By Matthew Cushen
Creating a useful product or service is only part of the challenge for a growing business. To get customers to try your offer you are going to have attract the attention of potential customers with a well thought-out approach to marketing.
Despite not being a marketing professional (and I do think that a qualified & experienced marketeer is more valuable than a qualified lawyer or chartered accountant) I’ve worked with enough very large and very small brands to understand what it takes to create the conditions for a brand to cut-through. Some purists might disagree with some of this, but here’s my simple 5-point checklist for a new business attempting to build a loved brand.
Decide who you are marketing to. Is there a large enough population to build scale (your target market), but with individual pockets that are small enough to be effectively & efficiently targeted with your available marketing budget?
As investors we like to see some sort of market segmentation, thinking about what are the different needs & priorities for different parts of the market, the difference in scale and how easy or hard those different segments will be to target. The combination of these leading to decisions on which segments to go after first that are likely to give you the best and quickest return on your precious marketing budget.
How you show up and what you stand for. Your name, logo, tag line, tone of voice, packaging, communications, advertising etc. This needs to be distinctive versus other brands in the same space. It doesn’t need to be for everyone, I’d much prefer a start-up business to try to be something strong and head-turning for a small target audience than try to be all things for all people (for which they haven’t got the budget to communicate to anyway). This distinctiveness creates attraction for you target market. Customers end up thinking ‘this might be for me, I want to know more’.
A good example here is Dollar Shave Club (if you haven’t yet seen them then have a chuckle at their first viral video here). Their potential market was and is huge – all men that shave in America. But where Gillette (Procter & Gamble) had their cliched & worthy “best a man can get” campaigns with the likes of Roger Federer and Tiger Woods, Dollar Shave Club created genuinely funny viral videos, showing a quirky approachable personality and celebrating their challenger credentials. They knew they wouldn’t appeal to everyone but they appealed to enough to establish a brand subsequently sold to Unilever for $1 billion.
What you are offering and how you are delivering on your brand promise – the features and benefits of your product or service. Clearly these need to be relevant to your target market, but also need to be differentiated to the competition. You may be lucky enough to have innovated a genuinely different product or service, although differences these days tend to be smaller, less tangible and more fleeting and your proposition may be the combination of many tiny differences. Either way you need a clear articulation of the unique benefits. This creates your relevance. Customers end up thinking – ‘this is for me, I want it’.
The more differentiated your proposition and/or distinctive your brand the less price sensitive it is likely to be. Analysis from Kantar Millward Brown of loyalty card data of 2,400 shoppers for 79 brands showed that shoppers paid 22% more for brands they find different and meaningful versus those they didn’t. If you are drawn into competing purely on price this suggests a lack of differentiation. And that’s a very difficult place for a start-up without scale to operate in, unless there is a genuine operational/business model difference that has unlocked a cost advantage.
The price shouldn’t just be related to costs and a required margin. It needs to be objectively related to the rest of the market and the benefits of your proposition. Customers end up thinking – ‘this is valuable for me, I can afford it’.
Fever Tree is a good example of product differentiation (all natural ingredients and clean taste) and distinctiveness in brand (from ‘if ¾ of your drink is the mixer, then mix it with the best’ through to gin pairings, Fever Tree branded glassware and events) that has delivered a healthy and sustained price premium.
When our investments set prices we like to see the logic that breaks down the value of their proposition versus the value of the competition’s proposition. Hopefully a degree of differentiation means there is no direct mapping. So the comparisons may need to be indirect or maybe even surrogates (using the Fever Tree example again, the price premium achieve by craft gins). Whatever the comparisons that are needed to get into the consumer’s head for how they are going to perceive value.
A differentiated proposition and a distinctive brand will get customer excited, but only when they get to see them. Rarely does anyone act on the first time they see a brand, it usually takes multiple and repeated interventions to influence consumer behaviour. A well thought out, creative and precision executed communications plan will match the budget available with activities to get the word out in the most effective & efficient way to the prioritised customer segments.
It should be a schedule of activities with a clear sense of priorities and timings. It should reconcile to the projected marketing spend and impact on revenues in the financial forecasts over the course of the next, say, 12 months. And it should be constantly updated from learning about what does and doesn’t work.
Whilst you read these in the logical order a customer might follow to consider a new product or service, formulating these elements is rarely as linear for the business. Choices made on any of the 5 ingredients impact each other so the process will be iterative. The target market impacted by the proposition, the brand tone of voice impacted by choices on price and so on.
There will be no right answer and the choices made will evolve over time. There is always new opportunity to gain fresh insight, make new hypothesise, experiment, A/B test and iterate.