The concept of “placement” is one of the elements in the traditional marketing mix, also known as the 4Ps of marketing. The marketing mix consists of Product, Price, Place, and Promotion, and it’s a framework that businesses use to develop a strategic approach to marketing their products or services.
In this context, “place” refers to the distribution strategy, which includes getting the product to the right place at the right time to be easily accessible to the target customers. Which also determines your place in a competitive market.
“Place” in the marketing mix refers to the strategies and channels a business uses to make its products or services available to the target customers. So, as a strategy, has more to do with your position in the market than a physical (or even virtual) location.
It involves decisions related to the distribution network, retail locations, and transportation, including transportation of data as well as data is the most traded commodity in the world (now ahead of Oil/Gas and coffee as numbers 2 and 3 respectively).
Add in inventory management and logistics, and you can quickly see how being an Entrepreneur becomes more of a full-time job than the laptop lifestyle sitting at the beach that you see on social media.
The goal of the “place” element is to ensure that customers can conveniently and efficiently access the product, which helps in maximizing sales and customer satisfaction. Entrepreneurs tend to use the “jobs to be done” theory, the practical application developed from the theory of disruptive innovation (Christensen). At its core, is the belief that customers don’t buy products, they hire them to do a job for the customer, which is the benefit of buying a product from you (it solves the customer’s problem).
The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itselfPeter Drucker
In business development, part of the startup process, your placement in the market determines the price, so must be decided first.
The price is then set by looking at Porter’s 6 forces model of profitability. If the strongest market force is the power of the buyer, then it drives prices down. So, you may not have a viable product.
However, if you place your product to do something no one else can, known as your unique selling point (USP), to power moves to the suppliers. As there is no comparison for customers, you can charge whatever you like.
I often hear people say, “I know what I’m worth, and I won’t drop my price”, but this is a fatal mistake. It is usually an indication of esteem sensitivity, one of the 3 psychosocial hazards behind the 3 reasons all businesses fail (as we explained in this blog).
It is usually followed up by “but my business model is ‘like’ Amazon, for [insert your industry here]”. If your product was really so good, wouldn’t Amazon (or Elon Musk) already be selling it?
Your personal brand is what people say about you when you are NOT in the roomJeff Bezos (Amazon founder)
Entrepreneurs and Distribution Strategy:
The place in the marketing mix is an entrepreneur’s primary job role. So, for successful ones, this is their primary skill set – Thinking skills.
They normally outsource the rest (personal and action skills) as part of their implementation plan, which is why “key partners” is point #1 on a Business Model Canvas.
Most entrepreneurs still use the diffusion of Innovation to set timeframes for their dreams.
A dream is just a plan without a timeframeBrett O’Connor, founder of Inception Network, cat lover.
Entrepreneurs need to carefully plan their distribution strategy to ensure their products reach customers effectively. The bigger the problems they solve, the more money they make.
It’s simple, but by no means easy. Otherwise, everyone would do it. Here’s how they approach it:
- Channel Selection: Entrepreneurs determine the most appropriate distribution channels for their products. They might choose between direct distribution (selling directly to customers) or indirect distribution (using intermediaries such as retailers, wholesalers, or distributors).
- Retail Partnerships: Entrepreneurs might collaborate with retailers or online marketplaces to showcase and sell their products. This could involve negotiations, creating appealing displays, and providing promotional support.
- Online Presence: In the digital age, having an online presence is crucial. Entrepreneurs set up e-commerce websites, partner with online retailers, or use social media platforms to sell and promote their products.
- Geographic Reach: Entrepreneurs decide where their products will be available geographically. This could involve targeting specific regions, countries, or even global markets.
- Logistics and Inventory: Entrepreneurs manage the logistical aspects of getting products from manufacturing to distribution centres to retail locations or customers. They also need to balance inventory levels to meet demand without excessive overstocking.
- Customer Convenience: The distribution strategy should prioritize customer convenience. Entrepreneurs aim to make products easily accessible, whether through brick-and-mortar stores, online platforms, or both.
- After-Sales Support: Entrepreneurs consider how customers will access after-sales services, warranties, repairs, or returns. A well-structured distribution network can aid in providing efficient support.
- Data and Analytics: Entrepreneurs often use data and analytics to track the performance of different distribution channels. This helps them make informed decisions to optimize their distribution strategy over time.
In essence, “place” within the marketing mix involves the strategic decisions entrepreneurs make to ensure their products are available to customers when and where they need them. It’s a critical aspect of a comprehensive marketing strategy that helps entrepreneurs effectively reach their target audience and drive sales.
How do you know who will pay for what?
This is something, again, most people struggle with. So having an Avatar in the previous step can usually help.
As avatars don’t buy products, people do, entrepreneurs now use their research in the previous step to find their first 5 customers. Why is 5 the magic number? To me, this seems to have more to do with putting humanity (back) into business. more to do with motivational psychology than mathematics:
we are the average of the five people we spend the most time withJim Rohn
Known as “foundation customers”, they are not your target market, and you don’t ask them what price they would pay. Early Adopters will find your target market, and what problems their friends have that need solving.
Early adopters are motivated by being the first. As Simon Sinek says, “They will line up all night to be the first to get the new iPhone”, when you could walk in next week and walk out with one straight away. They are also motivated to find the people who will pay 3 times more for a new product that is only twice as good, those people are the avatar you are looking for.
So, how do Entrepreneurs do it?
They have a process for everything. “SOPs” are part of scalability! And “monetizing” is the Entrepreneur catchphrase.
So, from what I’ve seen over 30 years in business, the process of setting a price for a brand-new innovative products goes something a little like this:
- Talk about what you believe, and only talk to others that believe what you believe, as Sinek would (again) say, start with why you do what you do. Steve Jobs said “We believe in challenging the status quo, we believe in thinking differently” (AKA, neurodiverse?)
- If you have to convince them why they should work with you, walk away. The late majority are the sceptics at the other end of the mass market you are looking for. Come back to them later on
- If they ask the “how” questions, how do I get it, how do I use it, you have what HR executives would call “management buy-in”. Empathic resonance is a key emotion that is an indicator that a customer is ready to make a purchase as part of the 5 step buyer behaviour process.
- That does not mean you are there yet. What you are looking for is the “what if” questions. What if [this] happens, etc. They are asking can you adapt it to another situation. Not their situation, early adopters don’t have problems, but they would have just thought of a friend that you have a solution for. They can ride in like a white knight on a bay mare, just like The Witcher, played by the same actor who was also Superman.
- This is where the horse-trading begins. They don’t want to pay, anything, but FOMO kicks in. But they will, as a free trial, in exchange for a testimonial. The line you use now is “I don’t think you are a potential customer, but maybe you know someone who is”?… “WELL, as matter of fact, I DO”, and just like that, hook, line, and sinker, you know their all in.
But it doesn’t end there…
You are teaching people how to fish, so they can feed themselves for life. You are NOT teaching fish how to bite.
The 2 key questions you need to teach foundation customers to ask their friends are:
- Is this a solution to your problem?
- What would you pay for it?
- What would you be willing to pay extra for?
See what I did there? Gave you extra value, right? No. If you don’t get a yes to the first one, no point asking the next 2. If you don’t ask the qualifying question, then you are not fishing for information. You are teaching fish how to bite, and they MUST (Make Up Stuff Too) answer questions that are irrelevant to them.
How do you know what price to charge?
This comes from the Airlie industry, specifically an HBR article from the 90s called “Right Away and All at Once: How We Saved Continental Airlines“.
This turnaround strategy works for startups too, or businesses restarting. This is effectively what many businesses are still trying to do after COVID. Particularly if they “rebranded” in the downtime during lockdown, which could be a factor in why 43% of all businesses failed to make a profit last year.
Step 3, in this process (again, Entrepreneurs love a good process), is “think money in, not money out. Which is why you ask question 2 in the above section. They will give you a list as long as your arm of what they will pay for. This is known as a “point of parity”, and Identifies what they see as the competition charge. However, this price places you in a crowded market and opens up the threat of substitution as a strong force against you.
Step 4 is “Ask the right customers the right questions“. Which we covered above already.
Step 5 out of 5 in the turnaround process above is “let the inmates run the asylum”. Sounds crazy, right?
But this is when a business transitions from being a startup into a going concern. The concern is, in a post-COVID economy, businesses have to go through this process again and again if they want to survive.
Not the full startup process but look at the data on the implementation of your placement strategy, in what many in business know as a 90-day “reset” (of goals and desired outcomes).
Find the wrong customers, in the business development phase and it will create a weakness in one of your 4 Ps that is difficult to recover from. Your business is doomed from the start, 100% of the time.
Customers are important, but not urgent. I think Henry Ford explained this best when he created a production line that is still used for manufacturing successful products today.
If I’d listened to my customers, I would have made faster horses.Henry ford
If you’d like to chat about any of this, and how we can help you develop your business, click below and book a discovery call. Or if you don’t like talking to people, send an email. Whatever works for yo is fine with us too.
About Inception Network:
Inception Network was founded five years ago with the mission to create self-employment opportunities for individuals. It focuses on supporting contractors and sole traders to grow their business so they receive regular work and can afford to put on staff to help.
About Business and Jobs Expos:
The Business and Jobs Expos, formerly known as the Small Business Expos, have been successfully running for the past 8 years. These expos provide a platform for all businesses, Governments, education, and training providers to connect under one roof (three times this year), to collaborate and explore support options for local small businesses to grow across southeast Queensland. To book your spot at the next B2B marketplace Expo, go to their website.