Updated: Nov 11, 2020
They say all good things come in three’s. In product management, you can use the power of three too. It can dramatically improve the effectiveness of your merchandising. Let's explore how this works...
We have all heard of the 3Ps of Marketing, delivering the right product to the right audience at the right price. But this magic number is also used by many brands to guide customer buying behaviours. Are you making the most of it in your business?
Let’s explore the 3 Ps in Marketing;
Product You product range must be clear, consistent and fresh. It is important to offer a breadth of choice with clear USP's and benefits that differentiate you from the competition. Place Your chosen route to market must compliment and support your product strategy. The customer journey must be well defined and easy to navigate. From the moment they first interact with your brand to completing a sale all the way through to aftercare. Price Customers are much better equipped to compare product prices at the touch of a button. If the price is badly positioned (too high or too low), customers will switch off and look elsewhere. It won't matter how good your product is or how well you outperform the competition.
I can hear you all say, “I’m sure there is a fourth P". It would be remiss of me not to mention, Promotion at this stage. This P defines your strategy for marketing your products to your customers.
Most companies consider Marketing to be one of the key drivers of success. In a crowded market place, companies continue to invest heavily to stand out. As a result, this array of choice has made customers more demanding in their expectations.
A trap that many companies fall into is to only focus their efforts on Marketing. Yet, if you ignore the foundations, you run the risk of little return on your investment over the long term. That is why for the purposes of this post, we will focus on the often overlooked, first 3P’s.
Let's discover how to use our magic number to restore balance to your product mix. This method is not a new concept, but is very effective when adopted to construct a Product range. It offers flexibility to cross and up sell products to promote customer retention. It is also a simple technique to review your portfolio on a regular basis to keep up to date with evolving trends.
Most customers will have a defined criteria in their minds when they set out in search of an item. Subconsciously, they will draw on past experiences, research and preferences. Marketing and messaging will have an influence, as will the budget they have to spend.
Taking a step back and looking through the customers' eyes, will give you clarity and areas to improve on. Your customers should feel empowered to make informed choices that best suit them.
This rule of 3 makes this task much easier, here's how:
Entry Level – A new customer to your brand, is likely to be curious yet cautious. Including an entry level to your range, can be a great introduction for them. This enables customers to trial your products with little perceived risk. The products are set at a low price point and are a steppingstone to entice customers to engage with your brand.
Mid Range – This is where the majority of your product offering is likely to sit. Each product should clearly state features and benefits.
Ensure your positioning is also reflected in your price points. Highlight complementary products and accessories where relevant.
Using this technique allows you to showcase the full breadth of your product range. It promotes possible cross-sell and up-sell options for your audience. The customer has the control to weigh up the price and benefit of each product to find the best fit for them.
Premium Range – This should be your star product. The range that showcases what your business stands for and what customers aspire to buy into. This range will be at a higher price point and will hold a higher perceived value. The experience should deliver customised benefits, or a sense of luxury and indulgence.
Supermarkets are a great place to see this in action. During your next weekly shop, take a look at how products are displayed.
Value and own brand items are on the bottom shelf (Entry Level). On the middle two shelves, mainstream brands, all grouped by category, brand and price. The positioning at at eye level guides the customer to see them first. (Mid range)
The premium products that offer a more decadent, gourmet option are all on the top shelf. (Premium range).
Designer brands follow a similar pattern but tend to lead with the Statement pieces . Couture items that showcase the brand displayed prominently (Premium Range). The main stock will be Seasonal or Pret-a-Porter collections, (Mid Range). Impulse purchases and small accessories are also available (Entry-level). These allow the customer to buy into the brand at an affordable price.
This method is not restricted to hardware. Service led companies can also benefit from using this technique.
Spas for example, offer grooming products and mini treatments as their Entry Level.
The majority of their treatments sit within their Mid-range. These are often offered with a price incentive when you buy more than one in a single transaction. Their Premium Range is usually a full Spa day complete with lunch and champagne included.
Customer experience is fast becoming the key driver to win repeat business and gain a loyal customer base. Simplifying and clarifying your product offering, is a an easy way to enhance their experience. Customers will feel more comfortable, more informed and more likely to find what they are looking for.
Applying this technique can also gain efficiencies within your business, such as:
Simplifying back-office administration and pricing processes
Identifying gaps and opportunities to launch new products
Increasing your average transaction value by offering complimentary products
The agility to adapt your range to meet market trends
Regardless of the size of your product range, the key to success is in getting these fundamental elements right.
When was the last time you had a review of your original Product and Service mix?
Is it still fit for purpose as customer trends and demands change?
How can you apply this method to enhance your Product Mix further?
If you would like to know more or would like help to set this up within your business, I would love to hear from you.
Product Range Management is my passion. I can review your data, analyse and optimise your range to meet your goals. I can also empower you with tailored tools to use in the future so you are always ahead of the game.