For a small business owner, wise use of marketing can tremendously improve the odds of meeting big goals. After all, the main goals of marketing are to improve customer satisfaction, generate profit, find or create demand, and craft a brand with a specific public image. All of these benefits and more can be neatly summed up by an old marketing model: The 4 P’s of Marketing.
First, you’ll hear people use the terms “4 P’s of marketing” and “marketing mix” interchangeably. Marketing mix is the more general term, and it can be used to refer to different versions of the 4 P’s, such as the 4 C’s or the 7 P’s.
In any case, the marketing mix is a foundational model for businesses, historically centered around the product, price, place, and promotion. You’ll notice all of those terms start with the letter P because this is where the 4 P’s come from.
In this post, we are going take a closer look at what the 4 P’s are, why they are important, and why they matter to you as a small business owner.
What do the 4 P’s of Marketing Mean?
As mentioned above, the 4 P’s of marketing are product, price, place, and promotion. Each of the P’s in marketing mix is different, but they all work together to help you reach your target market more effectively.
When running your small business, reaching your target market is incredibly important. You want to make sure that what you are selling or providing is effectively meeting the needs of those it is intended for. The 4 P’s can help you identify what consumers are searching for, how the product can be improved, and what you need to do to launch the product successfully.
Best of all, it’s a neat mnemonic device so you don’t have to remember so much abstract marketing theory. Anyone can remember four words that start with the letter P.
Believe it or not, the first P is exactly what it sounds like.
A product is an item that satisfies a customer’s needs, whether that be a good or service. You can create any product you wish, but to succeed in business, you must meet a need or satisfy a want with your product.
By making sure that your product is meeting the needs of your target market, this increases your potential for sales. (And let’s be honest, making more money is always a plus). This just happens to be very easy to overlook!
Remember: when creating products, you need to think about all business processes involved and whether or not they serve the customer. Your product isn’t just the product – it’s also the design, packaging, branding, and its functionality. Your product is how people feel when they use it, too.
The second P is price. As you may expect, the price is the amount that the consumer will pay for your product or service. Of course, if you’ve ever tried to price an item, you know how incredibly complex that can be! There are so many important elements to consider when setting a price for your product.
First, consider demand elasticity. Demand elasticity is essentially a really fancy way of saying “know how many people will leave if you raise the price by $1”. Ideally, you want your price to be set to where you make the maximum amount of profit – not so low that your margins are bad, but not so high that you lose too many potential customers.
Next, consider what your price says about your product’s value. Low prices can signal low-quality products and high prices can signal high-quality products. There are also certain “magic numbers” that change the way people view a product entirely, and these are different in every industry. For example, you might spend $10 here and there on an item you want, and you not think much about it. Whereas if you were buying a new $1,000 TV, you might spend a little more time thinking about which one you want and the benefits of one TV over another.
Finally, take a look at your competition. Competitive analysis is one of the cornerstones of thoughtful marketing strategy. People look for the best prices on things. Ask your coupon-clipping grandmother – this is no secret! You might even share some of the same customers as your biggest competitors! The point is, you need to set a price with a full understanding of the context that your customers will be using to make buying decisions.
The next P is the place, this is sometimes referred to as the niche. If you are really looking to see maximum growth for your product, then finding a niche to settle into can help skyrocket your success. To quote an earlier post we wrote on the subject, “[y]ou’ve found your niche when you’re able to make very specific products for very specific people with a very specific message.”
This P also deals with where your product will be distributed, sold, and manufactured. After all, getting your product or service to people is a part of the mix as well. The supply chain of physical items usually involves data management, materials handling, production, packaging, inventory, transportation, warehousing, and often security. In other words, this is the “how” part of how people will receive their products once purchased.
Promotion is the fourth and final P. In order to reach your audience, you need to be able to effectively communicate with them. In marketing, promotion is every method of communication that you use to inform people about a product or service.
Promotion is vital for your small business’s growth. When your business is starting out, informing people of who you are and what you offer is one of the most important things you can do. This is because people might not know about you yet and what you have to offer. Through effective promotion strategies, you can reach your target market, and hopefully, generate some leads from it.
Promotion covers a lot of different concepts, including outreach, product reviews, crowdfunding, advertising, and much more. The most valuable promotional tool for your business depends heavily on your industry, and you will probably need to experiment until you find one that works.
Remember: the goal of promotion is to generate demand. We’re already assuming you can satisfy customers because if you can’t do that, no amount of promotion will save your business!
Why Do the 4 P’s of Marketing Matter?
Your small business needs a strategy in order to keep growing and moving forward. It is no secret that having a business plan is vital for your success.
The 4 P’s of Marketing are four of the most important factors to consider when you create that strategy. Once you have a basic understanding of product, price, place, and promotion, you can begin marketing your product or service in earnest.
These factors, as we have discussed, are both internal and external in nature. When you are considering how to reach your target market, or better engage them, using the 4 P’s will help ensure you are asking yourself the right questions and taking the best steps.
When you have addressed each of the 4 P’s, and know each one of them well and what that means for you, then it will be time for you to start selling your product! Effective marketing strategies will help drive in more leads. If your product is good enough, that means you’ll see more sales and success!
That said, once you do start succeeding, revisit the 4 P’s from time to time. You want to keep your product fresh for the duration of its lifecycle.
Growing your business from the ground up can be very difficult, stressful, and even frustrating. More than anything else, you just want to see your product make it into customers hands.
Marketing will help you make sure this happens. The 4 P’s of Marketing are one of the easiest ways to succinctly summarize the complexity of our discipline. It takes work, but seeing your product make it to your customers will make this long process worth it in the end.