- A market is anyplace where goods and services can be exchanged
- The Marketing Mix (The 4 P’s): Product, Price, Promotion and Place
- Find the customer pain and cure it profitability
- Marketing focuses on the needs of the customer while sales focuses on the needs of the company.
- Define the product by curing the customer pain then confirm the market really exists.
- Marketing is not an exact science. It’s a mix of data, trends and gut.
Elmer Wheeler has the probably the most famous sales line: sell the sizzle not the steak. If sales sells the sizzle then marketing figures out the cut. Marketing is all about customer needs not convincing them to buy it (well, maybe a little of that too). The traditional foundation of marketing centers around the 4 P’s: Product, Price, Promotion and Place. These 4 components are essential to any marketing plan. There are others (See the Seth Godin reference below) but for our discussions, we will focus on these.
Before you can sell anything, you to define and build something. The product or service is what you want to sell to customers. The features, functions, look and feel need to be well defined to meet your customers needs. Many a product has failed because it was ill defined. Getting the product or service right will require understanding:
- What do they do now?: Understanding the present state will reveal gaps of opportunity. Ask questions about what the customer does now. Chances are, you will start to see what they can’t see — places where a properly defined product can fit in.
- Who are their customers?: If your gadget or service helps your customer service their customers, then get to know their customers. How do they use the existing product? What pain to they feel?
- Survey the entire ecosystem: This includes looking at everything that might interact with your product. This can sometimes be tough but strive for completeness since there are hidden gems to be found.
Price is a sticky wicket. Coming up with a price that is both profitable yet competitive is an art. Most pricing centers around two methods (there are others but these are good for now):
- Cost Plus Pricing: Cost plus pricing is just that. You figure your cost and then add some percent margin on top. This type of pricing is usually done with well established, commodity products. Industry norms usually dictate the margin.
- Value: Value pricing looks at the value to the customer. This value could be the worth of each feature or how much the customer saves by using your product. The trick here is to figure out what the customer values and how much it’s worth to them.
Competitors also have a lot to do with price. Your product or services price must be competitive or the value so significant that your customers will pay the premium. Companies do “price themselves out of the market” by poor pricing practices.
Now that you have a great product with stellar pricing, you now need to tell people about it. That’s what promoting is all about. Traditionally, this meant big budget, multimedia (print, TV) promotion campaigns or roll outs. Now, the savvy marketeer targets her promotion to the exact people that will buy (more on that in Target Marketing). Promotion is all about leaving a positive impression on your customers that your product or service fills a need, cures their pain or satisfies a want. The marketing message can be “in your face” or subtle. Either way, it’s all about leaving a positive (or negative competitor) impression.
Place is the market where you sell your product. Properly defining the place takes more effort than you might think. Markets are composed of submarkets. Those submarkets break into still more sub-submarkets. This goes on until you segment down to the individual (which nowadays gets easier to do). We will deal more with place when we discuss Target Markets. Place also includes competitors. A couple of items to take a look at related to competitors include:
- Current Product Offerings: Take a look at the present state of the market and figure out what is out there. Try and narrow down the features to their core. Then, expand from there.
- Competitor Roadmaps: If you can get ahold of them, see where they are headed. Their roadmaps may be customer driven or maybe technology driven but it should signal the direction they think the market is going.
Start Where it Makes Sense. Iterate as Required
There is no logical order to applying the 4 P’s. Their application depends on how you approach your product development. Some companies only focus on particular places, so place is clearly defined. Others might have technical expertise in a product category. Wherever you start, you need to understand them all (and then some). Iteration is part of the game. It will happen early and often even once the product is well under development. It’s a constant so plan accordingly.
Things To Ponder
- Choose a product that you recently bought. Write down the 4 P’s for it.
- Look around your life and define a pain you feel. What product or service would cure that pain? Write a paragraph description of the product or service.
- Research the market size for your favorite product or service. How is it defined? What submarkets are also included? What’s not included?
- Find a product that was a complete flop. Why did it fail? Which of the 4 P’s were lacking?