Worth reviewing: the four P's.

• Author: Motley, L. Biff
• Position: Customer Satisfaction

In the early 1960s, a professor at Notre Dame University, Jerome McCarthy, conceptualized the idea that modem marketing strategy was built around what he called the "Four P's of Marketing." The four P's are product, pricing, promotion and place (distribution).

Dr. McCarthy depicted these elements as a four-part circle circumscribing the customer, with an outer perimeter that he called "The external environments" of societal, regulatory and cultural influences.

How Harley-Davidson saved itself

Philip Kotler, professor of international marketing at Northwestern University's Kellogg School of Management, believes that the four P's are as relevant today as they were 40 years ago. An example involves how Harley-Davidson Inc., Milwaukee, brought itself back from the brink of bankruptcy in 1985 by diligently applying the principles of the four P's. According to Dr. Kotler, Harley took a close look at all four. First, Harley built a better bike. The old one, while beautiful to look at, leaked oil and had a variety of quality problems. These were fixed without altering the basic appeal of the body styles. Harley "promoted" by fostering a community of Harley riders. It helped put together local chapters of "HOGs," or Harley Owners Groups, to further the cult status of the product. Part of the basic offering, says Dr. Kotler, was "comradeship." And the promotional element succeeded by reinforcing this strong appeal.

In terms of place, Harley fostered close relationships with its dealers and provided them with a full line of other products, such as clothing, to augment the profitability of the Harley brand. Dealerships become gathering places for the faithful, where jam sessions, cookouts, swap meets and other events were a mainstay.

Pricing has been a fascinating element of the Harley strategy, as the company cannot produce enough bikes to satisfy demand. But Harley has not jacked up the price. Rather, it seeks a fair price to keep the customers coming back and to augment the notion that the product offers true "value." Bill Davidson, great-grandson of the founder, says, "Our loyalty rate is 90 percent plus. Once we get them, we keep them."

The Internet has changed some of the ways companies approach the...