Defining Your Target Customer

Part II of a Four Part Product Series (Part I / Part III / Part IV)

You can’t be all things to all people. If you could, Coke would rule the cola world and Pepsi wouldn’t exist. People are choosey, it’s our nature.

Nevertheless, Coke comes about as close as you can get to being all things to all people, but only by throwing endless marketing dollars behind their product. As a cash-strapped small wholesale producer, you may not be able to throw any marketing dollars behind your product. Your only option, then, is to define your target market as narrowly as possible, and then create a coherent product that specifically appeals to that target market. This is what is known as creating a niche product.

Let’s create a niche product together, from scratch. Our first step is to define our target customer. I’m a beer guy, so let’s create a new craft beer. If you’ve ever been to a craft beer store, you know how competitive that scene is. If we’re to have any hope of success, we’ll have to get quite specific with our target customer, and identify a desire that this customer has that our product can satisfy if we play our cards right.

Side Note: If you already have a product that you feel is falling short of its potential, then you can basically work backwards through this exercise. Start by identifying what desire your product satisfies. From there you can figure out who is most likely to have this desire. If you have existing customers, study them to learn more about what itch they have that your product scratches, and by extension, what your niche is. With a bit of tweaking to your branding and Unique Selling Proposition (USP), you can maximize the appeal of your niche product to your target market.

Okay. First we have to choose a state to start our brewery in. I’m from the Midwest. Of the 50 states in the union, Iowa has the tenth highest per-person consumption of beer.¹ I like Iowa, so I’m going choose Iowa. That narrows our focus right away — our customers for the foreseeable future will be Iowans (at least until we are poised to grow beyond our home region and have the licensing to sell interstate).

But like any population, Iowans are a diverse group of people with diverse tastes. So which Iowans are we going to appeal to? Well, what kinds of people drink craft beer? Let’s start with gender. Nationally speaking, men account for close to two-thirds of overall beer consumption.² But historically there was very little variety when it came to style of beer, and that beer was targeted to men and blue collar workers (as evidenced by the highly sexualized beer ads of yore). Enter the craft beer revolution. Craft beer found its market through variety, and its ability to appeal more broadly “to adult beverage drinkers who have historically opted for something other than a can of traditional lager.” ³ One of those groups is women, who have proven to be big drinkers of certain styles of craft beers,⁴ considerably more so than they ever were drinkers of the big brands.⁵ So men drink more beer, but we certainly don’t want to rule out women, who now make up 15% of the craft beer market.⁶

College graduates are nearly twice as likely to drink as are people who didn’t finish high school.⁷ Current college graduates are of the Millennial Generation, and Millennials love craft beer in a big way.⁸ Craft beer reflects their preference for locally-made and sustainable products, and they consider craft beer to be an affordable luxury that reflects their notions of sophistication and education.⁹

Taken together, I want to craft a beer that appeals to both men and women, and I want to capture these Millennials right out of the gate, when they reach legal drinking age (a bit cynical perhaps, but business is business…). Iowa just so happens to rank #7 in the number of bachelor degrees awarded per capita,¹⁰ so we know there are a lot of college students there. If we wanted to dig even deeper, we could work out how many college students of legal drinking age are living in Iowa, and how many of them drink beer regularly. I can’t find these stats online, but if this was a real venture, I would want to conduct surveys and focus group studies of my target customer.

Great! We’ve broadly pegged our target customer: seniors at Iowa colleges and universities, both male and female. Now, what might be the different barriers of entry into craft beer for this customer? Based on what I know of undergraduate life, I’m going to say money and taste. Most undergrads aren’t legally able to drink, but it’s no secret that they find ways to. They tend to drink really crummy macro beers like Busch, Miller, Coors, PBR, and Bud, because it’s cheap, it’s everywhere, and it’s straightforward. So our challenge is to satisfy an unmet desire of theirs: they want to drink better beer, but they are poor and their palates are accustomed to bland macrobrews.

Now that we know who we’re gunning for and what they wish they had, we have a clearer picture of who to focus our sales efforts on. With some creative brainstorming and research, we can figure out where this target customer shops and start building our retail target list. And by limiting our market, we have an idea which publications and websites to follow to stay on top of marketing opportunities, and we stand a great chance of becoming known within this market. But most importantly, with our target customer nailed down, we can now create a product that appeals to this target customer, and position it so that it stands out from the competition. For this, we need to discuss USP and Branding. We’ll take each in turn in the next couple of posts.

Up Next: Part III of IV

¹ http://247wallst.com/special-report/2014/07/01/states-that-drink-the-most-beer-3/2/
² http://www.nielsen.com/us/en/insights/news/2016/craft-beer-style-preferences-start-and-end-with-the-consumer.html
³ ibid
⁴ ibid
⁵ http://www.beer-brewing.com/beer_brewing/US_beer_industry/beer_demographics.htm
⁶ https://www.entrepreneur.com/article/246092
⁷ http://www.thedailybeast.com/articles/2010/12/29/drinking-stats-who-drinks-the-most-alcohol.html
⁸ https://www.entrepreneur.com/article/246092
⁹ http://www.investopedia.com/articles/personal-finance/072215/craft-beer-industry-driven-millennials.asp
¹⁰ http://www.statemaster.com/graph/edu_pos_deg_awa_bac_percap-degrees-awarded-bachelors-per-capita