• Revenue can simply be broken down into the Number of Units Sold x Price Per Unit.
• Costs can be broken down into Variable and Fixed Costs. And Variable Costs can be further broken down into the Number of Units Produced x Cost Per Unit

The 4Ps framework is widely used by company executives to design their marketing strategy. There are different variations of this framework, which is also sometimes referred to as the “Marketing mix” framework, but the 4Ps is the most common one.

This framework is commonly used when launching a new product or when reviewing the positioning of an existing product.

• Product: What are the key characteristics of the product sold? Key elements of the product definition could include: customer need fulfilled by product, product usage (E.g. who, where, how, etc.), good vs. service, product lifecycle (new vs. established), competing products and substitutes, etc.
• Price: At what price should the product be sold? Different considerations need to be taken into account here: the customer perceived value of the product, the price of competitive products, the customer price sensitivity, the cost of producing the product, etc.
• Promotion: Which promotion strategies should be used to sell the product? Key elements to consider include: promotion messages, media type (E.g. TV, social media, radio, etc.), best time to promote, competitors’ strategies, etc.
• Place: Through which channels should the product be distributed? Key elements to consider include: possible channels to distribute the product (E.g. in store, web, mail-to-order, etc.), customer expectations in terms of channel, requirement of a sales team or not, competitors’ strategies, etc.

3. Porter's 5 forces



Porter’s 5 forces is a framework commonly used by CEOs to explore the competitive dynamics of industries. Indeed not all industries are structured the same way.




Some industries are really hard to get into (E.g. banking) while others have very low barriers to entry (E.g. newspapers).




Suppliers have strong bargaining power in some industries (E.g. high-end medical equipment) but little power in others (E.g. small milk producer), etc.




Understanding these dynamics is extremely important when you're considering entering a new industry or when assessing the competitive dynamics of the industry a company is already in.



• Bargaining power of customers: How much bargaining power do customers have? If there is only one buyer but multiple suppliers, then that buyer will be at a strong advantage. Key elements to consider here include: customer concentration (percentage of industry revenues from Top 3 buyers), customer price sensitivity, customer information availability, etc.
• Bargaining power of suppliers: How much bargaining power do suppliers have? Similarly to the previous point, if there is only one supplier but multiple buyers, then that supplier will be at a strong advantage. Key elements to consider include: concentration of suppliers (percentage of industry revenues to Top 3 suppliers), difficulty of switching from one supplier to another, differentiation between suppliers, etc.
• Threat of substitutes: What are the substitutes for the product and are they increasingly popular? As a reminder, water is a substitute for Coke while Pepsi is a competitive product for Coke. Key elements to consider here include: potential new substitutes, ease of substitution, evolution of customer propensity to substitute, etc.
• Threat of new entrants: How difficult is it to enter the industry for potential new players? Key elements to consider here include: regulation authorisations, capital requirements, economies of scale, network effects, etc.
• Existing rivals: How competitive are existing rivals in the industry? Key elements to consider include: number of competitors and their market shares, similarity between their products and products of the firm analysed, financial health of competitors, etc.

4. 3Cs framework




The 3Cs framework is also commonly used to put together strategies for companies. As you will notice below, a lot of its components overlap with the Porter’s 5 forces.



• Customers: Who is the customer? Key elements to consider include: customer demographics (E.g. age, sex, income, etc.), customer needs, customer segments' size and growth rates, customer willingness to pay and price sensitivity, etc.
• Competition: What are the competitive dynamics? Key elements to consider include: competitors’ value proposition and brand, competitors’ market share and growth, competitors’ financial health, etc.
• Company: What defines the company? Key elements to consider include: product offering, profitability, core competencies, unique selling point, financial performance and resources, etc.

5. Market entry framework

The market entry framework is commonly used to make decisions on whether a company should enter a new market or not.

For instance, you could use it to decide if Starbucks should enter the Chinese market, or if Nike should enter the sports broadcasting business.

• Market: What are the characteristics of the market we are trying to enter? Key elements to consider include: market size and profitability, products already available in the market, intensity of the competition, heaviness of the regulation, etc.
• Client capabilities: Does the client have the right capabilities to enter that new market? Key elements to consider include: differences between the client's current market and the new one they are now targeting, number of times client has entered new markets and achieved success, other companies already in the new market, etc.
• Financials: Does it make financial sense to enter the new market? Key elements to consider include: current financial situation of the client, cost to enter the new market, ongoing costs once the market is entered, expected revenues and return on investment, etc.
• Entry strategy: How should the client go about entering the new market? Key elements to consider include: timing of market entry (now vs. delay), speed of market entry (test region vs. whole country), opportunity to buy competitor or do a JV, management approach (control from HQ vs. decentralise), etc.

6. Pricing case framework

Companies always face a difficult issue when launching a new product or service. What should its price be? The pricing framework is extremely helpful for answering that question.

• Cost-based: What price do we need to set to cover all our costs? Key elements to consider include: fixed costs and their allocation across products, variable costs and number of units produced / sold, profitability targeted, etc.
• Value-based: How much are customers willing to pay for our product? Key elements to consider include: price of the next best alternative to our product, features that make our product better than the next best alternative, value of these features, etc.
• Competitor-based: What is the competition charging for similar products? Key elements to consider include: available substitute products from the competition, price of these substitute products, value of our product vs. substitutes, etc.
• Overall strategy: Given the elements above, what should our pricing strategy be? Key elements to consider include: objective of the pricing strategy (E.g. high profitability or high market share), opportunities for upsell / cross-sell that should be taken into account (E.g. Kindle and ebooks), possibility to sell different versions of the same product (E.g. iPhone 13 and iPhone 13 Pro), etc.

7. Merger and acquisition framework

Finally, the merger and acquisition framework is used when companies are looking to acquire or merge with competitors.

These situations are not very frequent in a CEO's life, but they are highly stressful, which is one reason why consultants are often asked to support such initiatives.

• The market: What are the characteristics of the target company's market? Key elements to consider include: market size and growth, market profitability and intensity of the competition, market regulation, etc.
• The target: How attractive is the target to be acquired? Key elements to consider include: current and future financial position of the target, important assets or capabilities owned by the target, quality of the target's management team, target / buyer culture fit, etc.
• The buyer: What's driving the buyer to make the acquisition? Key elements to consider include: acquisition rationale (E.g. target undervalued, etc.), acquisition financing, buyer's acquisition experience, acquisition timing, etc.
• Synergies and risks: What are the acquisition synergies and risks? Key elements to consider include: value of individual and combined entities, cost synergies, revenue synergies, biggest risks of failure, etc.

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