Santa Barbara, CA
Are Four Ps Enough?
Anyone who's ever cracked a basic marketing textbook knows marketing strategy is built around the famous four Ps: Product, Place, Price and Promotion. In other words, every successful marketer must offer their unique product/service in a certain place (or places), at a certain price (or prices) and they must promote (some would say market) their product's features and benefits to their target market as effectively and efficiently as possible—all very true.
But for the great majority of small businesses, this can often be the extent of their marketing strategy. Let's say, for example, they decide to open a small restaurant offering Turkish cuisine (Product). They try to find a location in a recently vacated restaurant to save money on remodeling and kitchen equipment (Place). They price their offerings about the same as the Italian place three blocks away (Price). And they have a Grand Opening where they hand out free samples up and down the street. After that, they count on Yelp to help send customers their way (Promotion).
Technically, all four Ps are in place. Will Cafe Istanbul be a roaring success? Maybe, if they guessed correctly. Unfortunately, around 80% of all small businesses fail by their fifth birthday. Poor marketing strategy is often the culprit.
The Fifth P
What our Turkish restaurateurs probably failed to consider is the concept that is the keystone for every real marketing strategy; Positioning. It can be defined as the spot a product/service occupies in a consumer's ranking system, relative to the competing products, services or brands that they are aware of. The higher the rank, the better. The term was born in 1981 when two Madison Avenue veterans, Al Ries and Jack Trout, wrote the book, Positioning: The Battle For Your Mind. Still in print, it's now called a Marketing Classic, earning 4.5 stars from 270 Amazon reviewers.
Their premise is easy to comprehend but harder to accomplish. Every business must strive to take and hold a position in the marketplace not already occupied by someone/something else. They must differentiate their offerings so that current and future customers see them as unique and know why. It's how those customers will make the decision to buy, re-buy and tell others why they should buy too. The most successful products and companies stake out their position very carefully and then protect it with their life!
Good companies build their brand around their position by attaching images, stories, colors, music, and especially emotion to that position. Done right, customers literally want to join the brand—it becomes a part of who they are as a person— and a consumer. Great branding is really the child of great positioning.
What Dairy Farmers Know About Positioning
So what makes a great position? It turns out dairy farmers have the answer—it's those short, three-legged stools they've squatted on for what must be hundreds of years now. The humble milking stool only has three legs because it will self-stabilize on irregular surfaces like cow pastures or on barn floors—four legs are too many and actually not as stable.
So just like smart dairy farmers, great positioning sits on three legs as well. And each leg is vital—all three must be in place for a marketing position to succeed. The three legs are: Different & Better; Needs of the Target; The Other Sharks in the Water. Let's examine all three more closely.
1. Different & Better
A Marketer's Only Real Leverage
It sounds simple but actually is not. Your product/service must be both different AND better than the other products/services of which the consumer is aware. The consumer is looking hard for this and the faster they can see and believe it, the better.
For simple products, the difference may be as small as size, color, price or flavor. For more complicated products, like a digital camera, the differences can be subtle, nuanced and much harder for the customer to discern. They might say, "I see that feature is different by why is it better?"
For products that also come with some service included, like a restaurant, the differences can vary from day to day because people deliver service so it's almost never the same every time. A meal at a diner or a drink at a bar can be different each time it's consumed but it may not always be better—it may be worse!
For marketers who sell only services, being different and better becomes even more difficult. For example, what makes one lawyer different than another? They're a different person, but are they better than all the other lawyers? Most consumers who buy a service do so because they can't do it themselves—try giving yourself a good haircut, a root canal, or defending yourself in court. For service providers, expertise is often what makes them different and better—we like to be serviced by or cared for by experts. But here's the paradox; how does the non-expert consumer assess the service provider's expertise? Again, different and better sounds simple enough but for consumers trying to choose the right service provider, it's not.
Let's get back to Cafe Istanbul for a moment. Americans love to eat in ethnic/foreign restaurants—we may have almost as many Italian restaurants in America as in all of Italy. So Turkish food certainly is different from other ethnic food—and some will say it's also better. Good news! We may have our first leg to stand on.
And since our product offering is almost completely under our control, we'll need to make our Turkish cuisine and dining experience as perfect as we can. We want our customers at Cafe Istanbul to leave delighted and eager to tell their friends and family how special we are. We want them to remember and to tell others just how different and better we are!
Bottom Line: Our offering has to be both different and better, and our current and future consumers have to be able to see that easily!
2. The Needs of the Target
The Reason Consumers Want to Buy
The smartest marketers choose a target market for their product/services—you can't please everyone all the time. So they look for a group of people or companies (in the case of business-to-business marketers) who have a common need, want or problem that needs solving. Then, they determine if any or all of their products meet that group's specific needs. That way, they are presenting their product/service to a group of consumers who see their product/service as THE ANSWER. "Yes, this is exactly what I need; Oh, that's something I really want to have; Wow, that will solve the problem I'm having right now—thank goodness!"
Really smart marketers find a group whose needs are not being met adequately by any product or company and then they specifically tailor their offering to meet those needs. Unfortunately, many marketers fail by first building their product and then trying to force it into markets that it won't really satisfy.
But why do consumers want, or better yet, need something? Research tells us that consumer decision making is driven/motivated almost completely by emotional rather than rational thought processes. And that has lots to do with the way our brains evolved. As consumers, we either want to have positive emotions happen/continue or we want negative emotions to stop. But here's what is most important: we are far more motivated to make negative emotions stop. See more about the related concept Loss Aversion here.
Why is this? Most psychologist agree humans experience six basic emotions: happiness, sadness, fear, anger, disgust and surprise. Happiness, of course, is positive; sadness, fear, anger and disgust are negative; and surprise is neutral, it can go either way.
So the scales are tipped toward negative emotions, but why? Probably because those four and a half negative emotions helped us evolve over millions of years—our ancestors avoided situations that caused those emotions and we still do. Those feelings helped us take the action we needed to survive. The famous fight or flight survival mechanism is driven by anger and fear!
Smart marketers (and political campaigns who are selling a candidate instead of a product) often use fear and anger to motivate their customers/voters to take action. "Do you know how much damage termites may have already done to your home? Better call us for a free inspection right away!" This clever appeal taps into both the fear of expensive damage to our most important investment and the disgust many of us feel about insects in general. Pushing more than one emotional button is almost always more effective!
For humans, feeling happiness and/or achieving something positive always comes second to making something painful stop and hopefully never return. We haven't evolved by primarily striving for positives, we are here because we avoided negativity first and foremost!
Surprise is the wild card emotion for marketers. It's wonderful to surprise your customers with something more positive than they were expecting. "Wow, I didn't realize our room would be this large and this close to the beach!" However, research tells us that being negatively surprised by a product or service can do much more damage. The sour customer may never return AND is more likely to tell others about a negative experience than a positive one. Disappointing a customer with an unpleasant surprise usually goes viral in a hurry!
Back to Cafe Istanbul again. First question; What group of people in what location will want to partake in a Turkish dining experience right here in America? Let's assume there aren't enough Turkish visitors, students, or recent immigrants in our town to keep the seats full with folks looking for a taste of home. That means we have to discover a demographic group that would like to occasionally dine out and enjoy authentic Turkish cuisine in an authentic Turkish atmosphere—they want the flavor and feelings of Istanbul without the long, expensive flight and unfamiliar foreign travel experience. Maybe our town has an area with other unique/ethnic restaurant experiences. That would be a perfect location for Cafe Istanbul because our target consumers already frequent that part of town. And, we'd be right there as an alternative if the other restaurants were too busy or growing old or boring.
The desire to dine out, especially with good friends or family, can be motivated by both positive and negative emotions so that gives us several ways to position our restaurant. Food (and alcohol) consumption can often be a pleasurable experience that produces positive emotions so it's something many of us want/need to have. Our innate human need for socialization is also a powerful motivator—we want to avoid loneliness—we want to be connected to others. And finally, our need to experience something new and different (a positive surprise) can help bring new customers in the door! Although unfortunately, roughly half of us are late adopters and we'd see trying something new as way too risky. Luckily for new restaurants and other startups, the other half of us are much more adventurous. 🙂 Read more on the diffusion of innovation here.
Bottom line: Smart marketers find the right group of consumers (target market) and give them the product/service that group wants or needs to help them turn on or turn off their specific emotional buttons.
3. The Other Sharks in the Water
Some Environments are Much Better than Others!
Very few businesses exist in a competitive vacuum! If you happen to run the only concession stand at the summit of a 5-mile uphill hike in Yosemite National Park, there's a good chance you can sell food and water to the hardy wanderers who make it to your door. But those situations are pretty rare; especially for small businesses.
There are almost always other sharks (competitors) in the water, and they come in varying sizes and degrees of ferocity! Smart marketers stake out the third leg of their positioning strategy based on their specific competitive environment.
We need to assess who and how many direct competitors can also serve our target market as easily or more easily than we can. We should avoid a crowed marketplace for several reasons. First, there probably aren't enough customers to go around so we'll have to fight harder (and spend more) to promote our position. Second, in crowded markets, price can often be the only point of differentiation when everyone is selling almost the same thing. That can result in price wars that very often produce a race to the bottom. Too many unsophisticated marketers have jumped into a market because they thought they could offer the same thing at a lower price—but that automatically means lower profit margins and that's never been a good way to grow a business.
What about the size of the other sharks? Fortunately, small businesses usually compete with other small businesses. Everybody has roughly the same amount of money, resources and expertise, so nobody has a large competitive advantage. But small players really struggle when trying to compete with large, well-funded sharks. Big companies almost automatically have strong brands and consumers trust well-established brands. It's why they'll pay more in a grocery store for brand name products over the generic store brand, even thought the container's contents might be exactly the same. Remember, consumers are always looking for differences and brand names are shorthand for better.
We can try to compete in a crowded marketplace with both small and large sharks BUT our offering has to be very different and way better and/or it has to meet a need/want that nobody else has been able satisfy. If we can truly say this about our product then it's probably a revolutionary new thing and those don't actually come along that often, despite what infomercials try to make us believe. If you can honestly say what you offer is revolutionary then you need to hire a good legal team to help you protect your baby. The smartest sharks are always looking for success stories they can copy and big sharks have the money to eat you alive.
Let's assess Cafe Istanbul's competitive environment. First we need to check for direct competitors—other Turkish establishments and other ethnic restaurants. We'd only try to compete directly with an established Turkish restaurant if it was failing but their customers still seemed to desire delicious Turkish cuisine—that would be a good opening. But if they were doing very well, we'd have a tough time pulling their customers away. People like to stick with what they know.
As far as other ethnic eateries, if there were several others that seemed relatively successful, that would be a good sign. It means there must be a good local appetite for different flavors and experiences. The only question; are there enough consumers to fill a profitable percentage of all those seats week-in and week-out?
That leads us to indirect competition. That would include not only ALL other restaurants (how many and how large) BUT also the other things upon which consumers might spend their discretionary dollars—entertainment, shopping, recreation and so on. When the economy is good, people have more to spend on food and non-essentials. If we want to make a go of Cafe Istanbul, we need to pay attention to our local economy.
Bottom Line: Smart marketers pay lots of attention to ALL the sharks in their waters around them. They know who and how big they are and they know what position the other sharks occupy. Most importantly, they know both the strengths and weaknesses of the other sharks. They try to match or even exceed the strengths and exploit the weaknesses!
Articulating A Position
Good Marketing Plans often revolve around a Positioning Statement. In as few words as possible, it describes what makes a product/service or business different and better, compared to other offerings because it meets the specific needs/wants of a certain target market. It's really the most important thing a marketer can do to create an actionable, coherent road map for success.
So let's articulate a clear position for Cafe Istanbul using the three-leg model.
- Different & Better: Cafe Istanbul offers an authentic Turkish cuisine whose roots come from the Ottoman empire and Turkey's unique location at the crossroads of Europe and Asia. Turkish hospitality is famous the world over and patrons can enjoy dishes with flavors and textures one must experience to truly appreciate .
- Needs of the Target: Cafe Istanbul is the perfect choice for adventurous diners who aren't afraid to step outside mundane restaurant fare. And for those who have traveled to the Mediterranean, it will spark fond memories of warm evenings, dining and laughing with friends and family who share a love of travel and foreign cultures.
- Other Sharks in the Water: Located in the popular Hillside neighborhood, Cafe Istanbul is right in the heart of the trendy restaurant district, just down the street from the famous Rialto Theater and the Hopkins Art Collective.
This Position above stands firmly on three legs and therefore has a real chance of success. Cafe Istanbul will offer a truly unique product and service to a target market of sophisticated, adventurous customers in a location that gives it the best chance for success against minimal direct competition.
Final Word: Every small business can benefit from taking a hard look at their position in their unique marketplace to see if it really stands on its own three legs!