Marketing Strategy: Master the Five P's
By now we have covered the first four sections of the business plan. We talked about executive summary, we talked about the specific business description, we talked about the market analysis, and now as we go through those sections once you set up the vision, you need to show in the marketing strategy how you will accomplish basically these first four steps that we just talked and that's the marketing strategy and that's the heart of your plan. So to talk about this section, I will be referring to the famous five P's, which is theory on marketing mix which is the combination, what is the perfect ingredient list and combination to maximize the sales of your business? So we're going to go through each of the P's as those are very important choices that you have to make within your business plan. So let's get started. When we think about the five P's, you cannot really go and define what the marketing mix model is until you actually talk about who is the target that you're going to go aft...
er. So before establishing the five P's, we need to declare who the target is that you're going after and that your business will be focusing on. If you can imagine, no customers, no sales, no sales, no business. So when we think about the target is who are those customers that you are more likely to generate sales, that is a key section to include in the document on how is it that they have the distinguishing characteristics and how you understand those and how you're going to tap into those to reach them. So let's think of an example if you have a handmade hypoallergenic jewelry business, you need to think about who are those customers that are most likely to buy that product, perhaps it's people that have allergies to certain metals, so try to connect your business proposition with the target that is most likely to buy you. Also think about how that product and service will meet those needs. So again, in the jewelry example, if it's about handmade hypoallergenic jewelry, how the jewelry is uniquely made will be an important element to include as far as answering the question and how you will address the different needs of your customer. What are the demographics of the group, so how are you going to find them out there, how do these people look like? Any seasonal or cyclical trends that you should be made aware of from a target perspective, so let's say if you're an accountant, and it's tax season, any behaviors surrounding the tax season and when people prepare for tapping into your services, how far in advance, those are key important information to include if that's the business that you're in so seasonality can make a big difference in terms of the business trends that you're trying to capitalize on. So again, this is very specific to the businesses or services, the product or service that you offer. And then what is the approximate size of the market that you want to go after, you have to demonstrate the business potential, so here you can estimate how many customers you're planning on reaching. For example, what is the estimated annual total sales of these segments or the industry or what is the forecasted growth, and some of this information might be readily available on the internet or your own industry know how or just benchmarking competitors will be a great source of this information. So now with the target well defined, you can actually know who you're going after, what is the approximate size, you can also start to define how much of the market share do you believe is feasible for your business? This means what is the number of customers that you expect to gain and what is the percentage of the total pie that you believe is feasible for you to achieve. And this section is very important to just explain your logic and the calculation of the number of people that you want to reach. Again, here is all about demonstrating the potential and where the sales are going to come from. So that wraps up the target customer and now we can actually start talking about the five P's because we know who those five P's will be for. So the first P is positioning. So positioning is basically the benefit that you're promising the customer and this will be the basis in which you communicate with all your prospective clients. And as you can imagine, product needs to be differentiated in the marketplace for it to be attractive. And more importantly we know that the most successful businesses are able to turn those products or services into a successful brand, and that's something that you should also aspire to do because if you're able to transcend beyond product or service to actually become a brand, that will become a sustainable source of business for you. So here you would include what is the positioning of your product, or service that you're offering and here you can also call out what are the hero variants for example that you're going to be offering. If you are a donut shop, you would probably describe here all the different types of donuts that you have to offer or you have a special promotion or super glazed donuts, or seasonal donuts, that is something that you would describe in terms of the products features that you believe you can capitalize on as your total lineup. So in this section, you would include as much information as you have about your product, also if you have done any prototype testing or if you have customer feedback, if you have done any consumer research, that information belongs in this section as well. So that covers product. And products or services, they don't sell on their own, that's why we need to have promotion strategies. And promotion strategies have different components. One of the core sections of promotion, the most often used, is when we think about advertising and media, because you have to, once you have an idea on how to sell your brand, you need to use that idea to reach your potential customer. So that appeal and that relevance of that product that you're offering needs to be known by the right people which is again your target. And remember that strong ideas need to be persuasive, they need to be insightful and that's where you're trying to do with any piece of communication you put out there for your business. So here you will include what is the information or what is those key points that you're going to use to sell your product. It's important to include that because that becomes part of your ability to turn a customer interaction into sales. And once you have a good idea on how to promote your product, you need to make sure that that idea travels, and here's where you can make some assumptions in terms of how many people you need to reach with that message in order to convert the right amount of sales that you're promising in your business plan. So for example, will you have your own website, will you be on Pinterest, will you have your own Facebook campaign. What are the places in which your message will show up? Also, if you're a counselor, for example, you might think about specific radio shows with this type of content where your information might be the most relevant for it to really be effective in converting customers. If you're a photographer, you can buy Google search and when people are researching for maybe their wedding pictures or special occasions, you should be able to come right out. So what is important in the finding reach is that you're picking those right vehicles on where the consumer is most likely to be receptive to your message. So whether you have a media strategy including reach and when and where, you would include that in this section as well. How much will you invest? We know that the broader the reach, the broader the awareness, but reach comes at a price. That's why big companies use TV, which is the broadest reach vehicle but you have to identify the vehicle and the level of spending that's right for you. So roughly understand at least how many customers you believe you need to reach in order to deliver the sales targets and the growth targets that you are reflecting in the sections of your business plan. So in this, to arrive at this information you might want to make your own experiments, the traditional pre- and post-measures works like wonders if you are changing just one variable at a time in terms of the investment that you're making so if you're running a Facebook campaign, compare the sales that you have prior to the campaign and after. And that applies to any principle, whether it's print, whether you decided to have some flyers out there to reach your customers, so deciding how you invest to reach your customers will be an important consideration as you'll see later on, it will also impact the PNL of your business. So let's look at a few examples of promotional strategies that you can consider. So in addition to advertising in media, you can also consider public relations, for example. If you are a business in the beauty industry, perhaps having editors talk about you or bloggers talk about you, will drive more credibility to your product. Personal selling, do you need a task force in charge of promoting your product or your service? Product sampling. If you have a phenomenal product, one of the best strategies to promote it might be getting people to try it so that they're convinced to buy your product so how will you sample it. So in the donuts example, will you offer samples, will you go to maybe festivals, what would you do in the store, what would you do outside of the store. So sampling specially if you have a great product can be a great promotional strategy and you would reflect that. The approximate cost of that sampling, the frequency in which you will do it and the conversion rates that you expect. Printed materials, how will you spread the message. And how will you also offer additional incentives to purchase, brochures, catalogs, flyers, there are many ways in which you can do this. And then you have also the price incentives as we mentioned, so the flyers can also go supported with perhaps coupons or discounts. So we talked about promotional strategy, now we're ready to talk about pricing. And the pricing strategy for your business is a critical one to set, because it will impact your revenue, it will also impact how people perceive you and it has to also be done relative to competition so when we're talking about pricing for your product or service, there are three things you need to take into account. First, the pricing that you set, how does it relate to competition. Again, if you are priced too high, you might not be as attractive if you're offering the same benefits. If you're priced too low, you might be leaving money at the table where you could be generating more margin for yourself. Two, it has to be, pricing needs to be set in a way that it works financially for you, meaning that as you set the price, there's enough to cover the cost of goods, there's enough to cover advertising and any other cost that your business has, so one of the mistakes I see more often in business is that they don't set up the price correctly and they will not have enough buffer and margin to actually cover the costs that are needed to run a successful business. So you have to take that into account when you're talking about pricing. And then finally, as we saw earlier, there's a lot of promotional tactics, some of them can be connected to price if you were doing further price discounts to your normal pricing, you need to reflect that in your pricing strategy and also in which frequency you're going to do it. Cause if you do it too much for all intents and purposes, you're actually impacting the overall price of your product. So this is one to pay attention to and to get very, very clear on and how is it that it will impact the ability of the customer to buy you and also impact your ability to generate profit. So after pricing, comes placement. Some people call it distribution and the best way to think about this one is now you need to get your product available at the right price, at the right place, and at the right time. So the availability of the product is what will determine whether the consumer can actually find it, either at the store or the representatives that are offering your service, it's all about having the most access to your product. So how you make the product available is an important choice to reflect in your placement section of the document. What are the distribution channels that you want to use. These are the locations, the retailers, the stores or even the self stores that you want to use to make your product available. So in this section you would explain how you plan to achieve it, how many distribution points you would like to get, how you intend to achieve it, in terms of additional cost added that you have to incur to enable this but the broader the availability, the more likely you are going to turn that into sales. So that covers the five P's. We've talked about positioning, we talked about the product, we talked about promotion, we talked about placement, and when we think about all these different P's that are part of the mix, are parts of the strategy and how you're going to build your business so when you talk about section number five, make sure that you're as descriptive as possible in all the different elements that you are making choices on in order to maximize your sales. And beware that many of these choices have an associated cost with them and that is where we transition into the financial projections that need to really capture all the choices that you're making in terms of your go to market strategy.