Lessons from Business School: You Can’t Spell “Sales” without Four Ps

Business.com / Sales / Last Modified: February 22, 2017

Production, Placement, Promotion, and Pricing. These are the four Ps we learned about in business class, and for good reason.

The “four Ps of sales” are the cornerstone of MBA training. You should periodically evaluate your business through the lenses of:

  • Production (also called Product)
  • Placement
  • Promotion
  • Pricing

With the exception of Pricing, which brings in revenue, the Ps are expenses. It doesn’t matter in what order you address them. What matters is that you have control over all four, and you can’t afford not to address them.

Production (Product)

You have a product (or service) that you sell. That product has features and benefits, as well as service needed, a warranty, and installation needs. It is also something that you produce; and that production involves manufacturing processes and costs. (The same applies to services, except the costs are related to how you provide the service and the expense of providing it, primarily involving human capital.)

Your key concerns:

  • Keep production costs as lean as possible. If it costs more to make the product than you are selling it for, that’s a problem (although loss leaders are sometimes used to promote other product lines).
  • Maintain appropriate quality. Keep in mind that what’s considered high quality for a Swiss watch is different from a Swatch watch. You don’t want to disappoint your customers with shoddy goods, but there are different quality expectations for different types of goods. New software releases (as well as new auto platforms), for example, are expected to have a few (or more than a few) glitches in them.
  • Achieve sustainability. You need to make production sustainable. Not just in the environmental sense (though that of course is also good), but also in the sense that you have sufficient resources to meet demand as needed.

Related Article: Fill It to the Top: Tips to Ensure a Strong Sales Funnel

Placement

Placement refers to distribution, or how your product gets to customers, and includes warehousing, fulfillment, electronic download and shipping. Another important element is another P-word, packaging. This includes not only how your product is boxed for inventory and shipment, but how it is displayed and branded. According to the Family Business Experts, packaging is the crucial meeting of marketing and advertising strategies with storing and shipping that improves branding and value proposition to increase sales and profits.

Your key concerns:

  • Does the packaging protect the product, convey the brand and minimize waste to reduce shipping and packaging costs? For an example, look at anything you’ve ever bought from Apple.
  • Is your supply chain efficient enough to meet customer needs and minimize your operational expenses? Supply Chain Management notes that an effective supply chain management strategy addresses the following:

- Distribution Network: number and location of suppliers, production facilities, distribution centers, warehouses and customer sales points.

- Distribution Strategy: centralized vs. decentralized, third-party logistics, fulfillment and shipment strategies.

- Information Systems: historical, current and forecasted data concerning inventory, suppliers, transportation and customer demand

- Inventory Management: Quantity and location of raw and finished goods.

Promotion

The philosophy of “build it and they will come” only works in the movies. Promotion includes not just advertising and marketing, but branding. Your company as a whole, not just a particular product, must convey your message to customers.

Your key concerns:

  • What marketing channels are you using, and which get the best results for your advertising buy? These channels include broadcast media, online presence, social media, print, direct mail and billboards.
  • Do I have a consistent brand identity that conveys the essence of the company and its products and services? Again, think Apple.
  • What are the best times to promote? Aside from seasonal patterns, does your product fit into a particular business cycle or social trend? Ahead of the curve is always better than behind it.
  • What’s my competition doing? You may want to respond to competitive advertising, by comparing and contrasting your products with theirs. See Microsoft vs. Apple or, since turnabout is fair play, Samsung vs. Apple.

Related Article: Born to Sell: Do You Have Sales Personality?

Pricing

You want to set price points that return a reasonable profit and sustain your business.

Your key concerns:

  • What is the customer willing to pay? Does your product offer added value that justifies premium pricing? Do customers have any price expectations, and are they willing to pay a premium?
  • Discounts? Price reductions could be justified for quantity purchases or to empty inventory levels. In some cases, though, discounts could be perceived as “cheapening” certain premium products. Sometimes customers expect to pay more as an indication of perceived quality.
  • What are your competitors doing? Unless you can offer value-adds, you need to stay in line with what your competition is offering.

If you keep on top of all your Ps, you’ll have one more P to add—Profitability.

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