Unlock the Power of Business Frameworks
Have you ever come across the 4 P’s, STP, Porter’s Five Forces, PESTELE, 2D Mapping, or the 5 C’s? Perhaps some are familiar, or maybe all—or none! These are just a few of the myriad business frameworks crafted over the years to help entrepreneurs and business leaders consistently achieve success.
Streamline Your Strategy: While these frameworks are designed to simplify your thought processes and save time, they’re often misused, over-used, or fall short of expectations. The challenge doesn't end there—what happens after you finish with one framework? Does the process stop? Understanding how these frameworks fit into your larger business workflow is crucial for maximizing success.
What You'll Gain
The purpose of this article is to demystify and explain each of these frameworks while introducing a new way of thinking about them.
Now, dive in to transform your strategic approach, streamline your efforts, and ensure you’re leveraging the right tools for optimal business performance.
Why is this important to me?
For those who have delved into frameworks like the 4 P’s, STP, Porter’s Five Forces, PESTELE, 2D Mapping, or the 5 C’s, the transformative impact of using the right tool for the right problem is clear. When applied correctly, these frameworks can be a game-changer, streamlining processes and driving success.
For those who haven't tapped into these resources, the journey can be much tougher. Without the guidance of these tried-and-true frameworks, you may find yourself reinventing solutions that have been honed over decades.
There's a reason why these frameworks have stood the test of time and remain staples in top consulting firms today—they work. When executed properly, they not only save significant time but also provide structured, reliable paths to achieving business goals.
Ok, what are your best ideas for using business frameworks?
First, let’s get familiar with each framework and shape our mindset to easily recall and apply the right one when needed. The best way to do this, in my experience, is to think of each framework as a tool in a toolkit.
Imagine a tool you know well—it could be a hammer, a screwdriver, a drill, a saw, a sewing machine, a pen, a computer, or any tool you’ve worked with. Now, consider the job that required that tool: writing a paper, mending a hole in clothing, joining two pieces of wood, hanging a shelf—you get the idea. Think about your thought process for that task: you identified a problem or had a goal, instinctively knew what tool would fix the problem or achieve the task, and then used the necessary tool and parts to complete the job successfully.
Using a business framework (or tool) is no different. To do this process, it requires that you:- Can identify the problem and solution that you want.
- You are aware that there are tools to help fix the problem / achieve the solution.
- You have the tools and know how to work them.
- You can use the tools effectively to achieve success.
Keep this process in mind the next time you are facing a business challenge or trying to achieve a goal. It will make it easier for you to identify what is lacking and fix it.
Note that from here on out, I will use the words framework and tool interchangeably. Also note that this is meant to be flexible. You’re likely going to have to adjust the frameworks to meet your specific goals. And finally, like in real life, using several tools together can lead to even bigger impacts in your business. Like building a nice book shelf, several tools are needed to do the job.
With this in mind, let’s get into some of the more well-known frameworks.
Marketing Tools
The following frameworks are designed to be used in your marketing processes.
The Four P’s (also known as the Marketing Mix)
Concept: This framework was crafted to guide business leaders in focusing on four critical areas of their business to achieve success in their marketing campaigns. Think of it as a checklist—tick these four boxes, and you'll pave the way for effective and impactful campaigns.
Primarily used by professionals in sales and marketing roles, this framework ensures that every aspect of your strategy is covered, allowing you to navigate the complexities of the market with confidence and precision.
This framework is a game-changer when launching a product or service, but its utility doesn't stop there—it’s also invaluable for ongoing progress monitoring. The brilliance of this framework lies in its simplicity and memorability, distilled into four essential "P" words.
While there are certainly other factors to consider, the alliteration makes it easy to remember and apply these four crucial topics. Keep in mind, this is just the starting point. You'll likely want to incorporate additional elements tailored to your specific goals, but these four P's have consistently proven to be the foundational pillars for success.
Product:
What is the product or service being offered to the customer. In this part, you will detail all the important factors of the product or service. These factors include what is the value proposition, what features / designs will be used and why, what will the branding and packaging look like, etc. Other factors can be included such as what problem are we solving for the customer, how are we solving it, and why. Finally you can include what are the customer’s expectations and needs and how does the product meet these?
Price:
This includes all topics related to pricing your product and service. You should evaluate the costs of the products or services, existing competitor / market prices, the demand from customers, perceived customer value (what is the value of the solution as opposed to what is the cost of the product), any discounting or promotions, and what price level (premium or discount for example).
Place:
These are all the ways you interact with a customer when making a sale and delivering your product or service. When working on this topic, you should think through the entire sales process from when the customer first learns about you to when they make their purchase.
Additionally, it’s going to encompass how you fulfill your orders and deliver your product or service. You will want to consider things such as will you have an online, retail, or both business presence. Who is your target customer / market and how will you reach them. What logistics processes are needed, how you will fulfill orders, etc.
Promotion:
This topic covers all the work needed to find, communicate, and sell your product or service. This includes advertising strategies, delivering sales promotions, social media marketing strategies, and more. In other words, this covers how you are going to gain awareness and communicate your unique value to your potential customers to facilitate sales.
History: Neil Borden created the term “marketing mix” in the 1950s with a broad range of topics for businesses to consider when developing their marketing strategies. These include product planning, pricing, branding, distribution channels, personal selling, advertising, promotions, and market research. Keep this in mind as you may want to consider some of these topics as well during your marketing strategy development.
Later, in the 1960s, E. Jerome McCarthy simplified and refined Borden’s marketing mix into the 4 P model as we know it and as found in his book “Basic Marketing: A Managerial Approach”.
Segmentation, Targeting, and Position (STP)
Concept: The STP framework was developed as a deep dive process into what the company will do and what it won’t do, which customers it will serve and not serve, etc. This process is usually done together with input from sales, marketing, and senior executives. It can be used with several other tools to create powerful business strategies.
Segmentation:
This is the process of breaking large markets down into groups of consumers who have similar wants and needs. This is going to involve quite a bit of market research to identify markets and sub-markets while also getting to know and understand customers and how they fit into those markets. Markets can be segmented by several factors including geographics, demographic, and psychographics (lifestyle, personality, etc.).
Targeting:
This step refers to the process of choosing a market segment of people who have a good chance of becoming customers. In other words, this is your target market segment. Note that other tools may be useful in this step. For example, using tools such as the 5 C’s can help you decide which segments to choose. Overall, your business’s strengths and value proposition must match the segments’ needs and wants.
Positioning:
This part of the process will define how your company will approach and attract customers in a unique way relative to your competitors. For example, will you be low cost with fast service? Or high cost with high quality?
There are several ways you can position and differentiate your business; however, you always want to consider and choose positions that highlight your unique value proposition, the strengths of your business, and how you are different from competitors.
Over time, this gives customers the drive to choose you over other products. A common outcome of this step is to develop a Positioning Statement which includes a brief description of the target market, the company name, the product, how it is unique, and why customers should believe you.
History: This framework was developed as an alternative to mass marketing which treated customers as one big similar group. This movement started in the 1950s as consumer preferences became more diverse. Wendell R. Smith’s 1956 article “Product Differentiation and Market Segmentation as Alternative Marketing Strategies” was one key influence as well as Philip Kotler’s “Marketing Management” book.
Over time, technology has enabled more customization and personalization, so the STP framework has only grown in recognition and relevance and is widely used today.
Strategy Tools
The following frameworks are intended to help you develop and refine your business strategies.
Porter’s 5 Forces
Concept: This is one of the most well known and used frameworks to analyze strategic forces. The framework excels at focusing your attention on factors outside your company and thus somewhat outside your control. By the end of the process, you will have a plan of action to strengthen your positioning and a plan for how to react when market forces move for or against your business. Alternatively, this framework can be used to evaluate new markets that you may want to enter and develop a plan for entry. Here are the five forces:
Competitive rivalry:
In this section, you should analyze the competitors in your area of the market. Important factors include the number and size of competitors, their strengths and weaknesses, their geographic and demographic focus, and more. Strong competitors will increase things like trade wars (undercutting price for example), social and advertising battles, product innovation / copying, and more. The main goal for this section is to come away with a plan for how you will compete, how you can increase your differentiation and strength going forward, and how you might react as the competition reacts to your presence.
Threat of new entrants:
The last section covers how you compete with other competitors, this section analyzes how your company will deal with new entrants into your market space. You want to analyze factors such as how easy it is to start a business (what are the barriers to entry), are the capital requirements high or low, how much does the brand influence purchasing decisions, and more. This section will determine what factors are important to sustain your business success against new entrants and will also show you how you can possibly strengthen your position over time by changing certain factors such as increasing the amount of capital needed to compete.
Bargaining power of suppliers:
Strong suppliers will be able to charge more for their products, dictate contract terms, and choose who they want to work with. This all has the potential to limit your success. This section analyzes suppliers that you will need and their strengths and weaknesses. In this section you will create a strategy to deal with suppliers that strengthens your position over time. For example, standardize and generalize certain parts of your supply chain so that other companies can be included in the bid process or vertically integrating some parts of the supply chain into your company.
Bargaining power of buyers:
On the other side of the last section is the power of your potential buyers, the consumers of your product or service. This time, your company is on the other side wanting to strengthen your position against your consumers. A lot of the things you came up with in the last section, you will want to reverse for your position to strengthen it. For example, create an offering that is unique and high quality to limit the number of competitors that can bid on new business. Or expand your customer network so that you have multiple sales channels so that you can’t be held back by one set of negotiations. Most of these things can’t be done overnight. So, this part will produce a roadmap of activities you can incorporate in your strategies over time to strengthen your position.
Threat of substitute products or services:
This section evaluates how likely it is for your customers to switch to other products or services. This includes direct competitors, but more importantly it covers how easy it is for customers to choose products that are not the same but can facilitate the same general functionality.
A very basic example is the following. If you operate a fast-food burger restaurant, and you raised prices, would customers easily switch and eat at a restaurant that serves sandwiches at a lower cost? Different products, same function and in this case, it is very easy for a customer to substitute.
It’s almost impossible to fully prevent your customers from substituting, however with this section the goal is to have a plan to address this possibility with a wide range of solutions. Things like brand loyalty and recognition, service speed and quality, shipping cost and speed, rewards programs, and more can all be used to keep customers coming back to your business.
Porter’s five forces is an excellent tool to create a strategy that looks both internal and external to your company which makes it incredibly effective. It should be one of the major tools you use for your business because it spans so many different areas. When done correctly, you will be able to develop a plan to combat all potential market forces which will enable your team to move faster, get ahead of the competition, and solidify your future success.
History: Porter’s Five Forces was created in 1979 by Harvard professor Michael E. Porter and introduced in his book titled “Competitive Strategy: Techniques for Analyzing Industries and Competitors”.
PESTELE Analysis
Concept: A PESTELE analysis is a framework that evaluates how external factors could impact your business. It breaks down into seven distinct categories. The key takeaway for this tool is that it is designed to help you focus on external factors that you might not have thought about otherwise that aren’t directly related to your business but could have an indirect impact on your business.
Political:
Examines the impact of government policies, regulations, and political stability on a business. This includes tax policies, trade restrictions, tariffs, and political stability or instability.
Economic:
Analyzes economic factors like inflation rates, interest rates, economic growth, exchange rates, and unemployment levels. These factors affect purchasing power and consumer spending patterns.
Social:
Considers societal and cultural factors such as demographics, lifestyle changes, education levels, and population growth rates. These influence consumer needs and market size.
Technological:
Assesses the impact of technological advancements, innovation, research and development (R&D), automation, and technology incentives. This includes the rate of technological change and how it affects production and operations.
Ecological:
Looks at environmental and ecological aspects such as climate change, environmental regulations, sustainability, pollution, and the impact of ecological considerations on business operations.
Legal:
Reviews the impact of laws and regulations such as employment laws, health and safety regulations, consumer protection laws, and antitrust laws. Legal factors ensure businesses operate within the bounds of the law.
Ethics:
This factor examines the ethical standards and practices that a business adheres to. It involves evaluating the company's policies on issues like corporate social responsibility, labor practices, environmental impact, and business transparency.
History: This acronym has evolved over time and has taken on several forms such as: STEP, STEPE, PEST, PESTLE, and STEEPLE. The letters are rearranged, and some are not considered in certain variations, but they all mean the same thing. This concept originated in 1967 by Francis J. Aguilar and his book “Scanning the Business Environment” and he used ETPS for economic, technical, political, and social.
2D Mapping
Concept: 2D Mapping is the process of analyzing different companies based on two chosen criteria and then plotting their locations on a map using their names or their logos. For example, below I’ve done a 2D Map of the airline industry based on cost and quality. Most importantly, this tool clearly shows how brands cluster in certain areas and how they compete.
For example, Delta and Alaska focus on high quality at a higher price while JetBlue and Frontier focus on low cost and low-quality flights. If you are in this market, or are considering entering the market, you would want to make sure your logo is in an area that is unique to you away from competitors and that aligns with your capabilities and competitive strategy. You don’t, however, want to go into certain quadrants such as low quality and high cost.
This is not meant to be an exact science, and the exact locations may change based on whoever is doing the analysis, but don’t let that trip you up. This is still an excellent way to see how you can position to be differentiated in a market. You can do this as many times as needed switching out axis for other criteria such as product features or shipping speed.
History: It’s not clear exactly how this started, however the popularization of computers in the 1980s made this practice much easier and faster and greatly contributed to 2D mapping.
5 C’s
Concept: The 5 C’s is a high-level framework that attempts to draw in all aspects of strategy and several other frameworks to generate an overall business strategy. It evaluates both external and internal factors.
Company:
This involves analyzing the organization's strengths, weaknesses, resources, and capabilities. It includes evaluating the company's products, brand, culture, and financial health. A SWOT analysis is a useful tool to add to this part. Also, because financial health is involved you may want to incorporate financial ratios and metrics.
Customers:
Understanding the target market and customer segments is crucial. This includes identifying customer needs, preferences, behaviors, and purchasing patterns. Parts of the STP analysis may be useful to add here.
Competitors:
Analyzing the competitive landscape to understand who the competitors are, their strengths and weaknesses, market share, and strategies. This helps in identifying opportunities for differentiation and competitive advantage. 2D Mapping and parts of Porter’s 5 forces can be useful here.
Collaborators:
Examining the network of partners, suppliers, distributors, and other entities that work with the company. Strong collaborations can enhance a company's ability to deliver value to customers. Porter’s 5 forces, specifically the sections on supplier / buyer strength and competitor analysis can be useful here.
Climate or Context:
Assessing the broader environment in which the company operates, including political, economic, social, technological, legal, and environmental factors. This is like a PESTEL analysis and helps in understanding external influences on the business. You also may want to include parts of the STP analysis as well.
History: Kenichi Ohmae introduced the concept of the 3 C’s model in the 1980s focusing on Company, Customers, and Competitors. Sometime later Collaborators and Context were also added into the mix.
SWOT Analysis
Concept: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats—a versatile strategic planning tool used at multiple levels within a company. It can assess the entire organization or focus on specific market segments or divisions, providing a high-level summary of key factors that influence business success.
Why SWOT Matters:
- Versatile Applications: Ideal for executive summaries and brainstorming sessions, helping teams discuss new market entries, product development, and threat mitigation.
- Easy to Use: Typically presented in a slide divided into four quadrants, each with bullet points, making it straightforward and accessible.
- Strategic Insights: Offers a clear snapshot of your business's current position and future challenges and opportunities.
While it's primarily a high-level analysis tool, its simplicity and effectiveness make it invaluable for strategic planning and decision-making.
This is a basic example of how a SWOT analysis could look:
History: The SWOT analysis was created in the 1960s by Albert Humphrey at the Stanford Research Institute. It was originally named the SOFT analysis focusing on Satisfactory, Opportunity, Fault, and Threat but was renamed to SWOT by the late 1960s in the book “Business Policy: Text and Cases” by Edmund P. Learned, et al.
Next Steps
Business frameworks are like tools that you can add to your toolkit to solve business problems. The more you use the mindset and become familiar with the tools, the easier and faster you will be able to identify problems, create plans, and execute winning solutions.
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