Understanding your product in a competitive market.

1. Governance ■ Leadership ■ Blended Value Design ■ Products & Markets ■ Business
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Products and Markets

2. Social Enterprise Products and Markets
Toolkit
Understanding the value and social impact of
product/services in the marketplace
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3. 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
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4. 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.

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The First “P”
Product

6. 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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7. 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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8. 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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9. 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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10. 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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11. 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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12. 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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13. 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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14. 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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15. 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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The Second “P”
Place

17. 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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The Third “P”
Price

19. 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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20. 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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21. 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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22. 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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23. 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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24. 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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