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Friday, September 10, 2010

The 4 Ps or Tools of Marketing

Marketers have tools at their disposal with which to control their offerings to consumers. These tools are called the "4 P's of Marketing" or the "Tools of Marketing". Specifically, these are

  • Price
  • Product
  • Place (distribution)
  • Promotion

With the exception of Price all of the tools are costs.



Price is one of the components of the Sales or Revenues formula. Specifically, price per unit is multiplied by the number of units sold [Price x # of units = Sales].

But how do we determine the price of our product? We will become acquainted with the costs to manufacture or to acquire or to source our product. We have special design features which we build into our product and we also determine the quality of our product. We may use excellent components in order to make an excellent product. Therefore, we control the design, durability and features of the product and accordingly the costs for the product to arrive at the price the customer will pay for the item. We also have to consider our competition - what are they selling a similar product to ours for? Our formula then will include the cost of the product, a margin for quality, and our profit margin.

However, we must not forget that our customers know the value of things (you know that "educated consumer"), and we cannot charge more than what they will pay for it Remember, "it's what the market will bear", you cannot charge more than what the customer is willing to pay.


Product Design and Features

We create the product to meet the unmet needs of the target community, and its design and purpose or use. The culmination of our thoughts and vision is the product we will be selling. We control what the product is, what goes into making the product, whether we will outsource it or manufacture it ourselves, and, most importantly, we decide upon the quality of the product. After all, the higher the quality, the higher the price we can charge.


Place (Distribution)

The way we "get our product to market" (distribution channel) has a further implication upon the cost structure of the product. We can determine whether we will be a direct merchant, charging or not charging for the shipping to the customer, or we may want to use our own fleet of trucks to deliver the product to the retailer or the ultimate consumer.

Depending upon the size and durability of the product we may want to employ a wholesaler who will be responsible for the ultimate distribution of the product. Whatever method we decide upon, we must realize that the more middlemen involved in getting our product to market the more costs are involved and the more expensive our product is to the consumer.



How we reach our targeted customers to make them aware of our product or location is a consideration of cost and effectiveness. We can take an ad in a regional or local paper; make a 30 sec. or 60 sec. spot for the radio to be delivered by the host live, or tape it to be played on the radio. If we have the money we can also create a commercial video and buy time on a television channel that will reach our market. This is more expensive, although glamerous to have your ad on TV, but the reality of it is, it may not be for the small business.

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