Marketing 101: The 4 Ps of Marketing
Or: The What, Where, When, and How Much of Marketing.
Over the next couple blog posts, I will be going over the basics of marketing, and how it can be applied by social enterprises and social entrepreneurs. For this series I will be focusing on what you need to get from thinking about starting a social enterprise, to getting your first customers.
When you’re starting out as a new business, many of the decisions you make will affect how you can do marketing in the future. Your choices as you’re starting up will form the associations that people will have with your brand based on what you make, how it’s priced, where they can buy it and how you will let people know about your product or service. (from here on, I’ll be using ‘product’ to refer to both products and services)
These components make up what is traditionally called the 4Ps of marketing.
Why do people buy things?
Trade is the process of giving something that we have that others value for something that someone else has that we value. We trade time. We trade money. We trade favors.
Most businesses operate on the idea that someone will buy what they’re making. You need to make sure that the product you are providing are valued in some way by someone. For your business to work, people will either need your product, or want your product.
There are many reasons they might want your product. They might want it because it makes their lives simpler, or easier. It might ease their fear about something, or it might help their health. It might help them feel good about their contribution to society, or it might be entertaining.
Regardless why they want or need your product, someone will have to need or want your product enough to buy it.
Because you’re working as a social enterprise, you should try to make what you produce line up with the change you are trying to help create. It would appear hypocritical if a social enterprise committed to working on environmental issues was selling power from old inefficient coal power plants.
How much will your product cost?
To answer this question, you need to answer a few other questions first. Who will you be serving with your product? Are you able to sell many, or only a few of your product?
Different kinds of people buy different products. Your pricing will play into who your customers will be. The people who buy Rolex watches are very different than the people who buy dollar store watches. People who prefer to drive are unlikely to take the bus regardless how cheap it is, and people who are struggling to pay rent month to month will not be in the market for a BMW.
Your potential customers will make a snap judgement about your product based on the price.
You also need to be considering how many of your product you need to sell. Microeconomics 101 says that if the same item has a lower price, there will be more people who are willing to buy it. This is your basic X shaped supply and demand curve. The model isn’t perfect, (and there are plenty of exceptions) but it’s a great starting point for understanding that you will likely be able to sell more products with a lower price, and you’ll probably sell less if the price is higher.
You will need to decide how you will price your product as you start up. Is it worth it for you to provide a high price product and sell few? Are there people who are willing to pay a high price for your product? Are those people your ideal customers? Does it make more sense to sell your product at a lower price, and a lower profit margin? Would the increase in sales make up the difference between a high price and a low price?
Would either a high price or a low price make it harder to achieve your mission? Is it possible that the other parts of your social enterprise might suffer depending on who you are selling to? For example, if a poverty reduction social enterprise was selling high end vehicles, it is possible that the pricing could be working against the mission.
Where/How can people buy your product?
If people want to buy your product, where can they get it? Will it be available in physical stores, or can they order it online? How does it feel to buy the product? What do customers see? Hear? Feel?
If they’re able to buy it in stores, what kind of store is it? Is it a department store, or is the store run by your business? What is the focus of the store and how does it line up with what you’re doing? Does the store appeal to a certain kind of people? Different kinds of people will go to a local food store vs. a discount grocery store vs. a large chain grocery store.
If customers can buy your product online, what kind of experience do they have on the way to placing an order? Is the site controlled by your company, or through a reseller like Amazon? How easy is it for the customer to imagine using your product? Is there enough information for them to understand what the product is? Is there an option for them to ask questions or receive support in the process of buying your product?
Are there any potential issues that a potential customer might experience as they are trying to buy your product? How could you prevent these issues?
There are some places where your product won’t make sense. Finding a location to sell your product that matches the scale that you can provide can be difficult. It can also be difficult to find a location that you’re proud to partner with.
Having your own location also comes with added administration and extra management costs.
Do you restrict your product to few stores and limit access in favor of a good association with specific locations? How do you balance the potential convenience of an online store with the lower level of service when compared to a physical store? As a social enterprise, is your mission tied to a specific location and if so, how can you best serve that area?
How do people hear about your product?
Promotion includes advertising, events, discounts, presentations and more. Aspects of promotion are probably the first things you think of when you hear marketing.
What do you do that is worth talking about? If your product is specifically useful for a specific group of people, you should find ways to engage with those people.
For example, let’s say you’re a re-usable water bottle company. You could find an event where your product is specifically useful, something like a local outdoor music festival. You could sponsor the event by providing water re-filling stations. By sponsoring an event, you would do something that gets some attention and is likely to lead to other opportunities to talk about your business to other people and potentially the media.
Your social enterprise could provide information on causes and issues that are related to your business and your mission. Through helpful engagement and accurate information, you could establish your staff and business as a primary source on your issue.
Depending on your mission, some promotions will make more sense than others. If your business is focused on reducing poverty, you could provide coupons and discounts to people who are affected by the issues that are linked to your business.
Each of the four Ps of marketing are useful on their own, but they are made stronger if you think about them in combination. For example, let’s imagine a social enterprise that is selling bicycles and trying to reduce poverty.
Bikes as the product makes sense with the mission of reducing poverty as they can provide transportation options for people who wouldn’t be able to afford the maintenance of a motor vehicle. A bike company could also provide an option for people who might otherwise not be able to find a job or get to their job. This could start producing outcomes that reduce poverty.
The price of the bikes can vary, as they could hold several different kinds of bicycles, from lower price commuter bikes all the way up to racing bikes. They would want to have several different kinds of bikes available, especially at the beginning to see which kinds of bikes are bought. By offering different cost levels, it is also possible that by selling some expensive bikes it could be possible to provide lower cost bikes to those who need them. This way of pricing would align with the poverty reduction mission.
Selling bikes is typically best done in person, and in this example the best method would depend on whether the social enterprise is building the bicycles, running the bike shop, or both. If they’re building the bikes and selling them to shops, they wouldn’t necessarily need their own physical store. They could partner with existing stores to sell the bikes they build. Alternatively, they could run a store where they don’t build the bikes, but instead resell other brands of bikes.
There are many promotions that could be run around bicycles. The business could run events where people bike together from site to site with entertainment provided whenever they stop. They could also provide bike safety training for children and those who are new to biking. They could run tours through their facilities. They could donate bikes to employment assistance organizations that help people land stable jobs. The promotions should either increase visibility, profit, or work towards the mission of the social enterprise.
Keep in mind that each part of this has a cost. Fixing complex problems often costs money. In this example, this poverty reduction bicycle business could try giving away bikes to people with low incomes, while offering bikes at a price that is low enough to be accessible to people in poverty, while hiring people from low income areas, and running events to educate people about the importance of bikes. If they were to try this all at once, it would be extremely expensive and would make keeping the business running more difficult.
There are ways to make your product, pricing, place or promotions line up with your mission. Start with the parts of the business that are easy to align with the mission. As you operate, you will find other ways that your business can align with your mission, and you will also have a better idea of how much running the business costs. Don’t be afraid to adjust as you go.
Just remember, Keep it simple.
If you have any questions about social enterprise marketing, please email me at Matthew@strategymadesimple.ca, or tweet at me @MatthewRempel