The 4 Ps of Marketing. Part 1: Product and Brand
The 4Ps is a marketing mix concept that includes four strategic elements: Product, Price, Place, and Promotion. By defining well all the four elements, you can take a product to market successfully. I want to bring together all the pieces of this theory, and this first article is dedicated to the ideas and concepts of the first P – the Product.
Product and Brand. How to build a product line?
There are companies that hardly ever create new products, for example, oil processing companies, metal works, or heavy industry. These businesses are different from banking, insurance companies or manufacturers of everyday goods that need to come up with new products in order to stay competitive.
New products appear on the market all the time – online car insurance, 1-hour card approval, one-day delivery and so on – and to win the market it is important to both introduce similar products and add new ones.
1. Classification of Products
Before you create a new product, you should classify the products that are already on the market. There are several ways to do that:
- By emotional or functional customer value.
When you know the customer value of each existing product, you can immediately figure out which market segments are still not covered. Therefore, you can create a product with a value for segment precisely. This is the way that luxury (or, on the contrary, mass-market) goods or specific products such as fitness foods appear on the market.
- By buying behavior: is the customer involved, do they purchase by habit or by impulse.
Thing is, consumers tend to choose different products differently. For example, buying software requires a lot of intellectual and emotion effort, why confectionary is usually an impulse purchase.
- By the purchase process: is the product easy or difficult to buy.
In some cases, the customer simply has to click a button on a website, while in others the purchase process is long and requires consultations and discussion of trade details.
- By the market life cycle.
This means categorizing the products according to the market maturity stage. Companies tend to start working on a new product when the market reaches a new life cycle stage, for example, when the market has matured.
2. Ansoff Matrix
After you have analyzed the products that your company produces, it is time to determine your strategy for future growth. Here, the Ansoff Matrix comes in handy.
The Ansoff Matrix implies that revenues grow through developing new products and services or reaching new markets.
Growth strategy. Ansoff matrix
Correspondingly, the matrix offers four alternative growth strategies:
- Market Penetration
This strategy implies selling existing products or services to existing customers. The business focuses on stimulating customers to buy more and launches new offers and loyalty programs.
- Market Development
Market development is a strategy where the business focuses on selling existing products to new customers. It includes new geographical markets, new distribution channels, and modification of the product in order to reach the competitors’ market segments.
- Product Development
Product development is introducing a new product to your existing clients.
Diversification implies creating a new product and accessing new markets.
For the strategies that require creating a new product (number 3 and 4), you can use the following checklist to help you decide what the product should be like.
Growth strategy. Key questions
These are the main questions that you have to ask yourself:
- Who is my target customer?
Do emotions of functionality come first to them? Do they value technical features or the design of the product?
- Which specific needs of my target customer does the new product satisfy?
Make sure that in the end, the value is higher than the sacrifice that the customer makes in order to choose and buy the product.
The customer value is formed according to the following formula:
Analysis of customer value
I spoke more about customer value in my previous article Marketing and Sales Processes. A Modern Approach to Customer Behavior. Part 1 .
3. BCG Matrix
When working on your product portfolio, I advise using the BC-matrix. It will help you classify and analyze your products according to the market growth and relative market share.
FIG 4 BCG-matrix
In a BCG matrix, there are four categories of the products:
- Dogs – they have low market share and growth rate, and do not give large amounts of cash. You can either significantly invest resources to raise the growth rate or liquidate the product.
- Question Marks – they grow fast and have a low market share. You can either invest heavily to move this product to the Stars category or liquidate it, since the return is very low.
- Cash Cows – they have a high market share and a low growth rate. Cash Cows are good for the company because they bring more cash than they consume. You can use the profit from such products to develop the Question Marks and support the Stars.
- Stars – Stars show high growth and high market share. You should try to maintain and expand their market share since Stars generate large amounts of cash. Because of the high growth rate, they also consume large amounts of cash, so the actual profit is not so high.
These are the main concepts of the first of the fourth Ps. I’ve titled the article as The Product and Brand. So what does the brand have to do with all that?
Formally, the brand is the trademark. Concept-based, it is the promise of benefits that a company gives to the customers. In reality, the brand is not something the company communicates, nor is it a slogan or a name. It is the idea inside of the customer’s head.
When you are working out a marketing strategy for a new product or a product that your company already has, remember, that the idea in the customer’s head has impact on the customer value and the purchase decision. That is why I distinguish the product and the brand as the first of the four Ps, which answers the question “What do we sell?”
4. Brand Components
There are five main components that you have to consider when creating a brand:
- Market trends analysis
Are there any global changes and what are the risks?
- Competitor analysis
Who are your competitors and what are they promising?
- Analysis of your customers and of the customer value
Who is your customer and what do they value?
- Brand image
What customer value will you communicate to the market and what image you want to create?
- Business strategy
What is your business strategy for the next 5-10 years?
Before your company starts creating a brand, you must thoroughly consider all these brand components.
5. Brand Model
When creating the brand model you can take as an example one of the existing ones. Here is a simple yet effective structure:
- Brand Essence
The brand essence must correspond to the company’s strategy. This is your main promise to the customer, the statement of who you are.
- Value Proposition
The value and competency that lie at the heart of the product. These values must be clear to the customers and appreciated by the company’s employees.
- Brand image
The company’s logo, corporate design, corporate rules for ad campaigns and so on. In other words, that is the image that the company communicates to the market.
6. Brand Essence Structure
When building up the brand essence, you can base on functional benefits, emotional benefits and personal identity (what the product says about the consumer):
Forming brand essence
Here are some examples of the brand essence (remember, it is not the slogan!):
Google: Take the world’s information and make it universally accessible and useful (functional benefit).
Apple: Power to the people through technology (emotional benefit).
Disney: Family magic (self-identity).
Keep in mind that the brand essence is not created for the customer, but for the company itself! It serves as basis for interacting with the market.
7. Position Statement
Position Statement links the brand essence with the market. That is, a position statement is not s slogan; it’s an expression that sets the brand apart from its competitors.
The main goal of the position statement is defining how the product is different from other similar products on the market. Position statement usually is not communicated in market messages although it can be included in marketing campaigns if wanted.
A position statement usually takes into account:
- The target audience
- Field of use or business segment
- Differentiator (how is your product different to those of your competitors)
- Reasons to trust you.
Example: craftsmen and professional contractors (target audience) often use electrical tools. For them, the professional tools of Brand X (field of use) are more reliable than electrical tools of other brands (differentiator). The Brand X electrical tools are manufactured according to Y standards and have been produced since 1967. Moreover, due to a large network of service centers, you can repair a Brand X tool in 48 hours (reasons to trust).
8. Brand Perception
Having worked through all the brand components, you can finally create and communicate a certain image. However, from the customer’s point of view, a brand is not just a message. Brand perception is something that stays in the customer’s head after he or she interacts with the company, not even necessarily making a purchase.
If a bank states that issuing a credit takes less than an hour and communicates this message in their ad campaign, a certain customer expectation is formed. If this expectation is not fulfilled in practice, the brand perception will be negative.
To build your marketing processes efficiently, you must understand that it is not enough to integrate the brand image into advertising messages. You must integrate the brand into the customer’s experience of interacting with the company, its product or service. Also, remember that your interaction with the customer starts way before they make a purchase; and you can influence this interaction process.
You can learn about all the four stages of interaction with the customer in Marketing and Sales Processes. A Modern Approach to Customer Behavior. Part 2
Stay up to date with company news and receive notifications of new posts