When starting a new business or creating a new product, few people seriously consider what the correct steps to doing so is. Many people assume that if you produce something and ship it to stores, it will sell. What they are forgetting is that in order to actually have a take on your product, they’d have to know that there was potential for sales. Without marketing your product to your final consumer, how will people know it exists? When you are first considering introducing a new product or service, you have to consider the 4 P’s.
P #1 – Product
When considering introducing the product to others, it’s good to have a prototype. Before you consider a prototype, you’d have to consider what your product is in great detail. For example, I decided I want to create picnic table kits, what would that entail? You can’t simply tell a bank that you need a loan to create picnic table kits!
When providing the Product information of my marketing mix, I would say I wanted to make Cedar picnic tables kits with precut wood and included hardware. I would want the kits to be available in 2 sizes, which are 6’ x 2’ and 4’ x 1.5’. The kits would include all the materials required to make the table, as well as printed instructions.
Without that detailed information, you’re leaving everyone in the dark about your ideas. People can’t read minds, and without the proper mental picture, most banks would likely pass on your loan application.
P #2 – Place
Now that you’ve decided exactly what you’re going to make, where are you planning on selling it? Are you considering mass shipments to a chain of hardware stores, or would you prefer to sell them from your backyard? This information shows people the size of your project, as well as the amount of resources are required to put the project in motion.
P #3 – Promotion
I’ve decided I want to sell my picnic table kits to the big hardware store chains, and that I’m going to mass produce them in Canada and ship them to the store’s distribution centres. Great! Now how are my potential customers going to know my product exists? Beyond advertising in the hardware store’s flyers, I need to get my company name out there. Other advertising though any media would be a great thing to consider at this point.
P #4 – Price
After I’ve determine all of my potential costs, I have to consider what my unit cost is for each kit. Considering an expected production rate, as well as my fixed costs (the cost of renting my factory, utilities, etc.) as well as my variable costs (materials, packaging, etc.) I can determine what each kit is going to cost me. From there, I would consider the amount that other picnic tables and kits are selling for in stores, and that will allow me to determine my Manufacturer’s Suggested Retail Price. From that, I can determine what would be my best starting price to charge my stores per unit, and what sort of discounts I can offer them when they purchase in volume.
Before considering any business plan, you need to brainstorm and determine the 4 P’s of your marketing mix. This will provide all the important people with the proper information about your product, as well as how you intend to sell and market it!