Factors Contributing to the Success of a Business (2024)

• Small Business
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• Running a Business
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• Business Success

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1. There are a variety of factors that contribute to the success of a business. These factors can be effectively summarized through the "Four Ps" of marketing which were originally proposed by E. Jerome McCarthy, a marketer, back in 1960. The Four Ps are: product, price, place and promotion. When these elements are effectively followed and well-aligned they can lead to business success.

Product

1. A critical factor for the success of any business is a product or service that meets the needs of target consumers. The consideration of whether or not this is true involves understanding, not only potential customer needs, but also the availability of alternatives to what you have to offer--your competition. Competition can be both direct (McDonald's is a direct competitor for Burger King) or indirect (McDonald's indirect competition could be a sit-down restaurant, a deli or even a grocery store). Successful businesses develop and deliver products and services that reflect value for their target audience that is above and beyond anything else available.

Price

1. Product and service pricing is an important and often challenging aspect of business success. A low price is not always the best price. The decision will depend on how the business wishes to position itself--as a discounter (WalMart, for example), as a luxury brand (Lexus), or anything in between. In addition to the impact that pricing has on the product brand, businesses must also consider price in terms of their desired profit margins. Selling a product at a price that does not yield sufficient revenue for continued operations is obviously not a good decision. Conversely, selling a product at a price that is too high may result in fewer sales.

Place

1. Businesses obviously cannot be successful if consumers do not have access to their products or services. For manufacturers, this means making sure that retailers have their products on their shelves or in their stores. For online merchants, it means making the purchase process as simple and easy-to-understand as possible. For all businesses, it means having adequate supply of a product to meet demand.

Promotion

1. The best product in the world will never achieve success if consumers do not know it is available. Promotion is a critical element of the marketing mix and must be designed to reach the right people, in the right place, at the right time--with the right messages. Effective promotion requires a solid understanding of the target audience, the communication tools that are most likely to reach them and the messages that will result in a purchase decision.

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