What Are the 5 Ps of Marketing?
The 5 Ps are Product, People, Promotion, Place and Price. Each of these elements represents an aspect of your business you can modify to achieve the results you want.
Product is the services or goods that you sell to customers. Aspects of your product that you can manipulate to increase sales include the features or functions, packaging, branding, quality, appearance, service and warranty. When making product decisions, consider the wants and needs of your customers.
For example, if your product is a meal delivery kit, you may receive feedback from your customers indicating that they are pleased with the quality of the product but dislike having to dispose of the packaging every week. You could make adjustments to reduce the amount of packaging or offer some alternative, such as reusable packaging that customers can have picked up when their next delivery comes. This product decision maintains what your customers like about your product while addressing a pain point and providing value that the competition may not.
The second of the 5 Ps of marketing refers to yourself, your staff and your customers. This P primarily focuses on customer service. It involves finding out what your customers want, setting goals for service levels and then measuring how well you are achieving these goals.
The key to driving sales by manipulating this variable is to correctly identify what your customers want, develop processes and procedures that achieve your customer satisfaction goals and effectively recruit and train staff. For example, a common pain point for customers is having difficulty reaching a “real person” when contacting customer service. You can address this by hiring more staff, training your staff on proper call transfer protocol, reducing call times and providing additional methods of contact, such as a chat feature.
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The third of the 5 Ps of marketing refers to the activities you engage in to make your products, services and brand more recognizable and attractive to consumers. It is critical to do a cost-benefit analysis when deciding on promotional efforts. For example, buying an ad during the Super Bowl might be a great way to build brand awareness, but at an average cost of $7 million for a 30-second spot, you have to get a lot of increased sales out of the promotion to make it cost-effective.
It is also important to understand who your target market is and what media they consume. That $7 million might be a complete waste if the customers you are targeting don’t watch football.
The fourth of the 5 Ps of marketing refers to the place or places where your products are manufactured, delivered, distributed, displayed and sold. For this element, it is important to consider how your customers want to buy your product. If you are thinking about selling your product online, you must consider how comfortable your customers are with online shopping, how shipping might affect the quality of your products and whether customers are willing to pay for shipping costs.
Another product decision is where to make and warehouse your products. For example, if your customers are mostly located on the East Coast, it may not make sense to open a warehouse in California. You also need to decide which physical locations, if any, to sell your products from. This could include making decisions about how many stores to open and where to open them or which retailers to get to put your products on their shelves.
To make this decision, you need to consider where your customers live, where they shop and how far they are willing to travel to purchase your product or service. For example, if your meal kit delivery service wants to attract more local customers, you might consider partnering with local grocery stores that are interested in selling your products.
The last of the 5 Ps of marketing refers to how much you charge customers to purchase your products or services. This variable includes your advertised price, sales, discounts, promotions and credit terms.
Many factors go into determining the optimal price for your products or services. On a basic level, price consists of the total cost of selling your product or service plus the amount of profit you want to make. Costs include factors such as raw materials, labor, storage, shipping, distribution, marketing and commissions. Profit is the amount of money you want to make on each sale.
Typical profit margins vary by industry and product. Generally, a 5% net profit is considered a low margin, while 20% is high. The national average across industries is 7.71%. This means that when all costs are factored in, on average, businesses make about $7.71 in profit on each $100 worth of sales.
However, setting your price is more complicated than just figuring out how much profit you want to make. Small price changes can significantly affect sales. Price decisions get even more complicated when you consider that many customers associate price with quality. As a result, lowering the price of your product could increase perceived value; however, it also could lower perceived quality.
It matters how you want your product to be perceived in the market. If you are competing to be the lowest cost provider, then your margins will likely be slimmer than if you are marketing your product as a luxury item.
How Can You Utilize the 5 Ps of Marketing?
Effectively utilizing the 5 Ps of marketing requires a thorough understanding of your target market and the development of effective strategies to better convince that market to buy your products or services. The team at Rogue Wave Marketing can help you make your marketing efforts work for you through the development and implementation of powerful marketing strategies that add value to your business. Visit us online to get started today.