Good marketing separates the coffee from the lattes
Imagine being faced with the task of launching a new soft drink today. With all of the international, national and regional brand names, it could be a suicide mission. Just why will consumers abandon their current brand habits for our drink? A well-established market like this severely limits pricing latitude as well. Had Gatorade been portrayed as just another “soft drink” its success in the beverage industry may not be what it is today. Rather, from inspiration, its creators deemed it the opening entry in an entirely new beverage category of their design: sports drinks. Being first allowed them to write the definitions for this product class, establishing market parameters, including the pricing strategy. As the first, instantly they are both product and market experts. Containing some vitamins and minerals, the ingredients of Gatorade mimic those of the soft drink triumvirate: water, sugar and flavoring. The real opportunity - and its genius - lies in product presentation. We are asked to look at this beverage from an entirely new perspective. Market domination by Gatorade makes subsequent product challenges a David vs. Goliath effort at best. And few “me too” products ever reach parity with their market leader, a position usually maintained by the initiating entrant. The ingredient list on a bottle of cola identifies the basic soft drink trio, plus caffeine. Contrast this blend to that from the label on a can of Red Bull. Not narrowly targeted to sports participants, this “energy drink” makes its appeal to the masses - yet another distinct product group, invented through the rearrangement of familiar ingredients. And Red Bull is the class valedictorian. To the envy of the entire beverage industry, Red Bull’s A+ strategy commands a premium price. Various brands play catch-up in this market segment. It’s homework indeed trying to name the also-rans, as we record their failing grades. These are products of largely similar composition with entirely different market appeals, yet each is successful in its market segment. Despite the appearance presented in a grocer’s aisle, the beverage industry is not saturated with categories. Emphasizing or de-emphasizing a single element can be enough to create a new product classification. The marketing recipe must be accorded as much deference as the concoction’s, if not more. It’s the total narrative you establish for your product that brews the importance of product class distinction. If it’s really new, it’s really newsworthy, and the legitimacy earned from journalistic exposure should not be overestimated, particularly for a debutant product. Reflect on your own business. Our challenge as marketers is to identify the greener pastures that inherently lie where we can design or orchestrate our own product class. The concept can be readily transitioned to practicality. We may not need to create an entirely new product class either. Often, because of lack of use or familiarity, an existing product class can be quite useful. A successful coffee and doughnut retailer enjoyed steady but stagnant sales. The goal: increase the average sale. The question: how? Consumers were willing to digest some higher pricing for the fancier baked goods. But, regardless of the flavorings infused or the superlatives suggested - “gourmet,” “100 percent Colombian,” “Special Roast” — resistance was met when it came to what would be paid for a cup of coffee. Product intimacy won’t buy an attempt to charge prime rib prices for ground beef either. The merchant needed a new beverage class, something people are willing to pay more for. The plan called for the addition of espressos and lattés. Familiar to Europeans, this beverage class is less known in the U.S. market. The complexity their names allude to assist this transition to a higher price level. How much will you pay for a latté? You expect to pay more than for a cup of coffee. Customer surveys suggested as much. Contrast the ingredients list of this pretentious product class with that simple cup of coffee for a quick surprise. You see, it’s all about marketing. Needless to say, the dough is rolling in. Arthur “Chip” Card of Manchester is a business adviser and mentor. He may be reached at firstname.lastname@example.org.