As we discussed in our April newsletter, research is essential not just in deciding on the price for your product but also as a crucial first step for any business when starting out, launching a new product or at least an annual audit to re-assess the market place.
The next step is to put your plan together. Yes the crucial part when you actually decide what you are going to charge for your product. As Peter Doyle the famous business writer says :
“Pricing is the only element of the marketing mix that directly generates revenue. All the others add costs?”
But for us that is not the whole process which is why we have added a question mark. Yes Peter Doyle is quite right. We are in business to make money and setting our price is crucial to that. But it's not that easy, you can't just simply set your price and then wait for people to buy your product. You need to tell people about it and more importantly you need to tell people who are the most likely to buy your product. Which is where the essential 4P's of marketing come in.
If you have attended any marketing course you have been told about the 4P's of marketing. And there is a reason for that. Yes we marketeers can sometimes sound as if marketing is a complicated creative subject only understood by us in the know! But that's not true it's really quite simple and if you stick to the 4p's you will create a simple but effective marketing plan.
So what are the 4p's? Well they are Product, Price, Place, Promotion. And we are going to go through them each with some pointers. Though not in that order as we believe that promotion should come before place. Just to add some creativity to the 4p's.
However before that, an essential in any business is you need to have a Product to sell. And it's not just about having a product to sell. You need to know that there is a market for that product. Who the customer is and why they will want to buy your product. And who your potential customers are buying from just now i.e. you need to carry out a competitive audit. In addition you need to test case your product make sure that it is as good as you think it is and get as much feedback as you can from potential customers, friends and family. So that when you launch it in the marketplace you have covered all the basic steps and you are confident that there is indeed a market for your product. And it doesn't stop there you need to continue to carry this research out on an ongoing basis to ensure that your product meets current needs. You also need to invest in your product on an ongoing basis looking at both the product and the service you give. Many businesses launch a product on the marketplace and assume that is it job done. Now is the time to make lots of money. Hopefully that will be the case but if you also want to make money tomorrow as well as today you have to spend time investing in your product for the present and the future.
Price is also something that you can decide upon and then assume that is it. However that is also an error to be avoided. Price can change due to the seasons or it can change due to the economy or it can change due to many other factors such as demand for your product. So you need to be prepared to look at your price on an ongoing basis. You need to know where you make a profit on your product and just as importantly where you don't. You need to be aware of the market price for your product and once you have been in business for over a year it is a sensible idea to be aware of the historic nature of your price. You may find that some times of the year you can charge a premium when at others you need to look at lowering your prices or introducing special promotions. Some quick pointers on price. Firstly we would never use price as a key differentiator. Don't get into price wars, nobody wins and it cheapens your product. Look at your price on an ongoing basis and set your price to meet market demands but so that you also make a profit. Analyse your business on an ongoing basis. Set targets and analyse these regularly so you know where you are against target. If you do this you will know when you need to work harder to sell your product. Use historic data if you have it and above all else be confident in your price. We know that is easier said than done. But if you have a great product and you have done the background work on your price you need to have the confidence to take it to market and sell. Being confident will make your product far more attractive and will make you a better sales person.
This leads to Promotion. You need firstly a product to sell. Then you need to set a price but for us this third element is so crucial and the one that lets so many businesses down. You need a brand to sell your product. The majority of products are sold not by seeing the product but the image of that product. Yet so many businesses invest lots of money and time in their product and price and even their communication and pay no attention into the look of their promotions. First impressions do count especially in the very competitive and price driven market we are operating in. So yes, you might have to invest money in the look of your brand, your website and your promotional material. But let us ask you this? Why are you spending &&&&&’s on your product and the first thing that your customers see is what we call the printed blue tack job? A good example is the recent Alex Polizzi Fixer show. We could make this point on any of the six episodes but one in particular stood out. The Bakers shop in Padstow. Padstow food capital of Cornwall, world-renowned with the famous Rick Stein! A great opportunity for a local baker? Yes in theory and the location of this bakers shop was great on the harbour front of Padstow so that it was the first eatery to be seen as day trippers got off the boat. And yes, the product was good scrumptious cooked bread and Cornish pasties cooked to a family recipe. But what was the first thing that was seen? No not the locally baked goods! It was a broken window and cans of juice and a shop that had seen better days. OK if people ventured inside they would discover the baked goods but would they go that far? They weren't which was why the bakery was failing. The product was what people want to buy. The price was right but it was let down by the overall brand and look of the business. And people were walking right on by. So promotion may cost but if you don't invest you won't get the customers you expect and you will find that investing will be truly that an investment that will pay you back with &&&&’s. So do invest in the look and feel of your brand and promotion. And like product and price don't just do it once and think that is it. It isn't. Make sure that you spend time on an ongoing basis to look at the way your business is promoted. Does it say what you want it to say about your business? Is what you said about your business yesterday right for today's market? And will it be right for tomorrow's?
Finally like a product and a price your promotions are not going to do the job by themselves. You need to get the message out by communicating it in the right Place or to the right customers. You need to know who your customers are and consider what communication methods they are most likely to use. Yes set a budget that is crucial. But as crucial is what you spend that money on and how you measure it. Don't just use one communication method we all need to hear things at least five times for them to sink in and perhaps even more for us to actually purchase a product. So look at as many communication methods as possible. From adverts, direct mail, e-newsletters, and exhibitions, face to face, networking, press and PR, social media, word of mouth and your website. There are many ways to communicate just make sure that you cover as many as you can afford. Don't be afraid to say no to communications that you know haven't worked or your customers don't use just because your competitors are using them. Know what works for you and analyse on an ongoing basis. So yet again you know how to promote in today's marketplace but you are also aware of how this might change for tomorrow’s marketplace. And most of all take time each day to communicate your business. Tell yourself each day what you are going to do that day to communicate and then analyse each week what you have done. You are the communicator for your business so communicate and then communicate again.
In conclusion, Yes your business is worth it! But not if you stand still and do nothing. You need to invest in your product, take time to consider your price, make sure that first impressions count and communicate as much as possible. And make sure that your business is not only ready for the customer of today but also ready for the customer of tomorrow.