The Six "P's" in Your Marketing Pod
The one thing that all businesses have in common is a need for customers. For that reason, marketing is the lifeblood of any business.
The owner of every startup must therefore put a premium on creating a great marketing program. To live up to its potential, your marketing effort should build around six "P's."
First and foremost you need a fully developed marketing plan. You will never achieve what you dream of with a willy-nilly marketing effort. Your marketing process must be purposeful, well thought-out, and structured around specific steps and procedures for keeping your pipeline of potential customers full and maximizing the rate at which you convert potential customers into paying ones.
The marketing plan should also address the five other "P's" described below.
The first question which most encore entrepreneurs answer is what product or service their business will offer. That is, startups usually begin because the owner has a sense that there is a profitable market for something which he or she could offer. Because the answer to this question comes with such relative ease, there is also a tendency not to dwell on it long enough.
For instance, if yours will be a retail business, what will your inventory look like? Will it be broad, with a wide variety of selections? Or will you focus on building a deep inventory in a narrow segment of the market?
If you plan to start a restaurant, what range of cuisine will you offer? Will your menu build around a lighter fare? Or substantial meals? Will you have a wait staff to serve the meals? Or will you use a self-service or buffet model?
If your business will provide a service, will you bill yourself as a generalist? Or a specialist? Will you sell products along with your services? If so, do you see yourself as basically offering services with some products added? Or products with services added?
Before you move further into the development of your marketing plan, flesh out a full understanding of precisely what you will offer the market.
One of your most critical strategic decisions is how you will position your business in the market. Will you appeal to customers primarily on the basis of price? Location? Quality? Value? Prestige? Will you compete on the breadth of your offerings or inventory? Or will you brand yourself as the "go to" expert or retailer in narrow niche of the market?
Will you position yourself as "the new kid on the block" who is determined to knock out the kingpins in your marketing space? Or will you brand yourself as the veteran, proven provider whose new company is simply making your vast experience more accessible to your market?
Another critical question is whether you will position yourself as a business-to-business provider or a business-to-consumer provider. Perhaps, like major office supply stores, you plan to do both. Or you may want to start in the business-to-consumer realm, then move into the business-to-business market. Whatever the case, you need to think through the ramifications of the strategy you choose.
And don't make the mistake of starting your business and fumbling along until you determine what your position is in the market. Be purposeful in positioning yourself at the outset, even if you have to modify that position as you gain experience. Until you have made your basic positioning decisions, you cannot identify your primary target market or how you will appeal to that market.
The price you can charge for a product or service is based on its perceived value in the eyes of the customer. Perceived value is determined by a host of factors, including how urgently the customer needs what you offer, the alternatives the customer has to procure what you offer, the quality of your offering compared to your competition, the convenience of what you offer, and the status or prestige that comes with your product or service.
Why are items in "convenience stores" more pricey than in a nearby supermarket? Because the store owner knows that you will pay a higher price for the ease with which you can slip in, grab what you want, check out quickly, and be on your way — this in comparison to walking extensive aisles in the supermarket to find the item, then standing in a lengthy line to make your purchase. Put within a "convenience" package, the item has more value to you. So you will settle for a price in a convenience store that you would find unacceptable in a more conventional grocery store.
And to take this illustration further, the price for the same item in an airport store is likely to be even higher than in the convenience store. Not only is convenience a factor in the airport. There is simply no nearby alternative for buying the same product. Thus, the "value" of a candy bar (and hence the price you can successfully charge for it) is greater in an airport than in a convenience store. And greater in a convenience store than in a supermarket.
Take time, therefore, to analyze all of the factors which affect the customer's perceived value of what you offer. New business owners are sometimes so anxious to gain customers that they try to attract them on price. Price, however, is not a "fixed" number. What constitutes a "good price" depends entirely on the perceived value.
A few years aog I had a major coaching engagement with managers in the FritoLay marketing arm. For the first time I was able to peer behind the curtain at the extraordinary amount of research and data that companies like this compile on where best to place their product. They know not only where to place their product on the shelf to obtain the highest number of sales, but precisely how much they can up the price if the product is in the most ideal location.
Placement is fundamentally the question of how you get your product or service in front of potential customers. Or to put it another way, where will customers or clients find what you offer. If your business will have a bricks and mortar location, where will it be? How accessible is the location? Given your location, will would-be clients think of you in an upscale area or an area that's in decline?
If you are producing goods to be sold in stores, what kind of stores? And where do you want your item to appear in the store? (This, incidentally, is one of the toughest marketing desires to fulfill for a startup, as more established lines have probably already paid the store a fee for premium product placement.)
Another placement issue is the degree to which you will deliver your products or service on line. One of the beauties of today's marketplace is that you can build a very profitable business online without the traditional investment in real estate purchases or leases. And while the low cost of entry for internet businesses is attractive, you must ask the question, "How will I get myself seen on the internet?" Here you are likely to need the expertise of consultants who specialize in creating internet visibility for a company such as yours. And while their fees are substantial, they are usually much lower than your payments on a bricks-and-mortar location.
From my experience, many first-time business owners move too quickly to the question of how they will advertise and promote their business. I have intentionally put "promotion" at the end of this list because it's the last consideration to go into your marketing plan. There are more "wrong" places to advertise than there are "right" places.
Advertising, marketing, and promotion budgets can easily become a bottomless pit. That's why you must be quite throughtful and strategic in deciding where you will spend your precious promotional dollars. And you can't be strategic unless you are constantly monitoring what works and what doesn't work in your advertising and promotional effort.
Make it a point to routinely ask people how they found you. Was it a referral? Something they saw on the internet? Your web page? A newspaper ad? A radio spot? You have no way of knowing whether promotional dollars are being spent wisely until you know which efforts are getting a strong response rate.
Your initial marketing plan should therefore lay out how you intend to promote your business. But no portion of your marketing plan will be open to change as frequently as this one. Regularly eliminate promotional dollars that are giving an inadequate return on investment. And routinely experiment with new channels of promotion which hold the promise of finding more customers.
This article first appeared in Encore Entrepreneur inbox magazine on July 23, 2014.