When thinking about creating a business and selling a product or service, we often look at how we will differentiate our self from competitors, or how much we will sell for. What often gets neglected is where the product will come from, how it will get to the customers, and where the customers will buy it. This is an important aspect to look at as it can create a path towards a competitive advantage or product differentiation. 

For this reason, the third portion of the 4 P’s of a Product Marketing Mix is to look at Place. In this portion, we answer the question “where”. Where will we build our product, where will be storing the product, where will the product be distributed, and where will the customers purchase the product? Each of these items can have multiple answers and can change throughout the life of the product. To create our 4 Ps of the Product Marketing Mix, we look at how to start to answer these questions.

Sourcing the product or service.

Before a product of a service can be brought to market, it needs to be sourced. Where the product of service comes from can define a product as much as the features it boasts. Take for example two equivalent plates sourced from two different countries. Plate one is made in Sweden by Ikea, which can be seen as a low cost simple plate for the masses. Another one made in the Turkish Ceramic industry. Outside of material difference, the creative differences and cultural differences are also present in how the plates are created and how they look. When determining what you will sell, it is therefore important to know where you will source the product from.

Services also fall under the question of where to source from. Take for examples a company that helps customers build websites. In this example, we will call the company “Webify”. The service Webify provides is that of building customers websites. They can source this service either in house or outsource the work. Webify compares having in house local developers in Canada, or to out source to developers in Pakistan.

Each of these options will create a difference in the kind of service Webify will be able to provide. One aspect to take into consideration would be the time difference between Canada and Pakistan. If Webify was to have in house developer, they would be able to provide immediate service to their customer. Conversely, Webify would have to wait 24 hours to provide developer support to their customers if their development service is based in Pakistan.

Other considerations might include language, culture, work habits, or even understanding of how users interact with websites. 

Although these service source issues are related to website development, a lot of other services can face the same hurdles when developing a Product Mix.

Distribution and Purchasing

Now that a product has been sourced, the next step is to look at how the product will get to the customer, and where the customer can purchase the product.

Understanding how you will bring you product to your customers helps identify where you will store your product, and how you will get to the

There are several different methods of selling a product, which include:

• Brick-and-Mortar stores
• Online e-Commerce site
• Online Market Place
• Physical market place
• Door-to-door

Where you sell the product can influence the success or failure of your product marketing mix strategy. Online e-commerce sites are good for items that don’t need to be tried or tested before purchasing.

This is something the clothing industry has struggled with because people generally do not know how well an article of clothing will fit without first trying it on. Selling solely on a website inherently makes it harder to convince someone to buy clothing (Though not impossible). Ideally, the selected method of selling should complement your product offering.

Furthermore, you will have to get the product or service from the source to your customer. This too, should complement the product and the place of selling. If the goal is to get the product to the customer as quickly as possible, the product should be stored locally and ready to ship. Alternatively, if the product is custom made, having the resources available on site to produce the product will be important.

Putting it all together

Once these questions are answered, the full chain of sourcing, creating, storing and selling should complete the Place section of the 4 Ps. At this stage it should be checked to make sure that the selections match, complement, and/or improve the product that you are aiming to sell. The competitors product chain can also be analysed to see if there are ways to improve on what the competitors are already doing.  

Once that is complete, we can move on to the last section; the promotion.

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Pricing if often determined through a simples equation where a percentage is added onto of the cost of acquiring the product or offering the service. This method over simplifies the approach to pricing, and ignores real and perceived characteristics of a price that are key to having a successful product or service.

Creating a Pricing Strategy

The first step in creating a successful pricing strategy, is to deeply understand the product that you are trying to sell. This understanding should have been made clear during the first P of 4 Ps – the Product.

A good starting point for building out the price is to understand the cost of the product. Simply put, you don’t want to sell the product for cheaper than you purchased it for or else you will lose money at every transaction. The amount of mark up will depend on several different internal and external factors.

Internal Factors & The Price

The perceived quality of a product, or how premium the brand / product is can derived from several factors. One of these factors is derived from the general idea that higher quality or more luxurious products are relatively more expensive. Therefore, understanding your own companies branding, as well as the branding of the product or service can provide a clue as to how expensive the product should be.

If you are releasing a product that is meant for select individuals that have a fine taste (like our Pizza from the Product section!), your pricing should be appropriately first-rate. Conversely, if the product is a budget friendly item, it should be priced inexpensively. Pricing relative to your competitors or industry is key, here. Are you presenting a product that competes on price, and thus offering a lower cost item, or is your product more premium, and thus is relatively more expensive?

Other  internal factors to consider are the promotions that might be placed on the product. For example, if the product will have seasonal promotions, you will want to make sure that even at the promotional price, there will be a healthy profit. However, the idea of having promotions should also be examined in and of itself. Sales, promotions and discounts can create a cheap or commodity like product or service image. Conversely, little to no sale or promotions can build an exclusivity brand image.

External Factors & The Price

Once there is a clear understanding of what internal factors will effect the pricing, the external factors should be examined. External factors are the effect of pricing that you as a company have little to no control over.

Identifying competitors in the industry and what the pricing of competing products is can also assist in creating a successful pricing strategy. Comparing your product or services’ real and perceived value to that of a competitor can give you an idea of where your products price should be. Having a product that will be more cost effective will warrant a lower price. Quality products, again, would tend to be price higher than competitors.

Another external factor is the industry itself. Will the industry be able to support a new high cost competitor, or is it hyper competitive on price? Is there room for growth for a high quality (and high price) product, or will you need to take competitors’ market share by offering a low price?

The Purpose of Price

One you have a clear understanding of how, and at what price you will sell your product or service, you will be once step closer to completing the 4 Ps. The price plays a crucial role in helping define the product, not just from the internal perspective on how you want to brand the product, but also how the product will compare to the competing products or services in the industry.

Successfully defining what price, and why you want to sell at this price will give you a better understanding of your marketing strategy. Not only will you better understand where you product fits in the industry or how you should advertise the product, but you will be better able to react to changes in the industry.  

By this point in the 4 Ps of Marketing, you will have a solid understanding of your product or service, and what price you will sell it next. Next, we will take a look at Place – where you will sell your product or service!

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In this four part blog series, I will go over each of the Four Ps and explain how to conduct your own analysis and why it is necessary. Some people think that jumping right to Promotion is what marketing is all about, but without the other 3 Ps, it will be hard to build a solid and successful marketing plan.

The Product

The first of the Four Ps is the Product. In this category, you want to look at the actual tangible good or intangible service, that you will be selling. Once the good or service is identified, create a clear and detailed definition of the good or service that highlights what its unique characteristics are, and what features differentiate it from your competitors. Furthermore, this definition should describe the specific needs of the target audience that it fulfills or a need that is not yet fulfilled by competitors. 

Branding and packaging are also considered a part of a good or service, so their description should be included in the product’s definition. Some products even have a product life cycle that should be considered when crafting the definition.

The length of the definition can vary depending on the actual product or service. A hand-crafted clay mug would ideally have a shorter definition than a luxury car that aims to fulfill multiple needs with multiple features. It is not the length of the definition that is important, rather the understanding of the product. The better a definition is, the easier it will be to create a more effective marketing plan.

Defining Pizza as the Product

Let’s say that we wanted to start selling a new type of Pizza that no competitor is making. Our Product definition might look like so:

A triangle-shaped fine dinning Pizza, made with locally grown organic ingredients. The freshness of the ingredients make for a softer pizza dough, which no competitor is able to offer. A secret family recipe for white sauce will be used on top of the dough, topped off with fresh cheddar cheese and a selection of locally grown toppings. The topping selection will include tomatoes, onions, mushrooms, olives, and bell peppers. The packaging will be a unique triangle shaped pizza box, branded with the company name “Organic Triangles“, and the slogan “Like a pizza slice, but bigger and better!“

This definition clearly defines what the pizza is and how it will be differentiated. A tip I personally use is to highlight differentiating factors like triangle shaped or softer dough so that the key points about the product stand out to anyone reading the definition. It make reviewing the product features easier and quicker to find when building out the marketing plan. This is a personal preference of mine, and I have found it to be very useful and time saving.

The Purpose of Defining a Product

Once you have a clear grasp of what your good or service is, the Product portion of the Four Ps is complete.  This understanding will make your marketing plan more focused than it would be without such an understanding. For example, knowing that your product will be a high quality fine dining meal, you no longer need to consider marketing to people who just want a cheap & quick pizza.

Regardless of your product offering, you will be able to focus your marketing efforts where the product will best fulfill the needs of your potential customers. You will also understand what features or characteristics of your product are marketable, or which of these features you can potentially focus on. Having this knowledge can decrease the marketing effort required, and even save the valuable marketing budget.

However, creating a Product definition does not give you a complete picture. Next, we move onto the second P – Price!

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