Enp presentation products_and_markets_v3

Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis 1

Products and Markets

Social Enterprise Products and Markets Toolkit

Understanding the value and social impact of product/services in the marketplace

Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis

This toolkit looks at the fundamentals of product and market assessment, and the importance of understanding one’s product in a competitive market.

Presented by ENP and Octopus Strategies

Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis

Marketing Fundamentals: The 4 P’s

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At its essence, marketing is:

Putting the right product (or service)…in the right place…

at the right price…with the right promotion.

Together, this framework is referred to as “the 4 P’s,” a commonly used tool to help entrepreneurs understand their product and assess the market in which they’re selling their product.

This toolkit looks at the first three P’s. The fourth P, Promotion, is explained in detail in the Marketing Toolkit.

Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis

The First “P”

Product

Know Your Product

A product consists of goods or services produced or provided by an enterprise through its economic activities.  To find out if you’re selling the right product, start by asking yourself: 

• What are you selling?• Who does your product appeal to? • Why will these people want to buy your product or service?

How does it meet their needs?

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Know Your Product

In addition, social entrepreneurs need to consider one more question:

• How, if at all, does your product align with your social mission?

 Your product may or may not directly support your social impact goals, but it’s essential that you think this through.  The products sold in a thrift shop may have little to do with the children’s charity the thrift shop supports -- but it’s critical that they’re not supporting the challenges the charity exists to solve (in other words, people might stay away from a hospital gift shop that sold cigarettes).

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Know Your Product

What are you selling?

•What does your product look like? What does your service provide to customers? •How and where will the customer use it? •What will you call your product? •How is your product different from your similar products/services sold by competitors? •What is the most your product can cost to provide, and still be sold with a sufficient profit margin? •How realistic is it that you can successfully deliver the product or service?

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Market Research

Once you’ve carefully considered your product choice, you’ll need to conduct some research to learn more about your customers and how your product meets their needs. 

You’ll also want to look at what your competitors are doing, so that you learn from that and, when appropriate, set yourself apart (“differentiate”).

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Customer Research

Know your customer…

•What does your customer think about?•What do they care about?•What does the customer need from your product/service? •What features does your product have to meet these needs?•What features does your product have that the customer doesn’t actually need?•Where do buyers look for your product? •What price will they pay?•How often will they buy it?

Concepts of market segmentation and understanding your customer are explained in detail in the Sales and Customer Relations Toolkit.

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Customer Research

Social entrepreneurs also need to be keenly aware that those who benefit from your product or service may not be the ones who are actually willing to pay for it.  

If this is the case for your enterprise, think creatively about who your customers really are, and how their business with you can support your constituents.

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Competitive Research

Who else is selling a product or service that could meet the same needs as yours?  

• Direct competitors offer the same primary goods or services to the same customer base. For example, Coke and Pepsi are direct competitors.

• Indirect competitors offer a good or service that can serve as a viable substitute. For example, Coke and all brands of milk are indirect competitors.

 Make a list of your direct and indirect competitors.

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Competitive Research

For each competitor you’ve identified, consider:

• What are the advantages your product has over your competitors’ product?

• What are the advantages your competitors’ product has over your product?

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Competitive Research

A differentiator is anything that sets your product or service apart from your competition.  

In certain cases, differentiation can be the basis for customers choosing your product over your competition. 

For a social entrepreneur, the social value of your product or service can be a differentiator. However, it’s usually not a primary driver of the decision to purchase.

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Competitive Research

You might differentiate your product or service based on one or more of the following attributes, all of which are important to customers:

• Price• Efficiency, performance and quality• Health and safety impact• Convenience to buy and use• Symbolism and status

 What differentiates your product or service?

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Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis

The Second “P”

Place

The Second “P” - Place

Once you understand what you’re selling and to whom, you’ll need to decide where your product will be sold. Where will your potential customers look for your product or service?  

• Will you run a retail operation? If so, what kind?• Will you sell your products or services online?• Will you need to attend trade fairs? Or hire sales people?• Are there other potential distribution channels for your

product?

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Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business Operations ■ Customer Relations ■ Marketing ■ Risk Analysis

The Third “P”

Price

The Third “P” - Price

Just because you’re a social entrepreneur doesn’t mean your products or services shouldn’t compete competitively on price.  

In fact, it’s essential that you set your price so that at the end of the day, your business is profitable!

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Pricing Strategy

When setting a price for your product or service, start by factoring in what we’ve already discussed:

• What is your product?• Who are you it selling to?• Where are you selling it?

The next most important question to consider in your pricing strategy, particularly for social entrepreneurs, is:

• What’s the value (or the “value proposition”) to the customer?

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The Value Proposition

The value proposition is a statement of the unique benefits delivered by your offering to your target customer. It describes the value of your product or brand, and offers a compelling reason for customers to buy. 

In addition to the traditional financial definitions of “value,” for a social enterprise, the value proposition is usually defined by the social value the product or service.

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Social Value to the customer

When customers buy a product/service from a social enterprise, they don’t only buy it for the benefits that are apparent. They also buy it for its social value. Your product’s social value may be inherent in the product itself – for example, you may be selling consulting services that directly further your organization’s mission to create more affordable housing. Or the social value may be more indirect, as in the case of Girl Guide cookie sales, which raise revenues to support the nonprofit’s mission.  In either case, the social value is ultimately the social or environmental benefits that your nonprofit is able to provide with the revenues generated from the social enterprise -- benefits it wouldn’t be able to provide in the absence of that revenue.

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Pricing Strategy – Other Considerations

Like any business, in addition to considering your product’s value proposition, you’ll also need to consider the following when setting your price:

• What’s the demand for your product or service?• What are your competitors charging?• Is your customer price sensitive? In other words, will a small

decrease in price get you extra market share? Or will a small increase in price not be noticed, giving you extra profit margin?

• How much does it cost you to produce your product or service? Make sure to include fixed and variable costs.

• What are your pricing objectives? Do you want to maximize profit or maximize revenue?

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Summary

In social enterprise, as in traditional businesses, choosing the right product and understanding its market are important strategic insights.

Successful enterprises recognize the fundamental connection between products and markets, and the interplay between them, as products meet new competitors and customers’ tastes and preferences evolve. 

Remember… conducting proper market research is not a project, but an ongoing role within your enterprise.

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