In the earlier blog we shared about creating a brand from the learnings of the failures and triumphs of other brands. In this blog of the series, we’ll share the critical areas to address while achieving Product Market Fit( inspired from the book “22 Immutable Laws of Marketing” )
In the earlier blog, the closing lines , pointed out the dangers that Kingfisher, Carlsberg, and other well-known companies pose to our brand.
Well…. that’s more harmful for larger brands like Kingfisher than it is for us.
Larger brands don’t have a chance to replace a product, even one of the same category and of higher quality like ours, in the minds of consumers when a product, albeit fresh, is viewed as fitting in the minds of the consumer.
Colgate, although a well established brand, could not penetrate into the sensitivity toothpaste market with its product — Colgate Sensitive Plus.
Additionally, line extensions, like the one mentioned for Colgate, erode consumer trust because they give consumers the impression that the larger brand is afraid of the products of the newer brands and is therefore attempting to shift its attention away from its heritage to these recently introduced categories.
Atari, a gaming giant, lost its entire market share in gaming, when it pivoted its legacy of making games to manufacturing computers in categories owned by IBM and Apple.
Now… lets dive deep into building the Product Market Fit (PMF).
Product Market Fit is crucial to assess as even if the brand creates a lasting perception in consumers’ mind, the product is important to aid its existence in the long term.
Soo…
Now that the terminology is established, we must talk about the Product Market Fit.
Product Market Fit can be broken down as per the 4P’s of Marketing.
The 4Ps of marketing have been covered in detail under earlier blogs of “Auxano Knowledge Universe”. Thus, we won’t get deep into them, but for reference we’ll cover all the areas required to build a PMF for Xeez Beers.
- Price:
In developing countries like India, Pricing plays an important role in achieving the PMF.
And a lot of brands have already identified this theory, hence a common practice is offering the product for free or at discounted prices to achieve early mass adoption within customers.
It’s more harmful than good…
What marketers fail to grasp here is that while there may be a short-term increase in sales, customers habituate to only paying the discounted price, which makes it challenging for the product to expand sustainably in the future.
Would you pay for transacting through Paytm?
An effective pricing strategy involves charging the consumers the right amount from day one, and reducing it in future as the product achieves economies of scale.
It’s Rs. 189, for a 330 ml can of Xeez Beers.
Our pricing is higher when compared to other beers, however we form a pricing monopoly as there are no other “Healthy” Beer Makers in the Industry.
2. Product Placement:
While Pricing is important, it’s not the only deciding factor. The second factor is Product Placement.
What do you know better?
Sony or MHC? Air Dopes or Boat?
(MHC and Air Dopes are products of Sony and Boat respectively)
But also,
Colgate or Palmolive? Dominos or Jubilant foodworks?
(Palmolive and Jubilant Foodworks are the parent companies of Colgate and Dominos respectively)
As mentioned in the former example, Companies that seek for horizontal expansion prioritize their brand in order to promote a wider range of items under their name whereas those that aim for vertical expansion aim to achieve product market specialization, as mentioned in the later.
Since we are Market Creators and are creating a niche product, vertical expansion makes more sense than horizontal expansion.
It’s Xeez Beers over Glow-in-the-Dark Drinks (Our Parent Co.)
We would be selling our product in 330 ml packs, where we will place it between the segment which drinks alcohol and at the same time is health conscious.
3. People:
Target audience?
For sure it’s the people above the legal age, but exactly who and from where?
We’re specialists not generalists, our product has a clear Why — Healthy Beers, hence it is easy for us to define our Who — The age group between 25–40, which has an inclined interest towards health, at the same time are occasional drinkers.
And that for reference:
Total Beers sold in India in 2021 — TAM : Rs. 35000 Cr.
And, as per a study published in EY, 40% of Indian consumers are willing to pay a premium price for healthy products.
Thus SAM : (Rs. 35000 Cr. * 40%) = Rs. 14000 Cr.
Lastly, following adoption matrix
SOM that consists of the innovators, that get attracted the earliest: (Rs 14000 Cr. * 2.5%) = Rs. 350 Cr. (In recurring revenue annually)
4. Promotion:
This is how we create our Unique Selling Proposition (USP), for which we have discussed a lot about in the last blog of the series.
Who are other beer companies targeting — Its Drinkers, no one is targeting Healthy Drinkers. And that’s where we place our product.
Another aspect under promotion is candor. For sure our healthy beers won’t be as tasty as the other beers due to the absence of Yeast.
But, “We might not serve the tastiest beer, we do serve the healthiest beer”. And that makes our weakness into our Unique Selling Proposition.
“The 1970 VW will stay ugly longer” as though it was not good looking, it was amongst the most reliable cars in the market.
Conclusion:
Brand builds a perception in the minds of the consumers and the product helps in sustaining it for longer terms.
In the last blog we covered the importance of brand building, and in this blog we evaluated the areas lying under Product Market Fit.
While Xeez might not be in the market today, it will be soon. Keep a track of the stock at the liquor stores near you.
Author(s):
Kanuj Jadwani
