Wondering where to get started when marketing your new business? One of the easiest ways to do this is by applying something known as the 5 P’s of marketing. By following this process, you can create a basic marketing strategy for your business.
The 5 P’s of marketing stand for product, price, promotion, place, and people. Here is a brief explanation of each point.
The Five P’s
1. Getting a Grip on Your Product
The first “P” of marketing starts by closely examining your product from all angles. After all, the purpose of marketing is to sell your products. This means you need to have a deep understanding of the type of product you’re dealing with. Some things which need to be taken into consideration include the following:
- What is the USP (unique selling proposition) of your product? What makes it different from the competition? If what you’re selling is similar to existing products, can you find a way to differentiate yourself or put a new spin on something old?
- What are the key features of your products, and what benefits do they provide to the customer? These benefits should include things like solving problems, saving time and money, or increasing the quality of your customers’ lives.
- What are the physical attributes of your product? What does it look like, feel like, smell like, etc.? How do these attributes affect the consumer on an emotional and physical level? Depending on what you’re selling, these attributes may also include technical specifications.
- Does the customer understand what you’re selling? Can they grasp your product at first glance (you need to avoid making your product too complicated for ordinary people to understand)?
- How is your product packaged, and how does this make consumers feel? Remember, the first thing people notice is your packaging. The more expensive it is, the greater the perceived value of the product. Also, consider the role of eco-friendly packaging. In some markets, this may be preferable to other forms of packaging and can be a selling point.
- Do people actually want your product? This is one of the key elements in marketing success. Basically, don’t try to sell hot dogs to people who want hamburgers. You need to have physical evidence that people actually desire your products and are willing to pay for them.
- Are you selling a desirable product that fulfills consumer needs and wants? If you’re uncertain about this, then implement customer surveys or focus groups. These are excellent tools for determining customers’ needs and consumer behavior.
- What trends are currently taking place in your market? A good example of this is the rise of electric cars. Will trends such as this affect how you market your products? What are you going to do about this?
- Also, think about how your product is positioned in the market. Good positioning makes a world of difference when it comes to successfully marketing products. How is your product viewed, and where do you fit into the marketplace? Can changing your positioning increase sales or market share?
*The company analyzes its competitor’s products and comes up with a totally unique product unlike anything sold by another company.
*The company examines its product and draws up a list of features and benefits. It then uses these as a prism through which to market its products.
*The company makes its marketing easy to understand and avoids any confusion arising.
*The company employees a design team to come up with packaging which attracts and conveys the value of the product.
2. Determining Your Price Point
The second “P” of marketing is finding the right price for your product. What you first need to understand is that the price of a product is elastic. The beauty of marketing is that products can often be sold for far more than they are worth. For example, expensive products are often perceived as being “better.” Ultimately, your product pricing is dictated by a mix of factors, including the following:
- What type of price points is your competition using? Do you feel you’ve set an attractive price for your products? Would you benefit from lowering or raising your prices? How would doing this reposition your products in the marketplace? How does pricing differentiate your products from the competition?
- What role do sales promotions and discounts play in your pricing strategy? Will offering these affect your price point? Do you offer price matching and adjustment? Are you using these tools or planning on using them? Also, realize that these tools are basically added costs. If you’re going to offer them, then you may need to increase prices.
- How are consumers paying for the product? What type of payment arrangements are you offering? Are you providing credit terms or agreements? Once again, these can also be used strategically.
- Do you have a warranty or guarantee on the product? Warranties and guarantees are powerful selling tools. For example, consumers often choose a product simply because of the warranty. These can also affect your price point (i.e., a good warranty or guarantee means you can raise your prices).
- Do prices reflect the quality of your products? If your products are supposedly the best on the market, then their prices should demonstrate that.
- Have you taken overall business expenses into consideration? For example, how much does it cost to manufacture, transport, or display the product? Also, think about things like your distribution costs, how much you pay employees, and your rent, utilities, etc.
*The company surveys its competitors and comes up with an average price point that is attractive to the market.
*The company designs sales and promotions which can be used to boost sales.
*The company factors business expenses into the price of its product.
*The company selects a price point that reflects the value of its product or the value it would like to convey.
3. Creating and Deploying Promotions
The third “P” of marketing is your promotional activities, which are a core pillar when it comes to marketing products. What you have to realize is that the tools of advertising and marketing can literally create sales on demand. With an effective advertising campaign, you can dramatically increase your bottom line or reach any sales target. Ask yourself the following questions when putting together promotions:
- What form of advertising are you planning to use? Traditionally, this has included mediums such as print, radio, television, direct marketing, and face-to-face sales. Currently, advertising also comprises digital marketing tools like social media marketing, email marketing, and online advertising. In addition to this, you may want to create a Facebook page or e-commerce site for your business. Another promotional strategy is listing your products on online shops.
- Have you identified the target market for your product? What are the wants, needs, demographics, and attributes of your audience? What appeals to these people, and what are the most challenging problems facing the market? Are you actually advertising to these people?
- Is your target audience actually reached through your chosen advertising channels? If so, are there enough customers available to sustain your business? You do not want to advertise on a channel where no one is willing to buy your products.
- Have you considered other marketing strategies like branding, and do you have a plan for creating brand awareness? You may also want to consider promoting your products with tools like trade shows, sponsorships, free samples, or competitions.
- Have you considered the role of public relations in your business? Do you have a plan for handling public relations? Does the public perception of your business help, or is it hindering you? What do you plan to do about this?
- Do you understand the numbers behind your advertising, or are you flying blind? For example, in terms of money spent on promotions, each customer costs a certain amount to acquire and also has a lifetime value. When putting together promotions, these figures must be taken into account.
- Do you have a backend or plans for implementing one? Can you afford to spend more money on acquiring customers and then make those costs up on the backend?
- Are you using upsells and cross-promotions to increase your profit margins? Can these additional elements offset increased promotional costs?
- Have you calculated your ROI? The biggest mistake you can make is spending money on advertising without seeing a return. For every promotion, you must be able to calculate your return on investment. It goes without saying that if you’re not making money on your advertising, then something needs to change.
*The company performs market analyses and discerns which advertising channel is best for reaching its audience.
*The company performs market analyses and discerns who is most likely to buy its product.
*The company integrates branding into its marketing strategy.
*The company implements a public relations strategy with its marketing.
4. Finding a Place for Your Products
The fourth “P” of marketing is all about location. Marketing professionals know that products on the top shelf greatly outsell those on the bottom. The point is that products need to be in the right place if they’re going to sell. This is especially true if the consumer isn’t looking for your product, doesn’t know they want it, or you have a new product.
- What is the best way to distribute your products? How are you planning to get your products into the hands of the right customers? Will these distribution channels involve your own retail stores, big box stores, wholesalers, the internet, third-party distributors, or other means such as tradeshows, seminars, conventions, or mail orders?
- What type of relationship do you have with distributors? Who are you planning to reach out to, and how are you going to do it? Do they know about your company and products? What is your relationship like with them? Have you introduced yourself and your company?
- Do you have a plan for getting your products into big-box distributors or other outlets? For example, do you know how to place your products in stores like Walmart, Target, etc?
- Timing is also a factor in your extended marketing mix. Is this the right time to sell your product or service? What current events or trends can you take advantage of? The perfect combination of these factors can greatly boost your marketing success.
- Where are your display or brick and mortar locations? Do you intend to build or open these locations? What is your plan for doing this? Where is the ideal or perfect place for your retail outlets? If you have these locations in place, do they adequately cover the market?
- Is your product easily available to customers when they want it? Do you have a distribution and logistics network in place to make sure your product is on the shelves when people want to buy it? Can your logistics chain handle unexpected demand from a functional standpoint? This is extremely important. If the consumer cannot find your product, they may switch to a competitor.
- Delivery is also part of the marketing and customer experience. How you deliver your products has an immense influence on the perception of your company and your customers’ satisfaction with your business. If you’re selling a physical product, then what are your plans for delivery?
*The company contacts big-box distributors and inquires about distribution.
*The company decides on a method of distribution.
*The company manages its distribution chain in order to ensure that products are always on the shelves.
*The company designs a seamless delivery protocol that quickly gets the product into the hands of consumers.
5. Employing the Right People
The fifth “P” of marketing is finding good people. Now, when talking about people in relation to marketing, we are not necessarily talking about customers. What this actually refers to are the people who run your business. These staff members are critically important as they are the ones who interact with customers. This means they play a huge role in your marketing efforts and must be considered in your overall marketing mix.
People involved in your marking mix include employees like front-of-house staff, sales assistants, salespeople, or anyone involved in marketing. The way that existing and potential customers are treated by these employees plays an enormous role in customer satisfaction and user experience. This is especially true if you’re running a service business. These people also include customer service teams, who are an important factor in your success, so ask yourself these questions:
- Do you have a customer service process that is easy to use, effective and intuitive? For example, can people with day jobs access customer service?
- How do your customers feel about customer service? Are they happy with the level of service provided? Does the service experience result in happy customers?
- Are staff presentable, and do they have the right attitude? Are you motivating staff and offering performance bonuses? Are staff trained and knowledgeable about your products? Can they answer your customers’ questions?
*The company provides branded uniforms for its staff.
*Staff is trained to sell to customers and also have knowledge of products.
*Staff is motivated by things like performance bonuses.
*The company employees include face-to-face agents and sales staff.
Background of the 5 P’s
At this point, you may be wondering where the 5 P’s of marketing come from and if this information is actually credible. As it turns out, the answer is yes. The 5 P’s of marketing were first popularized by Neil Borden all the way back in 1949. Borden was a professor of advertising at the Harvard Graduate School of Business Administration and also coined the phrase “marketing mix.”
At the time, this was a revolutionary concept, and his aim in developing the 5 P’s was to create a type of marketing recipe which could be used by everyone from executives to small business owners.
Another person who played a role in the development of the 5 P’s was E. Jerome McCarthy, who was a Notre Dame marketing professor and author. In his 1960’s book titled, Basic Marketing: A Managerial Approach, he came up with the concept of the Four P’s of marketing. (He would add the additional “P” in subsequent editions.) Edmund Jerome McCarthy’s approach included things like price, promotion, product, and place, and according to his research, these were the four most important variables when marketing services or goods.
How to Use the Five P’s of Marketing
The simplest way to use the 5 P’s of marketing is by going through this post and applying the information we’ve provided. Start with a blank slate and work through each section, supplying good answers for the questions and ideas we’ve listed.
Avoid writing down the first thing that comes to mind. Think deeply about everything you’ve learned and try to scratch below the surface. Another good place to start is by using the bullet points as a checklist. Go through each point and check it off.
Ultimately the real value of the 5 P’s of marketing is that they force you to think about your business. This framework is essentially a tool that you can use to place your company under a microscope. By keeping the 5 P’s in mind, you can make different product decisions and thereby find ways to improve or change things.
The 5 P’s of marketing are a good starting point when building an effective marketing strategy or making strategic decisions. They also serve as a fantastic introduction for people who have no experience in marketing. By going through and applying each point, even someone running their first company can create a successful marketing campaign.
The bottom line is that this stuff works and is used every day by thousands of companies from big to small. Implement this information, and you’re almost guaranteed to see results.
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