MarketIntellibits  is published semi-monthly  by MarketIntell,  a  Market Intelligence
consultancy founded by Jack Miller, a long time sales and marketing executive in the
paper industry.

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Volume I   Issue 7
May 15,   2005

You know you’re in trouble if…
PART ONE: Product, Price

Let’s get right to the point. You’re in trouble if you don’t get the basics right.

The four P’s of Marketing are Product, Price, Promotion and Place. These are the basics,  
but how do you know if you’ve got them right? Here’s a clue: if you’re not customer
focused, you’ve got a problem.

This issue will talk about  Product and Price. We’ll talk about Promotion and Place next

First, Product.

Are you differentiated? What does your brand stand for? Do your customers care about
your points of differentiation? In an earlier issue I talked about the need to be
remarkable, that just being very good is not good enough. Do you really understand why
your customers buy what they buy? Is it the product, or something else?

Do you offer the products you want to sell, or the products customers want to buy? Do
you know what they want? Have you asked, and then really listened? Or does your only
real feedback come from the sales force, and then does this feedback get dismissed
because of a perception that the sales force only wants to sell what’s easy to sell?

Is your new product development focused on what your customers need, or what you
want to produce? You’re in trouble if new product development is driven by internal
needs rather than customer needs. You’re in big trouble if you think it has to be driven
by internal needs in order for you to be profitable, and in even bigger trouble if you’re

You’re in trouble if you can’t be profitable by giving the market what it needs.

And that leads me to Price

Is price your differentiator? Should it be? It shouldn’t be, unless you have a lowest cost
position that is sustainable. And that was not low cost, but LOWEST cost. Other than
Wal-Mart, there aren’t many examples of this.

Can you get a higher price because of the power of your brand? If you are selling a
commodity, a raw material that is a significant portion of your customer’s cost,  a
competitive price is essential – but do you need to be the lowest, or is it sufficient to be

What does your market research say about how your customers perceive your pricing?
If you haven’t done this research, you might be surprised by the results.

We can’t talk about price without talking about profit. Are you profit focused, or margin

Too often, businesses with high fixed cost are focused on “margin” or “contribution”
rather than profit. The theory is that a small margin is better than no margin: if you can’t
cover all the fixed cost it’s better to accept business that covers the variable cost and
some of the fixed cost rather than lose the business and contribute nothing to cover
fixed cost.

This is the “fallacy of the incremental order”: you take that incremental order because of
the margin. This isn’t quite the same as the old “we lose money on every order but we
make it up in volume”, but it’s not much better. Again, the theory is that the incremental
order provides margin, covers part of your fixed cost, and that other business  will
provide profit.  The problem is that before long, the price on the incremental order
becomes the market price, and you’re losing money on all your orders.  

You’re in trouble if you’re living on margin rather than profit.

Are you in trouble?

One of the first things a Doctor will do is take your temperature. If your temperature is not
normal, you need to find out why and take corrective action. But even if your
temperature is okay, that’s no guarantee, so you need regular check ups, too.  

Take your temperature: are your profits sufficient? If not, call Doctor MarketIntell at 203
925 0326.

Need to schedule a check up? Test your brand perception, or customer satisfaction?
Find out why your customers buy, or find out what they really need? Call Doctor
MarketIntell at 203 925 0326.

Or email:

© 2005 MarketIntell. All rights reserved

Be sure to watch for:

You know you’re in trouble if…
Part Two:  Promotion, Place

Click here to view the previous issue:    

“Are Your Stars Aligned?”

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