What does an entrepreneur need to know about marketing to win with their new product or service?
Let’s first see what marketing is and what it isn’t for the start-up business.
Marketing is about offering a potential customer a product or service that meets or fulfills a need, want or desire that they already possess. Don’t let statements like marketing “develops a demand for your product or service” mislead you. Demand must already exist in your potential customer, even an unmet need. For a small business to try create demand is simply foolishness. Yes, you can offer potential customers a product and service that satisfies the need that they already have but you really can’t create the need, want or desire in them. You need to channel their demand towards your product or service.
This may sound like a bunch of words to you so let me give you an example. A potential customer may be thirsty and have a need, want or desire to slake their thirst. They can quench their thirst in many ways: water, tea, coffee, beer, soda drinks, fruit juice. If they want fruit juice, and you’re a supplier of fruit juice drinks, you’d want them to drink your specific beverage. Why would they want your fruit juice? Perhaps it tastes better, is healthier, natural tasting or is made from the freshest natural ingredients.
The combination of elements that gets your potential customer to select your product or service from all others is known as marketing. A useful way to think of marketing is the four Ps:
Your product or service includes characteristics such as quality, design, features, warranty, sizes, packaging, brand name and returns policy.
This involves how your customer find your product or service and includes: distribution channels, coverage, inventory, transport and logistics, retail outlet location and website.
How is your product or service priced? Is your price higher than your competition? Why? What extra value do you offer? Remember that the lowest price not a sound strategy for a small business. Large companies with the economies of scale can compete on price strategy. That small businesses need to offer personalised service and add value. Do you offer quantity discounts or extended payment periods? What are your credit terms?
How will you communicate with your potential customers? Small businesses can use a mix of personal selling, word-of-mouth, referrals, low-cost advertising, sales promotion and public relations.
Some business people have added fifth and sixth Ps. These include Perception, People and Process. For small but businesses I’d add Persistence, Patience and Profit.
Anyone of these four Ps can be a source of innovation opportunity for a small business start-up. Many businesses they have become successful just by innovating one of the four Ps.
Take product, for instance. McDonald’s doesn’t make anything like a tasty home-made hamburger but it delivers hamburgers fast in a friendly and efficient way. Speed is key to the Macdonald’s product offering.
The Internet has enabled small businesses to promote their products and services at a minimal cost compared to traditional print advertising. Promotion via the Internet of services such as airline tickets, books and music is an important strategy for businesses in these markets.
Place been a source of competitive advantage for video distributors who have started providing videos on-line and even in petrol service stations. A small business can create a market for a product or service merely with a new twist on distribution.
As we’ve mentioned, the lowest price is commercial suicide for small businesses. This is not to say that small businesses should not price they products and services competitively. I’d rather suggest they add value (with a lot in potential savings to customers) through, for example, their expert advice from knowledgeable staff, quick after-sales service and even emergency call-outs after hours. Personalised service, reliability and relationships – a valuable differentiator for the small business.
Sharp, street-smart entrepreneurs will find many ways to innovate these four Ps. Just think how you could change only one or more of the four Ps and deliver value far superior, at least three times better, than competitors.