Imagine you have just found a way to produce a lot of donuts at a time at a low cost per donut. For every 100,000 donuts you make, you only have to pay $80,000 rather than the $100,000 that other firms have to pay for them. This means that you get higher profit margins if you sell at $2 a donut than other firms would. It sounds like a greater business venture right? But here’s the thing, you need to successfully sell your donuts to make that money and that may not be easy. Here are the 4 P’s that you can use to make your product(s) successful!
Product design
The first thing you may need to consider is what kind of product you’re going to sell, e.g. pink frosted donuts. Some important things to consider about your product is the functionality of it, the ✨aesthetics✨ of your product and the economic aspect of it. When thinking about the function of your product, you basically have to consider how it works. You need to consider if you want to make a product for travel or for cooking. Of course, it doesn’t make sense to sell a donut with the intention of having it be driven around so you need to make sure it’s fit for its purpose (eating) and that its not dangerous to eat. But the donut cannot be a simple donut as many customers may wish to buy it simply for how it looks. Therefore, how the donut looks will be important to take into account as well. Sports cars are similar in that they look amazing and that’s enough to buy them. That said, the often-expensive aesthetic features should not make the product too expensive to the point that the product becomes unprofitable because that would miss the point of selling it. If the donuts cost $2.00 but you can only sell them at $1.00, it would be better to drop some aesthetic features or drop the donuts entirely because if you made 200,000 donuts and sold them all, you could be at a loss of $200,000. Not ideal.
Price
Of course, you could always increase your price to make back all your money and then make a profit. That said, you’d have to be selling the GREATEST donuts in the history of Earth to justify a price of $100 per donut for example. You need to consider the best way to make a sustainable profit while lowering your price enough so that consumers keep buying from you. There are quite a few ways to price your products; you could use cost-plus pricing, where you add a percentage of the costs to the total cost as your price e.g. adding 25% of the $1.00 cost of your donuts and selling them for $1.25. You could use psychological pricing, where you sell slightly below a round number – $9.99 instead of $10 – because this tricks the customer into thinking they’ve gotten a significant discount or possibly competitive pricing as they will be looking at your rivals’ setting similar prices. If Krispy Kremes are selling at $2.75 you might sell at $2.80 or exactly $2.75.
Placement
The next point to consider is where you plan to sell it. You could for example sell your donuts at an ancient castle but it would make more sense to sell it at a busier area, e.g. the food court at a mall. Depending on how large a scale you want to sell your donuts, you would need to consider different kinds of distribution strategies. If you were planning to sell to specific individuals like family or friends, you could deliver the donuts yourself. But as you become a bigger seller, you may need to consider bringing in retailers like Tesco, Walmart, or Woolworths to sell the product for you at larger scales so that you can focus on making the actual donuts yourself. If you make lots of donuts quickly, you could bring in a wholesaler to bulk-buy your donuts and take up the costs of storing them. Retailers and wholesalers are important because they can distribute your donuts on a much larger scale than you could by yourself and of course, that means more returns for your efforts.
Promotion
Finally, you have to ensure that customers know that your donuts exist in the first place! This is why marketing is so important. You need to convince consumers in the market that you have the greatest donuts or convince them as to why they should buy yours, which is commonly done through what is known as a USP, an acronym for a unique selling point. This may be that your donuts are made with coffee, that you have the sweetest non-sugar donuts or possibly even that you make the simplest donuts on the market. How you market your product could be above-the-line which is informative, persuasive or assuring advertising aimed at mass media, or below-the-line, which could be like offering coupons, loyalty programs or even sponsorship deals, e.g. promoting your donuts at the Olympics! You might also want to consider how to package your donuts when thinking about promoting them because that does make a difference!
These are important factors to consider when thinking about selling your products and can be applied to just about any products or services you want to sell (not necessarily just donuts). Of course, you will have to keep in mind just how dynamic markets are and think about the pros and cons of whatever method you choose for each of the 4 P’s. But no matter what, you now have an insight into how products are sold and the motivation to buy a donut!
