Five P's: Placement with Purpose

Customers are facing an ever greater number of places to shop and the number of places isn't likely to decrease any time soon. In addition to the core ecommerce platforms and physical retail stores there are countless specialty outlets where customers can purchase your goods or service (if you choose to be on them).

All of these choices makes the placement of your offering even more important. These customers need to know where to find you and know what level of service they can expect on each of the different platforms. Learning how to place your product in the maximally beneficial locations will dramatically increase your market penetration and value to the customer.

Location

The location of your offering can mean so many things. While we often think of location as a physical place and we can clearly define where we want our offering to be placed physically it is vital that we think through the reasoning of where we want our product placed. For example, we know that cereal targeting children is placed at the child's eye level in grocery stores to increase sales of those products. However, do we ever really think about which stores we want our product placed in? This builds off of our talk on promotion where we want to make sure our brand strategies and values align in a pretty interesting way.

Do we want the product only to be carried in regional stores to showcase it as a more "local" setting or is it better to go into a big box retailer to hit a broad swath of customers and look to be more "mainstream". These decisions are important when determining how your product should be placed and tie in with how it will be marketed.

Logistics

We have talked a lot about logistics but what we have not dove into is the value of logistics in your marketing strategy. Mainly, we want to consider our distribution channels in this case as how we distribute our product or service can shape your customer experience and buying journey. When looking at how to distribute your product many people find themselves thinking of either using physical presences or virtual stores to sell. We know that, typically, we can get higher margins by using an online store but we know that selling the product physically leads to a higher conversion rate. This is where striking the right balance comes in. For example, a successful clothing line may have a small offering in stores to help customers feel the clothes (acting like a showroom) but then convert the customers to buy their clothing online to increase margin. We also see these choices affect service levels, for example, you may choose to keep your physical presence lightly stocked but have abundant stock of items online to shift sales to your virtual platform.

This will be discussed further in future posts as inventory deployment is a complicated, and often overlooked, area where a firm can build competitive advantage.

Market Penetration

The placement of your product or service offering can either enhance, or detract, from your market penetration. While it is often thought that the more places you are the more market share you will gain that is not always true. For some commodity businesses that may be the case but for the vast majority of firms the real judge of market penetration is how prevalent you are in the most applicable spots. By exclusively placing your offering in the midst of your core customer base you may be maximizing your market penetration more than if it was a blanket campaign.

Visualize this by thinking of a luxury watch brand, by placing itself in high end jewelry stores and in the hands of people viewed to be "elite" they can penetrate that target market much faster than if they placed their watches in those locations as well as a broad range of discount stores. Strategic placement of your product in the core of your customers "ideal buying environment" lays the foundation for successful long term sales.

When we think about all the places our business will go, we often envision some version of world domination. By thinking strategically about where you will conquer first, you build a loyal base of followers who will support your business's expansion into other regions and markets. The strong base you gather from being present in their ecosystem will allow you to quickly gain a foothold compared to the competition that failed to understand the importance of where your offering is placed.