Occasionally, I receive these business related questions. Here is a question that I received last week:
Since 1960, when E J McCarthy, a marketing professor at Michigan State University, first debuted the concept of the 4 Ps and the way in which they helped dictate the marketing mix, much has changed in available media. Yet the 4 Ps concept still applies today. Using the four Ps–Product (or Service), Place, Price, and Promotion, in what ways do they apply to today’s range of marketing tools?
Product– Entrepreneurs must be able to quickly identify a need and devise strategies to meet that need.One must engage in consumer research. You should never strive to be a “me too” product or service. Identify ways to add value to that good or service. Never solely rely on volume to make money, but creating a quality product or service. If you really want to stand out, you should choose a niche service. To do this, you can take a broad category such as senior home care. This can be further divided in to non-medical home services, and home health care services. If you select non-medical home services, you would want to identify a niche from there. You can provide transportation, grocery shopping, financial assistance, etc. Once you build up your base of clientele, then you will be able to branch out and offer other services while maintaining your core competency.
Price– A business owner must be strategic when setting the prices of one’s goods or services. One should know if volume is the main strategy. If you have the capacity (human capital and financial capital) you will b able to charge lower, and produce more units. One major set back with volume is losing focus on quality. This can have detrimental effects to product. If volume is not of necessity, one must add significant value to charge a higher price to remain sustainable. You can not just pick a number out of thin air, based on the amount that you would pay, or based on what you think someone else would pay. One must engage in competitive research to insure optimal pricing for your good or service. See what other competitors are charging for services. From here you should understand how you can add value if you want to increase the price. Or you can identify ways to provide the same good or service for less than your competition.
Place– This is too crucial for the survival of a company. To be successful in this areas, you must have the ability to grasp demographics and psychographics. You do not have to go back to school to get your MBA, but having a firm understanding of these two concepts will greatly benefit the entrepreneur. Demographics information tells you about the people in a specific MSA (Metropolitan Statistical Area). If possible drilling that information down to zip codes and neighborhoods will benefit you. Demographic information that is vital to you are factor such as average income, population, home ownership, age, etc. If you are opening a physical location, you need to know the number and type of people who pass daily by your office. Is it a major highway, or is there a major employer that cause a lot of traffic in the location? If the former, one could possibly open a grocery store to get consumers on their way to or from work. If it is the latter, there’s the possibility of opening a restaurant for people to get lunch or dinner. Psychographic information tells you about the way people think and their habits. If most of the people in the area rely on neighbors to help senior citizens and are not interested in paying for service, then opening a senior care franchise will not work. If most people cook at home, opening a restaurant might not be favorable. Psychographic research is best done by talking directly to consumer and creating focus groups.
Promotion– This is the life blood of business continuity. If you send out a press release about your grand opening, you might find people stopping by often during the first couple of weeks. However, eventually it will die down. Always build up the momentum. Let people know you still exist.One of the major roles of a CEO is to develop strategies to keep the interest in the company and gain new customers and partners. He or she must continually think of new ways to add value to goods or services. The devised strategy needs to be effectively communicated through sales people and marketing/public relations materials. There are three key principles to live by when promoting your message/your company is the keep it simple, keep it interesting, and keep it coming!
Lastly, another P was proposed by a Marketing Professor, Ira Kaufman. This 5th P, I think is necessary given the social media and the increase need for collaboration. Participation-the 5th P—really ties together all of the previous Ps. Participation is not only external, but internal as well. Companies that listen to the ideas of their employees maintain innovation. Companies that understand the dynamics of vendor relationships, help their vendor success by being open to change and increased inefficiency. Companies that listen to their clients know what products they want, how to price the products, where their products are needed, and the most effective way to promote their goods or services. Having a method of feedback for your customers really will help you to know where you stand and will stand as a business.
