When we built the Barefoot Wine brand, people used to ask us why we didn’t use television commercials and radio ads to get the word out. Aside from the fact that we couldn’t afford that kind of advertising, it really wouldn’t work for a startup CPG in the retail market. In fact, it seemed to us that mass marketing could backfire.
When you go to the mass market, you are going to the general public. It assumes that your products can be found in stores that members of the general public frequent, no matter where they live. This may work for direct-to-consumer online sales. But unless your product really is everywhere, your potential customers who have seen your products advertised on television will be very frustrated and disappointed when they can’t find them. They will label your products “undependable,” or “hard to get.”
Building a CPG retail product is very much of a territory-by-territory pursuit. Advertising outside of that territory is very inefficient and can be counterproductive. Using such mass marketing examples as TV, radio, email campaigns, or even social media campaigns are only effective if your customer can actually get your product.
Mass marketers will be quick to point out that mass marketing is more manageable and more effective when you apply segmented marketing theory. It is a big word for looking at the market in different ways: Geographic, Demographic, Firmographic, Behavioral, or Psychographic.
Tightening Market Focus Starting with Geographic Segmentation
Of course, there are other ways to look at your market, but when it comes to retail products, geographic dominates. In other words, “What means of marketing work best where your products are sold?” And also, “Why waste money on advertising in territories where your customer can’t get your products?”
Demographic Segmentation
Depending on your product, once you have discovered the geography that has access to your products, you now have the luxury of focusing in and targeting a tighter audience that can afford your product or is particularly drawn to it because it satisfies a need for their segment. This is demographic segmentation. For instance, we targeted a 37-year-old mom with two kids, shopping for a “Tuesday night wine.”
Firmographic Segmentation
You may also ask, “What organizations do they belong to?” This is firmographic segmentation by “firms” or organizations. For instance, we first identified the neighborhoods surrounding the stores where our products were for sale. Then we looked at what non-profits or community fund-raisers were important to our customers in those neighborhoods. We supported their causes with donations of product, physical and marketing help. We even advertised their cause in a forum they could not otherwise access, the retail markets. This gave the members of those non-profits a social reason to buy our products.
Behavioral Segmentation
You can further tighten the focus by looking at the customers’ buying patterns and habits. This is called behavioral segmentation. In our case, our customer was shopping in a supermarket for the week’s groceries. She bought wine as a staple, for everyday consumption. These shoppers were on a limited budget and a limited time frame. Since they did all the shopping for the family, they were under pressure to make brand choices that were consistent in flavor profile and quality. We, therefore, produced and sold non-vintage wine at the velocity price point to fit her requirements and budget.
Psychographic Segmentation
Finally, understanding your customers’ lifestyle, or psychographic segmentation, will help you hone in on the ways and places your product should be presented. You want to match and enhance what they are already doing. As an example, our customer was living a casual lifestyle with recreational activities. They were also working and trying to balance a budget and a schedule. So, we made our products easy for them to identify, remember, and locate. We used a recreational symbol, the bare foot, as a distinctive logo with which they could identify.
We advise you to go through all the segmenting exercises before you launch your product. Understand the importance of physical access and then narrow down your marketing approach. With CPG retail products, it’s better to use the right bait than throw a large net.
