The four Ps (and seven Ps): what it is and what to do instead

The idea worth keeping

Not as boxes to fill, but as questions that fall out of the maths of the goal:

• At this price, after the retailer's cut, what does each unit earn us?
• How many units must each store sell to cover the launch costs?
• Where will the product sell fastest, and is that enough stores?

Why reaching for it fails in an interview

• It is generic. Product, price, place and promotion fit any launch, so they show nothing about this one.
• It misses the driver that matters. For a chilled product, the deciding number is how many units each store sells a week, because slow sellers lose their shelf, and the four Ps never name it.
• It sounds rehearsed. Reading out four Ps sounds like a marketing class, not a case.

What to do instead: a worked case

1. 1

   Pin the question

   Decide how many stores to launch in so the first year makes money and the product keeps its shelf space.

2. 2

   Write the maths of the goal

   • Profit per store per year = units per week x 52 x (shelf price minus retailer margin minus unit cost) minus listing fee
   • Year one profit = stores x profit per store minus marketing
3. 3

   Use what you know about the business

   • Chilled shelf space is scarce, and retailers drop slow sellers after a few months, so units per store per week matter more than store count.
   • Retailers take a share of the shelf price and charge fees to list a new product.
   • Premium products sell faster in stores whose shoppers already buy premium dairy alternatives.

   The structure that falls out of it

   • Earnings per unit
     • Shelf price
     • Retailer margin
     • Unit cost
   • Units per store per week
     • Store type and shopper profile
   • Launch costs
     • Listing fee per store
     • Marketing

   Hypothesis: A wide launch spreads sales thin; fewer, better-matched stores will sell faster and keep their shelf.

4. 4

   Find the facts that decide it

   • Shelf price 2.50, retailer margin 30% (0.75), unit cost 1.00: the company earns 0.75 a unit.
   • In 2,000 stores at 20 units a week: 20 x 52 x 0.75 = 780 a store, minus a 500 listing fee = 280, so 560,000 in total, minus 1 million of marketing: a loss of 440,000.
   • In 800 premium stores at 35 units a week: 35 x 52 x 0.75 = 1,365 a store, x 800 = 1,092,000, minus 400,000 of listing fees and 500,000 of focused marketing: a profit of 192,000.
5. 5

   Say so what

   Launch in about 800 premium stores, not 2,000: the narrower launch earns about 192,000 in year one against a loss of about 440,000, and at 35 units a week the product is likely to keep its shelf. Expand to more stores once sales hold for six months. The risk is that a rival takes the space in the stores we skip.

Build the acumen behind it

The worked case used two things a list cannot give you: the five moves, and knowing how this kind of business makes money. These pages teach both.