The 3 Ps
1. PRODUCT – What is the product?
Products can be a physical good (iPhone), person (Kobe Bryant advertising sneakers), place (Disneyland), organization (Red Cross), service (Verizon), or even an idea (Breast Cancer ribbon).
2. PRICE – At what price will the product be sold?
A customer receives a bundle of benefits in every transaction. For example, Chipotle is a place to go to get somewhat higher quality Mexican food. The total value that a customer receives at Chipotle includes the product, the service (speed, mode of assembly, cleanliness, friendliness etc.) and also Chipotle’s philosophy of local sourcing and its humane approach to animals.
It is the customer’s perception that determines the value to him and the price he is willing to pay, not what the company actually thinks, believes, markets, or portrays.
3. PROMOTION – How will the product be promoted?
Typically, promotions have several components such as Advertising, Sales Promotion, Personal Selling and Publicity.
Advertising includes commercials on TV and radio, advertising in newspapers, magazines, billboards and direct mail. Digitally, web sites, podcasts, webinars, email blasts, banner ads and social media are all options.
Sales Promotion includes coupons, displays in stores, demonstrations and in-store sampling (like you see at Costco).
Personal Selling would include hiring salespeople, agents, distributors, telemarketing and selling at trade shows.
Publicity entails getting the news about the company, or the product, to the customers. An article written about the product is desirable. Speaking on a panel provides publicity too.
Word of Mouth is the oldest and by the far the best form of promotion. However, going viral is its ultimate manifestation.
The 3 Cs
1. COMPETITION – Which other companies sell something similar to the same customers? For example, the competition for Chipotle would be Qdoba, Baja Fresh and maybe even Panera depending on how broadly you defined the competitive arena.
2. CONSUMER – Who is the target market for the product? You need to know their demographics (such as age, sex, income, education, etc.), as well as their psychographics (beliefs, causes they feel strongly about, etc.).
3. CHANNEL – What are the channels of distribution, specifically where will the product be available?
Domino’s, the pizza chain, has two key channels – home delivery and store pickups for example.
Starbucks’ main channel of distribution is through its retail locations. They also sell their products in grocery and convenience stores.
Let’s assume Kellogg’s wants to sell you Frosted Flakes. After manufacturing it, they ship the boxes to a wholesaler who then sends it to retailers (Safeway, Vons, Jewel, etc.). You then buy this box of cereal from your local retailer.
Amazon works an e-commerce model, selling directly to consumers.
There are other channels such as telemarketing, home-delivery through online services and much less frequently of late – Tupperware parties.
Using this simple model, you can learn a significant amount about a company, its products, pricing and competitive strength among other things.
Verinder Syal, Author: Discover The Entrepreneur Within