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Lesson Four Worksheet

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In lesson four you will learn about the marketing mix and how to use customer value to direct your marketing strategy. There are two ways to experience the lesson plan:

This lesson plan is approximately 17 minutes + 40 minutes to answer the guided questions inside the Lesson Four Worksheet. Your responses to lesson plan worksheets are used to develop your personalized brand strategy and design. Please complete all worksheets in a timely manner to keep your project on track.

 

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4.1 Marketing Mix

In the previous steps, you conducted a situational analysis that answered what tasks must you do and what tasks do you do best but now it’s time to shift gears and focus on the third question: what tasks might I do? This is where the marketing mix comes into the picture. The marketing mix is a personalized strategy of activities that you will do to increase customer value and grow your business. 

Think of the marketing mix as your secret family recipe: it combines all the unique ingredients of your business to form a delightful dessert of success. It’s important to remember that the recipes’ uniqueness is what makes it so special; the ingredients and instructions will vary from other recipes. The same is true for your marketing strategy. It’s okay to admire what other competitors are doing in their business but the goal here is to be unique and different! Not all marketing activities work the same for every business. This is why you can’t just copy what industry leaders in your market are doing. If you want to succeed and standout longterm then it’s important to focus on your own strengths and develop a marketing mix that works for you!

There are four key areas in a marketing mix: product, promotion, price, and place. We will explore each of these areas more but first, let’s talk about your customer value proposition. Your customer value proposition is the cluster of benefits that you promise to your customers. A winning customer value proposition answers these main points:

  • How does your product/service solve problems or improve a situation?
  • What specific benefits can a customer expect to receive from you?
  • Why should a customer buy from your rather than someone else?

Here are a few examples of customer value propositions from big companies you know.

  • Wal-Mart: “Everday low prices” on a large range of products always in stock in every neighboorhood location.
  • Amazon: “The most customer-centric company” offering a large range of products at affordable prices in the most convenient method for customers.
  • Starbucks: “Create a culture of warmth and belonging” through exceptional store atmosphere and direct customer intimacy.

As mentioned above, the goal of the marketing mix is to increase customer value. To achieve this goal we use the customer value proposition to direct all our marketing activities. In the example above, Starbucks is an easy and obvious illustration. Starbucks promises its customers an exceptional atmosphere with intimate customer relationships. Here are a few examples of how Starbucks’ customer value proposition directs their activities:

  • Calling customers by name
  • Using technology to remember customers’ birthday, drink order, and preferences
  • Writing customers name on cups
  • Large, clean storefronts decorated in warm tones
  • Large comfortable furniture and chairs that encourage customers to linger
  • Soft, inviting music for ambiance

If you take a moment to think about other companies you know, then you may begin to realize how at the core of every good brand is a well-thought-out strategy to give customers exactly what they want and need. This is your goal for your own business.

 Pause to answer questions in Lesson Four Worksheet. Your responses to lesson plan worksheets are used to develop your personalized brand strategy and design. Please complete all worksheets in a timely manner to keep your project on track.

4.2 Product Strategy

The product strategy focuses on what you offer customers. Products offerings can include tangible products or intangible services. There are two major considerations for your product strategy: how many types of products/services to offer (product width) and how many variations of those products to offer (product depth).

Product Width

Deciding on how many different product/service lines to offer is a strategic decision that deals with product width. A company like Maybelline Cosmetics specializes in a wide product width with many different types of products, whereas a company like Essie has a narrow product width with a limited product line. 

Product Depth:

Product depth deals with variety within a product category. Following the previous example, Essie has a small product width as they only sell nail polish; however, Essie has a deep product depth because they sell many nail polish color variations.

A winning product mix can look very different from business to business, but there is one piece of research that may assist you in determining the right product mix for your own business. 

More is not always better

Sheena Iyengar from Columbia University conducted a famous marketing study demonstrating that too many product options result in fewer sales. If you’d like to read more on the study check out The Harvard Business Review or The New York Times for a fascinating explanation of why too many options are paralyzing to customers. 

Using Iyengar’s research, many companies have implemented strategies that are now considered best practices. In this lesson, we will cover two best practices: rule of three and bundling.

Rule of three :

The rule of three states that product variations, options or packages should be offered in sets of three. Take a moment to think of the products and services you purchase on a daily basis and the rule of three will become more and more evident. When you order from fast food menus there are almost always three sizes: small, medium, or large. When you are selecting membership levels there are usually three options: basic, premium, or platinum.

Bundling:

Bundling is an excellent strategy to simplify a product offering while adding value and is achieved by combining two or more products/services into a single package. Bundling often results in increased customer satisfaction because clients value the package more than individual items. Bundling can save time, money, and energy for both the client and business. 

Certainly, these are not the only strategies to develop a healthy product mix. The most important takeaway is to keep your product offering simple and easy for clients to understand. If you are constantly calling customers to explain your packages, then it’s probably too complicated and harming your sales potential.

Pause to answer questions in Lesson Four Worksheet. Your responses to lesson plan worksheets are used to develop your personalized brand strategy and design. Please complete all worksheets in a timely manner to keep your project on track.

4.3 Promotion Strategy

The goal of a promotion strategy is to communicate three key points to customers:

  • What type of offering is available
  • The unique benefits and features of the offering
  • Where and how to obtain the offering

Word of mouth 

Word of mouth is the most powerful information source influencing your promotion strategy. Simply put, customers trust the experience and opinions of their friends, family, and even strangers who have previously used a product/service. This is why referrals, website reviews, and ratings play such an important role in your marketing plan. To capitalize on the power of word of mouth, you might consider viral marketing initiatives. 

Viral marketing is an internet-enabled promotions strategy that encourages customers to refer their friends or share a testimonial in exchange for discounts, sweepstakes, or free merchandise. 

Word of mouth especially plays an important role in “risky” or expensive purchases. The more expensive or important the offering is to a customer, then the more likely it is that the customer will seek information from other sources (such as reviews or word of mouth referrals). Understanding where your own offering falls in this relationship can help you use viral marketing efforts and harness the power of word of mouth. 

Anatomy of a promotion strategy

To have a successful communication plan, it is important to understand what information customers think is necessary (price, size, location), where they will seek it (online, magazine, social media), when they will seek it (how far in advance and on what days), and how they will apply the information once obtained.

Pause to answer questions in Lesson Four Worksheet. Your responses to lesson plan worksheets are used to develop your personalized brand strategy and design. Please complete all worksheets in a timely manner to keep your project on track.

4.4 Price Strategy

Pricing strategy is arguably the most important and yet most challenging element of the marketing mix. The pricing decisions you make directly determines the types of customers and competitors you attract. There are many books and research studies that deal with pricing strategy. These are great tools to sharpen your business skills, but today we will only focus on the most common influences of price for your small business.

The relationship between quality and price

Price alone can influence a customer’s perception of quality and prestige. When priced too low, customers assume the product/service is low quality or faulty. When priced too high, customers think the product/service is overpriced because the cost is higher than the perceived benefit. What we have on our hands is a classic Goldilocks scenario: the price can’t be too hot or too cold, it has to be just right. When done correctly, the customers’ perceived benefits are greater than the price resulting in high customer value.

value = perceived benefit / price

 

Pricing Psychology

Pricing psychology is a complex and fascinating area of research. There are many strategies that have developed out of this field of study. Nick Kolenda’s article on Pricing Psychology is our favorite resource filled with free, insightful and practical pricing strategies for small businesses. Full disclosure, this is a lengthy guide with A LOT of information. It can be difficult to get through such a hefty set of information in one sitting, but in your own time, we highly recommend revisiting this article to improve and grow your business.

Pause to answer questions in Lesson Four Worksheet. Your responses to lesson plan worksheets are used to develop your personalized brand strategy and design. Please complete all worksheets in a timely manner to keep your project on track.

4.5 Place Strategy

The final element to a marketing mix is the place strategy which focuses on distribution channels between manufacturers, retailers, and ultimate consumers. With the popularity and growth of online shopping, small businesses now have the opportunity to bypass traditional distribution channels and sell their products or services directly to customers. 

If you fit into this category then take a deep breath (because this lesson plan is almost over) and thank the internet (because the world wide web is awesome). Now, more than ever before, small business have the opportunity to sell a product or service without going through an intermediary.

If your business model is more on the traditional side and you are interested in learning more about distribution strategies let us know and we will be sure to schedule a special coaching session. For everyone else, pass go and collect $500! Thanks for sticking this lesson out.

 

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