Lemonade Stand Marketing – The 5Ps

How do the 5Ps of marketing apply to something as simple as a lemonade stand? What lessons are learned that you can apply to grow a large and profitable business? As I mentioned in my previous post "Lemonade Stand Marketing – Location, Location, Location!", my kids put up a lemonade stand last weekend during the Colorado Dragon Boat Festival and here are the lessons learned that I think can be applied to your business too!

The Product:

In our case defining the product was simple. It was lemonade. But you know, there are different kinds of lemonade. Did the kids need to differentiate their product? Nope. Let's think back to who the best customer was. It was someone walking away from a hot, sweaty, over-crowded festival full of overpriced, under-portioned food. What were the key elements the target customer was interested in? That's right, it had to be cold and refreshing. Do you think they cared what color it was? Do you think they cared about the brand? Do you think they cared whether it was sugar-free? Not at all. Cold and refreshing were the desired characteristics.

The Price:

After attending a crowded festival where a bottle of water sold for $2 and a snow cone for $4, how much do you think the lemonade stand customer was willing to spend? The girls set the price at $0.50 for an 8 oz. cup. This was seen as a bargain by the customers. It was a great value compared to what they were used to. Such a value that they often gave more in tip than they paid for the product itself. And they did so happily! What can you do in your business to inspire your customer to pay you more than you ask?

The Place:

We already talked about this in the previous article. A simple lemonade stand across from a crowded festival brought in the traffic needed to reap solid financial rewards. OK, so it was a not-so-simple lemonade stand since the mom, that's me, is an entrepreneur with lots of supplies. So they did have a nice white pop-up tent to help provide shade. Okay, now the designer in me is taking over…It was used to not only provide shade but to create a focal point and define the space, thus drawing extra attention to the stand.

The Promotion:

The kids really took off with this and had a blast. They made a sign on hot pink fluorescent paper. Then the girls found themselves some sidewalk chalk and made arrows and signs all over the sidewalk. The menu was prominently displayed on the sidewalk. Then they got a paper and pencil and made a menu. They approached everyone on the street (it was hard to get past them) and took their order. Another technique used to grab attention was the spider man microphone. You know, the kind of toy microphone that simply magnifies your voice using no batteries. Shouting "Ice Cold Lemonade!" into the microphone was the most successful sales technique of the day to drive sales. Fortunately, no dress-up costumes were required to grab the attention of passerbys.

The Upsell:

I'm adding the upsell information in here with promotion, but it also entails the other Ps inlcuding product and price. You see, the girls didn't just sell lemonade, they had add-ons, loss-leaders and upsells. Yes, and they didn't even know it! They started with lemonade for $0.50 and then offered cookies/brownies for $0.25. Now how many people do you know these days that walk around with change in their pocket smaller than $1? Not many! So if you are whipping out a $1 bill to buy a $0.50 glass of lemonade, and there are $0.25 cookies next to them, are you going to want that extra $0.50 back or are you going to buy a cookies too? And do you really want the quarter in change or are you going to leave it as a tip? Now, they got really tricky here by offering free water to dogs. it was a kind gesture, because, you know, it was a really hot day. Well, it just so happened that one of the daddies jokingly suggested that they sell dog buscuits for a quarter too, and well, out came the dog buscuits! Now we had our official loss-leader, free dog water, with the dog buscuit upsell. Whalla! Who kinew selling lemonade was such a sophisticated endeavour?

The People:

Who do you think was more successful selling lemonade: seven little girls all bouncy and smiley or a sedentary mom and dad? When the kids took a break, so did sales. Just goes to show that sometimes your team members are the key to your success. If all else fail in your business, I suggest exploiting the cuteness factor of a little girl's smile. Now, for those of us who hate planning, do you think taking a step back and applying the 5Ps of marketing might give you some insight on how to improve your business? Next up: Lessons from the Lemonade Stand: Life Skills.

This past weekend was the annual Colorado Dragon Boat Festival which takes place in the park across from my house. It’s two days of racing dragon boats down a course, with hundreds of teams participating. It has also turned into the largest Asian culture festival in Colorado. Over 100,000 people attend the 2-day event.

Why is this information important to a child’s lemonade stand you ask? You could say Location, Location, Location; but I call it Traffic, Traffic, Traffic! The business location is important, but the key characteristic of the location is the amount of traffic of targeted customers that location brings. In our case, with 90 degree heat and 100,000 potential thirsty customers we put up the lemonade stand and invited some friends over to help run the store. So what happened?

Timing! Business success is all about timing. Do people drink lemonade in the morning? Not really. Do they drink it while they are on their way to the festival? No, because they just left home and are still refreshed from the air-conditioned car. When do they drink lemonade? On the way home from the overcrowded, sizzling hot, sunny festival.

Get in front of the customer when they are ready to buy!

So what time do you think the kids reaped the most reward for their efforts? That’s right, from 2-5pm; the hottest time of the day. When the girls put up the stand at 2pm, there were people standing in line while they were setting up! How’s that for a booming business!

Now, the girls took this one step further. They actually noticed that their were a lot of people with dogs passing by. One girl said, “We need free water for the dogs!” And so it was. The dog water was put out and then when the girls saw someone with a dog they enticed them over with the promise of free dog water. Now how can you pass up seven super cute 5, 7 & 9 years old girls with ice-cold lemonade and fresh water for your dog? That’s what I call knowing your customer and targeting their needs!

Are you applying these principles in your business? Have you identified the best traffic-getting location, timing and needs of your customer? Do you know how to get in front of them when they are ready to buy? How have you made timing, location and customer segmentation work for you?

Next up, Lessons from the Lemonade Stand: The 5Ps of Marketing.

To be successful in business, you need to know your ideal customer. And I mean really know them. Your success is going to hinge on how well you know and can talk to the needs and desires of that customer. You need to know everything you can about your customer because it makes you a more effective communicator. Knowing your customer’s wants and need lets you talk directly to the customer and target your messages so you can inform them about how you address their needs and desires. You’ll need to know how to segment your customers because you may need a different strategy for each unique segment. Because each customer segment has different needs, you may need to take different actions or use different tactics for each segment. Also if you have more than one product or service, you will need a unique strategy, actions and measurements for each product or service that you offer. This is because each product or service will be addressing the different needs and desires your customer has. These are the numerous aspects of the Ideal Customer that are incorporated into your marketing strategy. You will need to know and to define the following items:

• Your  Client Traits, like what are the characteristics of the clients you WANT to be working with.
• You will need to identify your Customer Segments if there are any. Who is your End User, who is the Decision Maker, who are the people who Influence the decision?
• You will need to know the Demographics, Psychographics, Pain, and Dreams of your customer
• You will need to know your Customer Needs and how the need your addressing fits into their other priorities.
• You will need to know how to Prioritize your marketing tactics and promotions based on your customer’s needs and behaviors.
• You will need to know how to Identify the best ways to talk to your customer
• You will need to know how to Identify the most cost effective means to communicate with your customer
• You will need to Know when your customer needs what you offer
• You will need to know how to Engage your customer so they keep coming back

Here's a chart I use to collect some of this information.

Once you learn this information about your customer, you will need to take it and use it to define your Positioning and the 5 P's of marketing which includes the following items:

1. Your Positioning which means how do you fit into the overall marketplace and compare to other solutions available. Your Positioning Statement is used to clarify you comparative differentiator. Next, your Elevator Pitch is used to help you converse about your company’s solution in a way that is concise and gets your main differentiators and solutions across to your customer and potential partners. Your Unique Selling Proposition is your tagline and is a short phrase that summarizes what makes your solution unique. Your Brand should be defined in a way that supports your positioning while appealing to the desires and dreams of your customer. Your messaging is critical to the success of all communications that you send out. You will need to know how to define your company’s messages, your benefits and how the features support those messages and benefits.
2. Your Product which means how are you going to design your products or services so that they meet the needs of your customer.
3. Your Distribution (Place) will be selected based on where your customer shops and their purchase behavior.
4. Your Promotions should be prioritized in order of the ones that are most effective in reaching your target customer.
5. Your People or staff should be selected to be the best fit for delivering the needs of your customer.
6. Your Price needs to take into account what your customer is willing to pay for your services.

This knowledge about your ideal customer is fundamental to everything you do in your business. It is critical that you take the time up front to learn everything you can about your customer and how you can best meet their needs. From here you will take this knowledge and apply it to the 5 P's of Marketing and create a marketing strategy and plan.

The marketing mix describes the way you use the primary marketing tools to achieve your company's objectives. Those tools are known as The 4 P's or 5P's of Marketing. The 5 P's are in an intentional, tactical way to meet the needs of a customer. Just like an artist combines the principles and elements of design in each piece of their work, the expert Marketer manipulates the elements of the marketing mix to best meet the needs of their customer and achieve the company objectives. Let's explain what those elements are…

The 5 P's of Marketing

1) Product:

The product is the actual goods or services offered by the company and how it meets the end-user's needs and wants.

2) Price:

The process and strategy for setting the price for a product or service. This includes discounts, or non-monetary fees (time, energy, or attention.)

3) Place (or distribution):

• The channel by which a product or service is sold (e.g. online, direct mail, retail)
• Which geographic region
• Which Industry
• Which segment (Kids, Moms, Men, Business Owners, CIO's)
• How the product gets to the customer
• How the selling environment affects the sale

4) Promotion:

This includes advertising, sales promotion, publicity, and personal selling.

5) People:

How do people affect the perceived value of the product or service.  People that influence that value can include employees, management, and consumers. For every product or service that you offer, you should write down what these 5P's are for that product. You will see that the marketing mix will vary by product or service, but there are some elements you will keep consistent across your brand.