Marketing as a broad financial concept comprises many elements and steps to ensure it gets to the target audience at the right time. Among these elements are five key terms, called the 5 P’s of marketing -Product, Price, Promotion, Place and People. Before you market your product or your new business, you must understand these key terms.
The 5 P’s of Marketing, also known as marketing variables is a significant business tool to help you select and create the right marketing strategies for your business. For a new business, it helps you identify your target audience, their needs, their location, how to add value and how to be unique amidst competition. For existing business owners, it helps you think about which areas of your business you can make certain changes to.
Although the 5 P’s are controllable business terms, they are always subject to your internal and external marketing environments. Below is a detailed explanation of each of the Ps.
A product or service element refers to an object or system made available for consumer use, it is anything that can be offered to a market to satisfy the desire or needs of a customer. Decisions in this area include functionality, branding, packaging, service, quality, appearance and warranty terms.
When thinking about your new product, consider the key features and how they meet the needs and wants of customers. For example, if you are a fashion designer, you may decide to add new colours to existing dress colours to extend your range.
The price element simply refers to the way you set prices for your products and services, considering the prices of competitors. A price system should include all factors that make up your overall cost, including the advertised price, discounts(if any), sales, credit terms or other payment arrangements.
Your pricing will also depend on the amount charged by other producers of your same product, and also your business position in the market. For example, if you advertise your business as a hub for affordable clothes, your pricing should reflect affordable, as they are lesser than that of a new stock brand. Here’s how to set your prices;
- Know your market
- Deciding your pricing objectives
- Work out your costs
- Consider cost-plus pricing
- Set a value-based price
- Think about other factors
Promotion in marketing refers to any type of marketing communication used to inform target audiences of the relative merits of a product, service, brand or issue, most of the time persuasive in nature. It includes sales, public relations, direct marketing, advertising, sponsorship and social media.
Due to the huge costs incurred during promotion, it is very important to conduct a return on investment analysis when making promotion decisions. To do this, you must first identify your target audience, what media they like to consume, what the cost of that media will be, how many more sales you need to cover your investment and how you will gather the information that shows how the promotion has worked in terms of leads generation, website clicks and other analytics.
The place element refers to how you get your product or service to your customers at the right time, at the right place, and in the right quantity. A major part of this includes distribution channels(e.g via a shopfront, online or a distributor), location, logistics, market coverage and even retail merchandising.
For example, if you are thinking of expanding your business online, you’ll need to think about how your customers use the internet, the type of social media platforms they use, if they would feel comfortable purchasing your goods online and how much they would be willing to pay for shipping costs.
The people element in marketing, refers to your customers, yourself and your staff. If you are thinking of growing your business, then you must consider both your customers and staff as they play a huge role in the growth of your business. This includes understanding what your customers’ needs and wants are, setting business goals and measuring your customer service level so you attract and keep loyal customers.
To develop your workforce, you will also need to consider staff training so they possess the current skills to offer the best work experience and meet customer expectations.