Marketing is not a battle of products; it is a battle of perceptions.
The major elements of a marketing strategy are the four Ps of marketing – product, place, price and promotion. These four elements are interconnected, and, when properly coordinated with a solid marketing plan, increase the sales appeal of a product or service. Small business managers must integrate these elements to maximize the impact of their product or service on the consumer. All four Ps must reinforce the image of the product or service the company presents to the potential customers.
The product itself is an essential element in marketing. Throughout history, small companies have been an important source of innovative products, a trend that continues today. Many small companies are on the leading edge of wearable technology, clothing that is embedded with computer technology and performs a variety of useful and sometimes entertaining functions.
Products travel through various stages of development. Knowing which stage of the life cycle a product is in allows managers to make decisions about whether to continue selling the product, when to introduce new follow up products, and when to introduce changes to an existing product. The length of a product’s lifecycle depends on many variables, including the type of product.
For there to be a great product, it must possess these characteristics:
- Deep: This includes features and functions that meet a range of customers’ needs.
- Indulgent: Makes customers feel special when they purchase it; a reward.
- Complete: The product should provide an excellent total customer experience, from packaging to technical support.
- Elegant: The product should be intuitive to use; it should work in a way users expect it to – without a fight.
- Emotive: The product should connect with customers in such a way that they are compelled to tell others about it.
Any product that possesses this characteristic has achieved the goal of being a great product.
Lifecycle of a product
In the introductory stage, marketers present their product(s) to potential customers. Initial high level of acceptance is rare. Generally, new products must break into existing marketers and compete with established products. Advertising and promotion help the new product become recognized more quickly. Potential customers must get information about the product, how to use it, and the needs it can satisfy. The cost of marketing a product at this level of the life cycle is usually high because a company must overcome customer resistance and inertia. Hence, profits generally are low, or even negative, in the introductory stage.
The product then enters the growth and acceptance stage. At this stage, customers begin to purchase the product in large numbers for sales figures to rise and profits to materialize. Products that reach this stage do not necessarily become successful. If in the introductory or the growth stage, the product fails to meet customers’ needs, it does not sell and eventually disappears from the marketplace. For successful products, sales and profit margins continue to rise through the growth stage.
In the maturity and competition stage, sales volume continues to rise, but profit margins peak and then begin to fall as competitors enter the market. Normally, this causes a reduction in the product’s selling price to meet competition and to hold its’ share of the market.
Sales peak in the market saturation stage of the product life cycle and this gives the marketers fair warning that it is time to introduce the next generation product.
The final stage of the product life cycle is the product decline stage. Sales continue to drop, and profit margins fall drastically. However, whenever a product reaches this stage of the cycle, it does not mean that it is doomed to failure. Products that have remained popular are always being revised. No firm can maintain its sales position without product innovation and change.
Some companies wait too late into the life cycle of one product to introduce another. The result is that they are totally unprepared when a competitor produces “a better mousetrap” and their sales decline.
Place or method of distribution has grown in importance as customers expect greater service and more convenience from businesses. This trend is one of the forces driving the rapid growth of the Web as a shopping tool; customers simply place their orders with a few mouse clicks, and within a few days, the merchandise appears at their doorstep! Each day, entrepreneurs come up with other clever ways to distribute their products and services and offer their customers more convenience. Some companies intentionally limit the distribution network for their products to enhance their brands.
Almost everyone agrees that the price of the product or service is a key factor in the decision to buy. Price affects both sales volume and profits, and without the right price, both sales and profits will suffer. For small businesses, non-price competition – focusing on factors other than price – often is a more effective strategy than trying to beat larger competitors in a price war. Non-price competition, such as free trial offers, free delivery, lengthy warranties, and money back guarantees (refund policy), intends to play down the product’s price and stress its durability, quality, reputation, or special features.
The goal of promotion is to inform and persuade consumers. Advertising communicates to potential customers through some mass medium the benefits of a good or service. In addition to using traditional advertising media, small companies are turning to innovative advertising techniques that connects with customers wherever they are. A small company’s promotional program can play a significant role in creating a specific image in its customers’ minds – whether it is upscale, discount or somewhere in between.