The business world is filled with individuals who still believe that making money and maintaining a business entity is a simple matter. These individuals tend to fail continually, perform even when they have fantastic products, and lose money to poorly planned campaigns.
On the other hand, well-trained and experienced business owners understand and appreciate the importance of a properly laid out plan. Every product must be appropriately analyzed.
The intended market evaluated for risks to avoid or mitigate and opportunities to exploit. These successful merchants are disciplined in the area of preparation. They will only make their move when they are sufficiently confident of the results of the actions.
This way, their business holdings, and its resources are not operated as a function of superstitious beliefs, a dependency on luck, nor with an expectation of aid from another merciful individual when things go awry.
Companies that have grown into giant corporations allude their significant success to the quality of the strategies that determined their choices and guided every decision-making process.
Generally, small and medium business owners are the worst offenders when it comes to adventuring the economic fray without an equipped strategy or even a basic plan of operations.
Some researchers inferred that more than 60% of total SMBs evaluated did not have a strategy at all.
This does not take into account the number who plan poorly and the misguided number, which frequently switch strategies halfway, failing to commit to one strategy and thus are deprived of reaping the fruits of their labors.
These traders and experts would discover that experience might be a good teacher, but the tuition fee is grossly expensive and overblown. They would also find that a right product or service is not enough to confer success in the business world.
If you are reading this write-up, it is possible you already have an interest in business strategy. You may already own a business, and you are looking to attain better results and performance.
If you don’t have a proper business strategy, do not despair. Let us evaluate a brilliant business strategy called 4P.
4P encompasses four aspects of an appropriate plan of business and stands for Product, Price, Promotion, and Place. Below we evaluate the pros and cons of the 4P business plan.
4P Business strategy and Plan
The 4P business plan is also known as the marketing mix. The 4P business strategy encompasses the processes and elements that are required to execute a successful business campaign.
Each of the factors: Price, Product, Promotion, and Place. Each of these factors is intertwined, and changes in one would affect the other.
Managers and business owners have to evaluate the characteristics of these factors and design a proper strategy to exploit their business environment. Let us get into the 4Ps.
The product encompasses the decisions and factors regarding goods and services that are provided to the market.
Product decisions describe the product, the value it offers to your customers, and other factors involved in manufacturing the product.
Strategies engaged with the product include creating a unique product or service, developing a creative brand, and innovative product design.
Price encompasses the factors that involve the cost of production, the price quotes for the product, and the price that the market to pay.
A proper price strategy can determine the amount of profit and scalability of company sales. A unique product might be able to draw more customers at a higher price, but the presence of competitors and a close substitute would force the amount to be reduced.
Promotion involves the activities and campaigns that sensitizes the market about the product. No matter how good a product is, it will not survive in the market if no one knows about it.
Promotional activities include an exhibition, sales promotions, advertising, word of mouth, and other events. If the marketing is too persistent, customers may have expectations that cannot be satisfied.
Place describes the environment within which the product is supplied. Place evaluations take into account the trends that occur in the market, customer behavior, customer needs, social and political factors in the market.
The place also evaluates inventory management, transport schedule, and distribution channels.
4P Business strategy Pros and Cons
The 4P business strategy is quite simple to conceptualize. The best plans are the ones that are easy to explain and modify as the conditions change. Each part of the 4P business strategy if adequately designed and evaluated.
Here are a few benefits of the 4P plan:
- It is easy to explain, conceptualize, and communicate the components of the plan.
- Proper design enables a business entity to set goals and work towards them.
- The 4P plan ensures that a business is not reactive and can maintain a modicum of control in the business environment.
- The business plan provides that companies can mount successful competitive strategies against competitors and their products.
- Companies can use the business strategy to identify opportunities to explore and risks to avoid.
- A business strategy provides a perception of safety and certainty that helps the company and its partner execute plans with confidence.
- Evaluating the components of the 4P enables a business to envision the future.
A business plan, while it empowers the company, can also have negative repercussions and aspects that may bring unwanted consequences. Even when a business plan is evaluated, designed, and executed to the best of one’s abilities.
Below are some of the possible implications of running a business plan.
- A business plan may prove inappropriate. This discrepancy may be due to factors that were overlooked or not adequately evaluated. Also, the elements in the business environment may also change in unexpected ways.
- Analysis and strategy design also require a lot of time investment. The amount of time needed is also affected by the size of the company, and other factors present in the market.
- The business plan is also limited to the perception and evaluation of the planner. The aims and objectives of success become dependent on the mindset of the group in charge. This consequence can be reduced by proper communication.
Prescribing a proper strategy requires that the management team to be equipped with the requisite knowledge. The management team must make adequate research of the market to enable it to plan and strategize accurately.