I wanted to dive into positioning a business and products a little more from a post a few weeks ago. What better way than to illustrate by using donuts?
Here’s the first donut that you may be familiar with. Product #1 is a simple donut from the local grocery store, i.e. Kroger:. It costs about 50 cents to $1 each, displayed in the bakery section behind a self-serve glass case.
The second donut is a special flavor donut, maple bacon with creme filling. It is now available at a small business in Middle Tennessee, Five Daughters Bakery. They have about 3-5 store fronts where customers can only buy donuts, snacks, and drinks.
Here are the 7 P’s for these two products:
| Product #1 | Product #2 | |
| Product | 50 cent to $1 donut | $4-$5 donut with specialty flavors, is maple bacon donut |
| Place | Local grocery store bakery case, i.e. Kroger, available in all stores in bakery case | Five Daughters Bakery, own retail store fronts, about 5 locations in Middle Tennessee |
| Price | 50 cents | $4-$5 |
| Promotion | None, display case, | Promotion on facebook, local media |
| Profit | High profit | Higher profit |
| People | General retail worker-part of chain | Specialized skills- specific for small business |
| Position | Premium product |
If you can walk into a Kroger and grab a plain donut at any time of the day, as long as they are on display for $1, would you? Or would you save your money and purchase a new flavor, maple bacon donut with creme filling for $5? These are freshly made with premium ingredients and obviously a one-of-a kind flavor. You have to go to a specific location and enter a specialty retail store that only offers this as its main products.
Do you see how the integration of all 7P’s allows product #1 to be low quality, but functional product?
Do you see how the integration of all 7 P’s allows product #2 to be a premium product, with customers willing to pay $4? Of course Kroger can always add premium donuts to its shelves and display cases but probably would not, at least not for a long period of time. Premium donuts would not fit with most of their customers across all of the locations.
As a small business owner entering a market, look for a niche, where you can create a unique product that customers deem valuable enough to pay premium prices. This will help ensure long-term financial sustainability.
Now, grab a glass of milk and try one of those delicious donuts!
Note: I have no affiliation with Five Daughters Bakery or Kroger, just simply a customer who enjoyed their donuts a few times.
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