message.
If a resource homogeneity assumption ascribes a
distinguished position in market exchange to the product, a
resource heterogeneity assumption gives the promotion or
communication element an extraordinary role in these
processes. In the latter perspective promotion appears as
muchmore than a directed means that, to a certain cost, can
be used to send a message about a product from a given
supply to a given demand. First, promotion or
communication is assumed to be a double-sided process,
i.e. it is approached as interaction. This interaction is not
restricted to a focal exchange interface, but can also involve
predecessors of directly and indirectly related resources.
Thus, interaction takes place within companies, beyond the
borders of companies and also beyond the borders of visible
relationships.
Second, interaction creates sediments in terms of features
of both the physical and social resources involved. This
process is far from the assumption of a generic “knowledge
spillover” described above. Instead, it is a process whereby
direct and indirect resources are confronted and recombined,
thus creating new features of physical resources such as
products and production facilities and/or social resources
such as business units and business relationships. Since these
resources are developed in interaction, a directed and
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Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
coordinated development pattern is created that stretches
over the borders of companies and organisations.
Communication in terms of interaction is considered as a
fundamental mechanism in the market exchange process. It is
a process that:
.
Constructs the structure behind an exchange interface. It
is through interaction that a certain resource combination
(a product and the structures behind its production and
use) is created.
.
Holds together the structure behind an exchange
interface. It is through interaction that the structures
responsible for the production and use of a certain
resource combination are co-ordinated, adapted and
made more efficient.
.
Develops the structure behind an exchange interface. It is
through interaction that the resources related to the
production and use of a certain resource combination are
confronted and recombined, i.e. that new features and
economic values are created.
Hence, from a resource heterogeneity perspective, interaction
appears to be crucial for the transformation of physical and
social elements to resources with an economic value.
Interaction has a double role in this process; it is essential
both in the creation of economic resources and in the creation
of market exchange. Crediting interaction with such an
importance (instead of reducing it to a one-directed
promotion issue) implies that the issue of creating an active
communication between the business actors should be on the
top of the marketing agenda. As soon as the knowledge of the
resource involved in exchange is incomplete, business actors’
active and conscious engagement in resource interaction
appears as an essential element in the value creation process,
and as an infinite source of dynamics. This stresses the
importance of considering the role and the features of social
resources. Both business units and business relationships can
be more or less consciously adapted for identifying and
handling interactive issues. An interesting complication
concerns how to interact with predecessors of indirectly
related resource interfaces, i.e. those that are not available
through existing business relationships.
A fourth key aspect when searching for new marketing
analysis tools seems to be the need to grasp the dynamic
features of promotion and communication, i.e. the role of
interaction and the effects on both economic resources and
the market exchange process.
Thus, it has to allow the investigation of interaction in
business actors’ handling of the interface between physical
and social resources. We need a research tool that facilitates
the investigation of how interaction shapes and directs
features of physical and social resources and how this
influences their economic values.
Four distinctly different Ps that can all contribute
to the creation of benefits
To summarise, when considering the 4Ps from an interactive,
resource heterogeneity perspective, the empirical issues they
represent still appear as extremely important characteristics in
the market exchange process. However, what also becomes
clear is how distinctly different the “4Ps” present themselves
from a resource heterogeneity perspective. If the “4Ps” in the
latter perspective have any genuine commonality, it is that
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
they are all carriers of opportunities and restrictions, and thus
are important sources of dynamics. But, they appear in a
completely different logic, as the following short discussion
reveals[3].
Two “Ps” appear as essential in the creation of economic
resources and market exchange:
1 Promotion, or rather interaction, appears as the elixir of life
in the market exchange process. It is promotion in terms
of interaction concerning the features and abilities of
resources that gives rise to the creation of economic value
and market exchange.
2 Place appears as the elixir of life in the value creation
process. It is through identifying and combining features
of resources at different locations that are related through
the market exchange process, i.e. products and
production facilities (including distribution channels) in
business units and business relationships, that new
economic values can be created.
Two “P’s” appear as embedded in the logic of promotion and
place:
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1 Price appears as an outcome of the structure that has been
created in the promotion and place processes. It is
through relating the structures responsible for the
production and use of a certain resource combination
that the price is created. Through such processes price can
even become lower as compared to a situation when there
is a pure market solution.
2 Product also appears as an outcome of the structure that
has been created in the promotion and place processes.
The product is created through the structures that are
responsible for its production and use, which
consequently are of utmost importance in the product
development process. However, to solely focus upon
products seems too narrow a perspective. Another
physical resource of great importance in the product
creation process is the production facility. Furthermore,
social resources such as business units and business
relationships are also of great importance in this process.
Although the “4Ps” appear in a completely different shape
when approaching them from an interactive, resource
heterogeneity assumption, they still defend the distinguished
role in the marketing process that Arndt (1979) credited them
with some decades ago. However, they appear in a different
logic, and consequently there is a need for new tools to
analyse them. In this perspective, it is easy to agree with Hunt
(1994), who argues for a “critical pluralism” within marketing
research. But, as Day and Montogmery (1999, p. 12)
underline, if these conceptual pluralisms ever will appear is a
responsibility not only of individual researchers, but of a
larger research community: “Here, the marketing journals,
the editors, and reviewers can nurture and encourage the
development of diverse approaches and points of view.”
Managerial implications
There are two different types of managerial implications that
this paper gives rise to. The first is the importance of
practioners in the development of new theoretical approaches.
There are obvious reasons why this work should start out
from important empirical observations or phenomenon. This
regards not least the existence and characteristics of dynamic
processes, value increasing resource developments and so on.
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Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
Here companies and individual marketing managers can be
important lead users.
The second implication regards the general focus.
Marketing has been quite activity oriented and the main
focus has been on designing and performing marketing
activities. If, as is argued in this article, resource development
is central then marketing must become much more devoted to
them. Not just the products that always have been central but
also how products and facilities are related to each other and
to important organisational resources. It is especially the
latter – the interfaces between technical and organisational
resources – that seems to have a large potential for the future
development.
Notes
1 Including the decreasing marginal return.
2 See e.g. Håkansson (Ed.) 1982; Håkansson and Snehota,
1995; Håkansson and Waluszewski, 2002; and www.
impgroup.org for an overview.
3 For a more thorough discussion, see Håkansson and
Waluszewski (2004).
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of Goods: An Interaction Approach, Wiley, New York, NY.
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Relationships in Business Networks, Routledge, London.
Håkansson, H. and Waluszewski, A. (2002), Managing
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Harrison, D. and Waluszewski, A. (Eds), Rethinking
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Wiley, Chichester.
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Projects that Changed the Modern World, Vintage Books,
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Kotler, P. (1967), Marketing Management: Analysis, Planning
and Control, Prentice-Hall, Englewood Cliffs, NJ.
 Developing a new understanding of markets: the 4Ps
Håkan Håkansson and Alexandra Waluszewski
Kotler, P. (2003), Marketing Management, 11th
(International) ed., Pearson Education Inc., Upper Saddle
River, NJ.
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Further reading
Håkansson, H., Harrison, D. and Waluszewski, A. (2004),
Rethinking Marketing: Developing a New Understanding of
Markets, Wiley, Chichester.
Executive summary and implications for
managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit of the
material present.
Marketing has made several transitions over the last 50
years, from seller of a firm’s output to key player in shaping a
company’s products, technologies and strategic direction.
The marketing mix model
Despite these changes, most of the research tools used to
analyse marketing problems have developed out of the
marketing mix model – and particularly the 4Ps of product,
price, place and promotion – launched in the 1960s. The
marketing mix model has a clear micro-economic “allocation
of resources” background. It rests on the assumption that the
relevant resources involved in the exchange process, including
117
Journal of Business & Industrial Marketing
Volume 20 · Number 3 · 2005 · 110 –117
the products, are homogeneous, and that economic value is
independent of how they are combined. The model also
assumes that there is a linear dependency between the
resources put into each of the 4Ps and the outcome. In other
words, each of the 4Ps is assumed to have a specific influence
on the outcome.
The reality of marketing today
Today’s marketing, however, deals much more with dynamic
issues where interaction is a key theme. Marketing now often
involves groups of companies and organizations on both the
supply and user sides, and although such business networks
are not entirely new, their number, form and complexity have
evolved rapidly. Investigating marketing involves trying to
capture an empirical world that is not a given, but is
constructed by the companies involved, who are constantly
wrestling with the issues of how to combine and activate
resources beyond company and organizational borders. In
today’s marketing, the value of resources is not given but
developed.
A new look at the 4Ps
Despite these changes, the 4Ps can be a useful starting point.
But the model needs to be reframed, including how each of
the 4Ps is conceptualised. Hakansson and Waluszewski
attempt to make such an interpretation. The authors put
forward the idea that promotion and place appear to be
essential for the creation of value, and product and price
appear more of an outcome of the same process.
Promotion, or rather interaction, is key to the market
exchange process. It is promotion in terms of interaction
concerning the features and abilities of resources, that gives
rise to the creation of economic value and market exchange.
Place is key to the value creation process. New economic
values can be created through identifying and combining
features of resources at different locations that are related
through the market exchange process – that is, products and
production facilities, including distribution channels, in
business units and business relationships.
Price is created through relating the structures responsible
for the production and use of a certain resource combination.
Through such processes, price can even become lower as
compared to a situation where there is a pure market solution.
The product is created through the structures that are
responsible for its production and use, which consequently
are of utmost importance in the product development
process. However, to focus solely upon products seems too
narrow a perspective. Another physical resource of great
importance in the product creation process is the production
facility. Resources such as business units and business
relationships are also of great importance in this process.
The importance of resource development
Hakansson and Waluszewski urge that marketing must be
increasingly devoted to resource development. Managers
should emphasise how products and facilities are related to
each other and to important organizational resources. In
particular, the interfaces between technical and organizational
resources seem to have large potential for future development.
(A précis of the article “Developing a new understanding of
markets: reinterpreting the 4Ps”. Supplied by Marketing
Consultants for Emerald.)
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