Saturday, October 9, 2010

The Classic Four "P's" Of Marketing

Businesses come and go and there are plenty of reasons for their success or failure, but the ones that thrive almost always have one thing in common: they are good marketers. What does that mean? It means they make all their business decisions based on meeting their customers’ needs. Which products or services they sell, where they sell them, how much they charge for them, how they encourage customers to buy them, and all the other hundreds (if not thousands) of business decisions a good marketer makes start with a simple question: how will this affect my customers?

This customer-first business philosophy isn’t something I invented. It’s been around since early in the last century when the dynamic managers of their time realized that supplying the kind of widget the customer wanted was more important than how many widgets their factories could produce. In other words, the manager who wanted to grow his business turned his eyes away from the factory floor and started looking outside—at the customers—to figure out how to succeed. Thus began the study and practice of marketing.

Like many people, my introduction to marketing came in college. The classic approach divided the discipline into four elements—the four “P’s”—Product, Price, Place, and Promotion. While plenty of academics and others have tried to update, enhance, and expand on this simple scheme, I still feel it’s pretty solid. It’s probably obvious to you, but here are what the four terms mean:

Product is the “what” of the business—as in “what should we sell?” You probably know that the best answer to this question is “what the customer wants to buy,” but you’d be surprised at how many companies try instead to build a business around “what can we make?” When you ignore the customer’s needs and wants, you suffer the fate of the apocryphal buggy whip manufacturer or, to cite a more modern example, you become, home of the hugely irritating sock puppet mascot and proof that just because you can sell kitty litter online doesn’t mean you should.

Price is market-driven, too, regardless of what your accountant tells you. Sure, you have to cover the cost of your product or service (as well as the overhead of your company) with enough left over to provide a profit, but you won’t be able to do that unless the customer is willing to pay for it in the first place. Individual customers don’t set your price, but as a group—when they become the market—their judgment of whether you’re delivering fair value can’t be ignored.

Place deals with the “where” of the business, as in “where does the product come from and where does the customer get it?” This includes topics like supply chain management and product distribution that are a little outside my areas of expertise, so I’ll just touch on them lightly in subsequent posts.

Promotion covers all the ways you communicate with the customer—from advertising and public relations to how your sales people interact with them in your store, office, telemarketing center, or online. These facets of marketing are so important I cover them separately in The Dynamic Manager’s Guide To Advertising and The Dynamic Manager’s Guide To Creative Selling, but a great deal of what I write about is promotion based on good marketing practices.

Dave Donelson, author of The Dynamic Manager's Guide To Marketing & Advertising: How To Grow Sales And Boost Your Profits
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