The 4P Marketing Strategy – How to Choose the Right Products
If you are a B2B company and want to grow your business by adding new products to your existing product portfolio this article and my other related articles will help you. They describe how a 4P Marketing Strategy can help you produce a successful “product launch” plan for your chosen marketplace.
A marketing strategy based on the marketing 4P’s looks at four key marketing and sales areas that need to be considered when producing your product launch plan:
1. Product. How to choose the right product to sell?
2. Place. Where to find the customers who will buy it?
3. Promotion. How to “package” and promote your product?
4. Price. How to choose a sales price that’s acceptable and profitable?
I don’t intend to cover all of the 4P’s in this article. I am going to focus on the first one by providing some advice and guidance on “How to choose the right product to sell”.
Choosing the Right Product
If you already have a successful B2B business or you want to grow one quickly it’s important to be able to assess whether your new product will fit in with your current product portfolio and whether it will meet the requirements of your marketplace.
Looking at your product in the context of the 4P’s of marketing is an excellent way of doing this. I have used the 4P Marketing Strategy approach for many years when launching new products. It’s easy to understand and when used correctly it’s very effective.
To be confident that you’re taking the right product to the market place you must be able to answer the following questions:
– Will the product sell in your market place?
– Can it be sold profitably?
– What skills and experience do you need to sell it?
Will the product sell in your marketplace?
If you are considering taking on a new product from another company do some research first to establish whether the product has a good sales history and whether your existing customers are likely to buy it?
If the product isn’t being sold successfully elsewhere or is only being sold successfully by companies with a very different company profile from yours you need to make a realistic assessment of the extra marketing and sales costs that are likely to be incurred before your new product can become profitable. You also need to carry out some “consultative research” with your existing customers to find out whether they would buy your new product. If they wouldn’t, you need to understand why. (You may find that it’s necessary to talk to other contacts within the same company or consider approaching companies in different market sectors if the customers in your main market sectors indicate that they are unlikely to buy your new product).
Can it be sold profitably?
Make a list of all the things you’ll need to do to market and sell your product. Use this list to build a spreadsheet of your projected marketing, sales and administrative costs and compare these with your forecast sales for the new product. Use some simple calculations to work out how long it will take before your product becomes profitable.
Sometimes it makes sense to sell a product even if it doesn’t make a profit! If your new product is very complimentary to existing products in your product portfolio and can be used to boost sales of these products it could still be worthwhile selling it. It may eventually become profitable on its own, or prepare the ground for another similar product that will be profitable (e.g. one you develop yourself).
Take into consideration all the factors identified in your previous research and don’t forget to include some estimated costs for the effort and time that you and/or your work colleagues will need to put in to launch and sell your new product.
What skills and experience must you have to sell it?
If your product is a very different type of product from those you are currently selling you will need to get some additional help (staff or bought-in resources) with your marketing and selling. Alternatively you could acquire the knowledge and skills required to market and sell the product by buying in consultancy services and training.
Whichever of these two options you choose, until you have built up a good level of knowledge and skill you won’t do a very good job helping your customers understand what the product will do for them. Neither will you be able to support them well once they’ve decided to purchase it.
The Value of the 4P Marketing Strategy Assessment
The reason why the first step of the 4P Marketing Strategy approach is so important is that it will help you reject a product that might not become very profitable and provide you with information that you will be able to use to select an alternative product that will fill the same gap in your product portfolio much better.
There may be other questions that you need to get answers to in addition to those we have considered above, but if you can provide comprehensive and satisfactory answers to my three main questions you will be able to move forward and start working on the other P’s of your 4P Marketing Strategy.
I hope I have made it very clear that thorough research is very necessary at this stage. It’s very easy to decide to skip this research if you have been “bowled over” by an exciting new product that you want to start selling as soon as possible. But bear in mind that every new product you take on will distract you from other important marketing and sales tasks.
If your new product starts to sell well soon after it’s launched into your marketplace all your effort will seem worthwhile. You’ll soon be able to invest in additional resources and help to maximize the sales of your new product. However, if your new product turns out to be unprofitable or provides only a small profit you will have wasted a lot of time and money that could have been invested in marketing and selling your existing products.
In summary, a 4P Marketing Strategy will help you develop a detailed, solid plan for the launch of your new product and will also help you to feel confident that you have the right product to ensure that this plan will succeed.