Why buy a $5000 watch when a $50 watch can tell the time?
Like most good answers regarding human psychology or consumer behavior, the answer is "it varies from person to person based on their unique set of experiences, beliefs, and values." But goodness is that unsatisfying, and worse yet, in and of itself, that answer (however much I do believe there is truth in there) is unactionable. So please allow me to share with you a classic framework that will help us think through our original question and, better yet, a more relevant question: Why would my Target Persona _________ pay my suggested price of ______ for my service or offering _______?
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We are introducing the classic four P's of marketing, also known as the marketing mix: Product, Price, Place, and Promotion.
That's it. They are seemingly simple; however, it's easy to miss the mark. Let's dive in.
The good or service your client or consumer is paying for.
When thinking about a product, let's think about:
- What is the good or service that you are selling or considering selling?
- What was the background context that led you to this potential idea?
- Are there competitors currently in the space?
- Where are your product's strengths, and how can you highlight them?
- What pain point does it solve for the customer?
- Is the general Market ready for your good or service? If not, is there a market (niche) that is?
- Are there any legal considerations to explore before investing time, effort, and capital?
- Think about what exactly it is you are selling. Using the watch example: Are you selling the ability to tell time? Or are you selling a status symbol to be obtained, which also happens to tell the time?
How much your customers is willing to pay for your offering.
When thinking about pricing, let's think about:
- What is the cost to you to provide this good or service?
- What are your competitor's pricing models?
- Do you provide Unique or leading-edge Value to your customers?
- Will people perceive your product as better if it is more expensive?
- Can you quantify a return to your customer?
- When can you provide discounts or even loss leaders?
The message and all communication that you are broadcasting to your customers. Oftentimes consisting of the above 2 P's and the narrative of influence for your brand.
When thinking about promotions, let's think about:
- How are you speaking to and conveying your message to your clients?
- What is the tone you are trying to tell?
- The medium: text, audio, images, videos, gifs?
- What is driving the perception of value into your customer's minds about your product?
Where consumers can receive your good or service, or your pitch. When thinking about the place, let's think about:
- How can the customer receive the benefit?
- Is it by them visiting a brick and mortar store (See Blockbuster) or opening their mailbox (Early Netflix), or turning on their smart TV (Netflix)?
- Does your offering require in-person contact or delivery?
- How do you bring people to you or get your offering to them?
- Where does your target audience spend their time, in person or online?
- Different demographics are going to prefer traditional media like newspapers and mailers
- Tik Tok, Instagram, Facebook, Google Ads, and publication websites are all places to present your offer to clients.
The above marketing mix still holds a useful framework to think through your offer to the marketplace. Hopefully, we can all use this primer to optimize our Pricing, Product, Promotions, and Places. Our 4P's Marketing template is coming soon! So make sure to check our weekly What's New to stay up to date with the latest templates and pro tips!