Synopsis
If the answer to “when” is today, they aren’t likely to get the product they want online. If your customer has time on their side because they planned for their problem solution and are willing to shop, you then must be cost-competitive with what people are offering online, not just down the street. If they need quality now, then it’s going to cost them a premium because it will cost you more to produce the product quickly.
Another way to think about the role of place in your business model is to look at your business through the “value triangle” involving quality, speed, and price. It’s commonly understood that you can have any two of these values, but not all three. Because this simple statement is a truism, it provides an excellent framework for considering your customers’ price sensitivity attributes and the importance of where you conduct business.
For example, if you live in Los Angeles and you just learned that you need to be in New York City tomorrow morning, it’s going to cost you a high premium to get there. Your need to be there quickly robs you of the alternative to fly more economically. Whereas, if you know in advance of your need to be in New York City, then you have time to shop for the best airfare.
Highly profitable businesses are built around the need to quickly provide a product or service. They have the infrastructure in place to turn things around fast. The downside is that this ability is associated with higher costs—so services like this won’t be a bargain for the customer. Think FedEx. Then think about the local courier service that will deliver your package even faster than FedEx. Your delivery is the only one they care about when you transact with them. The good news is that you know it will get there when you need it to; the bad news is that it’s going to cost a lot of money for speed and convenience.
Highly profitable businesses are also built around providing good products at the lowest prices. The challenge with these highly process disciplined businesses is they can’t deal with rush orders; if what you are seeking is not on their shelf ready to hand over to you, then it’s going to take as long as it’s going to take.
Another reason place has two organizing principles in your business model is the implications associated with “when” people need what you do and “where” do they want to acquire it. If the answer to “when” is today, they aren’t likely to get the product they want online. If they have time on their side because they planned for their problem solution and are willing to shop, you then must be cost-competitive with what people are offering online, not just down the street.
If they want quality, the question becomes one of time. If they have time to make their purchase, you have options for producing the desired quality. If they need quality now, it will cost them a premium because it will cost you more to produce the product quickly, particularly if you have to hijack your production processes to produce their order outside of your typical lead times.
While place is one of the four P’s in the marketing mix, it has vast implications on operations. Where your customer ultimately wants to conduct business, when they want to make the purchase, and the experience they want, where the exchange of value occurs shapes everything involved in delivering your products and services.
Are you getting the price premium you deserve?
Are you capitalizing on the price premiums you should earn when people demand speed and quality? Click here to have a certified BusinessCPR™ Business Scientist tell you if you are or not. Within twenty-four hours of receipt of your P&L Statement for the last four years, you will receive back by email your free assessment of whether you are earning a price premium for what you do or not.
Do you have the right pricing strategy?
Are you capitalizing on the price premiums you should earn when people demand speed and quality? Click the link below to have a certified BusinessCPR™ Business Scientist tell you if you are or not. Within twenty-four hours of receipt of your P&L Statement for the last four years, you will receive back by email your free assessment of whether you are earning a price premium for what you do or not.
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