In Business, if needs are what people are prepared to pay for, wants are what people are prepared to pay extra for.
To explain why this path to market works, I will explain how two of the most common theories used in business relate to each other, then give an example of the 7 steps in a start-up’s path to market.
Maslow’s Hierarchy of needs sets the order to develop the bottom 4 Ps of marketing, what project managers would call the “precedents” that must be done first that will then allow you to do other things.
So what are the top three Ps of the marking mix pyramid above? That is the sales process, known as these days as conversion, as in converting customer contact into income. This is where most of the top business consultants make their money, and they know all business owners want to learn this, so they know a business owner is willing to pay extra to develop the top 3 Ps.
If a business can “afford” the consultant will depend on if the business has no weakness in the bottom 4 Ps. You will be paying extra money at top dollar to fix things the business already needs to be doing before growth can occur. Most of the top consultant have some form of an information session for free to see if you are the consultant’s idea customer (one they can get fast results).
Both Maslow’s and the Marketing Mix theories start out focusing on satisfying needs first to put people in a position to get what they want.
The outcome of Maslow’s original theory was just left at Self Actualisation, which is the desire to become the most that a person can be, measured by the happiness of a person. But this was a bit like telling someone how to get fit enough to climb Mt Everest without telling them the route to climb when they got to the mountain. So Maslow developed his own model to not only include how to climb the mountain but also to reset your goals decide what to do next.
The outcome of the original 4Ps was Sales, measured in dollars.
When you put the two models side by side and take into account personality types, what is seen as an increasingly blurred line between sales and marketing becomes a lot clearer. Even Gary Vee will tell you one does not exist without the other, and people that only focus on sales without building the relationship first is what has given salespeople a bad reputation (particularly in MLM companies).
Marketing does lead to sales, but as it mainly focuses on why the customer needs it is, cost comparisons is a greater factor in the purchase decision. Customers know they need it, but can customers get it cheaper somewhere else?
Whereas sales in my experience are more about wanting something that you may not need (now), and as money is not as the biggest factor in the decision-making process, the “Sales Process” converts marketing into sales growth for both existing and new customers.
While the pinnacle of the original hierarchy of needs was self-actualisation, reaching this level was not sustainable if a person had a deficiency in any of the 4 levels below Self Actualisation. In the same way, a weakness is any of the bottom 4 Ps mean a business will not survive.
Here is where Emotional Intelligence comes into it.
Certain personality types are naturally better at one half of the pyramid than others. For example, an extrovert may focus on an inverted pyramid on Maslow’s 8 level hierarchy of needs model, trying to transcend to “god-like” status in their industry, believing that if they can it will funnel down and all of their lower level needs will be met as a consequence.
If you are looking for an example of this; when Elon Musk sold his sold Pay Pal for around $US170 million, he reinvested it into new companies, then had to borrow money to pay rent on his house (although I don’t know how big the house was).
That is not to say one person cannot work both above and below the line, but it involves different thinking and hard to maintain focus on both halves at the same time. It also involves using different varieties of empathy, and research shows that the ability to use both Cognitive and affective empathy equally as well is only present in the top 10% of performers, so it may be unrealistic to expect anyone can sustain the effort required.
The good news is, people are more open to collaboration these days rather than competition, and you can buddy up to someone who loves the urgent tasks with someone who loves working on the important tasks. Both will prefer to work on different areas of the marketing mix, and just in to help each other to overcome problems without getting in each other’s way or trying to take over
If you are wondering what replaces the “?” at the top of the Marketing Mix pyramid, this is where the “unicorn” business such as Uber, Amazon, or Facebook would sit. Unicorns have all of the 7Ps as a strength, and research into the history of these businesses will show the strengths were developed as examples. It didn’t happen overnight.
the 7 steps in a start-up’s path to market:
- A product or a service may be the product, but any start-up needs a Minimum Viable Product (MVP), and an investor cannot help you improve a product if it doesn’t exist.
- Price – the best way I’ve seen to set a price is getting people to trial your product and exchange an ongoing discounted price for “foundation customers,” as long as they provide you with information on what other customers would be prepared to pay extra for (as well what other customers would be willing to pay now).
- Place – how can the customers get your product. Distribution costs need to be factored into the breakeven point so you can set realistic sales targets.
- Promotion – at this point, the focus is on creating a need for people in your target to change to your product so you don’t have to spend money on adapting it, to promote the benefits of using it now, and how you could adapt the product to add value to it for repeat customers.
- Process – Make it as easy as possible to get the money from them and get the product to the customer. The less they have to think about it, the better your process is. Keep it simple and familiar to your target market. This is where an Entrepreneur/investor can be the most benefit to you if you can use their system. Why re-invent the wheel?
- Physical evidence – Now you have sales, you can start adapting your product for actual customers from user feedback. This produces tangible benefits to satisfy wants, and wants are what people will pay extra for.
- People – Here you are looking for “social proof”. Testimonial, referrals, repeat customers and strengthening your brand reputation.
What comes next?
You develop a new product (or model) or service and the path to market begins again. That’s how you stay ahead of your competition, or at least stay in business. If you don’t, your product becomes a weakness and the whole house of cards comes crashing down.