The Importance of Place — Campbell Partners

Marketing is four p’s: product, price, promotion, and place. Selling necessities is more dependent on the first two p’s: product and price. Promotion and place play a bigger role when selling more discretionary goods.

But here is the thing: virtually everything we buy is discretionary. We stopped buying out of need, oh, eighty years ago. Who really needs a whole aisle of shampoo? When my dad was a child, shampoo wasn’t even a product; soap worked just fine. Don’t even get me going on the dog food aisle.

People buy things they WANT, not things they need. The number of choices for even the most basic necessities are too numerous to count. WANT is an emotion. Promotion and place matter, because they are critical to providing the emotional satisfaction we get from spending.

Restoration Hardware gets it. When you visit one of their design centers, you want to join the club. It doesn’t matter the stores have no inventory: RH representatives order goods from the RH web site, just like you could do at home.

But RH understands the seduction process. Beauty that surrounds you. A smile and a refreshment from a representative who genuinely seems happy to be there serving you. When you leave, some house-porn in the form of a ridiculously expensive catalog, just to remind you of how you felt when you were in the store.

It is working: sales have grown almost a billion dollars since 2013, to $2.5 billion.

Quoting from Gary Friedman, Chairman and CEO:

“We don’t build stores. We create inspiring places that blur the line between residential and retail, indoors and outdoors. Spaces that are more home than store. Spaces filled with fresh air and light, that are an integration of food, wine, art, and design.”

In sum, they let you project yourself into this life. Sure, the product and the price matter. But they aren’t all that matter. At all. Otherwise, RH would close all these wildly expensive places and catalogs, and reallocate the savings to better product and lower prices.

Balancing the four p’s is critical to getting a business right. (Just ask Sears). Promotion and place often feel like discretionary spending to the operationally oriented executives that typically occupy the c-suite.

Just remember: to get consumers to spend money on things they don’t really need, maybe you should too.