Today's issue will follow up on Issue #018 where I spoke about the importance of using outlet segmentation in hunting new customers. Today I'll deep dive into the dangers of generalizing outlets and splitting them only into "cool ones" and "mainstream ones".
Unfortunately, most outlet segmentations I've seen in the last 20 years, either focus on volume (how much they sell) or on the brand image (how cool they are). After that, they stop, thinking it is enough. But if you don't go one level deeper, you are missing out, spending time in the market in a useless way.
• Volume-based segmentations are better for farming (developing rate of sale of velocity).
We will talk about Volume in the next article Issue #020.
Why do I think that? Because I made that mistake in the past. I started my career with a very strict approach to brand building. Having worked only with premium brands, I used to be very picky. Being in Marketing, I had tons of clashes with my colleagues in Sales. I used to think that the only way to build a premium brand was to focus on the "creme de la creme" of the outlets in the city while my colleagues were keen on expanding distribution rapidly.
I was frustrated. How could we not find a mutual approach to driving marketing and sales efforts? So, I asked to work in Sales. It was the only way to change my perspective on things.
I was focusing on the top part of the segment, my sales colleagues were focusing on the bottom part. We were both wrong (top drawing above) .
I deep-dived and started looking at things differently. I realized that there was a different way to build brands and this one was much more sustainable from a P&L perspective. Why?
It's not about cool or mainstream outlets. There are 4 types of customers and only 2 of them matter.
Hunting customers is a counterintuitive bottom-up exercise. By focusing only on the best outlets in town, you will miss great opportunities for more standard outlets that want your brand, don't require much attention, and bring in cash that will keep your brand afloat in the first months of your brand-building journey.
I see too many sales teams focusing on the wrong outlets, running around town spending time ineffectively betting on the wrong horse. They forget that their time is money and a day in the trade is very expensive when counting all aspects from salaries to fuel, from coffees to lunches out. You must focus on the outlets that are worth the effort, also from a P&L perspective.
Easier said than done, right? How can you find the right ones?
• Target Occasion: how does your core occasion fit with theirs? If your occasion is a "shot", a fine dining venue won't be right for you, even if it's on all the guides as the best place in town.
• Commercial Proposition: what's your purpose, what values does your brand represent? How would you translate your brand positioning into 3 types of outlets? Those are the outlets where your brand would perfectly fit their drinks range.
A simple way to understand which ones to focus on is to create a simple matrix like the one below. Before you start, read my previous article here.
Cluster the outlets in 4 quadrants based on premiumness and on your ability to win there.
#1. ❌ Top-left quadrant: Hard to get (The cool ones that don't want you)
These are some of the coolest bars and restaurants in the city. They are on everyone's hunting list. They are the best ones in the city but they are not the best ones for your brand at this stage. It could be for many reasons, for example:
• They aren't in line with your commercial proposition and occasion.
• They are part of an On-trade group that's difficult to get to
• They are keen on getting listing fees, or other investments that you can't afford (or might not even be legal)
They might become interested in you in the future but today it's useless to focus on them just because you feel that you have to be listed there to be recognized as a cool brand. Stop keeping them in your pipeline.
#2. ❌ Bottom-left quadrant: Not worth the time (Mainstream ones that don't want you)
These outlets are a no brainer. They are not good for brand-building and they are a pain. They don't resonate with your proposition, they will give you just headaches, and will probably buy only once if they will ever buy. The easiest ones to remove from your route. Skip them and never look back.