Finding the Right Price

One of the hardest challenges that businesses face is determining the right price for a product or service. It is not as simple as determining your costs and adding a percentage markup. Actually in total, there are at least five other factors than costs that affect price, and all of them are important to consider when determining your price.

First of course, you do need to cover your costs. This means that you need to be able to pay for the materials, labor, and overhead that go into your product or service. The problem is that overhead is a grey area. Many factors of pricing affect this dramatically.

One of these is your overall organizational and marketing objectives. The overarching goals of your organization can end up having a great effect on your costs. The more you want to do, the more your overhead will grow. Before determining price, thinking about where you are and where you are going. A major challenge of pricing you want to consider is that once you set a price it is often hard to change it, especially to raise it.

Plus, you need to think about how much you plan to spend on marketing and advertising. Advertising is an important tool that can bring in new customers and bring back existing customers. It is crucial to any business, but it also has a cost that should be put into the price. If you plan ahead and set a budget that is included in your price, spending on advertising will not be something that you feel like you are spending your profits on. Instead, it will be planned and accounted for in your price.

Next, there are legal and regulatory issues to consider depending on your product or service. These must also be included in the price. While this does not affect everything, it has a big effect on those it does reach.

After looking internally though, it is time to look externally to set the price. What is the competition priced at? Are you going to enter the market as a high, medium, or low priced competitor? In addition to this, ask yourself, what value do you provide to your customer in that price and how will you customer respond to your product and service? All of these external factors can influence price.

Finally, the last factor to consider is your personal pricing objectives. This is wear markup and profit comes into price. This is when you get to determine what additional profit you want to make after considering all the other facts. Be warned though, the markup must match the external factors previously mentioned. If the product is highly priced, but has no value to consumers, no one will buy it.

For better help understanding how to plan for advertising and marketing expenditures, Adventure Ad Agency is here to help. Please email us or give us a call anytime!

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The Four Ps and What they Mean for You

Product, Price, Place, Promotion. In marketing, we like to call these the four Ps. These four strategy perspectives are a powerful way to examine any product or service and its marketing strategy. Whether evaluating someone else’s product or service or your own, by first looking at the existing strategy, you can then see where there is room for improvement.

Product  is simply taking a look at what product or service is being offered. From the raw materials that go into it  to the label on the box, examine what exactly the product being provided offers for the customer. Specifically, what value does it have. Looking at the value is especially important for the service industry, as they often do not have physical goods being provided. Their product is the value gained from their service.

Price may seem obvious, and it is. How much does the product or service cost? After asking yourself this question, it is important to then decide if the price set covers the costs of providing the good or service, as well as accurately accounting for the value. Later, when examining the competition, understanding your price is key.

Place is the strategy of determining where your product or service is being purchased. This part is key to learning where the audience for you product is. By determining where the items are going, you can better focus on providing value specifically to a more targeted audience, as well as advertising to that same targeted audience. You could also potentially see where your product or service is not reaching, that you believe it should reach. Then, you can adapt your marketing strategy to that audience.

Promotion – Finally, promotion has everything to do with advertising. Ask yourself, how are you currently advertising and promotion your product. Looking back then at product, price, and place, you may learn many ways to improve your advertising strategy.

The most important rule of the four Ps though is to always look at them in context, more importantly in context of the competition. These four ways to look at your marketing strategy are made even more powerful when used while also considering the competition in the market. Once you know your own product, price, place, and promotion and work to improve them internally, you can then look at the competition’s product, price, place, and promotion and improve externally.

10 Things Every Marketing Plan Should Have

The first step in developing any marketing strategy is to start with a plan. Developing a plan for your marketing strategy may seem overwhelming. Plans can range from super simple to extremely advanced and complex. However, all marketing plans, big or small, have a few things in common. We will go over ten necessary elements that all marketing plans must contain in order to be successful.

1. The Product

Possibly the most important aspect of your marketing plan is the product. What makes your product superior to others in your industry? Why would someone choose you over someone else? Find what makes your product unique and go with it. Emphasize what you can offer that others can’t.

2. The Research

Okay, so now you know why your product is the best, but whose going to buy it? You need to conduct market research to analyze buying trends in your industry. Collect, organize, and analyze data regarding the demographics of customers, your competition, current sales in your industry, suppliers, and market patterns. This valuable knowledge can help you successfully market to the right people in the right ways.

3. Define

Once you understand the market, you need to define the target audience. Instead of trying to please everybody, zone in on a specific group of people who will be more likely to purchase your product. Describe you ideal customer in detail. Be sure to get more specific than women in their 30s-60s. Really dig deep to decide who your ideal customer will be.

4. Goals

Don’t just keep your goals in your head. Writing them down can help you more clearly define them and set realistic, but ambitious goals. Write full sentences that state what you want to accomplish in your business overall and through your marketing strategy specifically. You can break up your goals into specific mission statements, and it may be helpful to make them quantifiable. For example, a mission statement could be to gain two new clients a month.

5. The Medium

Where is you marketing strategy going to take place? Will your company benefit most from social media or a more traditional approach? Think about which mediums appeal to your target audience and how your product will best be displayed.

6. The Promotion

Putting your product on social media or on television is not enough; you must also promote it. Promotion could be consistent branding on social media, events, giveaways, etc. There is no right or wrong way to promote your product. You just need to make sure you are consistent with your brand and reaching the right audience.

7. The Positioning

Where your product will be positioned in the market? You must decide if you are going to be top-of-the-line or if you want to seem more casual and appeal to the masses. Decide a position for your product and make all of your advertisements surround it.

8. The Schedule

Once you have all of your ideas mapped out, you need to place them on a schedule. Keep the schedule brief and organized, as it will likely need to be changed frequently. Having a schedule can help you keep yourself on track and better monitor how your strategies are doing.

9. The Budget

Of course, in running any business budget is important. See what strategies you can afford and which may be better saved for a later date.

10. The Analytics

How are you going to monitor your results? You need to ensure you can test and analyze to identify the strategies that are working. You can use tools such as surveys, database management tools, and number of engagements to measure your success.

Now you are ready to begin your marketing plan! Be sure to consistently compare your actual marketing strategy to your plan and make sure you are reaching your goals.