No fans, no brand
By Ted Wright June 26, 2007
It’s clear to us that the beverage industry is morphing from the old top down product introduction strategy to a business model similar to the cosmetics industry: two or three players in each broad segment who specialize in distribution, manufacturing and advertising on a global scale and then lots of start ups who specialize in either creating the next trend or being the first to capitalize on it. These start up brands grow to a certain size and are then purchased by the global players. Izze, Odwalla, Monster, Fuze, Rockstar, Hpnotiq, Rolling Rock and now Vitamin Water are just a few brands that fit into this new model. So what does this mean for those firms in start up or fast growth mode? Where should you be putting your efforts
No fans, no brand
To grow your brand you have to have fans. We refer to these people as “Influencers”. Here are some facts you should know about the average Influencer in North America
§ They will share your brand story with their friends 6 times more than the average consumer
§ They will continue to share your story for almost eight weeks. The average consumer will only share a brand story for about 10 days.
§ 92% of Americans will purchase and try a product that is new to them if it is recommended to them by an Influencial friend.
These Influencers or “fans” are the most powerful marketing force that a beverage brand can have. Over time this fan base can become a powerful profit engine for your brand as they continue to encourage people to sample and purchase your brand.
Recently I heard the marketing guru of a fast growing soda brand say that for every dollar spent on broadcast advertising meant that six people could not be sampled or otherwise have a personal one on one experience with the brand. This meant that, for his brand, with every $10,000 radio or print buy, that crucial one-on-one brand expereince would have to be sacrificed for 60,000 potential customers and Influencers. Given that each Influencer who loves your brand accounts for almost 42,000 brand impression this means that bulding you fan base through word of mouth marketing is the most economically efficeint way of growing both revenue and profit. Needless to say this particular marketing guru nvere put a dime into anything other than building his brand’s fan base through word of mouth marketing. Having just sold his company for a very tidy sum he is very happy with the decisions that he made.
Distribution
Now that you have built this tremendous fan base it’s time to seek expansion of your distribution. “But wait” you might be thinking, “don’t I have to get distrbution first”. Here is a fundimental truth to remember – distrbutors and venue owners are in business to make as much money as possible. They really only have one question, “How will taking on your brand make me more money?”. If you have built up a base of fans for your beverage and they are going to locations and asking for it, the owners will see the profit potential and figure out how to get the product into their stores/venues and to the customers. How else would brands like POM, IZZE, Fat Tire, VOSS and Hanger One grow? They all have giant competitors with the deepest pockets possible yet these brands are able to grow year after year with ever increasing distribution channels because the consumer is requesting these brands.
Each brand that you can think of started at one location with one manager or owner taking a risk on a new product. The brands that were successful were those that had a group of brand fans that went and bought the product and then got others to join them. As that replacted across markets and the countries these brands grew into the global powerhouses they are today
Innovation
All of the brands that we have mentioned in this article have kept their brand groth up by continueally putting money and time into innovation. Every start up beverage brand that has continued it’s success has done so through innovation. In these days of consoldationg players in both distribution and global brand ownership those brands that have a portfolio of products with a consistent brnd message across their brands have been the most successful at growing and then getting purchased.
We started at consolidation equaling opprtunities for start up brands so let’s all tie this together. Big brands do those things well that thrive on scale. Creating and exclerating trends are not scale dependent skills. In fact quite the opposite they depend on the hyper focused entreprenuer who is in the street every day and can see potential where others don’t. The person who is so close to the consumer they can sense a coming shift in demand before anyone else. You want consolidation because that leaves the big firms to get bigger leaving you room to do the work you do best and when you hit upon a winner those massive companies with global scale will be only do glad to buy you out so that you can be economically independent forever.