These are really marketing and business basics, but for the sake of those who did not have the benefit of a marketing class in college, then hopefully this post will be instructive. Especially if you want to be a bit bookish about things.
Simply put, for me, 4 Ps of Marketing provides us a guide on the key areas that what we need to work on to effectively market our business. Meanwhile, Porter’s 5 Forces are the forces at work for and against the business within the industry and the economy. Again, we need to be mindful of these in generating business concepts, or sustaining an already established business.
My post tries to explain these frameworks as simple as possible, mostly through guide questions. You can read more here on 4Ps of Marketing and here on Porter’s 5 Forces Analysis. But before you do that, why not stay for a while and try mine first?
4 Ps of Marketing
Before you launch your business, make sure you establish these 4Ps. And continuously refine them.
- Product: What are you offering (whether product or service)? How does your product differ from the rest of the competition? Does it offer something valuable or unique? And how consistently and standardized can you offer the product/ service?
- Place: Where is your product or service located? Is it a foodcart, an online store, located in a mall? With heavy foot-traffic, near your target market and niche? Easily accessible? Are neighboring stores, if any, aligned with the market segment your are targeting?
- Price: For how much are you selling your product or service? Is it a premium brand, or targets Class C and D? Your pricing should not only consider competition, it should also consider, first and foremost, your target market. Targeting the lower socio-economic class with a premium priced product or service is definitely a disconnect. Also, is demand for your product elastic or inelastic in case of price changes?
- Promotion: How do you market and advertise your products? At this day and age, it pays to be online, easily searchable in search engines, and if relevant, likable in Facebook and followable in Twitter. Text blasts, flyering, etc? No random texts please from unknown numbers. You should align this with where your target market spends more time and frequents, whether on the web or out in the streets.
Porter’s 5 Forces
Competition is a relevant major force, but not the only force you should be concerned and prepared for. Again, need to be mindful of these prior to launch and regularly post-launching.
- Threat of New Competition: Like in foodcart businesses, how fast do we see replicas and copycats sprouting here and there? There are businesses that have many ‘barriers to entry’ while there are more businesses that are easy to copy. Is your product copyrighted, patented, licensed only to select few or with a winning secret recipe? Or your neighbor can easily copy your business tomorrow and improve on it?
- Threat of Substitute Products or Services: Before there was Starbucks, now we have milk teas. Milk teas are also eating up the small market of pearl shakes and coolers. And I’m sure it also has a dent on other beverages (teas, sodas etc). Will your customers stick to your product through thick and thin, or when the going gets tough, they’ll go for cheaper or better alternatives? You can’t just be mindful of direct competitiors, indirect competitors from other categories and substitutes can also harm your business.
- Bargaining Power of Customers: If I’m a consumer, I wish. But if you have a very small and focused market (like one major customer only), then that customer can easily haggle and bargain with you. Otherwise, they’ll no longer avail of your business. Also, price elasticity of your products? Lastly, are your consumers the type who will easily bash you in the world wide web due to poor service?
- Bargaining Power of Suppliers: Concentration risk on a select few suppliers. If they charge you more, then you have no choice, no other alternatives? If they fail to deliver, you also fail your customers. Big concern especially for businesses that do not have economies of scale yet.
- Intensity of Competitive Rivalry: Are you in a cut-throat industry? Or is your strategy to focus in your small yet sustainable market niche? How will you stand out in fierce competition? There are many business out there controlled by just a handful of market players. And some industries where rivalry is not just limited to advertisements and within the industry, but also in setting up deals with sister companies in other industries. Oligarchy. We’re very much interconnected now, you know.
There you have it. 4Ps and 5 Forces. I hope you will find these useful, no matter how big or small your business is.