They missed some critical elements in your B-school education. The “4 P’s” of Marketing, also known as the Marketing Mix: Product, Price, Promotion, & Place (Distribution) serve as the back-bone for any business.
While the teaching’s are timeless, they are not complete. With that said, I propose the “2 missing P’s” in Marketing…..
POWER – The strength of your competitive position
The Golden Rule: He who has the gold makes the rules. Simply put, the more power one has in their niche, the better. There are many reasons why strong market positions matters, pricing power at the top of the list. Perhaps the most important of all? The CUSTOMER votes everyday with their purchase. The largest share player in a category is usually (not always) the player that is winning the vote from the customer, and that matters most.
Power is measured by the all mighty market share. Your $ revenue as a % of industry revenue. If you are selling $100mm in a $1bb category, you have a 10% market share. Whether that means you are in a #1 or #10 share position is dependent on many factors. In general, the more competitors fighting over points of market share, the more “fragmented” the competitive space is.
Why else is market share important? Simply put, if your growth is not keeping pace with the category, you will be loose market share. In the above example, if the category is growing at 10%, the future sales will be $1.1bb. If you grew at 2%, your sales would be $102mm, and your share would fall to 9.3%. While that does not sound like much, that is an erosion of your competitive strength of -7%
10% -9.3%= .7% share point decline. .7% decline over your base 10% (-.7%/10%) = -7% decline.
So $ growth of +2% translates into a -7% loss in competitive position. Growth needs to be viewed in the context of your competitive space.
PEOPLE – The secret sauce of every business…..
Have you ever worked on a killer new product that never got off the ground?
Have you struggled to protect margins as customers (and your sales teams) demand lower pricing?
Have you seen competitors with fewer resources grab market share in light speed?
Has growth stagnated with no solution in the pipeline?
All of these challenges have a people component at the very core of the issue. There are countless books written on leadership, customer service, social media, strategy, execution and countless other topics. What underlies all aspects of business are the people in it, their focus & commitment to the greater good of the organization. The people create the products, sell them to the customer bases, everything that exists from an “order to the cash.” There’s a favorite saying I have: “People make things happen…..or NOT happen.” It sums it up nicely.