Ask almost anyone about marketing and you’ll undoubtedly hear about the four Ps: product, price, promotion and place (distribution). Over time the four classic Ps have been tweaked here and there, with some additions (there are marketing experts who have now increased the list to 7 or 8 Ps) and some folks now insisting that the move from mass-marketing to niche-marketing should result in a model that is more consumer-oriented and hence we should talk about the four Cs: consumer, cost, communication and convenience. But the bottom line is the same: there is a mix of elements that must be considered together when you decide how to market your startup’s product or service and price is just one of those elements.
The key is to make sure that all of the elements of the marketing mix (however you choose to define those elements) work together to provide a clear, consistent and compelling message about what it is your startup is selling. So when you think about how to price the product or service you offer, you must also consider how you wish to position your startup in the marketplace. Will you be at the high end, offering quality goods or services that can command a premium price? At the low end, because you’ve found a unique way to cut costs and know that money-saving customers will flock to your door? Or somewhere in the middle, appealing to a special niche with products and services tailored to fit their special needs?
No matter where you choose to position your new business, it is essential that all of the elements of the marketing mix reflect the same message. So, for example, if you are targeting the luxury market, you will want everything about your product or service to be tasteful and elegant; your promotional materials will be printed on glossy stock; and your distribution channels will be fancy boutiques rather than the dollar store, all consistent with the high quality of your offering and the high price you are charging for it.
If you are successful in communicating a consistent message throughout the marketing mix, you will go a long way to establishing your brand. A lot has been written about the branding process, but it is essentially establishing your company name, logo or tagline (or a combination of these) as a representation of your position in the marketplace, so that people know right away what to expect. For example, when customers see the Starbucks brand, they have specific expectations, whether they are buying a pound of Starbucks coffee at the grocery store or relaxing with a latte in a Starbucks shop. The name, the logo, the graphics – all of these have become a sort of shorthand for expressing the entire experience that customers have come to associate with Starbucks.
How do you make sure that your price and all the other marketing elements are consistently conveying the message you want? Well, you can start by using the classic 4Ps marketing mix model and answering a series of questions that establish your positioning in the marketplace. Need some additional insights? Purdue University has an online worksheet that delves even deeper into the marketing process. Finally, consider price from the branding perspective; this white paper from Wicked Start will show you how.